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HomeMy WebLinkAboutCSD-11-004 - Local Environmental Action Fund (LEAF)REPORT TO:Finance & Corporate Services Committee DATE OF MEETING: January 17, 2011 SUBMITTED BY: Jeff Willmer, Deputy CAO Community Services Department PREPARED BY: Barbara Steiner, Senior Environmental Planner, 519-741-2293 WARD(S) INVOLVED: All DATE OF REPORT: December 21, 2010 REPORT NO.: CSD -11 - 004 SUBJECT: LOCAL ENVIRONMENTAL ACTION FUND (LEAF): (1) RECOMMENDATION FOR 2010 APPLICATIONS FROM YMCA AND CREW; AND (2) OPERATIONAL IMPROVEMENTS FOR FUTURE YEARS. RECOMMENDATION: THAT the 2010 Local Environmental Action Fund (LEAF) grant application from the YMCAnot be approved; THAT the 2010 LEAF grant application from Community Renewable Energy Waterloo (CREW) be amended by the applicant and referred to the 2011 intake; and, THAT the issues that have emerged regarding the evaluation of applications to LEAF and grant administration in the first two (2) years (2009 and 2010) be addressed as described in this staff report (CSD-11-004); and THAT loans from LEAF not be considered; and further, THAT the City not change the fund’s operating framework to market LEAF to actively pursue donations from other sources. BACKGROUND: On May 3, 2010 Council resolved that the issues that have emerged regarding the evaluation of applications to LEAF and grant administration as outlined in report DTS-10-083, as well as consideration of a marketing plan to actively pursue donations and/or leveraging of other funding sources to LEAF be addressed prior to applications being made and evaluated in the 2011 round of applications. On that same date, Council requested that staff be directed to investigate the feasibility of providing for the issuance of loans under the City’s LEAF program to worthwhile projects and programs that meet LEAF criteria; and that final disposition of the 2010 LEAF applications submitted by the local YMCA and Community Renewable Energy Waterloo (CREW) be deferred, pending any recommendation as to the outcome of the investigation into the feasibility of the provision of loans from LEAF. REPORT: In staff report DTS 10-083, a number of emerging issues were identified with respect to the evaluation procedures as well as some administrative details. LOANS THROUGH LEAF In addition to achieving the stated goal and criteria of LEAF, any group who merits LEAF funding must also demonstrate a need for that funding—i.e. the funding will be there to overcome (a) barrier(s) to implementing a valuable environmental initiative, whether the funding comes in the form of a grant or a loan. And following this, if it is determined that a loan can remove the barrier(s) to implementing the initiative, should it fall to the City to provide such a loan? Under some circumstances, a loan may be the better tool to removing barriers to making environmental change. A loan, as opposed to a grant, would make sense only if the project or program funded would ultimately generate revenue which could then be used to repay the loan. Providing loans, as opposed to grants, would mean that, in theory, monies would be eventually returned to the fund in order to fund other / more projects in the future. However, the City’s experience with loan programs would suggest that any loans that are made should be considered and set aside as a grant; there should be no reliance on the loan being repaid (i.e. the loan should encumber the fund) to permit these monies to be “re-granted” or “re-loaned.” Questions that need to be asked: which types of projects Of all of the projects / programs that meet the criteria for LEAF, would generate revenue, allowing them to benefit from the loan model? City’s experience with loan programs What is the as incentives to accomplish City objectives? sufficient uptake Would there be of loans if grants are also available? additional administrative burden What would be placed on staff if loans were added to the program? Projects / programs suitable for loan incentives - Revenue generating environmental projects that meet LEAF criteria would likely be restricted to those that can benefit from guaranteed revenue from existing programs like Ontario Power Authority’s Feed-In-Tariff (FIT) and microFIT programs. The attractive rates to sell power back to the grid are designed to cover the costs of designing and installing an on-site renewable energy project. The most attractive rates are paid for approved rooftop solar photovoltaic infrastructure. The Ontario Government passed the Green Energy Act (GEA) on May 14th, 2009 and regulations were introduced in September 2009. The GEA is expected to bring new investment into Ontario’s renewable energy infrastructure and help build a greener economy by creating new jobs, decreasing a reliance on coal-fired power plants, and protecting the environment. As part of the GEA initiatives, the Ontario Power Authority launched a FIT program on October 1, 2009. The FIT program replaces the Renewable Energy Standard Offer Contract (RESOP) program and makes it easier for Ontario residents to install solar power. Other City Loan Incentives and Uptake – Neither the Façade Improvement Loan nor the Upper Storey Renovation Loan exist any longer, the first having been replaced by a grant program at the beginning of 2010. When they existed, the loans were secured with a lien against the property, one of the “checks and balances” required with a loan program as opposed to a grant program. While defaulting on loans made was not a significant factor in cancelling these loan programs, the number of property owners using the program was very limited. In administering these loan programs, it was observed that the loan model was relatively cumbersome for both the City and those in receipt of the loan. This, in turn, added to the administrative costs of the loan program. Potential Uptake - To date, no organization has even enquired about receiving a loan for environmental projects or programs from LEAF. Obviously, if grants are available, they would be preferred by applicants over loans. As discussed above, for loans to be a sensible option for an organization, there must exist the possibility of revenue generation from the project such that money could, at some point, be allocated to the repayment of the loan. Resourcing Loan Administration – One of the objectives of LEAF was to build capacity within the community to conduct worthwhile environmental projects and programs without adding additional cost burdens to the City, for example in the form of additional person-hours of City staff time. Adding a loan function to LEAF would require staff develop a separate and entire “loan system.” Loans would further add to staff time in administering LEAF. For all of the reasons discussed—most significantly no current, and limited potential future, demand from environmental proponents—loans from LEAF are not being recommended. THE 2010 APPLICATIONS OF YMCA AND CREW YMCA Solar Roof – The YMCA applied for a 2010 LEAF grant to cover the entire cost of a solar roof on a second storey addition being implemented in 2010. Discussions with the applicant revealed that a loan would not be of interest to them and, further, they have their own source of borrowed money at an attractive rate if that was the route they wished to pursue. A loan from LEAF, therefore, would not have removed a barrier to the installation of a solar roof to the addition, and is therefore not recommended. CREW Faith Institutions microFIT Solar Roofs Project – The purpose of this proposal is to offset the cost of rooftop photovoltaic systems to allow up to 25 faith-based institutions to have a 10kW system on their property. Seed money provided through the LEAF grant would provide a 1kW solar installation to function as an incentive for the institutions to fundraise / finance the balance of the capital to increase the system to a full 10kW. Discussions with CREW indicate that (a) grant(s) is/are preferable to a loan from LEAF, and would be more effective in removing the barriers for faith institutions to become involved in the Province’s microFIT program for (a) solar rooftop installation(s). That is, it is hoped by the applicant that the grant could cover the upfront costs that would be incurred by the institution for studies such as structural engineering studies to determine the capability of the building to support a solar installation, and other engineering (feasibility) studies to determine how any installation can or should be implemented on any given roof (aspect etc.) Staff has met with CREW to confirm that they will amend their 2010 application and resubmit to the 2011 LEAF intake. Therefore, neither a grant nor a loan to / for CREW’s 2010 application is recommended. IMPROVEMENTS TO EVALUATION AND ADMINISTRATIVE PROCEDURES After two rounds of applications (2009 and 2010), several recurrent issues have come to light. How should Kitchener’s LEAF respond to “second year” or “continuation” 1. applications? The Eligibility Criteria state,Grants are normally based on one-time funding, and are not intended for on-going (e.g. operational) support. Applicants have the option of defining the project or program as occurring over several years and, from the beginning, some applicants have applied in that manner. In other words, while the project occurs over 2 or 3 years, the initial application includes a Work Program that reflects those timelines. It is reasonable that the City expect this kind of rigour in project planning in order to demonstrate the worthiness of the project. In addition, where multi-year projects are approved for a LEAF grant, financial progress reports to the City on at least an annual basis will be a condition of the grant. Staff propose that application forms and the website be amended to clarify how “multi-year” projects or programs should be described in the application, What should be the City’s approach to the “school greening” applications? 2. LEAF, as well as the Community Environmental Improvement Grant (CEIG) program, have received numerous applications for the funding of such programs over the years. The City will undoubtedly continue to receive such applications. A standard, equitable City approach should be developed (i.e. whether and how to fund) for funding requests for school greening projects. The Regional Municipality of Waterloo (RMOW) initiated grants from their Environmental Stewardship Fund in late 2009, and issued the first grants in the spring of 2010. Substantial interest was expressed by schools who wished to use Regional funds to support school greening projects, and the need to provide a consistent approach to applications from school boards was identified. In report P-10-040, an approach to schoolground greening applications to the Environmental Stewardship Fund was proposed and approved, including maximum grant amounts. Kitchener’s LEAF Steering Committee also observed in evaluating the 2010 applications, that a mechanism for being equitable for such applications was necessary. In 2010, the LEAF Steering Committee were guided by: the need to fund only (a fixed percentage of) biological components of such greening proposals in keeping with the criteria developed for LEAF; the need demonstrated by any particular application from an individual school; and a recognition that equity among the different schools was necessary. Staff also recognized the need to not only be equitable in how LEAF treated schoolground greening applications but also how the CEIG program treated them. It was also recognized that schoolgrounds are definitely considered by citizens to be a significant part of the open space in their communities throughout Kitchener, and that schoolgrounds and public parks are often planned and operated in a coordinated way throughout the city. For all of these reasons, staff from both the Planning (Community Services Department) and Operations (Infrastructure Services Department) Divisions of the City will together consult with the school boards to set out how the City should collaborate in school greening projects, and to how to fund them equitably. Staff discussions will commence early in 2011 in order to provide at least interim guidance to the 2011 deliberations of the LEAF Steering Committee. 3. Should the City consider providing loans (in addition to grants) to kick-start worthwhile projects or programs that meet LEAF criteria? See above. How should the City be monitoring the expenditures from LEAF? 4. The wording in the legal agreements signed by the grantees allows the City to request documentation for such expenditures as needed. The 2009 projects are just now concluding and reporting is being submitted; interim reports where required were received earlier. Grantees have been very open to providing whatever documentation is requested of them in order to document how the granted funds were expended. A subtle change may be to alert applicants (at the time of application, on the application forms and website) that corroborating documentation (e.g. invoices) will be required where the LEAF funds were used for capital expenditures. Progress reporting is more important for grants that cover a longer period of time, and is not necessarily related to the amount of the grant. Yearly progress reports should be required at a minimum for projects that extend over a period of more than one year. How should the Communications Plan for LEAF be revised in order to attract 5. exceptional applicants? How do we better promote involvement in the program? For the past two years, there has been an extensive communications plan in place to publicize the availability of the LEAF Fund grants and the application process. Communications efforts to date have represented a combined effort, including communications efforts to reach out to and inform the larger community as a whole and efforts to reach out to, and inform, targeted environmental groups and organizations. With many previous applicants indicating that they have heard about the process via word of mouth, a continued combined approach to the communications efforts is recommended to ensure both community awareness and awareness on the part of specific target audiences. In 2011, the communications plan will be revised to include some new initiatives to increase the number of places where information is made available, and to increase outreach to specific targeted groups and organizations. New initiatives this year will include: More target groups and organizations will be identified and an information package will be developed and provided directly to them – and where possible, staff will reach out to those groups in person to provide the information; Advertising opportunities within industry publications and journals will be explored further; Scheduled, regular promotion of the application process on the city’s corporate social media sites – Twitter and Facebook; Front page placement of information on the city’s website – a primary front page image will be devoted to LEAF which conveniently directs visitors to the application page. Additional information profiling past winners will also be added to the website; Revisit the Rogers TV spot – done for the past two years – to determine whether those budget dollars can be better used elsewhere (i.e. radio advertising, more print advertising); and Monitoring of number of applications received and extra promotions/contacts applied if numbers are low. Ideally, community awareness would be achieved through a full-scale promotional campaign which involves significantly more advertising than the 2011 communications plan includes. As in the past two years, further mass communication efforts involving advertising are restricted due to budget limitations. A proper, full-scale promotional campaign would require an additional $10,000-$20,000. Recognizing that the grant application process requires both significant time and resources to complete – the application timeframe for the 2012 grants will be changed to accommodate a two-month application period for all groups and organizations. In past years, a shorter timeline was provided for groups and organizations requesting grants of under $50,000. This year, there will be one grant deadline for all applications – February 28, 2011. How should the application forms be revised? 6. In general and based on experience over the last two years, the application form must: better anticipate applicant challenges and concerns throughout the process. Improvements will include: A requirement for the applicant to outline their proposal to sustain multi-year, on- going programs without re-applying to LEAF (Point 1 above); Guidelines for schoolground greening applicants; More specifics associated with the requirement to enter into a Legal Agreement with the City, e.g. final and interim project / financial reporting (Point 4 above), the need to provide a Certificate of Insurance in a format acceptable to the City; Set out standards for greenhouse gas calculations for the interim and final monitoring reports; and Include suggestions for other types of supplementary measurables of project success. MARKETING PLAN TO ATTRACT DONATIONS TO LEAF Council created LEAF to act as a catalyst for transformational environmental projects or programs to be undertaken by organizations other than the City. One of the most powerful features of LEAF is its goal and ability to build capacity in the community to make positive environmental changes. Carrying further the notion of “capacity building” within the community- at-large, LEAF is to enable faster progress toward environmental sustainability without requiring additional City staff resources to carry out the projects or encumbering staff resources with increasing grant administration responsibilities. Implementing a plan to solicit donations to LEAF would not only involve upfront marketing expertise and staff time to develop such a plan, but would also require ongoing, new administrative responsibilities in the area of fundraising. Staff resources cannot currently absorb this additional demand either from a time or an expertise perspective. Another option used by other organizations who engage in fundraising would be for the City to outsource fundraising for LEAF to a marketing firm that would be compensated by having them retain a portion of the funds they solicit. This model, however, does a disservice to the donor as not all of their donation flows to the project to which they believe they are contributing. For these reasons, it is recommended that the City not change the fund’s operating framework to market LEAF to actively pursue donations from other sources. That being said, should unsolicited donations to LEAF (such as a bequest) become a reality at some point, they would be welcome and staff would endeavour to facilitate such a contribution to LEAF. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Community Priorities Leadership and Community Engagement Improving the operational framework of LEAF will enhance our partnership with citizens, business, agencies, organizations, school boards and all orders of government in all Healthy Community initiatives (Strategic Direction 1) Environment Improving the operational framework of LEAF will help achieve the Citizens’ Vision for the Environment (2027), in which our community focuses significant energy and resources on becoming more environmentally friendly. Plan Foundation Efficient and Effective Government Improving the operational framework of LEAF will enhance citizens’ ability to access LEAF while prudently managing the city’s finances and enhance communications with Kitchener residents who want to access the LEAF. FINANCIAL IMPLICATIONS: None for 2011. If deemed desirable by staff, any enhanced promotional campaign for future years (as described above) will be considered through the 2012 budget process. COMMUNITY ENGAGEMENT: A draft of this report was distributed to the LEAF Steering Committee for review and comment. An updated Communications Plan was prepared by Communications Division staff and is outlined above. ACKNOWLEDGED BY: Jeff Willmer, Deputy CAO Community Services Department