Ithaca, NY, adopted a Green New Deal in June 2019. Their goal is achieving carbon neutrality community-wide by 2030, while ensuring benefits are shared so as to reduce historical inequities. We interview Luis Aguirre-Torres, Ithaca's dynamic new Sustainability Director, about his big plans for achieving Ithaca's goals, and how he's already raised $150M by creating ground-breaking relationships between private capital, business, government, and philanthropies.
Ithaca, NY, adopted a Green New Deal in June 2019. Their goal is achieving carbon neutrality community-wide by 2030, while ensuring benefits are shared so as to reduce historical inequities. We interview Luis Aguirre-Torres, Ithaca's dynamic new Sustainability Director, about his big plans for achieving Ithaca's goals, and how he's already raised $150M by creating ground-breaking relationships between private capital, business, government, and philanthropies.
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Recast photo by Kenneth C. Zirkel, CC BY-SA 4.0, via Wikimedia Commons
Abby Finis 00:02
Cities produce more than sixty percent of global greenhouse gas emissions. Big cities get a lot of attention, but most household emissions in the US actually come from communities outside urban cores, making them critical players in climate mitigation and climate justice. City Climate Corner explores how these small- and mid-sized cities are tackling climate change and moving toward an equitable and sustainable future.
Abby Finis 00:21
I'm Abby Finis.
Larry Kraft 00:23
And, I'm Larry Kraft. We're co-hosts for City Climate Corner.
Larry Kraft 00:28
Hey, Abby!
Abby Finis 00:29
Hey, Larry!
Larry Kraft 00:31
What has been your career path to get into this work?
Abby Finis 00:35
I was an undergrad, and for a long time I had planned to go to law school. I had a moment where I realized that I did not want to be in school for the next three years, I wanted a break. I wasn't really sure that law school was what I wanted to do. I had always had a little bit of an interest in the environment, and whatever that meant, but didn't quite know what that was. I ended up looking at what you do with a political science degree, and not going to law school.
Abby Finis 01:08
I went and taught English in South Korea for a couple of years and came back, talked to a friend's mom about what I was interested in, and she suggested I go to school for urban planning. So, I did that with a focus on environmental issues, but quickly realized that that meant how do we build low density housing on agricultural lands and protect the wellheads. That was not quite fitting either. But, then I took a course on energy and climate and really saw the nexus between those two areas. I jumped right in and ended up taking a job at the Minnesota Department of Commerce, working with local governments on energy programs through the American Recovery and Reinvestment Act. Which, I think I brought up before on the show. And there you have it. It launched my career into local government, climate planning.
Larry Kraft 02:02
Interesting! But for me, I was in the tech industry for a long time, twenty-five years. And then, it was my epiphany and changing, was worrying about my kids and what their future was gonna look like. It always having been a concern, but kind of got to a point of, you know, put up or shut up. I shifted careers. And, I think the person we're talking to had some similarities to that.
Abby Finis 02:31
Yeah, you have a couple of parallels there.
Larry Kraft 02:34
Yeah. And, on top of it, then he winds up in Ithaca, New York, which is near and dear to my heart, as I went to school there at Cornell.
Abby Finis 02:45
So you have a lot of parallels with our guest today, Luis Aguirre-Torres, out of Ithaca. He has a really interesting path for how he came into becoming the Sustainability Coordinator for the City of Ithaca, New York.
Larry Kraft 02:59
And, his background leads him to I think, doing some really out of the box things which I'm excited to hear about so let's do it.
Abby Finis 03:08
Let's do it.
Larry Kraft 03:11
Today we are here with Luis Aguirre-Torres, the Sustainability Director for Ithaca, New York. Welcome, Luis! Why don't you go ahead and introduce yourself?
Luis Aguirre-Torres 03:20
Thank you very much. Yeah! I'm Luis, I am the Director of Sustainability for the City of Ithaca. I have a few years of experience working in policy, working in technology, and working in finance. So, you know, this all comes together here.
Larry Kraft 03:34
I remember from when we spoke before, that you have an interesting path that brought you to this role. You weren't always in sustainability. So can you tell us a little bit more about how you got to where you are now?
Luis Aguirre-Torres 03:48
Well, let me just then go back in time. I am from Mexico. I grew up there, went to school there, and I obtained a computer engineering degree in the previous century. And then, I moved to England where I went to grad school. I did more computer science over there, and eventually a PhD in electronic engineering, where I specialized in entropy. I've been always marveled by, you know, the structures of chaotic systems. And, I figured that I wanted to study that. Funny enough, I did study entropy, but my focus was the internet because I don't think there's anything more chaotic than internet and this is before social media, imagine now.
After that I became an entrepreneur, I started a few companies and I joined a few others. I think the most interesting one was I started this company with other people that led us to get funding in different countries. I ended up moving to Israel and then moving to other countries in Southeast Asia, where I was, you know, trying my luck as an entrepreneur, which for a while it worked, but then it stopped working. I think I said when we met, that was the first time that I understood what the rise and fall of the American Dream could actually be. You're so close from achieving something that you really want and then it went away. But, you know, life teaches you lessons and being an entrepreneur and being in different cultures, different countries, it teaches you a lot about you, about your country, and about different places where you would like to be in.
So, I moved to California after that experience. And, when I was in California, I was trying to decide whether I should start on our tech company. But, something happened. One of those days where you wake up and you realize, man, my life's just not complete the way it is. It doesn't give me this feeling that everybody needs to have before going to bed and when you wake up. I decided that I needed to do something important. I talked to my wife and we decided that climate change was the thing. And we were both really concerned about the environment and I was like, "Man, I'm a technical guy. How can I actually do anything for the environment?" But then, the conversation led to I understand technology, I understand policy, because I've been dealing with government, or at least a tolerance to policy. I understand finance, because I had to finance my companies, and I understand what it means to start something from zero.
Luis Aguirre-Torres 06:03
I figured I could enter this field, as I go to study further technology. I was very intrigued by solar, then wind, and then electric vehicles. Then, I understood that for any of these to work, we need to change the rules of the game. The rules of the game were written in policies, so I needed to get into policy. Well, it was just series of accidents, because we were part of the the Silicon Valley Leadership Group that was working with the Schwarzenegger Administration at the time. We ended up working with the Governor Schwarzenegger in the last stages of implementation of SB 32, which was this climate change legislation that actually changed the world. And then after that, I continued with my Think Tank, but the relationships that we built, we in California, expanded to Washington. And then, I was able to build a relationship with USAID, the State Department, and then we were sponsored by them to go to Latin America and provide technical assistance to Latin American countries.
For the past ten years, I've been trying to help Latin American countries to develop the right climate change legislation and the right renewable energy ecosystem. It's really hard because everybody talks a good game, but nobody wants to do the hard part of it, which is, you know, change policy, which is bring investment, which is changing behavior. I've been doing that for a while, and then COVID hit. It was the right time to move back to Ithaca. My wife had moved with a car when I was doing all of these things in different countries. Given that she was here, she's a professor at Cornell, I feel it was about time for me to move back. I stepped down from my position, I left my company, and I came here happily unemployed. But, it just happened to be that the City was looking for a sustainability dude. And, I figured I could be that dude. I applied, got the job, and now I'm asked to do crazy, crazy thing, which is take the City to be carbon neutral by 2030.
Abby Finis 07:56
Wow, yeah. I like how you framed that if we're all willing to plan and set goals. But, the hard part is what we've got to focus on. And, you're doing that in the context of the City's new Green Deal; that's rooted in the original green New Deal. That's a policy proposal for the federal government to reduce emissions and create high paying jobs, kind of at its most basic level. Can you give us a little bit of background on how the Green New Deal has inspired the City of Ithaca to adopt its own?
Luis Aguirre-Torres 08:28
It was 2019 January, Sunrise Movement decides to come to Washington. We know we have a bunch of brand new Congress, people in Washington. So Sunrise Movement decides to come in, confront them, and tell them "Dudes, we really need to work on climate change. We need to do something about it." And, honestly, I always, always thought that it was an impossible thing. I mean, it was never going to get to Congress. But, then when I saw what they did, I realized that they never really meant for it to pass. They meant for it to be discussed. They meant for it to create a movement and they did that. And, this movement made it everywhere and beyond the United States. But, in Ithaca what happened was that it inspired a bunch of kids that created this branch of the Sunrise Movement, and then they went to talk to the mayor, they went to talk to Common Council and they were like, "Okay, we're not leaving until you commit to do something to fight climate change." And, this is a cool city. We go about life in a very normal, casual way.
Even though the City is a very progressive city, it's blue in the middle of a red ocean really in upstate New York, it keeps it quiet, a low profile in general. But, then the mayor was like, "Nah, man. We need to do something." He was inspired to propose that the City of Ithaca adopt a Green New Deal. But, then that was it. Just like I said in Washington, we had some ideas, but none of it is really implementable. None of it is actionable. Same thing happened here. We had this idea, this brilliant idea, "We're gonna share the benefits with everybody! Nobody's gonna be left behind! Carbon neutrality!" But, nobody sat down with an Excel spreadsheet and said, "Okay, how much is this gonna cost? How are we going to implement this thing?" But, we had a Green New Deal, that was the first step. The next day was going to be the hard one. But you know, that's the way it happened here.
Abby Finis 10:17
I mean, how is the Green New Deal different from a typical Climate Action Plan? What made the City decide to do that, rather than say, "Hey, we're gonna do a Climate Action Plan," the way we see other cities doing that?
Luis Aguirre-Torres 10:30
Well, a Climate Action Plan is all the rage in most places, because that's what you have to do. You need to do a very precise greenhouse gas inventory, then after that, we need to set our target using this baseline, and then we're gonna go for it. And, if you think about it, the human element is left out of the entire plan. So at the end of the day, what is it that we're trying to do? And, you need to go back to 2015, right? What is that we're trying to do. We have this massive thing happening that puts life at risk, human life as we know it could disappear because of climate change. So, let's do this massive risk mitigation exercise, at the global level. Let's get coordinated to do this risk mitigation.
We really have to think about it in those terms: mitigating risks, so human life can continue, and can be better than what we have right now. We already been affected by climate change. It's not only weather patterns and it's not only the sea level rising. Everything is changing, it's changing at an amazing speed. We're so distracted by technology and political divisions that we don't see that this thing is entirely transforming our lives. I really think that, if you're thinking about fighting climate change, doing a Climate Action Plan is cool, because it gives you a direction, but it doesn't give you a sense of this being a problem that we all need to solve together.
Having a Green New Deal that includes a Climate Action Plan, it really is what differentiates the approach that we're taking. So the Ithaca Green New Deal includes net zero 2030 strategy, which is based on our current Climate Action Plan, but also includes a huge element of climate justice. And, this really means we're gonna do it for the people, with the people, and we're gonna work together, and if we're gonna fail, we're gonna fail big, but we're gonna make it, we're gonna make it for everybody. So that's what the Green New Deal is about. It's is this great idea that we can do something where others have failed, but that we, for some reason, are different and we're gonna do it right.
Larry Kraft 12:34
You're here now to implement the plan, the Green New Deal, and make it reality. And, I know, there's some aggressive goals. I was impressed with something you were telling me about your 1000s Campaign. Can you tell us about that and how that relates to what you're trying to do with the Green New Deal?
Luis Aguirre-Torres 12:49
Yeah, that was kind of crazy, man. Because, when I joined the City, they gave me this resolution from Common Council saying, "The City adopted a Green New Deal. We're gonna share the benefits with the community and we're gonna be carbon neutral by 2030. There you go. Have fun!" And, you know, I looked at it and I was like, "Good, what's behind this thing?" And, not much, really. My job wasn't implemented, it was designing the Green New Deal, and then figuring out how to implement it, but also figuring out how to pay for it. So the first thing I did was to say, "Okay, they want this and it's very aggressive." But, it's awesome, also we need this type of aggressiveness. So, let's go carbon neutral by 2030. And, let's make sure that we do right by everybody.
I added the numbers, and it was two billion dollars. I went back to the mayor and I was like, "Dude, we need two billion dollars." And, he was like, "Yeah, do you have any money right now?" Because, it was really hard. The budget for the City is eighty million dollars. To think about two billion dollars to do this. But, that's when things start changing. Because, the very first thing that we need to do is to reassess what the relationship is between government and society. The social contract that exists and it's interpreted the same way hadn't really changed. It was a very different thing. We needed to see government as a convener, as the one that articulates change. But, mostly a catalyst for innovation, a catalyst for investment, and a catalyst for behavioral change. So, I figured, "Okay, we need two billion dollars. It's not for the government or for the community to come up with that money. There's tons of money everywhere. I'm gonna set out this plan to raise two billion dollars in the next ten years."
And, it sounds like an impossible task mostly because it is an impossible task for a city our size. So, we need to start with baby steps. I looked at where we need to reduce emissions, and for the most part, in a community like ours, we're talking about three parts: one of them has to do with buildings, one of them has to do with transportation, and the other one has to do with the grid. So, if we were to implement energy efficiency, electrification, and decarbonisation strategies in a horizontal cross cutting approach rather than a vertical approach per industry, then we could actually make a lot of progress. And, I figured we work on buildings, which is close to fifty percent of the emissions in the City, we can make a dent on this thing; we can reduce emissions at least by half.
But, I figured, "Okay, I need to do that." What is it that you need to do in a city where forty percent of the buildings were built before 1920? Where you have a chunk of the City that is categorized as historic? I went and I talked to Historically Tech and was like, "I need your help." And, he helped them and worked with me on this and they were very happy to do so because they were like, "Yeah, if you're going to touch my buildings, I want to make sure that you do it right." I started working with them, and then I found this group of people that were working in workforce development and I was like, "Dude, I need your help." So, we started creating these huge voluntary organizations of people wanting to help out. But, then we have this problem about finance. We still have a problem that we don't have any money at all.
Luis Aguirre-Torres 15:50
The first thing I did was think, "What if the City were to issue a bond? What if we were to have a Green Bond, raise the money, and have a Loan Guarantee Program so people could actually borrow money and pay for this?" And, there were a ton of problems with that, but probably the most important one was this is Ithaca, overleveraged, post COVID like we don't have the rating to issue a fifty million dollar bond right now. We needed somebody else to do it for us. I started looking and talking to different companies. I was like, "Can you actually take the risk of my hands and issue a Green Bond on my behalf?" And, most of the time the answer was, "I don't know you man. I don't know why you're asking me that." But, eventually, you tell them, "What I'm trying to do is to transform my city." I tell them, "If you help me with this thing, there is a possibility that we can help each other." Because, a private company, especially a private company that can or has this idea like many startups, will eventually be a publicly traded company etc.
There are ways of increasing value for those companies, and one of them is through promoting cash flow and the continuous expansion of market share; very similar to all of these cash flow business model companies like Uber or Airbnb. You don't need to be profitable, you just need to have constant cash flow, and cashflow needs to continue to grow all the time. So, when you talk to these companies and you tell them that I can help increase your value, your investors are interested in you being you know a company with a higher market capitalization. The pitch was like, "Why don't we work together because you can increase your value? You can help me with my City and you can bring some of the money."
The idea was for them to issue a bond. But, then it was their idea like, "You know what, we should talk to investors because the cost of capital of a bond if you do it like this, twice removed from the City, it's going to increase the cost of capital. And, at the end, you're going to pay for it. So, why don't we talk to investors?" We started talking to investors. This company did their own and I did myself. I made a ton of phone calls out of the blue calling people like, "You don't know me, but you want to know me man." And, then I started doing this cell speech and eventually, I landed on this private equity firm that I was like, "Dude, I have this idea and I need a ton of money. And, you say that you want to help the world and only make money through this, and you know there is a good way of using your capital. I think we can come up with a business model that will allow you to have a return on your investment and allow my City to actually add practically no cost to the community have a transformation."
So, at the end, the pieces came together. We had a private equity firm, an investment bank, and now another private equity firm that I am not allowed at this point to disclose the names. But, I can tell you, these are real, they exist. And, they made a hard commitment in writing for today in totalling $150 million. I think last time we spoke it was 100 million, but right now we have $150 million committed to do this. That gives me enough gas to transform about 2000 buildings, a combination of residential and commercial buildings. And, what I mean transform, I mean doing an energy assessment, determine where we need to integrate the envelope. We need to change something there, we need to change the windows, put ventilation systems, whether we can actually or should replace all the thermal loads. Whether we should replace lighting, install advanced control systems, or even real interactive technology. And, EV charging stations in every building.
Luis Aguirre-Torres 19:15
Once we do this assessment, we're going to select the buildings where we can actually work to improve energy efficiency. And, at the same time, electrify the use of energy in those buildings. We got the money! One of the things that the City needed to do was to figure out how to play with risk. Once again, inspired by the Paris Agreement, which is this risk mitigating strategy, we're okay, we need to mitigate risk, but this time is financial. So, the contractor, these guys are very cool, but I cannot really dump all the risk on them. We needed to do something about this. We figured, "Okay, we could do like a loan guarantee." And eventually, this idea evolved into a Loan Loss Reserve Program that would allow to reduce risk and tackle the low-income community, which is what we really need to do, right? I mean, because if we think about, once again, going back to this, the Green New Deal is defined in terms of its Climate Action Plan. But, also in terms of climate justice, we come back to this. And, we think we need to go after the low- and moderate-income community. Otherwise, this is not a proper transformation; we're doing the same thing we have done forever.
We needed to reduce risk. And, in that way, we could reduce the cost of capital. Once we did that, we figured, "Okay, now we're stuck with the risk. The series is tagged with a risk." And, at the time, it was $100 million. But, if I transfer eighty percent of the risk from the contractor to me, that means the City is on the hook for $80 million. If Delta hits tomorrow, and the whole economy goes to hell, then what are we gonna do with $80 million in debt, right? We need to do what we'd do if we were to get insurance, because the City was basically providing insurance for the contractor; that's what transferring risk does. Because, we were like, "Okay, we can get a stop loss insurance policy, basically go in for a reinsurance, and we could transfer our risk to another company, to an insurance company." So, once we set it all up, it was like, "Man, this kind of works because we have investors putting money into a special purpose vehicle, which is a financing facility set up by a program manager, by a main contractor, who's transferring some of the risk through a Loan Loss Reserve Program to the City. And, the City's transferring to an insurance company." Suddenly, all the pieces were in place, and we had a program where people will probably not have to pay a penny in interest to be part of this program. And, then we could actually start transforming our City in the right direction.
Larry Kraft 21:30
Okay, wow! I wanted to ask a few more questions on that, to make sure that I and our listeners will understand it. The investors put money in and how do they get return?
Luis Aguirre-Torres 21:44
Yeah, that is the $150 million question. And, if I get away with this, it's going to be the $400 million question. It always depends where you get the money from, because the cost of capital associated with money can be very low, and that is in the form of a subsidy from government. Or, it could be very high, which is normally private equity. And, in between you have a bunch of things: you have venture capital individual investment, you have investment banks, and the lot in there. Everybody has a different business model. So, if you're a private equity firm, you're instead of in a quick return. And, quick in their own terms, three years, five years could be. So, you're looking for a return, but also, it's a matter of volume. It's just like everything; it's a product or a service, and this product is money. If you have greater volume, you can afford to lower your expectations on a single transaction, as long as you get the benefit of the economy of scale that you're creating. So that is one.
And, so that told us, if we need for this to be cheap, it has to be huge. We cannot build this for one hundred buildings, we need to do this for 6000 buildings; you know, that was the first part. So, they agree, "Okay, my cost of capital can come down." And, if you offer insurance, so the risk is not as high, it can come down. But, there's a limit in that. And, then I need this to be zero, because otherwise it's not going to be fair. I'm going to be doing this for the wealthy side of the community, and I really need to do it for everybody else. Then we thought about, "Okay, would it work to create the eco electrification fund?" And, that is a 501C3 organization that raises money for from the wealthy side of the community. And, then I went and talked to a number of philanthropic organizations. I was like, "Why did you want to do matching? Why do you want to match into the money that I can raise?" And not one, but two, or three, or four philanthropic organizations that could calculate the matching, and then the government could do much and on top of that. Then suddenly, you have a fund that is entirely designed to cover the interest that will be generated from the program.
Luis Aguirre-Torres 23:38
If you run an actuarial model on the whole thing, you only need to cover this for two standard between two and three standard deviations. If you look at you know what the City of Ithaca is, if you look at the median income on a bell curve, if you move one standard deviation to the left, you have the moderate income block. Then, you move two standard deviations you have low-moderate, and then you move beyond that you have low income. And low and low-moderate corresponds to ten percent of the population. So, assuming one hundred percent participation of that group, the total interest that you need to cover with the electrification fund will not exceed eight million dollars. So, we figure the target is eight million dollars, but if we want to cover also moderate, you know, the target is going to be thirteen million dollars. And, if we want to cover the entire program, then the target has to be twenty million dollars in the next eight years.
Then, if you think about it, it's not an impossible task, you can actually do that. And these in here, I haven't really talked about state or federal incentives, this is all private money, this is all philanthropic partnerships. And, then you include state and federal incentives, and then suddenly, this whole thing, boom, goes down to zero. These guys still get a return, it's just that return is not paid by the community, it is paid by a combination of financial instruments and incentives and subsidies that we're going to make use of. So, these guys make their money, it's just not as obvious and simple as with other programs,
Larry Kraft 25:00
The sum of their return come from the fact that by electrifying and making these buildings more energy efficient, you're lowering the cost of the utility fees, and you monetize some of that for them?
Luis Aguirre-Torres 25:14
Yeah, that is the basic principle. It works as an energy performance contract. It's really hard because if you look at the volatility, in particularly natural gas prices, it's very hard to project to fifteen years what the price is going to be.
Larry Kraft 25:30
Right.
Luis Aguirre-Torres 25:31
But, then you need to look at legislation and the way legislation is going at the end of the day. At the very beginning, yes, definitely the only incentive that you have is savings. And, you need to make sure that the savings are passed on to the people who pay the utility bill, because it's very easy scenario to conceive that the landlord will reap all the benefits, and then the tenants will continue paying the same. But, then at the same time, if we do these retrofitting electrification, the property value goes up. The building owner might be like, "Dude, I don't want to do that, because my tax bill is gonna go up." But, then you go, like, "Okay, why don't we have a deal, man." We have a tax abatement program that allows you to not increase your tax bill for the duration of the program, but for the duration of the program, you will not increase the rent for these guys for your inflation, and you pass the benefits of the savings to them.
There is an incentive for everybody, because at the end of the period, these guys have a company that is much higher value than it was before a company, a building, sorry. As a building owner, as a landlord you make money in the process. Because, if you think about it, in terms of what we're doing, like fifteen years, and then you think that this is zero percent interest, so to fifteen years, given the inflation, the net present value of that is positive. Basically, you're making money on this by not paying interest. That is at the very core of what we're trying to do. This has to do with equity; it has to do with making sure that people really reap the benefits of this.
Abby Finis 27:00
Another clarifying question; I'm just thinking about from the standpoint of participating in the program. If say you're a home owner, you said the City is really assuming some of the risk. And, then the insurance companies assuming some of the risk, and we've seen some of these like Residential Property Assessed Clean Energy PACE Programs, that have really been hurting homeowners, in a few select states that have those programs. If you are a homeowner, how are you assuming the loan? Is it assessed through your property or is it totally separate? How are you paying that back?
Luis Aguirre-Torres 27:31
I think a very key difference that we have is PACE, in the state of New York, is solely for commercial use; we don't have that option for residential. But, even if we had that option for residential estate to the taxpayer, and at the end of the day, somebody could lose their home because they want to do retrofitting like really do I need like a HIPAA will make me lose my home. It doesn't make any sense. John Oliver was spot on when he was criticizing that program. It's not only what happens at the end, but it's also how he is administered.
The one difference in thinking that I have, I cannot speak for everybody, but that I have, is that a lot of the time we think of federal money and state money as coming to the risk capital. And, that should be a catalyst for investment. There is the expectation that this is just the seed for a lot of things that need to happen. But, I think it was ill conceived because it really doesn't do that a lot of the time, it actually reduces the cost of capital, but it doesn't reduce risk. If they had thought about PACE from a risk financial risk mitigation, with the potential beneficiaries of the program in mind, they wouldn't have defined it the way they did. It wouldn't be as expensive, in terms of cost of capital, because they weren't thinking about their risk, and rather than reducing cost of capital. It wouldn't be less expensive, it wouldn't be so onerous, and at the end of the day, you wouldn't have people losing their homes because they installed a heat pump.
We're not doing any of that. We are aware that this will come to reduce the cost of capital, not to the risk investment.
Larry Kraft 29:01
What is the biggest risk area that you see, in terms of whether it works or not?
Luis Aguirre-Torres 29:07
Well, if you think about this, in the context of the Green New Deal, there are a lot of elements, I need to go with it. And, there are things that we are discovering as we go along. The first thing was, it has to benefit everybody. So, people need to buy into the program. And, if we go for low income people, but imagine this: I don't have a job because of COVID, I'm struggling, I am losing unemployment benefits. Well, the extra element for unemployment benefits this week. And, then somebody comes and says, "Take a loan with zero percent interest. But, take a loan." All I hear is loan? Fifteen years? Are you crazy? I don't have the patience, or I don't have the time, or the willingness to listen to this dude telling me about net present value of things, right? So, we need to communicate this in a way that people can understand and in a way that people can understand not only what the benefits are, but also what's coming after that. There's going to be legislation that is going to make me do this. This is probably the one opportunity that I have to do it at no cost. There is a risk in not being able to communicate, on one hand the benefits, on the other the urgency. But, finally the need, the absolute need, to do this for many, many reasons.
Another reason we see is workforce development. Well, we don't have enough. This is a small city, and we have a few engineering firms. But, we don't have the people that we need. We estimate that we have a deficit of about four hundred workers for this program to work. We started talking to other cities, but that is an issue. We don't have enough workers, I mean, the service industry is suffering right now in Ithaca because people left. Ithaca people went back to where they live, the students left, and then certainly we don't have the workers that we need. That is another one that we're considering. And, here is one that I did not see coming: with COVID, some of our building and code inspectors quit, some of them retired. And, now we just don't have enough building inspectors to help with this, we are going to be the bottleneck of the whole thing; probably the program manager, probably people we come in hearts to be part of this program. But, then the City needs to do the administrative side of things and might not be able to do it, because we don't have enough people today. There are a bunch of risks that we were like, "Oh, man, this is new."
Larry Kraft 31:27
Is the program targeted primarily at commercial building owners, or commercial and residential?
Luis Aguirre-Torres 31:34
It's for both; the rules of the program are different. So for commercial, we're really talking about operating leasing program, a low cost operating leasing, and for residential, we're talking about low cost or zero cost lending.
Larry Kraft 31:46
If I'm a resident on this, then the value proposition for me is, here's a no cost loan, right? Zero percent interest loan that allows me to do a bunch of energy efficiency type work on my home, that's going to lower my bill more than the loan cost. Is that kind of the thing?
Luis Aguirre-Torres 32:14
Yeah! The pitch would be, "You do this one. You're going to improve your quality of life, and the air quality inside your house is going to be much better. You're not going to be breathing anything, because you will not have any combustion inside." And, when you put it like that, a lot of people go like, "Oh, that is true. I didn't even realize that. But, I'm inhaling these fumes all the time." And, the next thing that you tell them, and by making this more efficient that you do, "The combined utility bill that you have today would be less by a single utility bill, which will be all for electricity." And, we can guarantee those savings. We're actually structuring the program in a way that you will never pay if you don't have savings. So, only if you have savings, you'll pay and if you don't, that's what insurance is for. That would be the pitch, and then I would add, "And, in any case, in five years, the City is going to mandate that you move away from natural gas in any case."
Larry Kraft 33:07
So do it now and make some money off it or do it later and you have to do it. When we talked before, you talked about this 1000 buildings 1000 thing is that now, more?
Luis Aguirre-Torres 33:19
Yeah! There is the one program that is gonna make me lose or keep my job at some point. Because, right now I've been on the job for less than six months, and all that I described happened in six months. It was like an avalanche of new information for the City Council, for the mayor, for everybody. How do you sell this? How do you sell something so risky? Especially, if nobody knows you, nobody knows what you're doing. It was hard. It was a hard sell. I needed to make sure that they understand that I'm willing to risk my job and my reputation on this thing. So I was like, "Dude, in 1000 days, I can do 1000 buildings, electrify 1000 cars create 1000 jobs for this city." I was like, "Just give me three years, and I promise you transformation will be here."
We're in a rush, because climate change, we're in a rush because Luis can lose his job in that 1000 days so we need to make sure that this works. But, what we did was and this is well thought out I think, so 1000 buildings, we believe it's doable. I mean, if you start calculating how many buildings you need to do per day, how many buildings you need to do per week, it's overwhelming. It's absolutely crazy. What do you need to figure out is, how you're going to ramp up this program? How do we promote the exponential increase in the number of buildings that we're actually working on simultaneously. How many local frames do we have? How many local frames do we need to create? How many we need to bring from different places? That is the first part of it. You don't think in terms of how many, you think in terms of what you need to do for it to happen.
And, then if you think about electric vehicles, electrify 1000 vehicles, we think about how many people are going to buy an electric car in a city that has 3000 cars total. It's a crazy thing. But, think about it in two wheel, four wheel electric vehicles. Think about bringing shared mo-ped systems, shared bike systems, or the car share system to be fully electrified. Imagine inviting companies like Uber and Lyft to come to the City, but only have electric vehicles. What if you were to invite all the key stakeholders to electrify their fleets? And, you develop a financial product or system with this way you raise enough capital, so you can help everybody who wants to be part of this. 1000 vehicles doesn't sound that crazy anymore. And, 1000 jobs, just think about the dimension of what we're talking about. We're going for 1000 buildings, but the reality is that I want to electrify the entire city. We're going for 1000 cars, but my dream is that everybody has an electric vehicle alternative, including the transit system that goes fully electric.
Imagine all of the industries that we are creating just by doing this at scale. Because, there is a hardware industry, we're talking about hitbox. But, we're also talking about software, we're also talking about green interacting technology, we're talking about solar panels. We're talking about a number of jobs that are going to be created, it's just not the retrofitting guys, not only the heat pump installation guy. It's like ten to twelve different industries. And if you include transportation, there is even more. And, then the community is very engaged, but not engaged enough. At the same time, part of my job is to make sure that there is some level of democratic engagement with the community. It's not hard to believe that I could establish 1000 conversations with the community at the same time. These commitments come from thinking we have a good chance of making it happen. Things kind of get in the way, Delta could get in the way, but I always say that when I sell my pitch to the mayor. Nobody's ever changed the world by having a merely adequate idea. You want to change things, and you want to be the epicenter of the greatest transformation in this country, you need to go with it. You need to try really hard, and put all the put all the cookies in the same place by doing that.
Larry Kraft 36:59
And Luis, I know you have a large staff.
Luis Aguirre-Torres 37:03
Well, recently like last week, we hired somebody. So now it's two. It's really interesting. We don't sleep a lot. But, I think now is when the work begins. I mean, managing this crazy electrification program is going to be an absolute nightmare. And, the program manager is going to play an important role there. Based on that agreement, with the program manager, that the contract hasn't been signed yet, but we're in the process of defining. Based on that, I'll determine how big my team needs to be. Because, I believe we can do this and be quite lean at the same time. And, in any case, there is no budget for anything else. We need to figure out how to be lean.
Abby Finis 37:49
I'm curious about the implementation portion of it. You've talked a little bit about the risk being there's not enough people to fill these jobs. A big part of the Green New Deal in Ithaca is that economic inequality and trying to rectify that, and racial injustices, how is that incorporated into implementation? Ensuring who gets the jobs? How you reach lower income households?
Luis Aguirre-Torres 38:15
We have a program in the City that finally has been baptized as Justice 50. And, it's not that we're trying to do one better than the federal government or anything, we just modeled this on Justice 40 program. But, Justice 40 is a very interesting program because it's finally somebody who's being bait if you want, by saying, "We're going to share the benefits, at least forty percent of the benefits." As long as you don't ask me to define benefits. It's going to be cool. So, we actually went and said, "Look, we need to be more precise. We need a very precise definition. And that has to be justified. So let's go and do numbers." We did numbers. And we figured, for example, the electrification program. I was talking about the standard deviations, right? So, if you go two standard deviations to the left, that's where most of the work is needed. And, those buildings may need fifty percent of the budget compared to the rest of the City that has been already weatherized.
How do you actually make this happen? Budget wise, it's easy. We set out a taskforce that already identified buildings that qualify using quality census tracks; what buildings are part of low-income, and we just need to make sure that we keep these balanced, at least in that we can project that a lot of the work is going to go in that direction. So, that's one thing. Then the other is the RFP that we had out for the program manager. It had in there that eighty percent of the workforce needs to come from the county, and it's going to be working with green workforce development taskforce created by the mayor. And, this taskforce actually is making sure that at least fifty percent of the people participating in this program are going to be categorized as low- and low-moderate income. We're using the definition of climate justice that extends beyond what Gina McCarthy recommended at the White House for the climate justice definition. I love what the government is doing both at the state and federal level.
There's a bunch of buildings that have been electrified, but those are people with money. A lot of the money has to go there, and we estimate that is close to fifty percent. So we're like, "Okay, we need to have a quantifiable metric. Fifty percent! Okay." And, if we think about it, a lot of the emissions come from there, which you can think of it as a lot of the emissions to the City. But, you can also think about, "Dude these are the guys breathing the air in the place where most of the emissions are produced." By removing that, fifty percent of the environmental and financial and economic benefits of what we're doing actually are going in that direction. Then, it becomes implementation.
Luis Aguirre-Torres 40:43
The definition of climate justice is a disadvantaged community, which right now is being used interchangeably with the disadvantaged, or even people refer to communities of color as if they were climate justice communities. But, when you think about it, the reality today is, for example, in the city of Ithaca, people were gentrified out of the city. This is a very expensive city to live in because of Cornell University. Right now, people living outside the city, are the ones who work in the city. But it's not that all 300 decided to move here; everybody moved in every direction. So, our climate justice community can be an individual; an individual that meets certain characteristics because of socioeconomic status, level of education, proficiency in English, isolation, because of anything that really affects their standard of living today, they can be a climate justice community.
What we need to do is to identify who they are. This taskforce is actually identifying people that, under normal quality census tracts, would not be identified as climate justice community, would be under this program; we're doing it through Justice 50. Justice 50 is a very complex program that has identified community leaders that are helping us refine this definition. But, it's this idea that we need to go beyond because I don't care about the skin color. I really think if we think about it just exclusively as a racial or ethnic issue, you're going to run into trouble. You just need to look at who has been disproportionately affected by climate change historically. And yeah, a lot of it falls on communities of color, who are going to be disproportionately affected in the future because of what we're doing. And, disproportionately affected include people that because of COVID now live in isolation in a house that is in terrible conditions, but also includes people whose livelihood depended on the fossil fuel industry. Those are also people that you need to take into account with everything that you do. They're covered under Justice 50. It has to go beyond just looking at racial differences or political differences, it has to go to who these people are, what they need, and how we can help them.
Abby Finis 42:51
You've done a ton in six months, and the City has really thought a lot about these issues and setting things up. It sounds like you're set up for success, and we hope that you will be successful. How do you think about the next phase of replicating this, scaling this, how can cities continue to learn from what Ithaca is doing?
Luis Aguirre-Torres 43:12
Well, I think a lot of what we're doing is going to be trial and error. We imagine that we have the speech, and it's going to work, but it may not. We imagine that the different companies we have are enough to start the work and others will come. We're really thinking of these as the Field of Dreams; we're building it, and people will come. And, we are absolutely certain we are the greatest donquixote all combined here. But, I really think that what we're doing is, on one hand, interconnected to everything. There are the different elements: there is climate justice, there is the actual work, there is financial, there is the political will. And, it's a number of things that need to come together at the same time. But, at the same time, each one individually can be treated differently and controlled. Risk associated with each one of them can be treated differently.
So, when you do that, then you understand that at the end, what we have are a bunch of building blocks that can be put together. And, then if you properly describe the emerging complexity that you have in each one of these building blocks, and you properly identify that and identify the relationship that exists between each one of the building blocks, then it's easy to package this. Because, what you have is not a recipe; it's just a list of potential risks that you need to mitigate and potential relationships that you need to build. Potential complexities are going to emerge. Once you have that it's up to people to decide what the best for their communities could be. So, I really think that we're building a model that is quite replicable. I hope people pay attention. So, they don't replicate everything that goes wrong, and only what goes right. But, I think we have a chance of making this a model for other cities.
Larry Kraft 44:51
What advice do you have for other cities in general or that are watching you?
Luis Aguirre-Torres 44:58
It's really funny, because I saw this terrible movie the other day with Keanu Reeves, where I don't know, I think he has to be the coach of this baseball team ,because he's doing community service. Yes, it's a terrible movie. But, the one thing he says is, "It all starts with trying, man." And the second thing is, "You need to show up. Not only one day, every day." I think what really made, and I'm sorry to use this example, but the reality is yeah, one you need to have the will to try something and something different. And, also you need to believe that we have the ability to make it happen. But, then you need to do the work, because god do we go in circles. I mean, really. And, we started talking about the Green New Deal, and I am sure they knew it wasn't going to pass. But, I want to see an effort where it actually passes.
I want to see people moving forward. It's time to move north every single time. Because moving sideways, it's just delaying the inevitable. And, I really think that if you're a city that worries about climate change, god, just go ahead and do it. You're going to screw it up. But, if everybody had this idea, let's fail, let's fail big, and let's fail big together, we can actually produce. One of the events that we're having in relationship to all of this is we're having an epic fail event, where we're going to invite people to talk about massive, ridiculous failures, or trying something awesome. Because, we want people to understand what we're trying to do is incredibly hard. And, it has a low probability of success; it doesn't mean it's not doable, it just means we need to work hard together, and make sure that we cover all our bases. I really think that that's the advice that I would give to anybody: try something hard for once in your life. And, if you're doing it, make sure that you try super hard to make it happen and maybe it will work.
Larry Kraft 46:49
Yeah, I love that. I'm sure there are things that won't work in what you're doing, but I'm sure there's a lot that will work. Thanks for pushing the envelope.
Abby Finis 46:58
Yeah, thank you Luis.
Larry Kraft 47:02
Alright, Abby. What a conversation. What are your takeaways?
Abby Finis 47:06
Man!! There's a ton to think about here. And, I think your head just kind of swirls at all the ideas and possibilities that come with this initiative. And Ithaca, I think my biggest takeaway is just Luis coming in and having this pretty incredible background that's not fully rooted in sustainability. So, he comes in with this creative approach to a big problem. And, his attitude is let's do this. If we're going to fail, we're going to fail big. But, let's put a number out there: 1000 homes, 600 businesses, 1000 electric vehicles. And, has only been there for six months, and has raised 150 million to get this project started. I'm just super impressed with this initiative.
Larry Kraft 47:57
Yeah! For a city of 30,000 people to be thinking about how to raise hundreds of millions of dollars, the first reaction is, "Yeah, you're crazy!" But, then he goes and does it, right? I think there's so much to be said for something he said about, you don't think about the per day stuff, think about what you need to do to make it happen. And, that's what he brought to this, this kind of creativity approach. You can feel he's got a personality that draws people to him, and you can see that happening with the RFP that he put out, the capital that he's raising, the volunteers that are kind of flocking to it, so it's exciting!
Abby Finis 48:32
Yeah! It's kind of putting all those pieces together. We've talked before about how there is different cities paying for it; there's different franchise fees or tax pieces, or putting it into the budget, or however cities are coming up with this and they're all doing it kind of within the mechanisms of their local government. And, he's thinking outside of that box and saying, "Well, government can catalyze these things. Government doesn't have to pay for everything. And so how do we bring in that private capital and make this happen?"
Larry Kraft 49:04
Right, and have government or other people that government can mean bring in to reduce areas of risk, right? That's really a unique approach in terms of the insurance he's bringing in, and the ways of reducing interest rates for those at the lower end of the spectrum.
Abby Finis 49:19
And, I'm not going to pretend to understand it all, but it seems like they have looked at all of the different areas of what might go wrong in a financial sense and covering those bases. The next trick is getting people to buy in and getting the work done.
Larry Kraft 49:37
Yeah, we'd love to talk to him again in six to twelve months. I do say the next time I go back to Cornell for a reunion or something, I'm going to spend some time with Luis.
Abby Finis 49:49
Yeah, you definitely should. Another thing that struck me is 1000 electric vehicles and expanding the definition of what electric vehicle means to include bikes, to include scooters, private fleets, those kinds of things. I like that approach because I think that we are too often very narrowly focused on that we have to electrify vehicles and it feels very focused on that kind of one for one change. But, you still get wide roads with that, you get a lot of impervious surface through parking lots, and all sorts of other problems that come along with that. So, thinking about transportation more comprehensively, I think is always a good approach.
Larry Kraft 50:26
I would add one more thing. He was able to encapsulate kind of a big idea in going from Justice 40 to be Justice 50.
Abby Finis 50:34
Yeah, take that Joe Biden!
Larry Kraft 50:39
Absolutely. And, he's quite a dude, isn't he?
Abby Finis 50:40
He is. He's a great guy. I am super curious to see where this goes. I wish Ithaca all the luck. I think a lot of folks are going to be talking about it.
Abby Finis 50:52
We hope you enjoyed this episode of City Climate Corner. If you like what you're hearing, make sure to subscribe and give us a review. If you're able, become a monthly supporter through Patreon. As always, you can find more information on this topic and resources from each episode's guests on our webpage cityclimatecorner.com. If you have an idea for the show, send us an email at cityclimatecorner@gmail.com or find us on Twitter, Instagram, and Facebook.
Larry Kraft 51:16
City Climate Corner is produced by Abby Finis, and me, Larry Kraft. Edited by me. Our production assistant is Maggie Morin. Music by ...
Abby Finis 51:25
King Gizzard and the Lizard Wizard.
Larry Kraft 51:27
Thanks for listening, and we'll see you next time.
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