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City of Hillsboro, OR - Implementation

City of Hillsboro

City of Hillsboro

Implementation Model: Sustainability Revolving Fund

Community Size

Small suburban, population 93,000

Goal

To achieve a 60% reduction in City facility EUI by 2030, based on a 2007 baseline

Barriers

Inconsistent access to capital for energy efficiency projects

Solution

Creation of Sustainability Revolving Fund (SRF), a dedicated internal fund established to finance projects that address one or more goals in the City’s Sustainability Plan

Outcome

The SRF was originally seeded and is now replenished with savings from energy efficiency projects. Since its inception in 2010, the fund has provided more than $45,000 to support five projects that will produce an estimated $24,000 in annual cost savings. In addition to energy savings, the SRF has served to advertise the benefits of the sustainability program to City employees, increased awareness of the savings potential achieved through energy efficiency, and successfully highlighted the City’s innovative approach to financing

Overview

The City of Hillsboro, OR, has more than doubled in population since 1995, making it the fifth-largest city in the state. Hillsboro strives to be a model of energy efficiency and sustainability. In 2010, the Hillsboro City Council approved the City’s first Sustainability Plan which called for a 60 percent reduction in City facility energy use by 2030. The Plan builds on the City’s Strategic Plan and 2020 Vision and Action Plan..

The City has taken aggressive action on energy efficiency and distributed renewable energy generation. Their comprehensive sustainability program includes long term goals for City operations, and numerous community partnerships have been developed around sustainability. In 2005, the City built the second LEED Gold certified municipal building in the country and has since completed two additional LEED Gold certified new buildings. Energy efficiency projects completed to date include: facility lighting retrofits, installation of high efficiency LED traffic signal bulbs and streetlights, boiler process optimization, HVAC replacement, and lighting controls. In addition, the City has installed nearly 200kW of solar generation on their facilities, with more planned. Between 2009 and 2013, Hillsboro reduced the energy use of the City’s entire building portfolio by an average of 11%.

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Hillsboro's Playbook

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Policies

In October 2010, the City Council passed Resolution No. 2346, which adopted the City’s Sustainability Plan. The Plan, which was developed by internal staff teams, focuses on City facilities and operations. It incorporates long term sustainability goals, principles, and recommended projects to achieve those goals. It also identifies several energy efficiency related goals. As of fall 2013, 13 of the 16 original energy-related projects identified were either started or completed, including the creation of an internal Sustainability Revolving Fund (SRF) to ensure a dedicated funding source to further Plan goals.

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Process

The City Council and management recognized the need for a formal sustainability program to establish a baseline of operations, define long-term goals, and institute a strong inter-departmental sustainability planning effort to coordinate across City functions and stakeholders. The City’s first sustainability project manager was hired in 2008 as part of the City Manager’s Office and in the spring of 2009, the City launched a formal sustainability initiative. The Sustainability Plan was then adopted in fall 2010.

The Sustainability Implementation Core Team, comprised of City staff working groups formed around four key sustainability areas (one of which is energy), developed and implemented projects to support the goals of the Sustainability Plan. The working groups realized that while some funding may come from existing City departmental budgets, there was a need for a dedicated funding source as well as the means to reinvest project savings. In response, the City Finance Director and Budget Committee authorized creation of the Sustainability Revolving Fund (SRF) within the City budget to capture savings from sustainability projects that would fund subsequent projects. The fund was seeded by nearly $30,000 in avoided costs from lighting and mechanical upgrade projects at two city facilities as well as additional Facilities Management Funds for a total of $51,000.

Since its inception in 2010, the SRF has provided more than $45,000 to support five projects. As of November 2013, a percentage of the savings (or avoided costs) from those projects totaling more than $57,000 had been reinvested back into the fund. The SRF provides a resource for any City employee to access funding for internal sustainability projects and a consistent structure to use, replenish and manage resulting savings. Applications are reviewed by a team on an on-going basis. Projects can apply for up to $25,000 and must support one or more sustainability goals, depending on the funding amount. Small and medium grants (up to $5,000) can be requested by any City employee and larger requests ($5,000 to $25,000) must be coordinated with the Sustainability Implementation Core Team and the Sustainability Project Manager.

In all cases, proposals are considered based on total available funds. Scoring points are given to proposals that demonstrate leveraged funds from other City or external sources. If leveraged funds are needed, they must be secured by the applicant for the project. Examples of leveraged funds sources included Energy Trust of Oregon, private partners, nonprofit or local government partners (e.g., Washington County and Hillsboro Chamber of Commerce). Funds may be used for projects that:

  1. Demonstrate an economic, environmental and/or social return on investment;
  2. Directly address one or more of the City’s sustainability goals; and
  3. Primarily cover equipment, materials and other “hard” costs that have a high impact; other costs (e.g., personnel) may be covered but should be sufficiently justified in the proposal.
Available Grant Funding Levels Qualifications Who Can Apply & Review Process
Small
(up to $1,000)
Requires relatively small investments and may not realize cost savings, but directly or indirectly address at least one sustainability goal. City employees.
Medium
($1,000-$5,000)
Directly addresses at least one sustainability goal and ideally realizes cost savings or avoided costs. City employees. Requests coordinated with an Implementation Core Team member or Sustainability Project Manager.
Large
($5,000-&10,000)
Directly addresses at least one sustainability goal and must demonstrate cost savings or avoided costs. City employees. Requests must be coordinated with an Implementation Core Team member or Sustainability Project Manager.
Major
($10,000-$25,000)
Directly addresses more than one sustainability goal and must demonstrate significant cost savings or avoided costs. Implementation Core Team member or Sustainability Project Manager.

Application Selection Process: Projects are selected and prioritized and funds allocated using the following process:

  1. Applications are submitted to the Sustainability Project Manager at the end of every other month (January, March, May, July, September, and November.)
  2. Applications are reviewed by five staff, including two Implementation Core Team members, Finance Director or delegate, Senior Leadership Team representative (department managers) and the Sustainability Project Manager. Members who propose a project are not eligible to participate in the selection process.
  3. Applications are reviewed and scored against the established criteria (see application) and are allocated based on availability.

Fund Management: Once projects are completed, the fund is replenished with project savings/avoided costs which are calculated annually. The Finance Department annually requests from the Sustainability Project Manager accounting of expenditures verified by Finance, and transfers are made from the relevant fund into the SRF in the proposed budget, which is considered in the City budget process. After the first year, 50 percent of savings/avoided costs established from the baseline will be placed in the SRF and 25 percent after the second and third full years. Repayments are based strictly on avoided energy costs, therefore it is possible that the ‘repayment’ could exceed the amount paid for some projects. If this happens, the City will operate on a case by case basis to either stop the repayment or continue through the year based on the overall SRF balance and other considerations. The SRF is capped at $250,000 and monitored to ensure the balance does not exceed this amount.

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Tools and Resources

The success of the SRF was contingent on the support of an open and committed City Finance Department and local champions in City leadership and the Budget Committee. Staffing resources include the Sustainability Project Manager in the City Manager’s Office who acts as the central coordinator to advertise and manage the program as well as oversees and administers the fund. The Finance Department ensures proper accounting of the fund balance and annual request in the City Budget.

The City Finance Department led the development of the SRF and serves as the ultimate authority of the Fund. It took six months to design the program, determine eligibility criteria, create the application and review process, and determine how the SRF was replenished and tracked. The SRF is a dedicated City fund at the same level as the General Fund.

Tools:


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Outreach

Through the City’s internal e-newsletter and in-person staff briefings, City employees are made aware of the SRF, its development and purpose, funding process and information on what projects it has funded to date. Additionally, the SRF concept has been presented to organizations throughout the American northwest as well as internationally. A university in Buenos Aires recently implemented a similar revolving loan fund after learning about the Hillsboro model.

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Measuring Success

As of fall 2013, approximately $57,000 had been reinvested back into the SRF as a result of energy cost savings. Project energy performance is tracked by the Sustainability Team using EPA’s Portfolio Manager and financial performance is tracked by the Finance Department with an internal spreadsheet. The SRF has allowed the City to reduce energy consumption and utility costs. The fund has responded to the direct request from the City Council that avoided costs or savings from project investments be captured. These savings replenish the fund, making it self-sustaining. The fund serves as a beacon of success for meeting the City’s sustainability goals.

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Outcomes

The creation of the fund has resulted in progress toward meeting the City’s sustainability goals and provided resources for additional projects. As of April 2014, five projects had received SRF funding; together they are estimated to save approximately $24,000 annually. One example, the GPS Vehicle Tracking project cost a total of $15,800, $8,000 of which was provided by the SRF. This was completed in 2012 and is now saving the City $9,759 annually, nearly $4,000 higher than projected. (For detailed information, please see SRF Project Chart). The SRF has proven to be a great tool for advertising the benefits of the sustainability program to City employees, increased awareness of the savings potential achieved through energy efficiency, and successfully highlighted the City’s innovative approach to financing sustainability.