As noted previously, Cooperatives are a private and voluntary alternative to the public mandatory EID. This would translate into an electric coop where members build own and main-tain the renewable energy infrastructure as well as paying in based on the amount of energy used.
State laws for the creation of coops vary generally have 4 princes; The first principle is democ-ratic ownership and control by users, the second principle is limited returns on capital, the third is return of benefits or margins to users on the basis of use, and the fourth is having the obliga-tion of user-owner financing. One person, One vote regardless of the amount of money is in-vested, and not acting as investment vehicles but instead is helping group of individuals reach common business goals. The third and fourth principles address the for the members, by the members, approach to any co-op organization which put simply, cannot be run on purely profit maximizing purposes. In the energy cooperative regulatory scheme, the coop would purchase 85
City of Bridgeport, CT Energy Improvement District. Anaerobic Digester Community Meeting, March, 27, 2012
83
5:30 PM.
Bricker & Eckler LLP. City of Oregon Establishes an Energy Special Improvement District as Part of the North
84
-west Ohio Advanced Energy Improvement Corporation. Lexology, USA, September, 21, 2012.
U.S. DEP'T OF AGRICULTURE, COOPERATIVE FINANCING AND TAXATION 6, available at http://
85
www.rurdev.usda.gov/rbs/pub/cirlsec9.pdf (summarizing "[t]he 8 percent [limitation on dividends] is a historical level contained in many State laws").
, e.g., Mo. REv. STAT. § 394 (2012) (dealing with the creation and requirements for rural electric cooperatives);
S.C. CODE ANN. § 33-49-250 (2012) (defining the powers of the cooperative, including to "generate, manufacture, purchase, acquire, accumulate, and transmit electric energy and to distribute, sell, supply, and dispose of electric energy to its members"); OKLA. STAT. ANN. tit. 18 § 437.1 (West 2012) (stating: "Cooperative, nonprofit, mem-bership corporations may be organized under this act for the purpose of supplying electric energy and promoting and extending the use thereof in rural areas").
and maintain its equipment and distribute to its members. At the same time, its non profit status would likely gain the approval of public utilities because it would not be viewed as a competitor.
Few coops other than rural electric coops, focus specifically on the provision of energy.
The primary reasons for the limited use of energy co ops are due to limit on profit which limit interest from typical renewable energy companies and investors also the fact that profits are divided based on member use rather than investment, also deterring for profit investment. Like governments, coops also do not benefit from tax credits. Despite limits on business structure for energy, several community solar projects have adopted the coop mechanism. i.e solar pioneer II project in Ashland, Oregon: citizens and business purchase upfront, one quarter, one half, or full solar panel increments and now receive payment for the value of the corresponding energy pro-duced over a 20 year term as well as rights to renewable energy credits. Another example of a functioning energy co-op is the Colorado Clean Energy Collective which, allows individuals to own solar panels directly in a community solar farm. While, some communities are hesitant to sell shares into such projects due to concerns about state and federal securities regulations, non-profit coop structures may provide exemptions from these regulations. In summation, coops work best where renewable projects are purely community based and the financial capacity of members is for the most part equal. At the same time however, the provision of energy rather than the maximization of profit, must be the end goal.
D. For New Sub Divisions:
Upon the creation of an new sub division, developers advantage over property owners in existing neighborhoods; do not have to impose new institutions on residents. Can establish in-stead upfront common fees for construction and maintenance of renewable infrastructure. by doing this developers are binding future residents to community scale energy while placing them on notice of their fees and their purpose. can avoid inequitable cost structure based on resident home size or other income proxies; EID’s can use similar varied fee structures but they must first
be approved by the city government . The Home Owners Association (HOA) is a natural vehi86 -cle for overseeing and funding the operation of community renewable infrastructure. A HOA is equivalent to the board of directors in BID’s in that, they collect monthly annual fees from all residents. The kind of rules an HOA is authorized to make include: with respect to homeowners usage of energy produced and what state and federal laws bind an HOA with respect to their sale and distribution of energy. In addition to this, HOA’s can identify the state specific rules that per-tain to these legal areas and modify them to allow for HOA’s to finance or participate in renew-able energy projects. This is the first step in ensuring that the HOA formed, may be used for community scale renewable energy. States that do support community scale renewable energy must prevent HOAs from banning distributed renewable equipment . 87
In many respects, it is Easier to form the BIDs because they do not require municipal or property owner approval. This is because of covenants conditions and restrictions (CC&R’s) as they are already established before property owners approve their lots. Simultaneously, munici-palities increasingly require the establishment of HOA’s by developers to ensure that streets and other subdivision infrastructures, will be maintained and paid for by subdivision residents rather than the city. One problem would occur if the owners of lots within subdivision have a highly differing income then it is likely that uniform fees would seem unfair. This problem is reduced in BIDs as here, there is in place the reduction or elimination of fees for governments or
See, Wayne S. Hyatt & JoAnne P. Stubblefield, The Identity Crisis of Community Associations: In Search of
86
the AppropriateAnalogy, 27 REAL PROP. PROB. & TR. J. 589, 599 (1993)
("A community association is an automatic, mandatory membership organization. That means that all owners of property subject to the covenants creating the community association automatically become members of that associ-ation by virtue of taking title to that property. They must remain citizens of that associassoci-ation subject to its governing and taxing powers so long as they remain owners." )
Kristina Caffrey,. The House of the Rising Sun: Homeowners' Associations, Restrictive Covenants, Solar Panels,
87
and the Contract Clause, 50 NAT. RESOURCES J. 721, 725 (2010).
its. When properties are not homogenous, CC&Rs can include carried fee assessments that ac-count for income differences. 88
The extent to which counties allow for zoning codes for instance, in San Diego the zon-ing regulations were recently broadened for unincorporated areas lookzon-ing to support community scale renewables. Previously, the county required any such projects to obtain a major use permit. This legal change is crucial to the implementation of community scale renewable 89 projects in existing neighborhoods simply because if zoning codes are too narrow, individuals should apply for interconnection specifying technical interconnection standards and requiring utilities to indicate interconnection status on the internet. This would standardize the intercon-nection process for small scale renewables. Once this is standardized, the next thing communi-ties must consider is the extent to which its structures are designed to undergo renewable installa-tions such as, building accessibility to sunlight and other things of that nature.
Easements have been an effective mechanism for ensuring that there is adequate air quali-ty, sunlight, or similar conditions, so that property owners may have a right to open a block of air on neighboring properties. Easements vary based on the property laws within a city or state and can either be imposed on neighbors or they can be private where legislation allows property owners to include restrictions in their deeds . No matter what their form, easements enable 90
Winokur, JamesL.Choice, Consent, and Citizenship in Common Interest Communities, in COMMON INTEREST
88
COMMUNITIES: PRIVATE GOVERNMENT AND THE PUBLIC INTEREST p.87, 89 (Stephen E. Barton & Car-ol J. Silverman eds., 1994).
See, e.g. Ellickson, Robert C. Cities and Homeowners Associations, 130 U. PA. L. REV. p.1519, 1522, 1524 (1982) (differentiating HOAs from other "governments" in that in HOAs, homeowners voluntarily subject themselves to rules by moving to the community).
Wolf, Michael Allen. A Yellow Light For "Green Zoning”: Some Words of Caution About Incorporating Green
89
Building Standards into Local Land Use Law, 43 URB. LAW 949, 961 (2011) (citing ADVISORY COUNCIL ON HISTORIC PRESERVATION, SUSTAINABILITY AND HISTORIC FEDERAL BUILDINGS 17-19 (May 2, 2011),
IOWA CODE § 564A.3-A.4 (2012) (allowing a "city council or the county board of supervisors" to "designate a
90
solar access regulatory board to receive and act on applications for a solar access easement" and allowing property owners to apply to the border for "an order granting a solar access easement").
communities to build renewable instillations in areas with existing buildings and since this is the end goal, communities must explore what form would apply to them.
An even more affirmative route than easements for the installation of renewables, would be via the requirement for the construction of renewable infrastructure in infill development.
Zoning codes can mandate that renewables be installed or that at least the proper hookups are installed to facilitate these installations. Cities also have the ability to require that developers install dwelling units so that a solar energy system may be installed and future property owners have the ability to negotiate with developers about purchasing said units. These same require-ments could also be imposed on existing neighborhoods and demand that retrofits be consistent with the best practices outlined by the EPA, for energy ready homes program . 91
The legal measures that can be taken by municipalities are related to zoning and planning requirements on the part of developers. As stated previously, municipalities can require that de-velopers of new buildings or subdivisions zone construction so that there is sufficient access to sunlight and that renewable technology be part of the building plan in order to produce Net Zero buildings. However, it is possible for local governments to overstep their legal bounds here at the national level.
For instance, the U.S. Supreme Court ruled that any conditions developers are required to meet by local governments must prove that any conditions attached to zoning permits must be proportional to the impacts of the project and the conditions imposed. This matter was brought to the court under two separate cases, Nolan v. California Coastal Commission, and Dolan v. The City of Tigard . In the latter case, the court found that government agencies may not require 92 that people surrender their constitutional rights in exchange for discretionary benefits where the property sought has little or no relationship to the benefit concerned. Here a small business own-er was looking to expand hown-er business on propown-erty that she owned and would only be granted a
Solar PhotovoltaicSpecification, Checklist, and Guide, U.S. ENVTL. PROT. AGENCY, http://www.energystar.gov/
91
ialpartners/bldrs lendersraters/rerh/docs/Renewable EnergyPV.pdfVOa3e-05ee (last visited Apr. 12, 2013).
Some states currently do not apply Nollan and Dolan to impact fees, although this doctrine may change. See, e.g.,
92
St. Johns River Water Mgmt. District v. Koontz, 77 So.3d 1220 (Fla. 2011) (finding that Nollan and Dolan are only applicable where the condition sought involves a land dedication).
permit by the city of Tigard if she were to dedicate part of her land to a greenway/bike path, to help achieve the city’s goal of reducing traffic congestion. However, the court found that the dedication requirements were not related to the development of her business and thus constituted an uncompensated taking of her property therefore violating the fifth amendment. So if a district or municipality is seeking to promote renewable instillations via permit requirements, they must first provide a numerical estimation of climate impacts related to carbon emissions, heating and cooling of buildings, or what have you, that would be significantly reduced by renewable energy installations.
Alternatively, the Nollan v. California Coastal Commission case outlines the courts views on the use of easements by local authorities. Previously mentioned were the ability of lo-calities to use easements of light and air as a means to promote solar and wind installations. In addition to this, there are three other types of easements recognized by common law courts and they are; easements of right-of-way, easements of support, and easement rights pertaining to arti-ficial waterways.
In common law courts, easements themselves are considered property rights in that, they are meant to protect the right of persons to have access and enjoy land other than land that is owned by them. In the Nollan case, the right of way easement was imposed by the California Coastal Commission (CCC) onto all property owners along Ventura County beaches, including the Nollan family . The CCC required that the development of homes along the ocean front, 93 must dedicate a strip of land along the beach front so as not to deny the public access to the beach. The court ruled in favor of the Nollan family arguing that there must be a close nexus between the regulatory conditions imposed and the development impacts of concern and that the regulatory action must substantially advance legitimate state interests.
The Former Supreme Court Justice Scalia, found that that the public access condition did not meet the nexus test by compensating for the slight loss of view that would occur with the
Nollan v. Cal. Coastal Com'n., 483 U.S. at 825 (1987). The California Coastal Commission required own
93
-ers of beachfront property wishing to obtain a building permit to maintain a pathway on their property open to the public. Faria Beach, Docket No. 86-133, State Appellate Court. 177 Cal.App.3d 719, 223 Cal. Rptr. 28, reversed.
velopment of the Nollan’s property. Upon this ruling, a local authority wishing to use easements in efforts to reduce impacts on climate change, that authority must show that the interest is suffi-ciently connected to the requirements of renewable construction . The interpretation of ease94 -ments could potentially become more lenient depending on the next Supreme Court justice who is appointed. However, if the next justice is appointed under a republican administration this No-vember, it is likely that current interpretations will stand and localities will have to be mindful of the language that they apply regarding the conditions of easements.
Dolan, 483 U.S. at 391 (requiring an "individualized determination" of
94
impacts but not a "precise mathematical calculation").
V. FINANCIAL INSTRUMENTS AND INCENTIVES:
A. Environmental Finance
The main goal of environmental finance is to bring the greatest amount of environmental good to the greatest number of people at the lowest possible cost. Having not ratified the Ky95 -oto pr-otocol into the United States federal legislation, has been without a doubt the greatest legal challenge in the U.S, in terms of achieving this goal at a national level. This is because in the 96 U.S, treaties are the supreme law of the land and had it been ratified, every state would have been legally required to comply with its energy targets, including those related to the energy per-formance of buildings and mandatory requirements for renewable energy installations.
Alternatively in the U.K, as a member of the EU, they are required to comply with all treaties, directives, and regulations implemented by the European Union, therefore making the implementation of laws on the energy performance on buildings, much more effective at the na-tional level. Since the policies that facilitate these environmental projects are enforced weakly at the federal level in the U.S, it has been and continues to be, up to state and local authorities to put policy in motion. Prior to the 2008 market crash, Berkley, CA came up with what is likely the most successful model for governments doing solar instillation at the local level and that was the Property Assessed Clean Energy program or PACE. This plan comprised the city of Berkley buying solar panels for homes via the issuing a municipal bond and getting repaid by placing tax assessment on home owners property.
The average life span of a solar panel is 20 to 25 years, so the government would issue a 20 year bond. The idea behind this plan is that the fact that governments, unlike individuals, have very good credit and are able to get the lowest possible interest rates no matter how good someones credit may be. In addition to low interest, governments are also able to issue bonds over a much longer period of time than a private individual could. This is crucial to the goal of
Curley, Michael. Finance Policy for Renewable Energy and a Sustainable Environment. CRC Press, Taylor and
95
Francis Group, Boca Raton, FL (2014).
Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 10 December 1997, in
96
force 16 February 2005, 37 International Legal Materials (1998) 22. (Kyoto Protocol).
environmental finance because longer terms equate lower payments and therefore greater incen-tive for doing the instillations.
Eventually other cities and states began to adopt similar legislation to the PACE program because it was virtually painless. For one, it was completely voluntary so an increase in taxes was a product of consensus. Secondly, both the improvement and the assessment go with the property so if the house is sold to a new owner, they reap the benefit and pay their fair share.
Finally the extended term limit made it easier for a wider spectrum of individuals to be party to the program. Unfortunately, the housing market crash brought this to a grinding halt when the Federal Housing Finance Association when they recognized that solar lien’s actually took legal precedence over mortgages owned by the government sponsored enterprise, Fannie Mae who was loosing billions of dollars a month at the time. The order issued to Fannie Mae to stop buy-ing mortgages with solar liens on them still stands. While this put a damper on residential instil-lations, the FHFA ruling did not apply to public land, obviously . So going back to the initial 97 goal, greatest environmental good at lowest cost, to what extent could governments utilize their assets (long-term bonds and low interest rates) on their own buildings; schools, jails, libraries etc.
Many cities in the U.S. have entered into a Power Purchase Agreement (PPA) for a solar system on top of their land. The solar contractor will use city land to construct the array, in ex-change for long-term, low electricity rates. This will in turn help keep rates low for customers and with an significant amount of annual savings from reduced energy costs. The city will also have the option to purchase the system at fair market value after 20 years. At the same time states are cutting their energy bills by a significant amount and private entities are getting the federal tax incentives that governments cannot, allowing for the lowest solar overall solar price.
The problem is that PPA’s are only legal in half of the U.S. which, illustrates the problem with a
The problem is that PPA’s are only legal in half of the U.S. which, illustrates the problem with a