Title
Recommendation to Develop a Home Electrification Pilot Project for Low Income Households Using Energy Efficiency and Conservation Block Grant Funds. (City Manager 10021032)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
Through the Energy Efficiency & Conservation Block Grant (EECBG) program, the City of Alameda (City) is expected to receive $133,250 in formula-based grant funds. The funds must be used on a project that reduces carbon emissions, improves energy efficiency, or reduces energy use. Staff recommends the funds be spent on a pilot project to provide financial support for the electrification of homes occupied by low income households in Alameda.
The goal of the pilot is to prevent displacement, preserve affordable housing stock, and support climate goals. The proposed pilot project would expand the City’s existing Residential Rehabilitation Program which is administered by the Community Development Department and operated by Habitat for Humanity East Bay/Silicon Valley and Rebuilding Together. The Residential Rehabilitation Program serves low-income homeowners with repairs that keep them in their homes. The pilot project will provide additional funding for electrification upgrades into the larger-scale rehabilitation projects administered by Habitat for Humanity and by upgrading natural gas water heaters to heat pumps or other small-scale interventions when and where Rebuilding Together is performing minor health and safety-oriented repairs.
BACKGROUND
On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (the Act), which provides $550 billion for roads, bridges, public transportation, water infrastructure, climate resilience, and broadband over fiscal years 2022 through 2026. One program of the Act is the EECBG program, which is managed by the Department of Energy (DOE). The EECBG program will provide $430 million to state, local and tribal governments.
In 2009, the American Recovery and Reinvestment Act provided $3.2 billion in EECBG funding for energy efficiency and conservation projects with an emphasis on job creation. That round of funding resulted in Alameda receiving $640,600 in formula-based grant funds which were used to support:
• Installing solar panels on the Main Library
• Energy audit training
• Energy audits of school district and City facilities
• Installing lighting sensors at City Hall
DISCUSSION
The City will receive $133,250 in formula-based grant funds under the renewed EECBG program. Staff must submit a preliminary application by April 28, 2023, and then a full application by January 2024. The funds must be used for projects and programs that achieve any of the following:
• Reduce carbon emissions
• Improve energy efficiency
• Reduce energy use
In alignment with the Biden Administration’s Justice40 Initiative, which seeks to advance environmental justice by ensuring that at least 40 percent of federal investments flow to disadvantaged communities, the DOE is encouraging use of the funds for seed investment and projects that benefit disadvantaged communities. According to DOE guidelines, funds may be used for:
• Strategy development
• Technical Consultant Services
• Building Energy Audits
• Financial Incentive Programs
• Energy Efficiency Retrofits
• Energy Efficiency and Conservation Programs for Buildings and Facilities
• Development and Implementation of Transportation Programs
• Building Codes and Inspections
• Energy Distribution Tech for Energy Efficiency
• Material Conservation Programs
• Reduction and Capture of Methane and Greenhouse Gases
• Traffic Signals and Street Lighting
• Renewable Energy Technologies on Gov. Buildings
• Programs for financing, purchasing, and installing energy efficiency, renewable energy, and zero-emission transportation (and associated infrastructure
The DOE is strongly encouraging jurisdictions receiving less than $200,000 in EECBG funds to opt in to a voucher in lieu of a grant, which can cover technical assistance services and/or equipment purchase and installation rebates. A voucher is designed to reduce the burden of administering a federal grant and initiate a faster start-up process.
Staff considered current City initiatives and priorities, including projects in the City Council-adopted Equitable Building Decarbonization Plan and Climate Action and Resiliency Plan when evaluating potential projects for the grant funds.
Staff is recommending that the City request a voucher for EECBG funds to be spent on a Low-Income Home Electrification Pilot Project. The pilot will leverage the City’s existing Residential Rehabilitation Program which is administered by the Community Development Department and operated by Habitat for Humanity East Bay/Silicon Valley and Rebuilding Together. The Residential Rehabilitation Program serves low-income homeowners with critical health and safety repairs that keep them in their homes. The Low-Income Home Electrification Pilot Project will accelerate the shift away from fossil fuels through two programs:
1) Integrating full electrification upgrades into large-scale rehabilitation projects administered by Habitat for Humanity; and
2) Upgrading natural gas water heaters to heat pumps or other small-scale interventions in homes where Rebuilding Together is performing other minor health and safety oriented repairs.
The project will proactively support low-income homeowners to transition to electric appliances in anticipation of the Bay Area Air Quality Management District (BAAQMD) rules passed in March 2023 that ban the sale of natural gas water heater as of 2027 and natural gas furnaces in 2029. Natural gas appliances are responsible for 90% of nitrogen oxides (NOx) emitted from homes in the Bay Area that contribute to smog and poor air quality, as well as contribute to asthma, heart disease, and diabetes in inhabitants.
The pilot, as initially scoped, is anticipated to result in full electrification of up to five (5) homes and installation of approximately 10-20 heat pump water heaters over the three-year project. As part of the pilot, staff would supplement with rebates from Alameda Municipal Power, the Inflation Reduction Act and other state and federal sources where possible for electrification measures, which may extend the number of installations that can be undertaken.
ALTERNATIVES
• Alternative projects considered include providing EV charging stations at City-owned parking lots and energy efficiency and electrification upgrades at City facilities, however these alternatives were not considered to meet the equity priorities of this funding as strongly.
• Not taking any action would result in in loss of the City’s EECBG funding.
FINANCIAL IMPACT
The $133,250 in grant funds will cover the full cost of project implementation. There is no required local match for this grant. The grant will be included in the Fiscal Year 2023-25 Biennial Budget, subject to City Council approval in June 2023.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The proposed pilot project is consistent with the General Plan (2021), specifically:
• Policy CC-4 states: “Take action to make Alameda a net zero GHG community”
• Policy CC-13 states: “Reduce greenhouse gas emissions from natural gas consumption and natural gas leaks” and Action (c) states: “support programs that encourage homeowners/commercial building owners to implement electrification retrofits, with an emphasis on Alameda’s most vulnerable residents.”
The proposed pilot program is consistent with the goals of the Climate Action and Resiliency Plan (2019) to reduce greenhouse gas emissions by 50% below 2005 levels by 2030 and achieve net zero emissions as soon as possible. Action E1 calls for “Fuel switching” in existing buildings to convert natural gas consumption to electricity use.
ENVIRONMENTAL REVIEW
The proposal to develop a financial grant program is not defined as a project under the California Environmental Quality Act. However, each individual project undertaken under the City Residential Rehabilitation Program with the proposed program would be a project under CEQA and must be evaluated at the time such a project is undertaken. Typically, these projects are categorically exempt from further review under CEQA guidelines section 15301 (Existing Facilities).
CLIMATE IMPACT
The EECBG funds will be used to advance sustainability and reduce greenhouse gas emissions by implementing key initiatives of the Climate Action and Resiliency Plan (CARP), Equitable Building Decarbonization Plan and General Plan.
RECOMMENDATION
Develop a Low-Income Home Electrification Pilot Project using Energy Efficiency & Conservation Block Grant funds.
Respectfully submitted,
Andrew Thomas, Planning Building and Transportation Director
By,
Danielle Mieler, Sustainability and Resilience Manager
Lisa Fitts, Community Development Program Manager
Financial Impact section reviewed,
Margaret O’Brien, Finance Director