The county of Humboldt is weighing whether to place a bond or carbon tax measure on the November ballot to fund projects aimed at reducing the county's greenhouse gas emissions in the face of a global climate crisis.
Like other communities throughout the world, Humboldt County is wrestling with how to transition to clean, renewable energy sources that will generate enough power to meet its needs and create a Climate Action Plan. A locally based green energy supply would free Humboldt County from PG&E and its public safety power shutoffs, while also creating many high-skilled jobs and boosting the local economy. The proverbial elephant in the room, however, is who's going to finance the shift.
To many, part of the appeal of Terra-Gen's Humboldt Wind Project, which would have placed dozens of giant wind turbines on ridges south of Rio Dell, was that it was privately financed. But with the Humboldt County Board of Supervisors having rejected the company's proposal last year due to a host of community concerns, the funding question now looms over any potential energy project.
This is where bonds come in. A bond is similar to a home mortgage, in which banks offer a big chunk of money up front in exchange for years — or decades — of interest payments that can double the cost of the original loan. The difference is that when a bank offers you a home loan, it expects you to make the payments. When a bank sells a bond to a city or county, the payments are generally made by taxing residents. Bonds of this type are known as general obligation bonds and most Humboldt property owners are familiar with them through funding measures for local school districts.
A bond proposal would need to be approved by a two-thirds vote in the November election and the burden of the tax would fall exclusively on the county's property owners. Unlike standard property taxes, which depend on the value of the home or business, this would be a parcel tax, costing the same amount for each parcel. Those who own many parcels — like dairy ranchers and timber companies — would pay a lot more than a single homeowner.
But there is also another kind of bond that doesn't involve increasing anybody's taxes: revenue bonds. These are typically used for projects expected to generate money, like toll bridges. A project that could result in the sale of locally produced electricity would bring in money that could be used to pay back the cost of the bonds. Because this type of bond would not impose new taxes on residents, it would not need voter approval.
When supervisors Mike Wilson and Estelle Fennell introduced the idea of pursuing a green energy bond at the March 4 Humboldt County Board of Supervisors meeting, no specific projects — or amounts — were pitched. According to the county's staff report, this vital information would be obtained "later in time."
In order to get a better understanding of what people want and would be willing to pay for, Wilson proposed polling residents. He emphasized that he was only interested in projects that would eventually pay for themselves in some way or another. He was particularly interested in four categories of projects: off-shore wind generation, microgrids for public facilities, programs to encourage the use of electric vehicles (such as building more charging stations) and a property assessed clean energy (PACE) program.
PACE is a type of financing under which the county provides loans to property owners to install green energy improvements, such as solar panels. The loan is paid off through increases in yearly property taxes.
Wilson proposed creating an ad hoc committee including some of the supervisors, county staff and other stakeholders to vet the details and find a project that would be acceptable to at least two-thirds of county voters.
Redwood Coast Energy Authority Executive Director Matthew Marshall was enthusiastic. Renewable projects, he said, could provide cost savings in good times and backup when the main grid went down. In addition, the county could also expect to obtain matching funds from the state or federal government.
Treasurer-Tax Collector John Bartholomew addressed the board twice — first in his official capacity and later simply as a Blue Lake resident. As the treasurer, he said that while the county has enough assets to be able to float a bond — more than $14 billion in assessed taxable properties — it would be unwise to approach the limits of the county's credit capability.
He also pointed out that residents of some cities are already paying for various bonds and might not support adding to their property tax bills.
When Bartholomew spoke later, as a Blue Lake resident, he strongly supported the project, urging the county to provide seed money that could be used to leverage outside grants.
Humboldt Bay Harbor, Recreation and Conservation District Executive Director Larry Oetker said that a microgrid is essential if the harbor is to continue doing business in the 21st century, for both business and regulatory reasons. Without a good, resilient energy system at the harbor, the offshore wind project coveted by the county could go elsewhere. The district, he said, is working with the Schatz Energy Research Center, which has several million dollars available.
"In the 21st century, we need clean, green industries," he said.
Scott Adair, the county's director of economic development, said greening the county's energy grid could create thousands of new jobs and warned against sitting on funds that could be used to spur development.
When the board opened public comment, a number of prominent environmentalists — including Larry Goldberg, Tom Wheeler, Scott Graecen, Colin Fiske and Jennifer Kalt — spoke in support of the proposal.
"We need energy security to attract the kinds of businesses we want," said Kalt.
Natalynne DeLapp, who had been the community liaison for Terra-Gen's project, said the county had rejected an out-of-area investor and now it was up to local homeowners to pick up the tab. She disliked the idea of polling the public about suitable projects.
"That is a horrible idea," she said. "Let the experts decide."
Third District County Planning Commissioner Noah Levy, speaking from the audience, agreed that experts should decide on the projects and urged the board to pursue revenue bonds, which would not affect taxpayers.
"That will de-fang the economic-based arguments," he said.
Fifth District Supervisor Steve Madrone asked Bartholomew if adding improvements such as solar panels to a house would increase its assessed value and therefore add to property taxes.
"Many people get into PACE loans without understanding ... how it will affect their tax bills," Bartholomew replied. "I've talked to a number of people who said, 'Oh, gee, I got this PACE loan and now my property tax has doubled.'"
He added that while he supported the PACE program, he did not approve of the fact that people were not told about its real costs, resulting in "sticker shock surprise."
Wilson reminded the board and the public that local electricity is currently being powered by natural gas and, therefore, the public is inadvertently supporting fracking though it seems to generate little protest.
"We don't have anyone tying themselves to the gates of that [Humboldt Bay Power Plant]," he observed.
Reaching across the philosophical divide, Wilson asked First District Supervisor Rex Bohn to be on an ad hoc committee with him to move the bond idea forward.
"Rex is the most skeptical and I'm the most optimistic," he said. "While we do roll our eyes at each other a lot ... we've had a lot of common conversations."
Bohn responded with a comical eyeroll before listing all the problems he saw with the bond proposal, beginning with the public's increasing reluctance to pass new bonds before addressing other issues.
"I don't know who we're going to get up here to install all these projects." he said. "There's billions of dollars of projects — solar projects — going on. We're already 10, maybe 14 years down the line."
He added that, as it was with Terra-Gen, finding a location for a large-scale industrial project will be a formidable challenge.
Madrone took the conversation in a different direction, saying a parcel tax would be unfair and he prefers a carbon tax.
"You may be producing all your own energy and riding a bicycle everywhere you go," he said. "Should you be taxed at the same level as somebody who isn't? The idea of a carbon tax is that if you produce CO2 emissions, you pay a fee for that. That's putting the cost on the emitter and that starts changing behavior because it affects business decisions on return on investment."
Wilson wanted more information on a carbon tax and wondered if it could be implemented on a local level.
He then made a motion to direct staff to examine the legal requirements and timelines involved with putting a bond or carbon tax on the November ballot, asking them to bring a budget proposal to fund necessary polling and further review forward to the board at its March 17 meeting, as well as to create an ad hoc committee made up of himself and Bohn, as well as representatives from RCEA, Schatz and the county economic development department.
The motion passed unanimously.