The item had been postponed from the council’s May 19, 2014 meeting.

According to a staff memo written in response to a councilmember question, reskinning of the Larcom City Hall building would mean replacing the existing exterior walls and windows of the building. The result would be new squared-off exterior, eliminating the inverted pyramid design. The new exterior would hang vertically from the sixth floor.

The focus of the project is on improving energy efficiency. The memo describes existing windows as mostly single-pane glass on aluminum frames, which offer little insulation value. The project would also result in an incremental gain in square footage – because the lower floors would have the same footprint as the sixth floor, which is currently the largest floor of the building. According to the memo, materials used for the exterior would “blend better” with the recently constructed Justice Center, which adjoins city hall.

An amendment to the resolution made at the council meeting added a “resolved” clause that expressed support for an energy efficiency renovation at city hall. The consensus on the council was not to support cosmetic improvements.

Details on the council’s deliberations are provided in The Chronicle’s live updates filed during the meeting.

This brief was filed from the city council’s chambers on the second floor of city hall located at 301 E. Huron.

The countywide Property Assessed Clean Energy (PACE) program aims to help owners of commercial (not residential) properties pay for energy improvements by securing financing from commercial lenders and repaying the loan through voluntary special assessments.

The county is joining the Lean & Green Michigan coalition and contracting with Levin Energy Partners to manage the PACE program. Andy Levin, who’s spearheading the PACE program statewide through Lean & Green, had spoken briefly to the board on Jan. 22, 2014, and had previously answered questions about the program at the board’s Dec. 4, 2013 meeting. State Sen. Rebekah Warren also spoke briefly during public commentary on Dec. 4 to support the initiative. She was instrumental in passing the state enabling legislation to allow such programs in Michigan.

The law firm of Miller, Canfield, Paddock & Stone will act as legal counsel. Several other counties are part of Lean & Green, according to the group’s website. Other partners listed on the site include the Southeast Michigan Regional Energy Office, which was co-founded by county commissioner Conan Smith. Smith is married to Warren.

The county’s PACE program differs from the one set up by the city of Ann Arbor, which created a loan loss pool to reduce interest rates for participating property owners by covering a portion of delinquent or defaulted payments. Washtenaw County does not plan to set up its own loan loss reserve.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The board had issued a notice of intent to create the program at its meeting on Jan. 8, 2014.

The goal of PACE is to help owners of commercial (not residential) properties pay for energy improvements by securing financing from commercial lenders and repaying the loan through voluntary special assessments.

The county’s proposal entails joining the Lean & Green Michigan coalition and contracting with Levin Energy Partners to manage the PACE program. Andy Levin, who’s spearheading the PACE program statewide through Lean & Green, had attended a Dec. 4, 2013 board meeting to answer questions. State Sen. Rebekah Warren also spoke briefly during public commentary on Dec. 4 to support the initiative. She was instrumental in passing the state enabling legislation to allow such programs in Michigan.

The law firm of Miller, Canfield, Paddock & Stone would act as legal counsel. Several other counties are part of Lean & Green, according to the group’s website. Other partners listed on the site include the Southeast Michigan Regional Energy Office, which was co-founded by county commissioner Conan Smith. Smith is married to Warren.

On Jan. 22, Levin again briefly addressed the board during public commentary, as did several business owners who supported the PACE initiative. The board also held a former public hearing on the proposal later in the evening, but Levin and others had left by that point and no one spoke during the formal hearing.

The county’s PACE program would differ from the one set up by the city of Ann Arbor, which created a loan loss pool to reduce interest rates for participating property owners by covering a portion of delinquent or defaulted payments. Washtenaw County does not plan to set up its own loan loss reserve, and no county funds would be used for the program, according to Levin.

However, a reserve fund is mentioned in documentation that describes the program:

8. Reserve Fund

In the event Washtenaw County decides to issue bonds to provide financing for a PACE Program, Washtenaw County can determine at that time to fund a bond reserve account from any legally available funds, including funds from the proceeds of bonds.

By participating in LAGM [Lean & Green Michigan], Washtenaw County assists its constituent property owners in taking advantage of any and all appropriate loan loss reserve and gap financing programs of the Michigan Economic Development Corporation (“MEDC”). Such financing mechanism can similarly be used to finance a reserve fund.

[.pdf of PACE program documentation] [.pdf of PACE cover memo] [.pdf PACE resolution]

This brief was filed from the boardroom of the county administration building at 220 N. Main in Ann Arbor. A more detailed report will follow: [link]

Andy Levin of Lean & Green Michigan talks with Washtenaw County commissioner Felicia Brabec before the county board’s Dec. 4, 2013 meeting. (Photos by the writer.)

They ultimately gave initial approval to a notice of intent to form a PACE program. If created, the program would allow commercial property owners in Washtenaw County to fund energy improvements by securing financing from lenders and repaying the loan through voluntary special assessments.

The county’s proposal entails joining the Lean & Green Michigan coalition and contracting with Levin Energy Partners to manage the PACE program. Andy Levin, who’s spearheading the PACE program statewide through Lean & Green, was on hand during the Dec. 4 meeting to field questions. Levin – son of U.S. Rep. Sandy Levin and nephew of U.S. Sen. Carl Levin – was head of the Michigan Dept. of Energy, Labor & Economic Growth (DELEG) during Gov. Jennifer Granholm’s administration, when the PACE legislation was enacted.

Also attending the Dec. 4 meeting was state Sen. Rebekah Warren (D-District 18), who spoke briefly during public commentary to support the county’s initiative. She was instrumental in passing the state enabling legislation to allow such programs in Michigan. Warren is married to county commissioner Conan Smith, a co-founder of the Southeast Michigan Regional Energy Office, which is a partner in Lean & Green Michigan.

A final vote on the notice of intent is now scheduled for the board’s first meeting next year – on Jan. 8, 2014. A public hearing on this issue has been set for the board’s Jan. 22 meeting. That’s because the board would need to take an additional vote to actually create the PACE district. No date for that vote to create the district has been set.

In other action, commissioners accepted a $150,000 state grant to establish the Washtenaw County Trial Court’s Peacemaking Court. Timothy Connors, a 22nd circuit court judge who’s leading this initiative, attended the Dec. 4 meeting and told the board that this project will explore and determine what, if any, tribal court philosophies or procedures might have applicability in Michigan’s courts. Participation in the peacemaking court will be voluntary.

The board also made a raft of appointments, including appointing the county’s water resources commissioner, Evan Pratt, as director of public works. That vote came over dissent from commissioner Rolland Sizemore Jr. The board of public works had raised a question about the appointment’s potential conflict-of-interest, given that Pratt holds an elected office as water resources commissioner. The county’s corporation counsel, Curtis Hedger, prepared a legal opinion on the issue, stating that the appointment would not be prohibited by the state’s Incompatible Public Offices Act.

No appointment was made to the southeast Michigan Regional Transit Authority (RTA). Richard Murphy – one of two RTA board members from Washtenaw County – is not seeking reappointment. During the Dec. 4 meeting, board chair Yousef Rabhi indicated that there’s some uncertainty about when Murphy’s one-year term actually ends, and he was sorting that out with state and RTA officials. Because RTA board members weren’t sworn in until April of 2013, some state and RTA officials believe the term extends until April – even though appointments for Washtenaw County’s two slots were made by the previous county board chair, Conan Smith, in late 2012.

The application process is still open for the RTA, with a new deadline of Jan. 12. That same deadline applies to openings on the county’s food policy council and parks & recreation commission. Applicants can submit material online, or get more information by contacting the county clerk’s office at 734-222-6655 or appointments@ewashtenaw.org.

Countywide PACE Program

On Dec. 4, commissioners were asked to take an initial step to create a countywide Property Assessed Clean Energy (PACE) program.

The goal of PACE is to help commercial property owners finance energy improvements by securing financing from lenders and repaying the loan through voluntary special assessments. In Michigan, the legislation that enables this approach (Public Act 210) was enacted in late 2010, at the end of Democratic Gov. Jennifer Granholm’s last term in office.

The proposal being considered by the county entails joining the Lean & Green Michigan coalition and contracting with Levin Energy Partners to manage the PACE program. Andy Levin, who’s spearheading the PACE program statewide through Lean & Green, was on hand during the Dec. 4 meeting to field questions. He described his role as “matchmaker,” helping the property owners find energy contractors and lenders.

The law firm of Miller, Canfield, Paddock & Stone is a partner in Lean & Green, and would act as legal counsel for any deal done through the county’s PACE program. Several other counties are part of Lean & Green, according to the group’s website. Other partners listed on the site include the Southeast Michigan Regional Energy Office, which was co-founded by county commissioner Conan Smith. Smith is married to State Sen. Rebekah Warren, who also spoke briefly during public commentary on Dec. 4 to support the initiative. She was instrumental in passing the state enabling legislation to allow such programs in Michigan.

The city of Ann Arbor was one of the first Michigan communities to establish a PACE program, which it did in 2011. The city used a federal grant that paid for the nonprofit Clean Energy Coalition to develop the city’s program. Its first projects moved forward earlier this year, when the city sold over $500,000 in PACE bonds through Ann Arbor State Bank, making it the first city in Michigan to complete a PACE bond sale. The financing funded projects at four locations: Arrowwood Hills Cooperative Housing, Big Boy Restaurant, the Goodyear Building, and Kerrytown Market & Shops.

The county’s PACE program would differ from the one set up by the city of Ann Arbor – which created a loan loss pool to reduce interest rates for participating property owners by covering a portion of delinquent or defaulted payments. Washtenaw County does not plan to set up its own loan loss reserve, and no county funds would be used for the program, according to Levin.

However, a reserve fund is mentioned in documentation that describes the program:

8. Reserve Fund

In the event Washtenaw County decides to issue bonds to provide financing for a PACE Program, Washtenaw County can determine at that time to fund a bond reserve account from any legally available funds, including funds from the proceeds of bonds.

By participating in LAGM [Lean & Green Michigan], Washtenaw County assists its constituent property owners in taking advantage of any and all appropriate loan loss reserve and gap financing programs of the Michigan Economic Development Corporation (“MEDC”). Such financing mechanism can similarly be used to finance a reserve fund.

[.pdf of PACE program documentation] [.pdf of PACE cover memo] [.pdf PACE resolution]

Commissioners discussed the topic for about an hour, with most of that time centered on questions they asked of Levin.

The state statute requires a three-step process to create a PACE program. On Dec. 4, the board was being asked to take the first step – approving a resolution of intent to notify the public that the board intends to move forward with creating a PACE district. The statute lays out the information that the county must include in notifying the public – including different types of financing options.

The next step would be to hold a public hearing. The final step would be a resolution that actually creates the countywide PACE district. That last step would likely come before the board in late January or early February.

Countywide PACE Program: Public Commentary

Rebekah Warren, an Ann Arbor resident and state senator (D-District 18), spoke during public commentary. She said she was there to lend support to the resolution regarding PACE. She noted that she had introduced the bill when she served in the state House of Representatives, and helped shepherd it through in a bipartisan package of bills that passed the Democratic-controlled House and Republican-controlled Senate at the time. Jeff Irwin, who served on the Washtenaw County board of commissioners then, also helped advocate for the legislation, she said. [Irwin, also an Ann Arbor Democrat, was subsequently elected to the state House of Representatives, representing District 53.]

Rebekah Warren, an Ann Arbor resident and state senator representing District 18. She is married to county commissioner Conan Smith.

Warren described energy efficiency as a “little forgotten piece of our energy work.” It’s “not quite as sexy as some other things we do,” she said, “but the cheapest energy form out there is energy never used.” So why don’t more people invest in energy-efficiency improvements? It’s expensive on the front end, Warren noted, and sometimes the paybacks are long, so people need help with the financing.

Such improvements are great for the environment, Warren said. The more that people can rely on renewable energy sources, the better it is for the planet. It’s also great for property values, she argued – energy-efficiency upgrades to commercial or residential properties makes them more attractive for resale. It also helps the financial bottom line for homeowners and businesses. It’s a win-win for the community, for citizens, and for the planet, she said.

The PACE program in Michigan was born in Washtenaw County, Warren noted, and it would be fantastic to see the county board move forward on this policy to do the kind of work that needs to be done here. She said she’d be happy to make herself available as a resource, and to support the program as it moves forward.

In responding to Warren’s commentary, commissioner Conan Smith (D-District 9) – who is married to Warren – said he was excited that the board would be considering the first step in establishing a PACE program. He noted that the board wouldn’t be creating the program that night, but rather would be voting on a resolution of intent to tell the public that they were considering such a program. He said he would have preferred a faster process than what the legislation laid out.

Countywide PACE Program: Board Discussion – How It Works

Conan Smith (D-District 9) began the discussion by apologizing for not attending the board’s Nov. 7 working session that included a briefing on the PACE program. He hoped that everyone’s questions would get answered, and he hoped to get board approval at both the initial ways & means meeting and at the regular board meeting that same night. [Typically, a resolution is given initial approval at a ways & means meeting, then is moved to the board agenda two weeks later. In December, however, there was only one meeting scheduled.] He said that the resolution of intent doesn’t obligate the county to do anything. “It just starts the process,” he said.

Smith suggested setting a public hearing for a board meeting in January 2014. That would give the public ample opportunity to read through the program before giving feedback, he said. Then the board could take action to actually create the PACE program at its meeting in early February. It’s a long timeline to get the program going, Smith said. There’s some urgency, he added, because there’s a property owner in Washtenaw County who wants to do a substantial project that could cost millions of dollars and create up to 20 jobs. It’s a project that’s in his Ann Arbor district, Smith noted, and he hoped to get that kind of economic activity moving.

He again asked the board to pass both the initial and final approval for the resolution of intent that night, then get into the “meaty debate on public policy in January and February.”

Alicia Ping (R-District 3) said in concept it seemed like a good thing. But she questioned one of the resolved clauses:

3. The Board of Commissioners formally states its intention to provide a property owner based method of financing and funds for energy projects, including from the sale of bonds or notes which shall not be a general obligation of the County, amounts advanced by the County from any other source permitted by law, or from owner-arranged financing from a commercial lender, which funds and financing shall be secured and repaid by assessments on the property benefited, with the agreement of the record owners, such that no County moneys, general County taxes or County credit of any kind whatsoever shall be pledged, committed or used in connection with any project as required by and subject to Act 270.

It seemed to be stating that the county would help finance projects, she said, but also that no county money would be used to do that. If it’s such a great program, she asked, why would the county have to put up any money?

Conan Smith responded, explaining that the county doesn’t need to put up any money for this program, although it could. He noted that the city of Ann Arbor decided to use some taxpayer dollars for its program, but it’s not necessary for the county to do that.

By way of background, the Ann Arbor city council created a PACE program and established an energy financing district over two years ago, at its Oct. 3, 2011 meeting. Several months earlier – in March 2011 – the council had voted to set up a $432,800 loan loss reserve fund to support the program, using an Energy Efficiency and Conservation Block Grant (EECBG) awarded to the city by the U.S. Department of Energy.

Conan Smith (D-District 9).

C. Smith said that ideally, institutions like the county government can set up a program to be supportive of third-party financing – making sure that banks and credit unions are participating. He described how the program would work if he owned a business. He’d go to a bank to get financing for an energy efficiency project. Instead of refinancing his mortgage to do it, one option would be to go through the PACE program. It allows the business owner, the lender, and the county to enter into a contractual agreement. If the business owner pays the lender, the county isn’t involved. But if the business owner doesn’t pay, then the county starts its normal foreclosure process, C. Smith said. So it’s really just using the county’s foreclosure process to secure the business owner’s loan, he said, and no county dollars are involved.

In that case, Ping replied, why couldn’t the lender start the foreclosure process instead?

Andy Levin of Lean & Green Michigan explained that the language in the board’s resolution, which Ping had highlighted, mirrors exactly the language in the state enabling legislation – that’s why it’s included. But the mechanism that people are using is private lending, he said.

Energy efficiency improvements require an upfront investment that results in a payoff, he explained, but it typically takes several years to break even. Commercial loans are usually for a shorter period than the break-even point of such investments, Levin said, and that’s the problem that PACE sets out to solve.

The program draws on the special assessment power that each local unit of government holds. That way, the lender is the beneficiary of a property tax obligation. That’s different from a typical loan, in that it must be repaid before any other commercial loan. More significantly, he said, it runs with the land. So if the property is sold, the new owner is responsible for the PACE loan obligation. In turn, that means that the lenders are willing to make longer-term loans related to the useful life of the energy improvements – typically 10-20 years.

Levin pointed out that since 2008, PACE has been adopted by 31 states and the District of Columbia. And the states that are adopting this program aren’t just the stereotype “blue” states you might assume, he noted. The most recent state to adopt PACE was Texas, signed into law by Republican Gov. Rick Perry. “It’s totally apolitical – it just works for business,” Levin said.

A typical lender doesn’t have the risk profile or ability to make a loan like this for 20 years, Levin said, so a lot of lenders for energy improvements are private equity companies. There are three funds that exist for no other purpose than to make PACE loans, he said, and they’re all in Michigan.

Ping then asked about what happens when the property is sold, but the new owner isn’t a good credit risk. Does someone else have to approve the transfer of the PACE loan, given that it runs with the property? No, Levin replied – the PACE lender would not have any power over that sale.

The reason that lenders offer PACE loans is that it’s a long-term, secured, debt-based investment, Levin said. A lot of big organizations – like pension funds and insurance companies – need to have that kind of investment in their portfolios. And ultimately, the property is the collateral, he noted.

County commissioners Alicia Ping (R-District 3) and Andy LaBarre (D-District 7).

Andy LaBarre (D-District 7) thanked Levin and asked him to thank Levin’s dad for the work he does in D.C. [Levin's father is U.S. Rep. Sandy Levin and his uncle is U.S. Sen. Carl Levin.]

LaBarre wondered what would be the worst possible scenario for Washtenaw County, under the program. Levin described a scenario in which a PACE loan is made for a property, but then the property owner defaults and goes into foreclosure, and the property can’t be sold or is sold for less than the taxes owed. The PACE lien is equal to any other taxes owed on the property, Levin explained. That’s the only way any government entity could lose money, he said.

LaBarre wondered if Levin was seeing success with the program in Michigan. Were mainstream lenders participating, or just boutique investors? Levin described Michigan as an “infant” regarding PACE. So far, four counties and two cities had joined Lean & Green Michigan, he said. [The website lists the counties of Huron, Ingham, Macomb and Saginaw, and the cities of Rochester Hills and Southfield. The following day, on Dec. 5, the Wayne County commission voted to create a PACE program and join Lean & Green Michigan.]

Nationally, the PACE market has been roughly doubling every year, Levin said, and he projected that 2014 would be “the breakout year.” The biggest deal so far was for a Century City Hilton in Los Angeles, he said. In Michigan, a project in Southfield is getting consent for a PACE loan from Comerica, which holds the property’s mortgage, Levin said. He described it as a big step, because the lender who holds the mortgage on a property must give consent “or we cannot do the project.” That is a requirement of Michigan’s PACE legislation, which he said he fully supports.

Rolland Sizemore Jr. (D-District 5) wanted Levin to provide examples from other counties – “the good stuff and the bad stuff.” Levin replied that he couldn’t yet provide examples from Michigan, but he could bring examples from other states.

Felicia Brabec (D-District 4) pointed to the cover memo statement that indicated the contractor doing work on any PACE project of $250,000 or higher must guarantee the energy saving on that project. How is that possible? she asked. Levin replied that the state statute doesn’t specify how that’s done, but just states that it must be done. It was put into the legislation by large companies like Johnson Controls and Siemens because that’s a guarantee they can make, he added, and they thought it would give them a competitive advantage over smaller firms. The guarantee is usually based on an energy audit. If the energy company doing the work doesn’t have the wherewithal to guarantee the energy savings, it would have to get insurance to cover that, Levin said.

Responding to another question from Brabec, Levin said that legally, the county is creating a countywide PACE district. So a company based in Wayne County couldn’t use Washtenaw County’s PACE program. But by joining Lean & Green Michigan, all of the local governments participating in Lean & Green would be using the same processes and application, he said. So if a company has multiple properties throughout Michigan, the company would have just one process to follow if it worked through Lean & Green Michigan. That’s the advantage of local governments joining the Lean & Green coalition, he said.

Countywide PACE Program: Board Discussion – Ann Arbor’s PACE

Yousef Rabhi (D-District 8) asked how the city of Ann Arbor handles the administration of its PACE program. Levin called it an “open question.” The city had paid a private nonprofit to create and run its PACE program, Levin explained, but that contract ended in March of 2013. Levin contrasted that program with Lean & Green Michigan, saying that Lean & Green is a market model as opposed to a publicly-funded program.

Commissioner Yousef Rabhi (D-District 8).

Conan Smith further explained that the city had hired the nonprofit Clean Energy Coalition to create the PACE program, saying that no one else had done it in the state before that. It was anticipated that a lot of the CEC’s work – including legal documentation – would be leveraged by other communities across Michigan to build their own programs, he said. The city used federal grant funding to pay for CEC’s work, Smith added. He noted that CEC itself had been created by the city. It was previously called the city’s Clean Cities program before spinning off into a separate entity, he said, so there’s been a long relationship between CEC and the city.

By way of additional background, Matt Naud – the city’s environmental coordinator – told The Chronicle during a phone interview that the city doesn’t currently have the same level of staffing for its PACE program that it did during the CEC contract. However, Nate Geisler was recently hired as a full-time employee to staff the city’s energy program, and Naud indicated that Geisler would likely be working on PACE as part of that job.

So far, there has been one round of financing through the city’s PACE program. At its Feb. 19, 2013 meeting, the city council authorized issuing up to $1 million in PACE bonds, to be secured through special assessment revenues and the city’s reserve fund. The city ultimately sold $560,000 in PACE bonds through Ann Arbor State Bank and was the first city in Michigan to complete a PACE bond sale. The money funded projects at four locations: Arrowwood Hills Cooperative Housing, Big Boy Restaurant, the Goodyear Building, and Kerrytown Market & Shops. A fifth project – at the building on South State where Bivouac is located – was planned, but ultimately fell through, because the building’s owner would not sign off on the project, according to Naud. He reported that all the projects are completed except for the work at Arrowwood.

Some of the differences between the city’s approach and the one proposed by Levin relate to timing and interest rates. Naud noted that there are no administrative fees for the city, and interest rates are lower than what Lean & Green Michigan projects will likely secure on the commercial market. According to a press release issued by the city earlier this year, property owners involved in Ann Arbor’s first round of PACE financing have 10 years to repay PACE assessments at 4.75% interest.

Related to timing, Naud noted that because the city deals with smaller projects, it might take more time to line up enough projects to bundle into a bond offering.

Naud said he didn’t foresee that the city would end its PACE program unless a decision were made to not spend any staff time on it. He noted that there are strong economic development arguments to be made for energy-efficiency improvements that PACE supports, and that it also helps achieve goals in the city’s climate action plan, which calls for an 8% reduction in greenhouse gas emissions by 2015, compared to 2000 levels.

During the county board’s deliberations on Dec. 4, Brabec asked whether an Ann Arbor company would need to use the Ann Arbor PACE district or the county’s. Levin replied that it would be the company’s choice. Levin said that if a company’s project is over $350,000, it couldn’t go through Ann Arbor’s PACE program because the city can’t accommodate larger projects. He said he was totally supportive of Ann Arbor’s PACE program, and called the city a pioneer in the effort.

However, Levin said it’s impractical for every city and township to create its own PACE program. It makes more sense for the county to do it, he said.

Countywide PACE Program: Board Discussion – Other Administrators?

LaBarre said he’s spoken about this program with the county treasurer [Catherine McClary]. He said she seemed supportive, although she wanted to know more about it. He asked for Levin to describe the process for a business owner who was interested in the PACE program. Would they talk to the county, or to Levin’s organization, or a bank?

Levin explained that if the county decides to create a PACE program by joining Lean & Green Michigan, then Levin would become the county’s PACE administrator. Most local governments in Michigan don’t have the money to hire new staff to handle the administration, he noted. The only thing that the county does is to have a designated official who signs the special assessment agreements with property owners.

A property owner would come to Lean & Green Michigan, Levin said – there’s an application on its website. He noted that a mall owner in Ann Arbor who’s interested in PACE found out about it because an executive met Levin at a national PACE retreat. The company doesn’t want to use the city of Ann Arbor’s PACE program, he said, because the project is too big for the city and the company doesn’t want to use public funds. That property owner would have the ability to approach Lean & Green Michigan with everything in order, he said, including the energy audit and financing.

But smaller property owners might not have that ability. So part of his role is to “play matchmaker,” Levin said, helping the property owner find an energy contractor and a lender.

From left: Corporation counsel Curt Hedger and commissioner Kent Martinez-Kratz (D-District 1).

Kent Martinez-Kratz (D-District 1) asked about the administrative fees that Levin would be charging. Levin replied that the fees for Miller Canfield, the law firm that’s a partner in this venture, would vary depending on the deal. It could range from a few thousand dollars to tens of thousands, depending on the size of the project. The fees for his firm, Levin Energy Partners, are generally 2% of the deal upfront.

Yousef Rabhi followed up on that question, asking for more details about how Levin would get paid. Levin clarified that his fees could be paid by the contractor, or it could be part of the closing costs. He noted that other costs associated with the project include a mandatory energy audit. The statute also requires a plan for ongoing monitoring and verification of those energy improvements.

Levin explained that the point of setting up Lean & Green Michigan was as an alternative to each local government paying a substantial amount of money to create and run its own PACE program. Taxpayers shouldn’t pay anything, and the entire process can be market-driven, Levin said.

Rabhi asked whether the program that Levin is proposing for Washtenaw County means that anyone who wants to do a PACE project through the county must work with Levin’s firm. Yes, Levin said. The county would be naming Levin as the third-party administrator for its PACE program. Levin pointed out that the county could actually create multiple PACE programs, if it wanted to. The county board can also end the program at any time, he said.

Rabhi asked if there are other options for entities to administer the county’s PACE program. Not in Michigan, Levin said. He described himself as part of a “brother and sisterhood of PACE pioneers” – about 30-40 people nationwide. Levin noted that he was head of the Michigan Dept. of Energy, Labor & Economic Growth (DELEG) during Gov. Jennifer Granholm’s administration, when the PACE legislation was enacted.

When he left that position, he realized there was an issue with administering the program, because local governments don’t want to pay for administering their own PACE program or issue bonds that would be paid off through a special assessment. He also talked with representatives from large corporations, who told him that they weren’t interested in dealing with different rules and regulations that would be set up if each local government had its own PACE program.

That’s what led him to the idea of having one statewide PACE market, Levin said, and that’s why he created Lean & Green Michigan. Any county or city can join for free, he said, and after that, the local governments don’t have to do much. Every deal involves a property owner, an energy contractor and a lender. All three of those parties prefer the idea of one big Michigan market, instead of a lot of smaller programs, he said.

Indicating that he hoped Levin wouldn’t take offense, Rabhi said it was important to review all of the county’s options and ensure that they were proceeding in the right way.

County commissioners Alicia Ping (R-District 3), Andy LaBarre (D-District 7), and Ronnie Peterson (D-District 6).

Levin replied that “it’s a huge entrepreneurial risk on my part, I mean, to be honest.” He’s doing a lot of setup that could take years, Levin said, and until projects start coming in, there’s no funding. “Not many people are willing to do that.”

Conan Smith told Rabhi that the short answer to the question of whether there is some other provider besides Lean & Green is “No.” Essentially, Lean & Green Michigan is a sole source provider of this service in the state, he said. As evidence, he pointed to an RFP (request for proposals) process that Wayne County undertook for a PACE administrator. There was one response, he said – from Lean & Green Michigan. “No one else wants to do this work,” Smith said. Washtenaw County could go through that same RFP process, he added, but he didn’t think there was anyone else who would respond.

In response to another query from Rabhi, Levin said that Lean & Green Michigan is the name of a program that Levin Energy Partners administers. He considers the Miller Canfield law firm to be an important partner too. Rabhi asked if the county was locking itself into using Miller Canfield on the legal side, under this proposal. Yes, Levin replied, to the extent that any outside counsel is needed.

Levin said he’s not just looking to get some energy projects done. “I’m looking at how Michigan can be the most innovative state in driving down the costs of these projects for property owners.”

Ronnie Peterson said he’d be supporting this proposal. It’s similar to other partnerships the county has in order to provide services to citizens, he said, giving Ann Arbor SPARK as an example. [SPARK is a nonprofit entity that provides economic development services, and receives appropriations from the county to help support that work.] Peterson said it didn’t cost the county one dime, and it will help Washtenaw County businesses function in a changing climate. The county can opt out of its arrangement with Levin at any time, he noted.

Peterson said he knew Levin on a personal basis, and that as a Harvard Law School graduate, Levin had more options than taking on this program. Peterson said he was grateful that Levin is giving back to the state with his talents and relationships that he’s built over the years. “I trust Andy Levin, and that does make a difference to me,” Peterson said.

Countywide PACE Program: Board Discussion – Next Steps

Rolland Sizemore Jr. asked whether it would be a “done deal” if commissioners approved the proposal at their board meeting that night, following the ways & means meeting. If not, why were commissioners pushing it through to be voted on at the board meeting?

Curtis Hedger, the county’s corporation counsel, explained that the state statute requires a three-step process to create a PACE program. The board is being asked to take the first step – approving a resolution of intent. It notifies the public that the board intends to move forward with creating a PACE district. The statute lays out the information that the county must include in notifying the public – including different types of financing.

The next step would be to hold a public hearing. The last and most important step, Hedger explained, will be a resolution that actually creates the countywide PACE district. That would likely come before the board in late January or early February, he said.

Sizemore asked if there was a way to stipulate that labor for these projects would come from the county. Ronnie Peterson replied that Andy Levin is very respected in the labor community, and had been involved with the AFL-CIO on a national level. Sizemore said he didn’t need an answer that night, but it was an important issue that he wanted to address.

Conan Smith offered an amendment to the resolution, to set a public hearing on the proposal for Jan. 22.

Outcome on Smith’s amendment: On a voice vote, commissioners passed the amendment to set the public hearing date for Jan. 22. Rolland Sizemore Jr. dissented.

The board then discussed whether to take both an initial vote that night at its ways & means committee meeting, plus a final vote at the board meeting immediately following it that same night. [Typically, items receive initial approval at ways & means, then are brought to the regular board meeting two weeks later. However, there was only one board meeting in December – on Dec. 4.]

Yousef Rabhi wondered why the board couldn’t take a final vote at its first meeting in 2014, on Jan. 8. He noted that commissioners could still hold the public hearing on Jan. 22. Conan Smith noted that the first meeting of the year typically includes only organizational items, like officer elections, but he supported doing regular business then, too.

Ronnie Peterson didn’t have a problem giving the item final approval later that night, noting that the proposal doesn’t cost the county any money. Felicia Brabec pointed out that some commissioners had additional questions, and that it wouldn’t change the timeline to have a final vote for the notice of intent on Jan. 8, given that the hearing was already set for Jan. 22.

Outcome: Commissioners unanimously gave initial approval to a notice of intent to form a PACE district. A final vote on the notice of intent is expected on Jan. 8, with a public hearing on Jan. 22. A vote to establish the PACE district itself will come in late January or early February.

Peacemaking Court

At their Dec. 4 meeting, commissioners were asked to authorize acceptance of a $150,000 grant to establish the Washtenaw County Trial Court’s Peacemaking Court. The grant, awarded by the State Court Administrator’s Office, is for funding from Oct. 1, 2013 through Sept. 30, 2014.

The state grants are intended to support creative approaches in the court system. The Peacemaking Court is described in a staff memo:

Like tribal peacemaking programs and restorative justice programs, the Peacemaking Court will provide a great benefit to youth and the community in juvenile cases by reducing recidivism and giving youth a diversionary option to avoid a record that can preclude future educational and employment opportunities. Domestic relations and other family cases will benefit from more durable and tailored solutions that result from a clearer understanding of the different perspectives or “truths” of all those involved. This, in turn, will enable the healing of important relationships, in contrast to the harm and polarization that too often results for families through the adversarial process.

The Peacemaking Court will allow the parties and those most affected by the conflict to talk about the event, its impact on them, and to look at the whole conflict in a comprehensive context that leads to understanding and meaningful solutions that address the needs of all those involved. When participants are respected and the individuals responsible for causing the problem are part of the decision process and take responsibility for their actions in a meaningful way, the resolutions are more comprehensive and address the needs of everyone involved, as well as the issues that underlie the problem. An important difference between the traditional system and the peacemaking court process is that the resolution is determined WITH the court not BY the court.

Key members involved in this project are 22nd Circuit Court judge Timothy Connors, 14A District Court judge Cedric Simpson, project director Susan Butterwick, and Robert Carbeck, who is 22nd Circuit Court deputy court administrator and budget director. [.pdf of grant application]

Connors, who has spearheaded this initiative, was on hand at the Dec. 4 meeting to describe the project and answer questions. Carbeck also attended but did not formally address the board.

Peacemaking Court: Board Discussion

Ronnie Peterson (D-District 6) invited judge Timothy Connors to the podium to describe the grant.

Timothy Connors, 22nd circuit court judge.

Connors said he knew commissioners wanted to know about funding. He told them the program not only doesn’t cost anything for the county, but it’s money coming in from the state. The only role for the county would be in administering the funds, he said.

The grant is to explore and determine what, if any, tribal court philosophies or procedures might have applicability in Michigan’s courts, Connors explained. These are things that can be borrowed from the more than 500 tribal nations across the country, he noted, including some of the tribal courts in Michigan that are leaders in the country. He’s been working with these courts and came to the conclusion that there’s a lot to learn.

Peacemaking courts are being held overseas, most notably by two communities in England, Connors reported, saying he’s met with representatives from those communities. Their approach is borrowed from New Zealand’s indigenous culture.

Connors noted that a lot of this work is based on South Africa’s Truth and Reconciliation Commission hearings held during Nelson Mandela’s presidency. “So I can’t imagine anybody really being threatened by it,” he said. Only people who want to participate will use this approach, he explained – saying it’s not imposed on anyone. It’s designed to offer an alternative way to resolve differences. After 23 years on the bench, he said, he’s learned that the court system often addresses the symptom, but seldom talks about the disease.

Judge Cedric Simpson will be participating from the 14A District Court. Connors said the approach is already being offered in the domestic relations and family court, and there’s interest in it from business-related cases and in the probate court. “It is my commitment to spend the rest of my career with you working and trying to do the best I can in my final 11 years,” he said. [Judges are elected to six-year terms, and Connors' current term expires in January 2019. He was likely referring to the statutory age limit – judges must be under 70 years old at the time of their election.] Connors said he hoped the county took advantage of the grant, and that he’d keep the board informed of the educational sessions that will be held about the peacemaking court.

Conan Smith (D-District 9) thanked Connors for his work. He said he’s been involved in alternative dispute resolution with the court, and was a small claims mediator, so “I know the power that conversations can have.” Learning from what other cultures have done is a great idea, Smith said, and he’s proud of the county and grateful to Connors and the team that pulled this together.

Yousef Rabhi (D-District 8) echoed those sentiments, saying he was glad to have a small role in this project. Ronnie Peterson (D-District 6) also thanked Connors, and recalled a conversation they’d had recently about former judge Francis O’Brien. Peterson noted that O’Brien had been well-known across the state and country for advanced programs and treatment models for juveniles. He was pleased to see that Connors was making sure that the legacy of O’Brien continued.

Peterson also said he was pleased that the wall between the county board and the court is coming down. He hoped the dialogue would result in additional innovative programs, but he joked that the initiative had to come from the judges: “We dare not to mess with you in robes, because of the power that you possess,” Peterson quipped.

Connors responded, saying he didn’t see those walls and that such walls between the county administration and the court would be “ridiculous.” He said he intended to involve the county’s detention center in the decision-making, and indicated that the goal for everyone is to help the children.

Infrastructure Projects

Two infrastructure projects – in Dexter Township and Freedom Township – were on the board’s Dec. 4 agenda for approval.

The board was asked to authorize issuing up to $460,000 in bonds for the Copper Meadows drain project in Dexter Township, northwest of Ann Arbor. The drain is located in the Copper Meadows subdivision off of North Territorial Road, near the Dexter town hall. The bonds would be repaid with special assessments on Dexter Township, Washtenaw County, and property owners in the drainage district. The first assessment would be levied in December 2014. [.pdf of staff memo on Copper Meadows project]

The board also was asked to pass a resolution that directs the county’s board of public works to undertake a lake improvement project at Pleasant Lake in Freedom Township, located southwest of Ann Arbor. The township’s board of trustees has passed a resolution asking for the county’s assistance in implementing and financing of a project to control invasive and nuisance species at the lake. The proposed five-year project would require special assessments on property owners that would benefit from the work.

Outcome: Both infrastructure projects received unanimous final approval by the board.

Appointments

Over 30 appointments to various county boards, committees and commissions were on the Dec. 4 agenda for approval. [.pdf of appointments]

Washtenaw County water resources commissioner Evan Pratt was appointed as the county’s director of public works.

Board chair Yousef Rabhi (D-District 8) read aloud his list of nominations, making a few additional comments along the way. He noted that an application for an opening on the agricultural lands preservation advisory committee had been received after the deadline, so he’d be bringing a nomination forward in January for that.

There were several unfilled positions on the local emergency planning committee, he noted, for slots that require certain types of representation – to represent hospitals, agriculture, and several other specific areas, for example. In total, the county needed to fill 23 positions, but only nine nominations were brought forward on Dec. 4.

An opening on the Washtenaw County parks & recreation commission that resulted from the retirement this month of long-time commissioner Nelson Meade will not be immediately filled, to allow for the opening to be publicized.

Openings for most positions had been publicized in October and November. An appointments caucus was held on Nov. 21 to discuss the openings and applications. That caucus drew only two commissioners, however – Rabhi and Conan Smith (D-District 9), who both represent districts in Ann Arbor.

The deadline had been extended until Dec. 1 for openings on three entities: the southeast Michigan Regional Transit Authority (RTA); the Washtenaw County historic district commission; and the Washtenaw County food policy council. As a result of the extension, additional positions were filled on the HDC (Alec Jerome) and the food policy council (Markell Miller and Caitlin Joseph).

Also, no appointment was made to the RTA. Richard Murphy – one of two RTA board members from Washtenaw County – is not seeking reappointment. During the Dec. 4 meeting, board chair Yousef Rabhi indicated that there’s some uncertainty about when Murphy’s one-year term actually ends, and that needs to be sorted out with state and RTA officials. Because RTA board members weren’t sworn in until April of 2013, some state and RTA officials believe the term extends until April – even though appointments for Washtenaw County’s two slots were made by the previous county board chair, Conan Smith, in late 2012.

Rabhi said he planned to re-open the application process, with a new deadline to be determined, after these issues are clarified.

Outcome: Appointments were approved unanimously.

Later in the month, the application process was re-opened for the RTA, with a new deadline of Jan. 12. That same deadline applies to openings on the county’s food policy council and parks & recreation commission. Applicants can submit material online, or get more information by contacting Peter Simms of the county clerk’s office at 734-222-6655 or appointments@ewashtenaw.org.

Appointments: Director of Public Works

In addition to the other appointments, the board was asked to appoint Evan Pratt, the county’s water resources commissioner, as director of public works, effective Jan. 1, 2014. The current director of public works is Daniel R. Myers. According to a staff memo, the board of public works had raised a question about potential conflict-of-interest with this appointment. From the memo:

Since Evan is currently the elected Water Resources Commissioner for the County, the Board of Public Works wanted to assure themselves that it was not a conflict for the person serving as the Water Resources Commissioner to also be appointed the Director of Public Works. With the assistance of Corporation Counsel they researched this issue and it was determined that it would not be a conflict of interest. Additionally, the current organizational structure of Public Works places the Director under the management direction of the Water Resources Commissioner so there is already direct involvement in Director of Public Works activities. [.pdf of corporation counsel opinion]

Earlier this year, Dan Smith (R-District 2) had asked the corporation counsel, Curtis Hedger, to weigh in on a separate issue – about the constitutionality of levying taxes based on pre-Headlee state laws. During deliberations at the board’s Oct. 16, 2013 meeting, Hedger said he would never put a legal opinion in a cover memo unless he’s directed by the board to do so. The board is his client – not individual commissioners, he told them, adding that he writes legal opinions under the board’s direction.

In the case of the opinion produced for the appointment of Pratt, Hedger indicated that the board leadership had asked for the opinion, on behalf of the entire board, as did the county administrator and the outgoing public works director.

Outcome: The appointment was approved on an 8-1 vote, over dissent from Rolland Sizemore Jr. He did not publicly state his reason for voting against this appointment.

Recognitions

Commissioners voted on resolutions of appreciation at their Dec. 4 meeting to honor two men who have served the county for decades: Dick Fleece and Nelson Meade.

Outgoing county health officer Dick Fleece and Ellen Rabinowitz, interim health officer.

Fleece has worked for the county for 38 years in the field of public and environmental health, and is retiring at the end of 2013. He was appointed the county’s environmental health director in 1994, and has served as the health officer since 2009. [.pdf of resolution of appreciation for Fleece] Fleece received a standing ovation from commissioners and staff.

At the county board’s Nov. 6, 2013 meeting, commissioners had appointed Ellen Rabinowitz as interim health officer.

Also on Dec. 4, commissioners honored Nelson Meade, who is stepping down from the Washtenaw County parks & recreation commission after serving for over 40 years. [.pdf of resolution of appreciation for Meade] He was an administrator at the University of Michigan’s School of Public Health and had served in various roles in city government, including two terms on the Ann Arbor city council. His departure from WCPARC was announced at its Nov. 12, 2013 meeting.

Meade did not attend the Dec. 4 meeting, but was given the framed resolution at a reception later in the week. And at the Dec. 10 WCPARC meeting, it was announced that County Farm Park will be renamed in Meade’s honor, as the Nelson Meade County Farm Park. The 141-acre park is located on Ann Arbor’s east side, at the southwest corner of Washtenaw Avenue and Platt Road.

Outcome: Both resolutions passed unanimously.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Public Health

At the board’s Nov. 6, 2013 meeting, Ellen Rabinowitz was appointed as interim health officer for the county, because the county’s current health officer, Dick Fleece, was retiring. As they’d done in the past, at that meeting both Conan Smith (D-District 9) and Ronnie Peterson (D-District 6) advocated for the county to create a board of public health. From The Chronicle’s Nov. 6 meeting report:

Conan Smith (D-District 9) told Rabinowitz that he really wants to see a public health board created. He asked her to report back to the board about what a public health board would mean to the department, and the process required to set it up. Rabinowitz replied that it’s an important issue to explore. The possibility of pulling together a board of experts is something she’s interested in exploring. Peterson said it should be a goal to establish such a board by the end of 2013, because public health advocates who might serve on the board should be involved in selecting a permanent director.

…

Regarding a public health board, Fleece said he’s heard varying opinions. Some people say that such boards require a lot of care and feeding to the extent that the board becomes a burden on staff. In other cases, the board can be an advocate and serve as a good source of information. There will be decisions to make regarding how much authority to give a public health board, he noted.

Fleece also pointed out that the county’s public health department already seeks advice from many sources, including the University of Michigan School of Public Health. He said he’d do everything he can to help with this process.

At the board’s Nov. 20, 2013 meeting, Rabinowitz told commissioners that she’d been working with the county administrator to develop a document that she planned to present to the board on Dec. 4. The document would lay out all the issues that need to be explored in reestablishing the board of public health, she said, including budget impacts, potential composition, and how it would relate to other existing boards.

Washtenaw County administrator Verna McDaniel.

On Dec. 4, Rabinowitz told the board that she knew Peterson had wanted a resolution on this issue to come forward at that meeting. However, she said she wasn’t ready yet because she’s still doing the due diligence and gathering information that’s needed to reestablish a board of public health. She was meeting the next day with the director of local public health services at the Michigan Dept. of Community Health to sort out why such a board is optional and what authority it would have. She’s also pulling together information about all the different ways that the county’s public health department currently receives public input, “because clearly that is one key role for a board of health,” she said.

Rabinowitz reported that she’ll also be meeting in January with the dean of the University of Michigan School of Public Health and the associate dean for public health practice to get their input. Her intent is to bring forward a resolution in the first quarter of 2014.

Yousef Rabhi (D-District 8) thanked Rabinowitz, saying that he knew she wanted to do what’s best for the county, what’s legal under the state statute, and what’s best in terms of engaging citizens. He noted that the county public health department already works with about 10 different citizen boards and commissions that are working on specific areas, like environmental health. He wanted to look at elevating the voice of people who sometimes don’t have input, and he looked forward to the proposal she’d be bringing forward next year.

Peterson said his desire to have a board of public health would not go away. The county has a parks & recreation commission, a board of public works, a drain board and a road commission, he noted, and a board of public health is just as important. He expected an update from the county administrator in January regarding the status of such a board. He argued that the county board needs to appoint people to a public health board who could advocate on behalf of children and other vulnerable citizens.

Conan Smith said he also was committed to putting a board of public health in place to guide commissioners. However, he added, he also understands the need for time to figure it out and do it right. He didn’t want to delay it with the intention of killing it, but thought it was worthwhile to get it done right.

Rabhi said he didn’t see the additional time as a delaying tactic, and he appreciated the time that staff was putting into it.

On a different topic, Alicia Ping said she hoped Rabinowitz could serve as a resource. Ping had recently received an email from the Saline mayor, reporting that there had been another heroin overdose in that city. The mayor is coordinating a response with the Saline police department and school system, she said, and has asked Ping to reach out to the county to see what resources are available.

Communications & Commentary: Misc. Public Commentary

Thomas Partridge spoke during both opportunities for public commentary during the evening. He introduced himself as a recent candidate for Ann Arbor city council, as well as a previous candidate for other offices. He urged the board to do more for the community’s most disadvantaged residents, finding ways to provide better access to health care, housing, transportation and education. He asked commissioners to work during their vacation period to help those in need. He argued that Gov. Rick Snyder and the state legislature had neglected and bullied the most vulnerable citizens on Michigan, as well as middle-class residents.

Present: Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Alicia Ping, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith.

Next regular board meeting: Wednesday, Jan. 8, 2014 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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A second energy-related item approved by the council on March 4 was a resolution to prepare the city’s infrastructure systematically to support plug-in electric vehicles. That includes direction to the city staff to review permit processing and zoning codes to ensure that barriers don’t exist to creating plug-in infrastructure. It also includes direction to the fleet services unit to weigh the possibility of making plug-in vehicles a part of the city’s fleet. The resolution also directs that the city collaborate with other organizations like the University of Michigan. The resolution includes a six-month deadline for reporting back to the council on any actions the council needs to take to remove barriers to plug-in readiness.

A third energy-related item on the council’s agenda was a resolution of support for Earth Hour, which takes place this year on March 23. The resolution includes encouragement by city employees to turn off or dim all non-essential lighting in city buildings between 8:30-9:30 p.m. on March 23. The resolution encourages residents to do the same.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

That step will be to authorize the issuance and sale of up to $1 million in bonds in support of the energy improvements to be undertaken by five property owners. In broad strokes, the PACE program is enabled by state legislation – the Property Assessed Clean Energy Act 270 of 2010. Property owners take out loans to make energy improvements to be repaid through regular installments as part of their taxes. Municipalities like the city of Ann Arbor administer the program. More than a year ago, on Jan. 9, 2012, the city council set the fees for participation in the program. Prior to that, on March 7, 2011, the city set up a loan loss fund with about $430,000 granted by the U.S. Department of Energy.

Properties for which owners have applied for improvements under Ann Arbor’s PACE program include: (1) Arrowwood (2566 Arrowwood Trail) for new HVAC equipment, insulation, occupancy sensors and lighting upgrade for the clubhouse; exterior lighting upgrade to LED; and solar shingles on one apartment building; (2) Big Boy (3611 Plymouth Road) for HVAC upgrade, lighting upgrade, cooking equipment replacement with energy efficient equipment, and controls; (3) Bivouac (330-336 S. State) for interior lighting upgrade; (4) Goodyear Building (118-124 S. Main) for HVAC replacement (boilers and A/C units), and lighting upgrade; and (5) Kerrytown Market & Shoppes (403 N. Fifth Ave.) for lighting upgrades in tenant areas and common areas.

The vote to postpone the authorization to issue bonds came at the council’s Feb. 4, 2013 meeting. Councilmembers had a number of questions that they wanted to get answered during the postponement. There had not been sufficient time to do that, as the item was not added to the agenda until the day of the meeting.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

The rationale for the project, according to a staff memo, is to address energy costs that are regressive, because renters often pay more on utilities due to the condition of rental housing stock. That is, higher energy costs affect poorer renters more. The grant will be used to develop a strategy to address inefficiencies in rental housing and thereby increase the affordability of rental housing stock.

The money was awarded to the city as part of a larger $3 million grant given last year to Washtenaw County through the U.S. Housing and Urban Development Community Challenge Planning Grant (CCPG). According to the city staff memo, the goal of the Washtenaw County grant is “to expand existing affordable and energy efficient housing options and connect them to job centers and healthy food through an enhanced multi-modal transportation corridor.”

The corridor in question is Washtenaw Avenue, between Ann Arbor and Ypsilanti.

The $256,000 will be used by Ann Arbor for a rental housing energy efficiency project that is planned to last through December of 2014. Of the $256,000, $210,000 is budgeted for labor to hire a project manager and $46,000 is budgeted for marketing and outreach.

Matching funds totaling $370,000 have been pledged: $50,000 from the Michigan Department of Environmental Quality grant supporting Michigan Green Communities; $60,000 from the Home Depot Foundation Sustainability Framework; and $260,000 from the city’s PACE/A2energy.org energy efficiency financing and community outreach efforts.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

The plain brick wall on the Michigan Theater Building on East Liberty in downtown Ann Arbor – rising up behind the storefronts – will be the site of a solar panel installation funded by XSeed Energy, a program of the Clean Energy Coalition and the city of Ann Arbor. (Photos by Mary Morgan.)

As a project manager for the Ypsilanti-based Clean Energy Coalition, Bona specializes in this art of saving energy. She is quick to add, however, that “my goal isn’t to make people sacrifice and suffer. It’s to make them see opportunities where life can be better and, oh, by the way, it uses a lot less energy.”

But it’s not just about using less energy. Bona and others in the Ann Arbor area are involved with projects that focus on generating alternative energy, too – in particular, solar power. Prompted in part by the lure of tax credits and available state and federal funding, an increasing number of efforts are underway to install solar panels on individual residences, businesses, nonprofits and schools – including, as one recent example, the Rudolf Steiner School of Ann Arbor.

And in mid-August, the Ann Arbor Historic District Commission unanimously approved two solar installation projects in historic districts, one for a private home on South Seventh Street, and another at the Michigan Theater. With some citing concern over aesthetics, commissioners acknowledged that they’ll likely see more of these requests in the future, and discussed the need to develop guidelines for solar installations within the city’s historic districts.

City Solar Initiatives: XSeed Energy

The Michigan Theater solar project is being funded by an especially ambitious program that Bona is leading, called XSeed Energy. The program, part of the Clean Energy Coalition (CEC), aims at installing solar projects and encouraging “community-supported local energy,” Bona says, “which means that whether it’s solar or wind or geothermal, it’s locally-sourced energy versus having coal shipped from West Virginia.”

XSeed evolved from a partnership between CEC and the city of Ann Arbor, through the U.S. Dept. of Energy’s Solar America Cities program. In 2007, the U.S. Dept. of Energy declared Ann Arbor one of 25 Solar America Cities. As a result, the city received $632,000 in funds dedicated to advancing solar energy. Since then, the city has published a comprehensive report titled “Solar Ann Arbor: A Plan for Action” – a 114-page document that Bona strongly recommends reading. XSeed was launched to help implement the plan. [.pdf of the plan's executive summary – the full document is available on the city's website.]

Andrew Brix, the city’s energy programs manager, worked closely with the consultant who created the plan, and says of its purpose: “It helps to remove or reduce the barriers associated with solar energy, such as cost, and tries to allow [solar energy] to become a mainstream production of energy.” Bona adds that the plan details the “potential for Ann Arbor, as a city, to be entirely powered by locally-generated power.”

Solar panels are installed on the shelter roof of the Ann Arbor Farmers Market.

One of the city’s already-installed solar projects is a 10-kilowatt solar array at the Ann Arbor Farmer’s Market, put in place in 2008 with money from the Dept. of Energy along with matching funds from the Ann Arbor Downtown Development Authority. Not only does the system advance the goal of using solar energy, it also tackles another facet of the city’s solar plan: awareness. The strategically placed array is easily within view, and – given the popularity of the farmer’s market – is guaranteed many viewers.

Public awareness is key, says Bona, who is also a member of the city’s planning commission: “The goal of XSeed is two-fold: one is to implement the installation of solar panels in lots of different locations – starting with nonprofits. The second piece is to make the general public aware of the installation, aware of how it works, have read-outs where people can see how much power it’s generating.”

The city is already providing information for property owners to raise awareness about the potential of solar energy. Wayne Appleyard, chairman of the city’s energy commission, explains that city staff, with the help of some University of Michigan interns, developed a system that estimates how much energy each residential home could generate via solar power in Ann Arbor.

Residents can use that system by visiting the city’s website and entering their address. They’ll then see a list of tabs, including one that’s labeled “Solar Potential.” Clicking on that tab generates a listing that looks like this:

Address: 101 Your Street
Full Zip Code: 48103-4357
Solar Potential: Excellent
Solar Hot Water Candidate: Yes
Roof Size:  756 sq. ft.
Estimated solar PV potential: 0.55 - 1.09 KW
Estimated electricity produced: 717.3 - 1434.61 KWh/yr
Estimated electricity savings: 304.9 - 383.81 per year
Estimated greenhouse gas savings: 1.65 - 2.36 tonnes CO2/yr

-

Appleyard, who has been a member of the energy commission for over 10 years and chair for the past year, cautions that the information is “an approximation.” But it’s useful as a guide for homeowners who are interested in the solar-energy option. Encouraging the use of residential solar energy is an explicit city goal, as outlined in its effort to put solar installations on 5,000 roofs by 2015, primarily for solar hot water systems.

Working Within a Historic District

While the city has a history of advocating for solar energy, it’s not common for solar projects to be located within the city’s historic districts. But during the Historic District Commission’s Aug. 12 meeting, the group unanimously approved two proposed solar initiatives: one for a Seventh Street residential home, and one for the Michigan Theater that’s funded by XSeed Energy. When completed, it will be the most high-profile solar project in the city.

In early 2010, XSeed began an application process for a solar panel project. The nonprofit Michigan Theater had the most potential of the applicants for two reasons, Bona explained. First, the project at the Michigan Theater offers an additional aspect of awareness because of the theater’s downtown location and because the system, once installed, would be easily visible from the street – the solar array will be installed on the south-facing wall of the theater, rather than on the out-of-sight roof.

As another factor in choosing Michigan Theater, Bona also cites the willingness of the theater’s staff – including executive director Russ Collins – to work with XSeed and fundraise, bringing in money to fund future projects.

Along with installing the solar system, XSeed required the Michigan Theater to reduce its energy use by 5%. Including the 5% that the solar array will offset from the theater’s electrical use, the entire project will reduce the theater’s need for fuel-based electricity by 10%.

“The goal with solar is not to replace the electricity we’re using today, but to step back and reduce the wasted energy,” says Bona, in explaining XSeed’s requirement for separate conservation measures. “Then we won’t need as much solar to make up the difference.” It’s an approach akin to avoiding the food processor while making pesto.

While the Michigan Theater was the first of the applicants selected by XSeed, Bona says they intend to do more projects.

Deliberations at the HDC: Questions, Concerns – and Approval

At their Aug. 12 meeting, historic district commissioners spent about 90 minutes discussing the two solar proposals. The first was for a home at 553 S. Seventh St., just north of West Madison in the Old West Side historic district. Homeowner Chris Hewett was asking for a “certificate of appropriateness,” which would allow him to proceed on installing solar panels on the roof of his 19th-century house.

The house at 553 S. Seventh St., with an indication of one option for installing solar panels on the roof. This image was included in the Aug. 12 meeting packet for the Ann Arbor Historic District Commission.

At the request of the city’s planning staff, he presented three configurations for installing the panels – commissioners were asked to weigh in on which of the three options would be most preferable, from their perspective.

Hewett told commissioners that he and his wife bought the house about a year ago, and were planning to make it more sustainable and energy efficient, while at the same time restoring its historical features. He said they were trying to take advantage of the credits available through DTE and federal programs, which would make the project financially feasible.

He said they use about 3 kilowatts of energy each month, and that the solar panels would likely generate about 1 kilowatt. In the future, they might return to the HDC to seek permission to install additional panels, he said.

Some commissioners posed questions about structural issues related to placing the array of 3-feet-by-5-feet panels on the roof. Kristina Glusac stated repeatedly that she felt there was insufficient information provided about the structure of the house and how the panels would be installed. Lesa Rozmarek was concerned about the possibility of ice damming.

Some of the commissioners were concerned about aesthetics, and initially wanted to choose an option that would minimize the visual impact of the panels. That issue was reflected in the staff report, presented by historic preservation coordinator Jill Thacher:

Staff’s initial thoughts on solar panels are that they are an acceptable, reversible addition to residential structures in historic districts if the panels a) match the color of the roof, b) match the angle of the roof and do not project more than eight inches above it, and c) do not cover more than 30% of the roof surface on which they are installed if any part of the panel is visible from a street or sidewalk, and most importantly, d) do not detract from the historic character of the house or destroy, obscure, or damage character-defining features.

During the time available for public comment, several people spoke – including many who were attending the meeting in connection with the Michigan Theater project, and who responded to some of the concerns raised by commissioners.

Saying he was a huge advocate of historic preservation, Matt Grocoff – founder of Greenovation TV – noted that he lived down the street from Hewett, and that he intends to make his home the oldest in America to achieve net-zero energy. While he was excited by the discussion, he said the commissioners were asking the wrong questions about the aesthetics. “The real question is what point is there in preserving our history if we don’t protect our future?” He urged commissioners to set a precedent by unanimously approving the installation of solar panels.

Clean Energy Coalition project managers Dave Strenski and Christina Snyder both spoke to the commission, addressing some of the technical concerns. Both have worked on other solar panel installations, and said they didn’t have problems with drainage or ice damming. Strenski, who volunteers with Solar Ypsi and did the installation of panels at the Ypsilanti city hall, said it was dumb to install the panels in a way that wouldn’t yield the highest efficiency. Shading was another factor to consider, he said – if any part of the array is in shade, it affects the performance of the entire system.

When asked by commissioner Tom Stulberg for his thoughts on the question of aesthetics, Strenski said aesthetics is in the eye of the beholder. Most people who install solar panels are proud of them and want them to be visible, he said, but energy efficiency – not aesthetics – should be the main factor.

Later in the meeting, HDC chair Ellen Ramsburgh said it was important for the commission to weigh in on placement. Part of their job was to make sure the additions didn’t detract from the historic character of the house, she said, and a roof is a very visible part of that. In general, she said, she preferred a less-distracting placement of the panels.

The fact that the solar panels could be removed was compelling for several commissioners, and some mentioned that they had a steep learning curve on this issue. But despite some concerns, the project received unanimous support from commissioners, giving the homeowner the option of choosing which solar array would work best for the site.

Next up was the Michigan Theater project on East Liberty, an installation on the south-facing wall of the main theater building, which is located in the State Street historic district. Though the wall is set back 58 feet from the front of the shops along East Liberty, the panels will be visible from the street.

The staff report recommended approval of the project, but again brought up aesthetic issues. Of particular concern to the XSeed project team was a possible restriction on color. From the staff report:

Staff supports the proposal if the panels and their supporting armature are a neutral, and preferably matte, brown, gray, or black color when feasible. Very conspicuous panels, such as bright blue ones, and bare metal frame finishes should be avoided if they detract from character-defining features of the structure and neighboring ones.

In addressing the commission, Bonnie Bona noted that the color of the panels is determined by the technology that’s used to create them, and that she would not want to restrict their ability to select the appropriate technology for the project. They plan to put the project out to bid, and would be open to new technologies, she said.

Mark Ritz, a volunteer with the Clean Energy Coalition who’s working with the XSeed program, elaborated on that topic, saying he’d researched the different types of solar panels available and that almost without exception, the panels are dark blue, mounted on silver anodized aluminum frames. The panel absorbs light and creates electricity from the light it absorbs, he explained. The most efficient wavelengths of light are the longer ones, he added, so what’s reflected are the shorter wavelengths – the dark blue and violet, which are not as efficient in being converted to electricity. By imposing a color restriction, he said, it would restrict their choices immensely in selecting the best technology for this site.

Both Snyder and Strenski spoke again in support of the project. Snyder noted that the panels that commissioners might find the most “distracting” from an aesthetic view – made of polycrystalline silicon, with the crystals showing – are those she finds most beautiful. “I could stand and look at them for hours,” she said. “It’s almost like looking at fire or moving water.”

Strenski encouraged commissioners to check out seminars offered by the Great Lakes Renewable Energy Association, based near Lansing. In addition to solar energy, the group provides training for wind energy too. “Wind energy’s going to be next on your list here,” Strenski said.

Andrew Brix, who’s a member of the XSeed advisory board, also addressed the commission. He mentioned that the city council approved a “green energy challenge” in 2006, with the goal of achieving 20% renewable energy use by 2015. He said he hoped the HDC would support the project and that they could continue this conversation about solar installations in historic districts, finding ways to address both the needs of historic preservation and the energy goals of the city.

During the commission’s deliberations, Lesa Rozmarek pointed out that the panels are being deliberately placed in a location that’s very visible. She said she didn’t have a problem with it in this case, but it’s something the commission should be aware of.

Diane Giannola said that a major point with this project is that the panels will be placed on a plain brick wall, and won’t interfere with the building’s historic front. She said she liked the educational aspect of the project, too.

The commissioners voted unanimously to issue a certificate of appropriateness for the Michigan Theater solar installation.

Coda to HDC Approval

In a follow-up email, Bona told The Chronicle that XSeed has budgeted about $30,000 for the Michigan Theater installation – $10,000 per kilowatt for a 3 kilowatt array. Bids are expected back from solar installers by the end of September. For other recent projects, prices have been in the range of $7,000 to $9,000 per kilowatt.

They expect to get about $15,000 from the DTE SolarCurrents program. The program allows the energy utility to buy renewable energy credits (RECs) from the state – credits that would otherwise go to homeowners or businesses. This helps the utility meet Michigan’s renewable energy standard, which was established by Public Act 295. The standard is a state mandate for Michigan electric utilities to generate 10% of their power from renewable resources by 2015.

In addition, XSeed is using the Michigan Theater installation to raise funds from corporate sponsorships, private donations and grants for public awareness efforts and future projects. That funding, in turn, will allow XSeed to provide incentives for private projects at residences, businesses and organizations. XSeed will also be pursuing public installations to provide power to residents, businesses, and organizations that don’t have adequate solar access on their own sites.

The focus on solar power, Bona wrote, is because of attractive incentives that are currently available to offset the cost of installation. In the future, XSeed will be looking at other renewable energy sources, too.

DTE, State Incentives Help Rudolf Steiner School

Yet another solar installation is coming in October – this one at the Rudolf Steiner School, on the campus of its high school on Pontiac Trail. The school received funding through two grants in June of this year: one from the Michigan Renewable Schools Program, which is funded by the Michigan Public Service Commission and administered by Energy Works Michigan; and one from DTE through its SolarCurrents program.

Rudolf Steiner School will receive $1,000 annually, says Sandra Greenstone, the school’s administrator, and is expected to save another $1,000 in electricity costs – about 12,000 kilowatt hours’ worth. In addition to a solar installation, the school will be making energy-saving changes based on results of an energy audit funded by the Michigan Renewable Schools Program, such as replacing windows and using energy-efficient light bulbs and fixtures.

Appleyard, of the city’s energy commission, considers the importance of the DTE program to be paramount in the accessibility of solar-powered systems. “It makes pretty good sense,” he says. “Certainly with DTE’s [SolarCurrents] program, photovoltaic arrays are a relatively secure investment in these times of uncertainty … since you’re signing a 20-year contract with DTE that basically guarantees that they’re going to pay you upfront money and then pay you every month for whatever you generate.”

Though DTE’s SolarCurrents program is viewed as progressive, hopes are set still higher for the possibility of incentives by the city, if pending state legislation is passed.

Andrew Brix, the city’s energy programs manager, believes the single most helpful piece of legislation is PACE (Property Assessed Clean Energy). Through the program, the city would use municipal bonds  to fund the upfront installation of a solar system to a resident’s home. The resident would then pay the city through property taxes in the coming years – probably over 15 to 20 years.

Wayne Appleyard and Bonnie Bona at a joint working session of the Ann Arbor planning commission, energy commission and environmental commission in April 2010. Appleyard chairs the energy commission. At the time, Bona was chair of the planning commission. (Chronicle file photo)

“This is incredibly helpful,” says Brix, “because most people don’t have the money for solar initiatives. It’s been passed in the House and is waiting to be reviewed in the Senate.” If legislation is approved, Brix says the city is “poised and ready” to run a PACE program.

The issue of PACE legislation came up during an April 13, 2010 joint working session of the Ann Arbor planning commission, energy commission and environmental commission, focused on the topic of sustainability and organized in part by Bona, who served as planning commission chair at the time. Matt Naud, the city’s environmental coordinator, explained some of the issues related to implementing a PACE program. From Chronicle coverage:

The program would be voluntary. Homeowners would first get an energy audit to find out if they’ve already taken initial steps on their own – for example, Naud said, you wouldn’t want to install solar power if you haven’t sufficiently caulked around your windows. You’d sign a contract with the city, which Naud said would microfinance the improvements. To repay the loan, homeowners would get an additional assessment on their property tax bills.

The risk is low, Naud said, as long as they structure the program in the right way – for example, not lending to people who are upside down on their mortgages, owing more than the home is worth. There’s already a system in place to make payments – the tax bills – and the improvements would add value to the property. The city has set aside $400,000 from a federal Energy Efficiency and Conservation Block Grant it received, to use as a loan loss reserve fund. If the enabling legislation is passed, the city would be able to put together a package that would work, Naud said.

[Link to a September 2009 article about the PACE program, written by Eric Jamison, a law student at Wayne State University Law School who's working with the Great Lakes Environmental Law Center to develop the program in Michigan. More information is also available on the PACE Now website. Previous Chronicle coverage related to PACE: "Special District Might Fund Energy Program"]

Local banks will likely be involved in the effort as well – the Bank of Ann Arbor, for example, has been talking with the city for several months about how a “green lending” program might be structured.

Appleyard says that the DTE program certainly changed the economics of solar installation, but he hopes a feed-in tariff law will be enacted, too. He contends that it’s a case of politicians saying they want to do it and then having the political will to back it up. “It’s just a question of how long we wait and how many more droughts we have and sea level rises and all those other things that are happening – climate change – before we go ahead and decide that we have to do something.”

Hayley Byrnes is an intern with The Ann Arbor Chronicle. Chronicle Publisher Mary Morgan contributed to this report.

Tom Kinnear talks with University of Michigan regent Julia Darlow. Regent Denise Ilitch is seated to the left. Kinnear is head of UM's Zell Lurie Institute for Entrepreneurial Studies, and spoke to regents about programs for student entrepreneurship. (Photo by the writer.)

Regents also approved the naming of the Von Voigtlander Women’s Hospital, reflecting a $15 million gift to the institution – part of the massive $754 million C.S. Mott Children’s Hospital and Women’s Hospital complex being built and expected to open in 2012.

The board signed off on several facilities projects, including interior work on offices at the former Pfizer site, now called the North Campus Research Complex (NCRC), as well as the next step in renovations of the Couzens Hall dormitory.

Also approved was a letter making UM’s annual operating request to the state, which laid out why legislators should appropriate funds to support the university in fiscal 2011. The letter, under the signature of UM president Mary Sue Coleman, did not request a specific dollar amount.

Coleman kicked off the meeting, as she typically does, with some opening remarks that led to news about plans to hold the April 2010 regents meeting in an unusual location: Grand Rapids.

Coleman: Kudos and Collaborations

In her introductory statement, UM president Mary Sue Coleman said it was a time of celebration for the 1,400 students graduating during winter commencement. Also worth celebrating, she said, was a licensing deal announced Dec. 16 between the pharmaceutical giant GlaxoSmithKline and NanoBio – an Ann Arbor firm founded by UM professor Jim Baker, who serves as its CEO. Research that led to the treatment for cold sores was developed at UM and is licensed to NanoBio, Coleman said, and demonstrates the value of university research.

Baker was also among 10 UM scientists who were recently elected as Fellows to the American Association for the Advancement of Science, Coleman said. He and others reflect the university’s rich heritage of innovators and entrepreneurs, she added, using that as a segue to highlight the work of UM’s Zell-Lurie Institute for Entrepreneurial Studies and MPowered Entrepreneurship, a campuswide student group. Representatives from both groups gave a presentation later in the meeting.

Coleman also expressed gratitude for the $15 million gift from the Ted and Jane Von Voigtlander Foundation for the women’s hospital, and to former UM football player Charles Woodson, who gave $2 million to the children’s hospital for pediatric research. The lobby of the hospital will be named in his honor when it opens in 2012, she said.

Finally, Coleman noted that she gave the commencement address at Grand Valley State University on Dec. 12, and that UM plans to work with that Grand Rapids-based institution on wind technology research. It’s an example of ways that UM is looking to collaborate with partners across the state, she said.

Regent and board chair Andy Richner then noted that because of the university’s growing partnerships in western Michigan, the regents would hold their April 2010 meeting in Grand Rapids. “We look forward to visiting the west side,” he said. A specific location for the meeting was not given.

Graduate Student Enrollment: Policy Change

Janet Weiss – dean of the Rackham Graduate School and vice provost for academic affairs-graduate studies – gave regents an update on a policy change affecting students enrolled in Ph.D. programs. The “continuous enrollment policy” requires that students enroll each semester until they complete their degree, unless they receive approval for a leave of absence.

Weiss told regents that the proposal is part of a strategy to help students complete their degrees with support from the university. Currently, about two-thirds of students in UM’s Ph.D. programs ultimately get their degrees. That’s better than the national average, Weiss said, “but we should be way better than the national average.”

The policy will help administrators better plan support services for the students, Weiss said, and make it easier for faculty to help students complete the program. “We don’t want students to fall between the cracks or to be left out of the loop,” she said.

The proposal has been controversial – at the April regents meeting, graduate students turned out to protest the change. Students charged that it was really a way to push them through the program, and they objected to the additional tuition that they felt they’d have to pay.

No one spoke during public comment at the Dec. 17 meeting, but Weiss told regents she knew they’d heard from students in April, and that she and all the other deans had been working to ensure that students wouldn’t bear additional tuition costs because of the new policy. The university could commit to tuition support for students who are making satisfactory progress toward their degree, she said.

The policy also allows for students to request authorized leaves of absence for health or family reasons. One of the concerns voiced by students in April was the fact that some students took time off to have children, for example, and they didn’t think the new policy would allow for that. Weiss told regents that the policy allowed for flexibility, and that a dispute resolution process would be set up so that students would have recourse for their concerns.

Returning to the issue of tuition, Weiss said that regents would be asked to approve a tuition reduction for Ph.D. candidates in June of 2010, when all tuition rates are set. To keep tuition costs flat, the plan is to lower the tuition rate but spread the cost over additional semesters. She described it as an important component of the overall policy, which she hopes to implement for the fall 2010 semester.

Responding to a question from regent Libby Maynard, Weiss described several others ways that students would be supported, including a faculty mentoring program and help to develop dissertation writing skills. Regent Denise Ilitch asked about the tone of the policy with respect to leaves of absence – would it be stringent and bureaucratic? Weiss pointed to drafts of the policy available online, and said there were four categories available: medical, family, military and personal. Students request permission from their graduate program adviser, who either recommends approval or not. The process is designed to be simple and quick, Weiss said, with recourse through the dispute resolution board.

Regent Julia Darlow asked if there were limits on the number of times a student could request a leave of absence. Weiss said only the personal leave category had a limit – students could use that one time.

With respect to tuition coverage, provost Teresa Sullivan said that her budget team had looked carefully at the numbers, and felt confident that it was financially viable.

Entrepreneurship at UM

To highlight the university’s entrepreneurial activities, two speakers gave presentations to the regents, starting with Tom Kinnear, executive director of the 10-year-old Zell-Lurie Institute for Entrepreneurial Studies at the Ross School of Business.

Kinnear began by saying he was “joined at the hip” with the other speaker, Thomas Zurbuchen, associate dean for entrepreneurial programs at the College of Engineering. Their approach, he said, was to “get people’s hands dirty” – meaning that they encouraged students to actually do the work of entrepreneurs. A large part of it is attitude, he said, including a willingness to take risks.

He cited several examples of that approach, most notably the Wolverine Venture Fund. With guidance from faculty and an advisory board, MBA students have made venture capital investments in over 18 companies since the $3.5 million fund was formed 11 years ago. One of those companies is NanoBio, Kinnear noted. “We were there before any of the big venture funds came in,” he said.

Most recently, the fund saw its biggest return – $2 million, from an investment in Ann Arbor-based HandyLab totaling $350,000 between 2000 and 2005. HandyLab, a UM spinoff, was acquired by New Jersey-based Becton, Dickinson and Company for an undisclosed amount in a deal announced in October 2009.

Kinnear also described the Zell-Lurie Institute’s role in the broader Michigan entrepreneurial community, as host of the long-running Michigan Growth Capital Symposium and the annual Entrepalooza, and the institute’s involvement with the Great Lakes Entrepreneur’s Quest, among other activities.

In handing off to Zurbuchen, Kinnear said the Zell-Lurie Insitute doesn’t work in isolation, and that a lot of collaboration happens with UM’s College of Engineering. He also noted that despite Michigan’s economy, “the world I live in, through this, is positive, growing, prosperous.”

Zurbuchen said he shared Kinnear’s optimism, and that entrepreneurial thinking spills out of the business school and across all the campus. It’s a supportive environment that wasn’t as strong 10 years ago, he maintained. [The full text of Zurbuchen's remarks are posted on his director's blog.]

Zurbuchen cited the MPowered 1,000 Pitches program as a way that the entire campus community was engaged in entrepreneurial thinking. This was the program’s second year, and 2,165 ideas for business ventures were submitted by students across campus.

Several challenges remain in order to make entrepreneurial thinking a core part of the engineering curriculum and of the entire campus, Zurbuchen concluded. The transformation requires help from all corners – he said he hoped that regents would do everything in their power to make it a success.

Several regents had comments and questions following the presentation. Regent Kathy White said she’d seen Zurbuchen and some of his students featured on a recent PBS Newshour report, and that it was exciting to see him helping get the word out about the entrepreneurial activity here. She invited him to tell the regents what they could do to help.

Libby Maynard said it was important to integrate that attitude into all of the curriculum, not just business and engineering. Andy Richner asked what could be done to keep more UM graduates – those who had this entrepreneurial mindset – from leaving the state.

Zurbuchen said that placing students in internships with local companies was an effective way to make connections with the local business community. Those internships can turn into jobs, he said.

Kinnear added that supporting Michigan’s economy was one reason why the Zell-Lurie Institute is involved in so many statewide initiatives and organizations, like the Michigan Venture Capital Association. [Kinnear is vice chairman of that Ann Arbor-based group.] He said the five biggest venture funds in the state – Ardesta, EDF Ventures, Arboretum Ventures, Dow Venture Capital and the Wolverine Venture Fund – are all controlled by UM graduates. He said the university can’t thrive without the infrastructure around it, and that they’re a long way from declaring success on that front. “We’re pushing the boulder up the hill a little,” he said.

Environmental Sustainability

Terry Alexander, executive director of the university’s office of campus sustainability, briefed regents on the new environmental sustainability initiative. His role is to coordinate operational aspects of the effort, working with UM’s Graham Environmental Sustainability Institute, which focuses on academics. The goal, he said, is to turn the campus into a living-learning lab for improving the environment.

Alexander reviewed key points of the initiative: 1) the 2009 Environmental Report, 2) renewable energy, 3) alternative transportation, 4) green purchasing and recycling, 5) new construction and renovation projects, and 6) the Planet Blue program.

Environmental Report: Noting that the full 2009 report was online, Alexander hit on a few highlights. Per capita water use was down 7.1% in 2009, compared to 2004. Energy use had remained flat, despite an additional 11% increase in gross square footage on campus during that period, and a 9% increase in the campus population compared to 2004. Normalized for those factors, he said, energy use was down 19% (measured by British thermal units, or BTUs). Greenhouse gas emissions were also flat, at around 600,000 metric tons of carbon dioxide equivalent. While it was good that energy usage and greenhouse gas emissions hadn’t increased, he said, “holding steady is not going to be adequate going into the future.” [.PDF file of 2009 Environmental Report]

Renewable Energy: This was an area that hadn’t made great strides, Alexander said. He pointed to the Dana Building’s photovoltaic array project, and the central power plant’s hot water solar array as two examples of efforts toward generating renewable energy on campus.

Alternative Transportation: Use of alternative transportation was up 28% compared to 2004, Alexander said. Ridership on the UM bus system surpassed 6 million during 2009, while the MRide program – which allows UM-affiliated riders to use the AATA system at no cost to them – had over 2.4 million riders. More than 3,000 people have signed up to use the GreenRide program, Alexander said, a system to help people find others interested in using carpools or vanpools. There are 86 UM vanpools, he reported, used by 527 people.

Green Purchasing/Recycling: The university’s recycling rate is at 33%, Alexander said, up from 29% in 2004. A toner cartridge recycling program is just starting, he said, with the expectation of saving about $2 million over the next year. One of their biggest recycling programs is during student move-out dates, when university staff helps divert items – things that would otherwise be left behind and thrown out – to local nonprofits. Over the life of that program, they’ve diverted an estimated 138 tons of usable items, he said.

New Construction/Renovation: This year, the university adopted a new goal for its design standards, aiming to go 30% beyond the 2007 energy efficiency standards set by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE). Alexander cited the example of the North Quad dormitory being built at the corner of Huron and State – by using energy efficient design, the university hopes to save $300,000 in annual utility costs.

Planet Blue: The Planet Blue initiative is a building-by-building approach, Alexander said, with operations staff working with each building’s occupants to find ways to reduce energy. Five buildings – including the Fleming administration building, Chemistry and Rackham – have completed the program, showing a 6% reduction in energy use and an annualized cost avoidance of $340,000. Thirty more buildings are involved in Planet Blue this year, and another 30 will be targeted in 2010. Alexander said he thinks the 6% energy reduction will grow to 15-20% when these other buildings complete the program.

Alexander told regents that compared to other schools in the Big 10, UM was a leader in sustainability efforts. Looking ahead, he said, the key will be to balance environmental and economic goals.

Gift for Women’s Hospital

Regents unanimously approved the naming of the new women’s hospital as the University of Michigan Von Voigtlander Women’s Hospital – reflecting a $15 million gift to the hospital from the Ted and Jane Von Voigtlander Foundation. Ted Von Voigtlander was a co-founder of the Discount Tire chain.

Ora Hirsch Pescovitz, UM’s executive vice president for medical affairs, thanked the staff who’d been instrumental in securing the gift, including Pat Warner, Jennifer Edwards, Tamara Carr and Tim Johnson. They were attending the meeting and received a round of applause from the regents. Pescovitz also thanked Gwen Haggerty, president of the foundation, daughter of the Jane Von Voigtlander and adopted daughter of Ted Von Voigtlander. Both of the Von Voigtlanders are deceased.

Regent Andrea Fischer Newman, who participated in the meeting by phone, made the motion to approve this resolution. She noted that it was almost 14 years ago that she spent a few days under the care of Johnson, “and I have a 13-year-old to prove it,” she quipped. Johnson is currently chair of obstetrics and gynecology at the UM Medical School. Newman said she remembered talking to him about his goals for women’s health programs at the university hospital, and that she knew how much this gift would mean toward achieving those goals.

A $754 million C.S. Mott Children’s Hospital and Women’s Hospital complex is being built on the university’s medical campus, and is scheduled to open in 2012.

Building Projects

Regents approved several facilities projects for the Ann Arbor campus:

• A $1.8 million remodel of about 92,000 square feet of office space in four buildings at the North Campus Research Complex (NCRC), formerly the Pfizer campus. The job includes painting and new carpet installation, as well as improving the site’s accessibility. When renovations are finished, the university plans to move administrative staff into the NCRC offices, vacating other space that it currently leases.
• The next step in the $49 million renovation of the Couzens Hall dormitory on East Ann Street, which houses about 560 students – authorizing the project to be put out for bids, and authorizing the awarding of construction contracts. At their July 2009 meeting, regents approved the schematic design for the dorm renovation, which UM chief financial officer Tim Slottow previously characterized as the last “deep” renovation of a heritage residence hall.
• An $11.1 million renovation and expansion project on the second floor of the Michigan Memorial Phoenix Laboratory building, which houses the Michigan Memorial Phoenix Energy Institute. The architectural firm of Lord, Aeck & Sargent Inc. will design the project. It includes renovating 10,000 square feet of research space and building another 10,000 square feet for administrative use.

Lease Report

The university’s real estate policy requires that an annual report be given to the regents with information about leases exceeding 50,000 square feet at any given location. The current report lists five such places – no dollar amounts were given regarding the cost of these leases.

• 229,550 square feet at the Domino’s Farms complex, leased from Domino’s Farms for use by various University of Michigan Health System (UMHS) departments, including sports medicine, plastic surgery, preventive cardiology, and various Medical School groups, including internal medicine.
• 125,815 square feet at the KMS Building on 3621 S. State St., leased from Kosmos Associates for hospital clinical billing and other UMHS groups.
• 63,920 square feet at 2301 Commonwealth Blvd., leased from First Properties Associates for use by various UMHS groups.
• 59,219 square feet at 325 E. Eisenhower Parkway, leased from Burlington Property LLC for use by physical medicine and rehabilitation, spine rehabilitation, and the Dental School.
• 51,534 square feet at 1051 N. Canton Center Road in Canton, leased from Saltz Center for the UMHS Canton Health Center.

Conflict of Interest Items

Regents approved 10 items that required disclosure under the state’s Conflict of Interest statute. They involved deals with the following nine companies: McCreadie Group Inc., Fusion Cooolant Systems Inc., ChemXLerate LLC, NanoBio Corp., NeuroNexus Technologies Inc., Incept BioSystems, ACSI LLC, Arbor Photonics Inc. and 3D Biomatrix Inc.

Regent Larry Deitch, an attorney, recused himself without elaboration from voting on a master sub-recipient agreement between the university and NanoBio Corp. – the company led by Jim Baker that was cited in UM president Mary Sue Coleman’s opening remarks.

Annual Operating Request to the State

Regents approved but did not discuss annual operating requests made to the state legislature for the Ann Arbor, Flint and Dearborn campuses for fiscal 2011, which begins July 1, 2010. [.PDF file of request made for the Ann Arbor campus]

The requests came in the form of a letter from UM president Mary Sue Coleman to state budget director Robert Emerson. No specific dollar amount was mentioned. Rather, the letter made a case for why it was important for the state to maintain adequate funding for the university. The letter states, in part:

We acknowledge the financial circumstances of the State. Nevertheless, the University of Michigan is an essential component in the stabilization and revitalization of the Michigan economy. We also play a critical role in the development and education of our workforce and cannot risk jeopardizing the quality of our instruction, research and service. Our current state appropriation is $47 million less, in nominal dollars, than the appropriation we received in fiscal 2002. At the same time, our activity levels have grown, and the competition we face for the best students and faculty has increased.

Maintaining our position as one of the most prestigious educational and research institutions in the world is one of our top goals, and it is critical to our ability to continue supporting the State’s economic recovery. The impact of the State’s historic contributions to the University of Michigan’s success cannot by overstated, and we believe the State’s continued investment in our success is central to our collective future.

UM’s Ann Arbor campus received a state appropriation of $316.6 million for its current fiscal year, plus $8.78 million in one-time funding.

Present: Mary Sue Coleman (ex officio), Julia Darlow, Larry Deitch, Denise Ilitch, Olivia Maynard, Andrea Fischer Newman (via phone), Andy Richner, Martin Taylor, Kathy White

Next board meeting: Thursday, Jan. 21 at 3 p.m. in the Fleming Administration Building, 503 Thompson St., Ann Arbor. [confirm date]

To ramp up for this influx of federal funding, the program will be hiring staff for the duration of the grant, which runs from April 1, 2009 through Sept. 30, 2010. Aaron Kraft, program coordinator, said there are two full-time employees now (including him), plus a private contractor who does inspections. Kraft expects they’ll need seven full-time staff in the office to handle outreach and applications, four more inspectors and double the number of general contractors that they use to work on these projects.

In addition to the increased number of houses they’ll be able to serve, the amount that can be spent per house has roughly doubled, Kraft said. Not including administrative costs, about $4,500 will be available for each home. The program covers houses, mobile homes, townhomes and condominiums, but not usually apartments in large complexes, Kraft said.

Those funds pay for an energy audit/home inspection, which reveals ways in which a home’s energy efficiency can be improved. That includes a “blower door” test to depressurize the house – basically, taking a powerful fan and sucking out the air to exaggerate the effects of air leakage through cracks around doors and windows. They’ll also do a meter reading on the refrigerator – if it’s an energy hog, the program might pay to replace it with a more efficient model.

For many homes, Kraft said, installing insulation in the attic, walls and foundation “gets the most bang for your buck.” They replace all light bulbs with compact fluorescent bulbs, but they don’t often replace windows – that’s often beyond the program’s budget, and it’s not where you’ll see the most energy savings, he said, calling that a myth generated by Wallside Windows.

The inspection also looks at general health and safety issues, like whether there are adequate smoke detectors. They’ll also check to make sure there’s no carbon monoxide emissions from a faulty furnace or hot water heater.

Federal guidelines, based on poverty levels, have changed for income eligibility, Kraft said, so more people qualify for the weatherization program. You automatically qualify for assistance if you’re receiving Michigan bridge cards (formerly known as food stamps), or if you receive supplemental security income (SSI). Priority is given to the disabled, elderly and families below 125% of the federal poverty level, Kraft said.

Beyond that, you qualify if you fall at or below these annual income levels:

• 1-person household: $21,660
• 2-person household: $29,140
• 3-person household: $36,620
• 4-person household: $44,100
• 5-person household: $51,580
• 6-person household: $59,060
• 7-person household: $66,540
• 8-person household: $74,020
• (For each additional person, add $7,480)

Income is calculated going back the previous 90 days, so if someone was making more than these levels but has been laid off recently, they might qualify.

The grant is part of a much larger amount expected for Washtenaw County from federal stimulus bills passed in 2008 and earlier this year. Other federal funding, such as $3 million for the purchase and rehab of foreclosed property, was discussed at the March 4 Board of Commissioners meeting, where some county staff members mentioned the weatherization funds and pointed The Chronicle to Kraft.

Much of the federal funding hasn’t been allocated with specific dollar amounts, so in that way the weatherization program is ahead of the game. The funds flow from the U.S. Department of Energy, and are administered locally via the county’s Employment Training and Community Services (ETCS) department out of its Harriet Street office in Ypsilanti.

Handling such a dramatic increase will be challenging, Kraft said. In the past, they’ve relied on word of mouth and local nonprofits or community organizations to make referrals. Or people might be made aware of the program when they call the county’s 2-1-1 information line. They’ll probably change their approach to outreach, he said, in order to get more people enrolled.

So what if the program doesn’t spend all the funds?

“Oh … not an option,” Kraft said.

If you think you qualify or would like more information, call the weatherization program 734.544.2948.