[Watch] Exploring Possibilities of Investing Now for Prosper…

Sydney Diavua

Good afternoon and welcome to Connecting Communities. Thank you for joining us for today’s webinar, Exploring Possibilities of Investing Now for Prosperous Sustainable Neighborhoods. I’m Sydney Diavua, assistant vice president of community development at the Federal Reserve Bank of St. Louis, and I will serve as your moderator for today’s session. When we planned this event in January, we had no idea of the space we’d be in today. Our thoughts are with the communities across the country who are enduring the recent natural disasters. 

During the webinar today, we’ll learn more about What’s Possible, Investing Now for Prosperous Sustainable Neighborhoods. It’s a collaboration between the Federal Reserve Bank of New York, Enterprise Community Partners, and Local Initiatives Support Corporation. What’s Possible is a collection of 25 essays from leading voices in climate and community development. This book isn’t just a collection of ideas, it’s a playbook for real action, helping places to seize the opportunities to make their communities more resilient. 

Events like these aren’t just conversations, they’re catalysts for action, bringing stakeholders together. We’re joined today by David Erickson and Javier Silva from the Federal Reserve Bank of New York, who’ll provide more information about What’s Possible. We’re also joined by a dynamic panel to hear from stakeholders on the front lines of this work. Before we get started, let’s move to slide three where we can take care of a few housekeeping items.

The views expressed during this session are those of the speakers and are intended for informational purposes. They do not necessarily represent the views of Fed Communities or the Federal Reserve System. Microphones have been muted. Please use the Q&A feature throughout the session to submit questions. We promise to get to as many of them as possible during the Q&A portion of this presentation.

Let’s keep the conversation going. Engage with us on X, formerly known as Twitter, using the hashtag #connectingcommunities and visit FedCommunities.org for a variety of community development articles, resources and data across the Federal Reserve system. And finally, this session will be recorded, and the presentation, video, and podcast will be available on FedCommunities.org within two weeks of this event.

I would now like to introduce our first speakers. David J. Erickson is the senior vice president of community development and leads the New York Fed’s community development team. David is the lead figure in bringing What’s Possible to fruition, which is part of the What Works series, which he began during his time at the San Francisco Fed.  

Javier Silva is a senior associate director with the community development team, and he works on the New York Fed’s climate resiliency team and the health equity team working with communities on these critical issues. Javier worked extensively on the What’s Possible book and he brings in valuable insights to the discussion this afternoon. Please join me in welcoming David and Javier. 

David Erickson

Thanks, Sydney, and thank you all for joining today. We’re super excited to have this conversation for a lot of reasons. The need, as Sydney mentioned, is dire as we’ve seen this week, and the possibilities are fantastic. And so that’s why this is just an exciting time to be having this conversation about how we can do things differently and with new resources. And so the one-liner for the book, if we can go to the next slide, is could we come up with a collection of essays that really focus on this theme about could we create communities that are more climate resilient and more opportunity rich? That’s the essence of the book. And we started about three years ago. At the time, there was an increase in the amount of investing that was happening from the green investing space. That’s what we were looking at. 

We had no idea that these cascading legislation would get passed and that there’d be these new resources available. That really is a game changer. So this is not once in a lifetime opportunity, this is once in a century opportunity, the amount of resources that are coming through the climate channel and much of which has to be invested in low-income communities. Shaun Donovan at Enterprise says this is the new New Deal. That’s how impactful he sees this collection of the Inflation Reduction Act, the Bipartisan Infrastructure Law and parts of several other laws that were passed. We can go to the next slide. 

So Sydney mentioned, this is a collaboration with LISC, Enterprise, and the New York Fed. We did get some technical support from RMI, formerly Rocky Mountain Institute, on technical aspects of climate change and climate policy. And it’s interesting, some people think that this book is too political. The Fed shouldn’t talk about things like this topic, for example, because climate is a political topic in the popular discourse for sure. I will assure you, this is not a political book and it is not controversial. In many ways this book is very mundane. It’s about things like you see on this slide, clean energy, resilience, equity, it is about weatherizing homes, it’s about decarbonizing buildings and how you train the local workforce to take on those middle class jobs in the new green economy. It’s about preparing communities for extreme weather events so that they’re better prepared for that. It’s for finding ways to build back faster and better after events like what we’re seeing in Florida and North Carolina. 

And so, in many ways, it’s just not controversial. Now I’ll say also that there’s real power in the mundane. And part of that is because the need is great and the resources are great as I mentioned before. There were $28 billion extreme weather events last year and we’re on target to have more than that this year. That was the most ever. And we are on a really dangerous trajectory, and communities need to be prepared for that. But even if you didn’t care about climate, even if you didn’t care about environmental issues, taken together, these programs would be the biggest jobs bill in your lifetime. It would be the biggest housing bill in your lifetime. It would be the biggest household financial wellbeing bill or program in your lifetime. So that is part of why this book is so important. If we can go to the next slide. 

And I’m just going to say I’m going to end on this and before I hand it over to my colleague, Javier. But the other thing is, anyone who’s young on this webinar, I envy you because, when I started in community development finance in the 1990s, basically I inherited an approach and we made it slightly better. We got better at low housing tax credit, we got a little bit better at new markets, things like that, maybe we improved it 20%. You all have an opportunity to rethink the whole system, the whole approach. 

And this is a map that appears on page 357 of the book. This is in my chapter in the book. If you’re not familiar with New York City geography, these might be a little confusing, but all four are the same geography. It’s Manhattan and the Bronx. So you’ll see in the middle of that long peninsula looking piece, that’s the Manhattan island, that’s Central Park in the middle. So that can orient you to the four maps. The first map is on life expectancy, the best summary statistic for health. And you’ll see as you go up from Greenwich Village, Upper East Side, Upper West Side, life expectancy is pretty long, but it begins to dip as you get into Harlem. And as you cross the river into the Bronx, it’s much lower. If you look at it through an economic lens, share of residents in poverty, we could have picked almost any. Access to capital, income, wealth, we could have picked other variables, it would look very similar to this map. 

Again, you’re going up the island, reasonably, there are very few people living in poverty, and then as you keep on going, it gets worse in Harlem and then the Bronx. We knew this. We knew that health and wealth were connected. What we didn’t really quite understand until we started working on this book is the extent to which these environmental vulnerabilities are also overlapping and they are the same map. So if you look at the heat deviation, this is a measure of where are the areas of the city that are hotter on hot days? And we know heat is one of the number one killers in terms of an environmental risk factor. And again, what you see as you go up the Manhattan Island, it’s cool relatively around Central Park, but you get higher and higher and into the Bronx, it gets much hotter. 

And then the same is true for air pollution, that the air quality in those communities are worse as well. And so that just calls on us to come to terms with this realization. There are overlapping vulnerabilities in the places that we are trying to serve, and therefore, we need to have overlapping interventions. And the silver lining is, there’s overlapping resources that we have to learn how to blend. And that’s what you’re going to learn when you read this book and that’s what you’re going to learn from the rest of this seminar. So thank you all for joining. I’m going to hand it over to Javier to talk a little bit about the rollout. Javier, over to you. 

Javier Silva

Great. Thank you, David. That was excellent. I’m so happy to be here for this webinar. Can we go to the next slide please? Great. So we have had a great rollout of this book. We’ve had 7,000 books distributed across the country and we’ve been holding events across the country as well from Puerto Rico, Albany, Philadelphia. And basically what we want to do with the rollout is really uplift local experience, local expertise. There’s a lot of great work going on at the community level and we’re using the book as a tool to really highlight what’s in the book, but also what’s going on in local communities. And so, for example, in Puerto Rico, the event that we’re going to have in December is going to focus more on hurricane recovery several years after Hurricane Irma and Maria devastated the island. Albany, we had an event in Albany that focused on capital and Philadelphia that focused on workforce development. The Boston event recently focused on affordable housing and workforce solutions. And, of course, in Phoenix our event focused on extreme heat. 

And so we’re really looking at what’s the local community need, the expertise and what’s important to that community in this space, organizing events to uplift those voices, bring expertise together and figure out how to find solutions to all of these issues that David raised in his talk. Can we go to the next slide please? And I think here you’ll just see a highlight of some of the events where we’ve had events this year, looking to have much more events next year. And I think with that, I’m really excited about the panel that’s coming up. So I want to get to the panel to really focus on some of the content of the book. So let’s go to the next slide and there’s a link there. And it’ll probably be in the chat as well where you can access the book, where the copies are free with complimentary shipping for all to have. And of course, feel free to reach out to us. If you’re a community stakeholder, we would love to talk to you about holding an event in your community. And with that, let’s go on to the panel. Thank you. 

Sydney Diavua

Thanks, Javier. Thanks, David. And you’re right, this panel is going to help us understand what’s going on in local communities, but also a little bit more about what’s in the book. So I’m going to invite our panelists to join us on screen, but as they come on screen, we’ve got two polling questions to help us learn a little bit about who’s in the audience today and what drew you to this webinar. So you’ll see our first poll appear on the screen and it’s, “What type of organization do you work for?” Our options are: government, financial institution, non-profit, philanthropic, private sector, or other. So we’ll give a moment for those responses to come in. 

Looks like we’ve got a pretty diverse group who’s on the line so far with a good split between those who are coming from government, financial institutions, and non-profit organizations, then a lot of mixed from other organizations. So thank you for telling us a little bit about yourselves. Now we’d like to understand a bit more about what brings you to today’s conversation and today’s webinar. The next polling question is, “At what intersection of climate resiliency and adaptation are you engaged in?”: housing, workforce development, energy efficiency, small business, policy, financing, or other? So we’ll give another moment for those responses to come in. It looks like a great deal of you all are working at the intersection of housing as well as a number of people who are working at the intersection of financing and policy. So thank you for telling us a little bit about yourselves, what drew you into the room. 

I’d now like to introduce our panel. Maggie Super Church is the director of policies and programs at the Massachusetts Community Climate Bank. Maggie is a nationally recognized leader in affordable housing and climate finance with over 25 years of experience.  

Rene A. Vargas Martinez is Inclusiv’s director of the Puerto Rico Network. Rene oversees an initiative to build a network of credit unions and cooperativas serving underserved communities in Puerto Rico and supports their activities to advance the island’s recovery efforts.  

Lisa Richter is co-founder and managing partner of Avivar Capital. Lisa oversees fund management and investing spanning asset classes, return expectations, geographies, and issues areas, and frequently incorporates place-based or sector focus to increase equitable access to opportunity.  

And Bryan Garcia, who is the president and CEO of the Connecticut Green Bank. Bryan leads the nation’s first state-level green bank where he has leveraged public resources to attract more private investment into the green economy. 

So I want to invite all of our panelists onto screen to join me. Thank you all again for joining us today for this important conversation and to talk about this topic, especially at a time such as this. So I’m just going to jump right in. I am really interested to hear more about the book and what you covered, but also some of the thoughts of how this is occurring in community.  

Rene, I will start with you. So as a part of the book, you authored an essay on Community-based Lenders Provide Critical Financial Services after Climate Events, Lessons Learned from Hurricanes Maria and Irma in Puerto Rico. And your article focuses on how the credit union sector supported the island’s community in the aftermath of one of its worst natural disasters. 

You’ve got some extensive experience working with cooperativas in Puerto Rico, and I would love for you to explain more about what that model is. And I also want to add that this is mostly rural communities, but you’ve been working on rural planning and renewable energy integration. So I want to start with strategies. So what are some specific strategies or solutions have you seen that successfully balance growth, affordability, and sustainability? 

Rene Vargas Martinez

Thank you, Sydney, and thank you for inviting me to participate in today’s Connecting Communities webinar with such distinguished speakers. I’d like to start also by expressing my gratitude to the New York Fed, Enterprise Community Partners, and LISC for allowing us to share how cooperativas in Puerto Rico prepared for and responded to hurricanes Irma and Maria. Now, cooperativas are really part of a century-old financial system. They have a presence in 75 of the 78 municipalities in Puerto Rico and, like credit unions in the continental United States, they provide affordable credit and financial services and are deeply connected to the communities that they serve. Now, if you were to drive up to a town or rural town in Puerto Rico, you roll down your window and you ask anyone, there’s a saying that if you ask them what the pillars of the community are, they’ll say la iglesia, the church; la alcaldia, the mayor’s office; and then their cooperativa, which is their financial cooperative. 

Now today, cooperativas serve over 1.2 million members and manage around $12 billion in community controlled assets. Now, during and after hurricanes Maria and Irma, cooperativas really played a critical role and stood up. Most reopened just 48 hours after the storm, while some bank branches and other financial institutions remained closed for months. They partnered with local organizations such as supermarkets, gas stations, hospitals, and municipalities to provide cash and essential supplies. They also offered emergency loan, flexibilized lending policies, kept cash circulating, allowing people to purchase basic needs in an environment without communications and without any payment systems working. Now, our essay in What’s Possible really documents the story and the lessons that the cooperativas learned throughout these disasters to share them with other financial institutions and regulators. We do encourage you to read the book and the essay, of course, if you have the time. 

Now, onto your question, cooperativas do deploy several strategies and solutions, but one of the most important that they have implemented as a financial movement is really focused on their green lending, both for residential and commercial customers in rural and also in urban areas. Cooperativas actually developed the first green lending product in Puerto Rico back in 2014. And since 2019 they’ve financed over $235 million in green loans. Now we know it’s much more, just that the regulator really started to capture that information fairly recently in 2019. Now this green loan product really has three main pillars. 

The first one is affordability. Now, cooperativas traditionally offer under market interest rates. In the case of green loans, this is their most affordable product with the lowest interest rate available. They provide flexible loan terms of up to 15 years for residential and also for commercial. Depending on the project it might be a bit more. And the loans really start like an interim line of credit until the installation of the, for example, solar panels or batteries are concluded so that the consumer doesn’t have to pay the loan for the system and also their electric utility bill. 

The second pillar is ownership. Cooperativas really emphasize ownership as a vehicle for wealth creation. This includes housing, it includes a car, or even the solar and battery system. This product really fosters full ownership of those systems offering an alternative to the much promoted 25-year PPA lease model. And we can talk about that in another time. And finally, it does emphasize consumer protection. Cooperativas really do protect consumers by implementing a due diligence process. Contractors must be registered in good standing and have a clean track record before those loan funds are disbursed, and the loan is disbursed by faces and the consumer has to approve of those disbursements. It’s not this kind of process where the person with the company, the contractor, pretty much installs and finances, so does everything and the consumer could sometimes lose that control. 

And to conclude, cooperativas have really also worked to increase their own resiliency. They’ve installed solar panels and batteries in their facilities to serve as resilience centers during disasters. One good example is Cooperativas Sagrada Familia and their Oasis Resilience Center in the town of Naranjito, which is now a micro hub for the distribution of supplies after a natural disaster. These are just some of the solutions that I wanted to share with you and your distinguished audience. 

Sydney Diavua

Thank you for, one, just giving us that overview of cooperativas, but also just to hear that this work has been in place for 10 years already and that it’s centered on these three pillars of ownership, affordability, and consumer protection. So it brings a new lens to how you all are thinking about what’s important to support consumers. 

Maggie, I’m going to go to you. You also authored an essay for the book and your essay was on Climate and Health, Global Challenges and Local Solutions, and it highlights climate and the link to health risk. And you’ve got experience in leading efforts at the Massachusetts Community Climate Bank. What innovative financial mechanisms or partnerships are essential in supporting decarbonization and affordability in housing? 

Maggie Super Church

Well, thank you, Sydney, and wonderful to be here with all of you. Thanks to the New York Fed and the team for hosting us, and wonderful to see some colleagues and hopefully share with some new folks that we haven’t had a chance to talk with yet. Let me just start by introducing the Massachusetts Community Climate Bank and then I’ll say a little bit more about some of the topics that I covered in my book chapter and how it ties to current work. The Community Climate Bank is quite new on the scene, although the work that we’re doing is certainly building on a long-standing set of investments in Massachusetts, and we’re proud to be the first climate bank, first green bank in the country that’s really focused on affordable housing and trying to make that link between addressing our energy and resilience needs and our affordable housing production and preservation goals in the Commonwealth. 

So the bank was announced formally by the Healey-Driscoll administration a little over a year ago, and we are situated at Mass Housing, the state’s housing finance agency, which has given us the ability to really get up and running quickly since we have a team here that’s really been thinking about how to structure both mortgages for low- and moderate-income homeowners as well as financing for multifamily affordable housing for decades.  

So with that context, let me just step back and say a little bit about why it’s important to think about a whole-home approach to how we treat buildings and in particular homes that are occupied by low- and moderate-income people and in environmental justice communities that have been overburdened for so long with pollution and all the other associated challenges we know have come with burning fossil fuels for many decades. 

So first, I’ll just say from a health perspective, one of the data points that really jumped out when I was doing research for this book, and it’s cited in the chapter, is that the impacts of air pollution from fossil fuels in the US alone are just massive. So 350,000 deaths per year in the US, that’s, for perspective, more than all deaths from guns, traffic crashes, and drug overdoses combined. And so, when we think about the cost of transitioning to a clean energy economy, we also have to think about all the other associated benefits. Certainly, others have talked about workforce development, wealth creation and preservation, cleaner communities, safer communities, but the health benefits by themselves are really substantial. And I think we can all picture ourselves in a home that maybe is drafty, leaky, moldy, difficult to heat, difficult to cool in the summer, becoming much more airtight, supported by clean power, getting rid of some of those indoor air pollutants. That’s a real immediate health benefit and also a longer term benefit. 

So really thinking about those connections to health so we’re not just say installing a heat pump, but ignoring issues with mold in the attic, where we’re not just putting in solar, but we’re ignoring what we could do to transition the hot water heater, really thinking about all the different components of the home that can contribute to making it more airtight, more efficient, lower cost to operate and powered by clean energy.  

The second thing I’ll say is buildings compose a large portion of our energy use in the country, and in Massachusetts that’s particularly true. So about 30% of carbon emissions come from residential and commercial buildings, and one to four family homes in particular make up more than 60% of all building emissions. 

And so when we think about what it’s going to take to achieve the state’s climate goals, and we are under requirements for progressive emissions reduction through to net zero by 2050, we really have to think about those one to four family homes in particular, those smaller, older homes often where people have the majority of their accumulated equity, their savings, but may be more vulnerable to climate disasters and may be most energy cost burdened. So all of those factors together really drove our decision to focus our first loan product for low- and moderate-income homeowners and one to four family homes. So in our area, if you know the Northeast at all, these are the older triple deckers, the smaller ranch homes, the capes, again, homes that historically were more affordable to working people but often have higher energy costs and need broader improvements to address health and safety. 

So the Energy Saver Home Loan Program, which we launched at the end of April, is providing a combination of hands-on technical support really through real humans who pick up the phone and also show up at your house and help you go through eligibility review, but also do that planning for your home. So for a lot of homeowners, myself included, it’s hard to know sometimes what do I do first? What do I do second, what has the biggest impact on total energy use? What has the biggest impact on utility bills? So the program is providing support from an expert team to help homeowners really plan for all of the improvements to their home and prioritize the ones to begin with to make them aware of and help them apply for all available rebates, incentives, benefits that may be available to them through the utilities, through the Inflation Reduction Act, through tax credits, through the state. And then importantly, to provide a low-cost, long-term loan that will offset costs that are not supported through those rebates or incentives. 

And it’s really structured to combine more flexible underwriting with, again, a longer term, a lower rate such that the monthly payments are much more manageable for low- and moderate-income homeowners. We also have built and are in the process of building out a contractor network to ensure, as Rene said, that homeowners have access to qualified contractors. They’re getting good services and supports really all the way through that process. So we’re very excited to be live with the program. We are hoping to have our first loans closed in the next several weeks and moving quickly on other fronts as well, including multifamily rental housing and solar. So happy to say more about that as we go forward, but that’s a little bit about what we’re doing and how we see the opportunity to really provide support to those homeowners to address health, energy use, energy burden and resilience together. Thank you. 

Sydney Diavua

Maggie, that’s so interesting and especially the Energy Saver Home Loan Program. I love how you said we use real humans who connect with people who help walk them through the process. How can this be something that’s scaled, whether it’s at a state level scaling or national level? How do you do that and incorporating the human aspect to it? 

Maggie Super Church

It’s a great question. I wish we could just replicate all the great people we have working on it already. There’s certainly, across the board, workforce challenges, so we need a whole lot more people who are doing whole home decarb planning, who are doing the actual home improvement work, who are providing the support from end to end. We are fortunate in Massachusetts to have some really terrific partners. So we put an RFP out and happy to say that we had a wonderful collection of folks who responded. And so we’re working with four different groups across the state to provide some of those services. And those are certainly, I think the kinds of roles that others could take on and likely will take on over time and certainly could be replicated in other states. 

I think on a financial side of things, the Inflation Reduction Act obviously is a huge opportunity to grow and scale many of the programs that we are all involved with. And so, we are in discussion with several of the award winners under that Greenhouse Gas Reduction Fund to understand what the opportunities may be to grow the program with those resources. So there’s no perfect answer, but I think it’s important that we really prove out what works and be in conversations like these to share what’s working and also where we can make improvements because these challenges are really acute across many, many places. 

Sydney Diavua

You’re right. And one of those places I know you referenced in your essay, and that brings me around to you, Bryan. The Connecticut Green Bank is innovating in many ways. Tell us a little bit first about the Connecticut Green Bank, but then tell us what are some of the most promising policy initiatives or frameworks that you’re seeing currently being deployed that are ensuring that energy transitions are both equitable and beneficial to vulnerable communities? 

Bryan Garcia

Great. Excellent. Well, thank you, Sydney, for that introduction. It’s great to be with you. Maggie and Rene, I’m super excited to read your essays, looking forward to digging into those. The Connecticut Green Bank, we’re the nation’s first state level green bank. We’re a quasi-public organization, which means we get to use private sector disciplines to achieve public sector goals. Our mission is to confront climate change, and we do that by increasing and accelerating investment into Connecticut’s green economy to create more resilient, healthier, and equitable communities. Over the last 12, 13 years since our inception in July of 2012, we have invested $410 million of public resources to unlock and mobilize $2.5 billion of private investment. So we’re close to our $3 billion mark, which is a big target for us. Of course, that investment creates jobs, so it’s helped create nearly 30,000 direct, indirect, and induced jobs in our communities. 

That investment creates tax revenues, so it’s generated nearly $150 million in individual, corporate, sales, and property tax revenues for the state and its communities. It’s also helped over 70,000 families and businesses reduce the burden of energy costs. We all know that when we help deploy clean energy… We’ve helped to support the deployment of over 700 megawatts of clean energy… That we help those families reduce the burden of energy costs. And when you do that, you also get all the benefits that we’re after in terms of reducing greenhouse gas emissions, reducing local air pollution. We can quantify to the points that were discussed earlier, the public health benefits from cleaner air. We’ve helped avoid between 200 to $500 million in avoided healthcare costs as a result of cleaner air. And over that period of time, through that investment, nearly 50% of it has gone into Connecticut’s vulnerable communities. So we want to make sure that the green economy that we are helping to build works for everyone and that all those benefits are realized. 

So in terms of the question, all of us on the call, Massachusetts, Puerto Rico, just us as the panel, if you look at each of our locations as a state, we all have very different policy objectives, but also similar. If we just look at greenhouse gas emission reduction targets, I’m sure Maggie can speak to those in Massachusetts. Connecticut has a reduce 45% of greenhouse gas emissions from 2001 levels by 2030. That’s an important foundational target for the state. We also have a renewable portfolio standard, 40% by 2030. So when you start to think of those foundational public policies and then ask yourselves what kind of incentives can be offered to ensure that the clean energy that’s being deployed reaches those vulnerable communities? Well, we have a residential renewable energy solutions program that’s administered by the utilities with oversight from our regulator, the Public Utilities Regulatory Authority, that provides additional incentives for projects that are located in vulnerable communities. 

So we’re seeing nearly 40% of the deployment of behind the meter solar in those communities. We have an energy storage solutions program that’s guided by 1,000 megawatts of energy storage by 2030 that is designed to connect to the solar program that I talked about earlier with that 40% target. We’re not there yet. We still are figuring out the value proposition for solar-plus storage in this market. It’s very different, Rene, than Puerto Rico. We work really closely with our friends over at the Puerto Rico Green Energy Trust. So we’re very aware of all the great work going on in Puerto Rico. And then we have, for example, a zero emission school bus program, 100% of school buses in environmental justice communities by 2030. 

So I can go on and on and on. Connecticut has all these different things designed to encourage GHG reductions job growth, but also with an eye towards enabling more investment in vulnerable communities so that we can realize an equitable transition. But the exciting part obviously is now that we have a national structure to really accelerate this investment. So we, of course, have the Inflation Reduction Act, which was signed into law in August of 2022, and all of the tax credits that just represent an extraordinary opportunity to all of our states and localities, our businesses, and families. If you think of all the tax credits that are in for benefiting families, we’ve got the 25C, the Energy Efficient Home Improvement Credit, where literally between $1,200 to $2,000 a year, every year for the next 10 years can be provided as a tax credit for those who want to invest in energy efficiency in their homes. 

So as you do that, you’re creating local jobs, you’re reducing your energy costs, you’re doing all those sorts of things. 25D, the Residential Clean Energy Credit, we’re all familiar with that, that’s the solar and storage on your roof. There are used and new EV credits, which are really important. And, of course, the Alternative Fuel Vehicle Refueling Credit. So lots of things that families can do at their home to take advantage of these tax credits.  

From a business perspective, a lot of the same things that I just talked about on the residential side, but there are also a whole cornucopia of things that states can do across the country to realize economic benefits from carbon capture and sequestration to zero emission nuclear to clean hydrogen, advanced manufacturing, advanced energy projects. I could go on and on and on. Each state and locality can find opportunities to realize additional investment. 

For example, here in Connecticut where we have green hydrogen and fuel cell technology, we are looking to dig into manufacturing tax credits to support local jobs. But the really cool thing I think of all of this are the tax credit adders. These are really important things for just transition. We’ve got energy communities adders. I’m sure folks on the line here are becoming more and more familiar. If not, you really need to. There are locations across this country where there were former coal-fired power plants or coal mines, former brownfields. You might be in a community that’s in transition that has unemployment rates in the fossil industry that are lower than broader unemployment rates. So you might actually be designated for a 10% additional tax credit. You might be a Low-Income Communities Bonus Tax Credit location where you can get a 10-20% additional tax credit. 

And all these things are stackable, so they’re not in lieu of. Actually, you can stack on top of them. The Low-Income Communities Tax Credit, there’s 1.8 gigawatts a year available. It’s kind of like a lottery. I think I saw last year it was oversubscribed four times. So there’s definitely demand for deploying solar in low-income and disadvantaged communities. Wind is also a technology there. And then lastly is the domestic content requirement. You can get a 10% additional on your tax credit if you’re using technologies that are made in America. 

So when you stack all of those things up, you’re getting the just transition, the Justice40 elements within the context of reducing greenhouse gas emissions. And then lastly, direct payment. For those of you who don’t know, you can, if you are a nonprofit, a state or local government, access tax credits through direct payment. This is a huge opportunity that the market is realizing and enabling more private investment in clean energy. So lots of good stuff out there for folks. We have through 2032 to deliver it, a 10-year runway, so let’s go. Let’s keep going and mobilize that investment to help our families and businesses. Thank you, Sydney. 

Sydney Diavua

Of course. Bryan, thank you for that wealth of information and I’m so glad that you brought in, not just what you all are doing for Connecticut, but how people can look at this nationally and how it scales.  

Lisa, I want to bring you into the conversation because you also wrote an essay for the book and it’s titled, Investing for More Prosperous and Climate Resilient Communities: How Investors Can Construct a Portfolio That Does Both. And your essay highlights financial tools that tie all of these things together. And we heard a lot about some of the different financing programs from Bryan. Can you walk us through how the audience should think about the tools that you address in your essay? 

Lisa Richter

Absolutely. Sydney, thank you so much. And thank you to everyone at the New York Fed and Enterprise and LISC for this session and all the other sessions that will go along. Avivar Capital is an SEC registered investment advisor. Our role in this constellation of organizations on the call today is that we work with investors to marshal their capital into the critical solutions that the other panelists are designing and implementing on the ground. I am so grateful that I can call Bryan and know that he can rattle off all those programs and I can figure out which one may fit for an impact investor that wants to drive measurable movement towards net zero in the state of Connecticut. Similarly, for the things that Maggie is doing in Massachusetts and certainly that Rene and the wonderful partners at Inclusiv are innovating for Puerto Rico. 

So what I would say is that Avivar, as an investment advisor, is both an advocate and an advisor. The advocacy part is that we seek out investors that want to drive positive social and environmental change in the marketplace. And so they will come to us because they want to know how to find the Renes, Maggies and Bryans. And we recognize that, however vital the public policy is that can help to drive social change, we will not in fact be able to realize the needed changes without being able to harness investment capital. So even as wonderful a piece of legislation as the Inflation Reduction Act requires private capital to do some of the things that all of the other panelists have talked about. So our advocacy is in educating investors on the need for this capital to drive social change on the possibility to use the capital they have to accelerate needed change, indeed to even drive the reinvention that David Erickson talked about that’s so critical. 

And then that’s the “what”. The “how” is understanding that every investor has a different set of needs. In other words, there are small-time savers who may not have a lot of investment capital to invest. What might be their way of entering into supporting all this critical activity? Perhaps it’s an insured deposit at a credit union that is helping to implement the kinds of, both disaster response loans that credit unions have done all over the nation with inclusive support, as well as the green updates to homes and other buildings that is going to help those buildings be more resilient to climate disasters in the future and lower operating costs for lower income residents. 

The science of investment looks at the range of needs investors have and helps channel capital in. So that’s cash, that’s the liquid dollars that might need to get spent relatively soon. But then investors that have a little more spare to put into the capital markets will usually do what’s called asset allocation and they’ll spread their money out across different types of investment structures. And I’m here to say that each and every one of those different asset classes offers opportunities to reinforce and accelerate the movement towards net zero. So moving from cash to the next asset class we typically think of, it’s bonds, otherwise known as fixed income, and some folks even include in that private debt where we’re essentially putting loans out into communities and expecting typically current income back with an expected maturity at some point in the future. Well, Bryan’s institution and the other green banks around the country are largely financed by bonds that investors can buy. 

There are other kinds of bonds that are set up to explicitly drive equitable employment as cities like Denver and Portland, Oregon move towards a net-zero type of local economy. And then continuing with asset allocation, the next asset class that folks typically invest in is public equities, publicly traded stocks such as you see on the stock market. We’re probably not going to get terribly targeted climate benefits there, but we can certainly avoid companies that we think are not conserving energy or finding ways to avoid climate disasters, toxic waste with leaks and that type of thing. So we can screen those out of our public equities portfolios. We can also vote our shares or do shareholder advocacy, voting proxies to try to push publicly traded corporations to improve their move towards net zero. And then the last category is called the alternatives, which is private equity, venture capital, real estate and this is where we often drive a lot of innovation in the economy. And we can look to companies that are innovating EV charging stations and making sure they reach the communities that are not regularly served. 

And just before I wrap up, I want to say, in the advocacy piece, it’s hugely important that any type of investor can invest across these asset classes, but also that we have the opportunity to do that in a way that reinvents, back to David’s point, an inclusive new economy so that we’re investing in those banks and credit unions that are channeling their capital to Justice40 communities, bonds that are advancing inclusive employment within their cities and states and backing the green banks that are advancing so many interesting solutions within states, public equities that are inclusive in their hiring, their governance and so on. 

But on the alternative side, channeling money to founders and venture capital funds that are focused on diverse founders. We know these are the ones that are going to hire people of color as their employees, that are going to create wealth as we implement these solutions for those communities and populations. We know historically that these are the communities that have had the greatest burdens placed on them in terms of climate risk, and that now have important opportunities to be a part of the solution not only in implementing these climate mitigation technologies, but also being the owners and the employees that got the economic benefit of that. 

Sydney Diavua

There’s that mute button. So, one, thank you for that primer on asset classes. And if I could just take a clip of that, I would take that everywhere with me. But I want to bring the group together because we’ve had some questions roll in and we’ve talked a lot about what’s available, what you all are doing. One thing I want to see if we can expound upon a little bit more is a question around partnerships. Can you all provide some specific partnership models that you can see being effective in advancing these health and equity and climate resiliency, this work? 

Rene Vargas Martinez

Sure. I can start really quickly. So, in the case of Puerto Rico, and I’ll focus on the cooperatives and on my previous answer, partnerships are essential. The challenges are just too broad in the island across too many sectors. So one of the specific examples in the context of the lending is a collaboration led by Cooperativa Jesus Obrero, the Puerto Rico Green Energy Trust, and the US Department of Energy to expand green lending by creating a scalable loan-loss reserve model. Basically how the model works is that it leverages subordinated debt to defer a portion of a green loan cost until the end of the term, making it affordable and ensuring a lower payment. And then, on the other end, the cooperativa uses a mix of its own resources along with local, federal, and private funding to cover those deferred costs so that they are not born directly by the consumer. 

And another example, and I have to mention it, of a partnership model that we believe will be successful will be powered by our $1.87 billion Greenhouse Gas Reduction Fund Award, which will support green lending initiatives like the one I mentioned earlier in the US mainland and Puerto Rico. For the implementation of this program, we are partnering with various governmental and non-governmental organizations. We have also developed concrete plans for collaboration across recipients including CCIA and CIF and Solar For All to ensure the smooth implementation of the program. In the case of Puerto Rico, we’ve been working with pretty much a whole host of stakeholders to make sure that this also has an impact in the island. Over to you, Sydney. 

Sydney Diavua

Anyone else? Any other partnership models you think would be useful to share with our audience? 

Lisa Richter

I could jump in on two very quickly because I want others to be able to talk. One, I want to flag that the Sierra Club Foundation has a significant effort that’s called Shifting Trillions, and we talked a little bit about their investment portfolio in our chapter in the book, which is about page 200 or so. Long story short, they have thought through a model for how to move capital and influence corporations in moving towards net zero. The second one that comes to mind is the San Joaquin Valley Impact Investment Fund in central California, but is rethinking its strategy to be able to reinforce the California Jobs First program that goes across 13 regions in the state, all of who’ve been charged to think about inclusive, resilient economies in their region, how to develop them. And we believe that those visions are not going to be able to proceed without investment capital. So we’re engaged in marshaling that investment capital to be able to reinforce those visions that are coming out of regional collaboratives across the state. 

Sydney Diavua

Thanks, Lisa. Maggie, we had a specific question that came in for you and it is, “Do you see any issues with scaling up your residential programs to small businesses and non-profits?” 

Maggie Super Church

Thank you. That’s a great question. There certainly are very similar needs for both technical assistance, building decarbonization planning and low cost capital to address buildings that are either commercially owned and occupied as well as non-profits. I would say one of the really exciting opportunities is one that Bryan highlighted, which is the direct pay. And so this is a way for non-profit organizations that don’t have any tax liability to take advantage of a federal tax credit. And these are significant credits, and one of the roles that green banks and other financing institutions and the kinds of funds that Lisa described can play is to help bridge the cost of those credits. In other words, you have to pay, do the work and then claim the credit. 

For entities that don’t have the funds on hand to pay for those improvements, there are a number of intermediaries and financing groups across the country thinking about how to help non-profits, community groups, churches, town halls, you name it, to access those credits. So I think that will be an exciting opportunity that we hope everyone will be taking advantage of wherever you are and would encourage people to again, look at those credits that Bryan mentioned because they’re a very significant resource for many different kinds of projects. 

Bryan Garcia

And just building from Maggie’s comment there, us finance folks, we use the term intermediaries, but it’s collaborations. It’s more, it’s supporting parties connecting together, and that’s really IRA is full of opportunities to do that. On a global level, in 2021 to 2022, there was some $1.3 trillion of investment to confront climate change. That is to reduce greenhouse gas emissions and to increase our resilience against the impacts of climate. About 50% of that capital came from the public sector, 50% from the private sector, 90% of that went into mitigation and 10% of it went into adaptation and resilience. We have to get to $6 trillion of investment by 2030. So all of that is going to require collaboration across sectors to get there. It’s going to be essential that we braid incentives and financing and all those sorts of things to be able to deliver the benefits to the families and businesses that we know we need to deliver. 

And then, just coming back to Rene’s point, that’s really the Greenhouse Gas Reduction Fund, so the single largest investment in climate and vulnerable communities is the $27 billion through the Greenhouse Gas Reduction Fund. There’s $7 billion of it, the Senator Sanders seven that’s there to support solar associated storage in low-income and disadvantaged communities. There are states, territories and tribes across the country that are going to be lifting that up. The Clean Communities Investment Accelerator, it’s super cool to see inclusive right there, front and center in supporting a national network of community lenders, credit unions out there providing capital to our low-income and disadvantaged communities, our families and businesses to help them realize the benefit of this economy. 

And then there’s the National Clean Investment Fund, about $14 billion left. I’m chair of the Coalition for Green Capital, so we are financing… Have been provided $5 billion and we just announced last week our first investment, which was in a tribal CDFI Spruce Root doing really cool things in Alaska. So lots more of that needed across this country to build this network of financial institutions, but the GGRF is going to be front and center in terms of mobilizing private investment in low-income and disadvantaged communities. 

Sydney Diavua

Thanks, Bryan. We’ve got about 60 seconds left before we’ve got to come to a close, but I did want to put just space out there. Is there a final thought that any of you all would leave or an actionable step that you believe will have the most immediate impact on these efforts? 

Lisa Richter

I’ll quickly leap in to say, I think every single person should think of themselves as an investor, whether it’s their personal savings or institutional savings that they may be involved with and ask how they can align those dollars with helping to advance this amazing agenda, which is looking to solve both climate and inclusive, sustainable, equitable communities at the same time. 

Sydney Diavua

Lisa, I think you called it all dollars on deck in your essay. 

Lisa Richter

I did. 

Maggie Super Church

I’ll build on Lisa’s comment to say I think we need to really look at how we link up disaster recovery, climate resilience, and decarbonization, because these are all pretty steep hills to climb and we’re going to need a lot of dollars. And if we can be efficient about addressing those needs together as opposed to separately, we have a much better chance of success. 

Bryan Garcia

Let me add, we don’t speak about energy efficiency enough. If we all took advantage of that Energy Efficiency Home Improvement Credit, every year for the next 10 years, it would unlock $500 billion every year in the energy efficiency marketplace. So not only saving you dollars but creating jobs. 

Sydney Diavua

Rene, any last words from you? 

Rene Vargas Martinez

I agree with the rest of the speakers, and I just want to say, in terms of what I do, we traditionally… This is just my perception, I’m not talking as Inclusiv here, so please, not out of these walls. We tend to forget territories in all of these processes and initiatives. Just don’t forget us. We exist, there’s people here, and we also deserve a future. 

Sydney Diavua

Thank you so much for that, and thank you to our speakers for providing all of your insights and all of the information and for engaging our audience around this topic.  

I want to say thank you to everyone who joined us today for spending your valuable time with us. We’ve explored challenges, but most importantly, we’ve uncovered some incredible opportunities for building equitable and resilient and sustainable communities. These opportunities will require collective action, and that’s whether through financing, policy development, or scaling up proven solutions.  

I want to note that, for those who are interested in a copy of What’s Possible, audience members can order a free copy of the book with complimentary shipping on the website in the chat and also on the homepage for this conversation. You’ll see a link to be able to order a copy of the book. 

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