Episode 4: The Environment
PRESS RELEASE
Philadelphia Public Banking Coalition
May 26, 2021
Councilmember Green discusses the Philadelphia Public Banking Authority
This public conversation addresses issues about establishment of a Philadelphia Public Bank.
PHILADELPHIA—On Tuesday, May 25, 2021, from 4:30 to 5:00, the fourth program in the “Financing Philadelphia’s Future with Councilmember Derek Green” series was presented by the Philadelphia Public Banking Coalition. These programs focus on issues pertaining to the prospective establishment and operation of a Philadelphia Public Banking Authority (PPBA). Each program provides an update from Councilmember Green, a conversation with a guest, and a live Q&A interaction with the public. The general public was invited to participate in this series of programs, moderated by Vanessa Lowe, on Zoom.
Councilmember Green announced that the law firm Holland & Knight (H&K) has been retained by the City to provide legal advice pertaining to a broad range of issues related to the PPBA. Green stated, “Now we’re really getting into some of the meat of the legal work for how to make this initiative, here in the City of Philadelphia, very vibrant and really help to fulfill its mission.” H&K is expected to report its finding by the end of this summer.
In response to a question, Green noted, “Under the American Rescue Plan (ARP) we will receive as a City $700 million this year and another $700 million next year, all of which must be spent by December 31st, 2024. This federal assistance will help the City respond to its needs, which include funding for a PPBA. One of the things we’re diving into with Holland & Knight as our outside counsel is identifying what will be the best sources of funds for capitalizing a Public Bank for the goals we’re trying to achieve.”
Maryrose Myrtetus, Executive Director of the recently established Philadelphia Green Capital Corp. (PGCC), was our guest. The PGCC is the “green bank” affiliate of the Philadelphia Energy Authority (PEA – https://philaenergy.org). In support of the PEA, the PGCC mission is to drive a robust and equitable market for clean energy efficiency, storage, and generation in Philadelphia by connecting projects to public, private and philanthropic capital. PGCC will use proven green bank tools to unlock capital for clean energy projects and will bring new financial products to the Philadelphia region’s clean energy economy. Green stated, “The Philadelphia Energy Authority has done a lot of great work in that regard. And, I look forward to an ongoing partnership with Maryrose and her team.”
Prior to launching the PGCC, Myrtetus developed and managed the PEA’s Commercial Property-Assessed Clean Energy (C-PACE) program (See https://philadelphiacpace.org ), which facilitates the financing for energy efficiency, water conservation, and clean energy projects. The PGCC will help bring to scale such financial innovations as the C-PACE program.
Myrtetus holds an MBA from the Yale School of Management and a BA from Vassar College. She has a background in renewable energy project finance, corporate strategy, government, and public policy. She has led transactions to acquire new solar, wind, and fuel cell, and district energy assets. She described her internship with Vice president Biden’s domestic policy team during the Obama Administration as, “one of the most exciting six-months of my life.”
Green and Myrtetus discussed the ways the PGCC and the prospective Philadelphia Public Banking Authority (PPBA) can work together. The two entities are aligned in their intentions to provide financing for public benefit by nurturing the local lending ecosystem and filling gaps in credit availability, although the PGCC is more narrowly focused than the PPBA. Both entities will offer credit enhancement, use alternative underwriting methods, and facilitate partnerships. The PGCC is an innovative finance platform following the “green bank” model from other states and cities, while the PPBA intends to become a City Depository Institution, so the future relationship will be symbiotic, with PGCC able to engage PPBA for both depository and borrowing services.
“One of the main philosophies of green banks is to ‘crowd-in’ capital, not crowd it out,” explained Myrtetus. “‘Green Bank’ is an energy industry term; it is not formally a bank in the sense most people are familiar with. Our ‘green bank’ is a specialty financing entity that is designed to create or grow markets for energy products and energy programs. Our goal is to bring in private capital, to leverage public capital, and to attract philanthropic capital to the table to help get these projects financed. That means we’re providing credit enhancements or loan loss reserves or payment guarantees; we want to provide the tools that allow other financing institutions to be able to scale these programs on the energy efficiency side, the solar side, and for the other technologies throughout the market. Green banks are nimble, and we plan to use best practices from across the country.”
Solarize, the rooftop solar origination program that PEA runs, is the largest solarization program in the country. PEA is using green bank tools to create a fund for low- and middle-income homeowners to acquire solar installations with financing that assures that their cost remains less than their current utility bills, targeting 20% cost reduction. The program pre-purchases Solar Renewable Energy Credits (SRECs) to lower the installation costs. This is an example of using low-cost homeowner loans which come with a loan-loss reserve to help use alternative underwriting based on utility bill repayment history rather than FICO scores. This method opens up the program to more participants. Furthermore, new jobs are created, along with opportunities for young Philadelphians to gain skills in technical trades and start their own businesses that will offer additional jobs. Phase 5 of the Solarization program will launch this summer.
When the PGCC launches this summer, four initial products will be introduced: One is a predevelopment loan and the other is a term loan; both programs are for nonprofits and multi-family building owners seeking funding for energy efficiency, renewable energy, and water conservation projects.
Speaking as Chairman of the Philadelphia Gas Commission, Green cited the recent Town Hall to discuss the ongoing PGW Diversification Study being funded by the Bloomberg American Cities Climate Challenge. Geothermal micro-districts may play a role in PGW’s future. C-PACE currently funds geothermal projects. So, the PPBA and the PGCC may soon be involved in financing projects related to PGW’s future.
Green also discussed how the American Jobs Plan proposed by President Biden may provide opportunities for the PPBA and PGCC to help finance electric vehicle infrastructure.
Green and Myrtetus agreed that the missions of the PPBA and the PGCC are in alignment. Both entities are in their infancy. They are looking forward to an expanding, productive partnership.
Councilmember Green introduced Bill #210005 on January 28, 2021 to authorize organization of the Philadelphia Public Banking Authority. This Bill is currently before the City Council Finance Committee.
The next “Financing Philadelphia’s Future” program will be held on June 29th. Our guest will be Nicole Levy, a fair lending advocate who promotes community economic development. Levy, who directs compliance with the Community Reinvestment Act and policies to promote local lending, has been an examiner for both the Federal Reserve Bank of Philadelphia and the Consumer Financial Protection Bureau.
Today’s and all previous Financing Philadelphia’s Future programs can be viewed from the Coalition’s website https://philapublicbanking.org/?page_id=249.