Good morning, everyone.

I'm Charles Allen, Ward 6 Councilmember and Chair of the Council's Committee on Transportation and the Environment.

Today is Friday, May 8th, 2026, and we are convening in person in room 500 of the John A.

Wilson building and virtually of the Zoom platform.

The time is now 1112 a.m.

And I'm calling to order this budget oversight hearing of the committee.

Today we're going to hear from public witnesses and government witnesses regarding the mayor's FY 2027 proposed budget for the following agency, the Green Finance Authority.

The Green Finance Authority, DC Green Bank, was created to provide access to capital to grow the clean economy and develop a more equitable, resilient, and sustainable district.

It offers innovative financing solutions for this purpose and focuses its investments on solar energy, greener and more efficient buildings, infrastructure resilience, and sustainable transportation.

The mayor's proposed FY27 operating budget for the Green Bank from is from the Sustainable Energy Trust Fund is $3.75 million, representing no change from the FY26 approved budget.

The Green Finance Authority's budget is not solely supported by local funding because it's able to support operations through returns on investments on certain fees from deals.

The Green Bank does not have a capital budget.

So we have a panel of public witnesses that we're going to turn to first.

After that, we'll then bring up our Green Finance Authority representatives.

First panel is all online and virtual.

So let me go ahead and call out their names and then we will turn to them for their testimony.

We have Tyrell Holcomb, who's the Vice President of External Affairs with Jubilee Housing, Matt Pestronk, who's president with Post Brothers, David Schatz, Vice President of New Vene Green Capital, Gilbert Campbell, co-founder of Volt Energy, and Samuel Vonar, policy director with DC Community Wealth Builders.

All right.

I don't think we have Mr.

Holcomb online yet, but if he's able to join us, we'll make sure we bring him over.

But Mr.

Pestronk, I think we've got you here.

So why don't I turn to you for your testimony?

If you're ready, we'll have you go first, and then we'll see if Mr.

Holcomb comes and we'll add him back in later.

I am right over there.

Thank you, Councilmember Allen.

Excellent.

Good morning.

Uh, whenever you're ready.

Thank you.

My company um is a real estate development company undertaking, currently undertaking multiple large mixed-use projects, primarily focused on coastal markets in the U.S.

We're based in Philadelphia.

Native Washingtonians undertaking a very large project in Washington at next next to the Washington Hilton at Connecticut, Florida and T, the former the former Universal Buildings.

If anyone wants to drive by, we're uh under making a tremendous amount of progress in our early construction.

And the project was instrumental in getting financed by the DC Green Bank through a loan program called CPACE, where the district um issues uh an assessment against the property that investors through typically through a private uh a private uh activity private placement agent, uh in this case UV Green Capital, um sells the future revenues of the project to investors who want to buy uh a fixed income product or a bond, typically a bond in the form of a bond, with no exposure to the district.

So the district does not guarantee the bonds, the district district does not guarantee our financing in any way, and the real estate tax assessment, the real estate taxes that are payable to the district, um, are paid prior to the um C-PACE assessment.

So the Green Bank has been was an indispensable ally to us in getting the project financed both in general uh through their knowledge of multiple uh multiple economic development tools available in the district and some that are proprietary to them and what the green banks um the green bank I think is a very interesting um test case within the DC government because I believe it's an instrumentality of the government, but they make money to support themselves mostly through the private sector by virtue of servicing revenues of financial products.

So we pay the green bank um debt service on our C-PACE assessment, and the Green Bank gets uh gets revenues to pay its overhead from that product.

And the financing market, the private sector financing market was very challenging.

Although the green bank, the private sector market financing market was extremely challenging, even for residential, even in that location for the better part of two years, and it's sort of it's it started to come back, but um the green bank is able to attract investors who want to finance sustainable development, and they will take a slightly lower return than a regular commercial lender, and that just works better for everybody.

It makes more sustainable development financed, our project has significant a fairly significant component of affordable housing, and it's gonna be lead gold, and we saved an enormous amount of embedded carbon uh by not demolishing the buildings, and and the fact they're going to be lead gold with their put back in service.

So I think the green bank has been a um has been a uh fabulous uh sustainable economic development advocate in Washington, and we're definitely going to we look forward to working with them on our next project, which everyone will hear about soon, but we're not ready.

I'm sure you don't want to break any news, Mr.

Pestronk.

You know, there's a saying when the when the gelt hits the felt.

All right.

Well, we will keep our eyes out for that.

Um, all right, thank you very much for your testimony.

If you can hang in for a moment, I'm gonna turn to some others and come back with some questions.

Uh so n let sorry, next let me turn to David Schatz with uh Nuveen Green Capital.

Thank you, Mr.

Chairman, and members of the committee.

Um my name's Dave Schatz.

I'm VP of Policy and Market Development at uh Nuveen Green Capital, and as Mr.

Pestronk mentioned, um we've uh been involved in a number of C-PACE transactions in the DC area and and within the district.

Um, most notably at the end of last year, we closed two projects, the Geneva that Mr.

Pestronk mentioned and um the Citizen M project in Georgetown.

Together they represented more than a half a billion dollars in private investment that we provided in the district.

Um, and we we've done so through the very successful C-PACE program that the DC Green Bank administers and through both of those transactions and transactions that we've done for over a decade in the district.

Uh, the DC Green Bank is um our go-to and is an absolutely essential part of those transactions.

We literally cannot process them without the Green Bank, and uh through both of those, they handled them with um tremendous professionalism and expertise.

Um, they have a uh a capacity that very few other administrators across the country, and we have done over two billion dollars just in the last year in C-PACE.

Um, few administrators across the country have the kind of expertise that the DC Green Bank has.

We have been um really solid partners together um to find deals uh for the district um and to process them quickly.

Um so we very much value their role in district government um and their role in closing deals in a timely manner that meets the needs of private uh developers um and capital providers across the industry.

Um so we are much look forward to working with them in the future, and uh there are some deals that are coming up.

Um, and I'm I'm happy to report that there are a number of deals across the district.

Um, the two I mentioned were Georgetown and DuPont Circle, but there are other deals that we are currently in the process of that are in other wards in the city, and we look forward to to announcing those soon as well.

Um, just to note that the C-PACE program overall is so so beneficial, and um, we look forward to the district continuing to support that program because it provides sustainability benefits that are tangible, measurable, reported as part of every deal, and economic development um benefits as well, uh, the build out of affordable housing units, as Mr.

Pestronk mentioned, and uh new developments that provide jobs in the district.

So very much looking looking forward to your questions, and thanks very much for your time.

Thank you very much, Mr.

Schatz.

Next, let me turn to Gilbert Campbell.

Good morning.

Um thank you, Councilman Chair.

And so, first off, my name is Gilbert Campbell.

I'm um co-founder and uh managing partner of a company called Old Energy.

Uh, we've been fortunate to develop solar projects all throughout the city with the heavy emphasis on educational institutions.

DC Green Bank has been a tremendous partner of ours.

Um, they provided over six million dollars in financing for us to be able to develop um over 1.5 megawatts of solar installations all throughout our university's campus as a result um of the loan and being able to build those projects.

Howard now is um has most on-site solar capacity than any other historically black college university or HBCU across the country.

And again, this would not have been possible without the DC Green Bank.

Additionally, some of the benefits that derive from this funding and obviously the projects being built, um, is helping Howard University um reduces energy cost uh with its decarbonization efforts and a lot of other things on campus, including um we've provided over a hundred thousand dollars of scholarships to Howard students, numerous um internships, again, just showing the power of um places that like HBCUs that historically have not had solar, being able to prosper and see it, but also for students walking across campus, being able to see number one, a visual commitment that the university has made to sustainability, but also a prudent financial decision, but also gets them opportunity to see what the future is looking like for job opportunities.

Uh, I will also add by DC Green Bank providing this um six million in financing to our company to develop these projects at Howard, also unlock US bank to be the tax equity investor.

US bank is the largest institutional investor for these type of deals across the country.

But however, uh they typically invest in much larger, what's called utility scale deals, but the uniqueness of Howard University with also US banks seeing DC Green Bank's commitment help make this happen.

And so I would just say I think it's vital that we support institutions like DC Green Bank that support the community that we're all fortunate to work and reside in.

Um, like I said, it's provided numerous jobs during the um construction of this project, for example.

Um, we did an internal mandate to have over 15%, I'm excuse me, 50% of the project to be uh constructed or consultants with local minority owned businesses, and we exceeded that.

Um, and over a dozen jobs were created through construction.

So it's just a great example with DC Green Bank of what is the art of the possible with uh you know innovative financing they can do to help our city become uh more sustainable, but also making sure universities and businesses and most importantly young people are seeing the benefits of clean energy.

So look forward to uh answering your questions and thank you for the testimony.

Absolutely.

Thank you very much, Mr.

Campbell.

Uh, and next let me turn to Samuel Bonar.

Hi there.

Good morning.

Um good morning.

Um hi everyone.

Um, my name is Sam Bonner, and I'm testifying on behalf of the DC Community Wealth Builders.

Uh, grassroots coalition, uh building community ownership, locally rooted wealth and an economic development strategy, uh, rooted in local financial infrastructure instead of endless corporate incentives.

Umstead of the usual attract and retain uh uh motto that we hear from economic development folks, uh DC needs to figure out a new model, maybe execute and build or organize and build um finance and build.

Uh, this means local jobs and sustainable growth that lowers the cost of social programs, economic infrastructure, and systems that pay for themselves.

That's why I've been so excited about the green bank as a starter version of what we'd really like to build in the long run, which would be the people's banks or you know, a public bank and a land bank, and maybe more holistically thinking about our local economic infrastructure and finance infrastructure such that they work together.

Um, you know, we have all these pieces.

We have the green bank, we have uh housing finance authority, and we have all these other assets that we could be putting together.

And so our main ask is to ask for an FTE and employee at the Green Bank, but we're also advocating for other agencies, um, to be able to think more holistically, to be able to connect the dots to be able to think about how we could leverage so much more of the city's wealth to uh produce the outcomes that the market isn't you know isn't producing, um to make the things pencil that have really huge important um outcomes beyond just um green infrastructure, which is incredibly important, um, but also grocery stores, use of the river, um, shared insurance pools or bonding capacity, um, uh, you know, child care centers, uh, local community uh gathering spaces, um, so the types of stuff that aren't that interesting to the private banks, um, but that I think if we leveraged the billions in public funds that we have that are currently sitting and making money for commercial banks, uh, the interest on those deposits, the tax liens and the vacant land uh for a land bank, um uh, then one, we wouldn't have to financialize or put up as much money as we have to start the green bank, um uh, and also to be able to make sure that we can actually have it be kind of self-sustaining in the long run.

Which um, you know, to be honest, I I need to learn more about how the green bank works, but I think that's why I will really want to have an FTE there to think not just how do we use the funds that the green bank has been appropriated, but how do we uh multiply that much more uh with all the potential um wealth that the city has.

Um yeah, those are the things that our coalition is advocating for, you know, a land bank and a public bank built on these same principles, maybe building off of and expanding um from the grant from the green bank.

Um, and um, yeah, we are are hoping that uh, you know, this given our kind of fiscal uh unsustainability that we've heard so much about, and given the fact that the market is not producing a lot of the outcomes and the types of permanently deeply affordable housing, family sized units that we want, uh, as well as green infrastructure.

Um, how do we, you know, I don't think we can afford to keep kicking the can down the road.

We studied both these ideas six years ago, um, and uh I think it's time for the city to finally like, okay, let's move the conversation forward uh to connect the dots and think about how we can be um actually financing the stuff that we say we need.

Uh we're always like, why isn't it working?

Why why aren't these incentives working?

Um so that's my ask.

Happy to take questions, and um, yeah, we'll talk soon.

All right, thank you very much, Mr.

Bonner.

Um, all right, we checked.

Mr.

Holcomb isn't here, but we'll certainly encourage him to submit his testimony so it could be part of the record.

Um, so let me jump in with a few questions.

Um, Mr.

Pestruck, I'll start with you.

Um, want to ask if you can elaborate a bit on what you talked about.

You referred to the green bank as a quote, indispensable ally in utilizing multiple funding tools.

Can you share a bit more about why you view this as indispensable?

Help kind of round that out for me so we understand what you mean.

Um, so the largest um uncaptured um uh addressable market in finance in capital in the availability of capital, there's infrastructure and sustainability financing.

Um you can argue that there nobody's building new infrastructure that's not as sustainable as it possibly can be.

It only makes sense to do that, apart real estate and infrastructure are closely related, and because um, this is just these absolutely tremendous um amount of capital, um interested in um financing things that are uh certified um and uh at the very cutting edge of energy conservation um of all different kinds of energy, minimizing the use of the production of new energy, the green bank is able to tap into that market via the issuance of um in our case CPACE, which I think is a product that um will change all of real estate financing, but for now getting capital into the district in a time when it was very difficult versus conventional market sources, um both it it uh green bank is able to bring in capital that is um less uh well they're commercial, they generate bringing in capital that wants a commercial like return, the amount of capital looking for the kinds of projects the green bank finances is gigantic and it hadn't been brought into it hadn't been uh funded at scale in Washington until the green bank really started to ramp up their production uh of C-PACE to be to be sold and monetized in the private sector.

So absolutely indispensable because they're at the cutting edge of unleashing a huge wall of capital that the district is in need of to create new buildings and jobs, right?

And so essentially, but for the green bank and the ability to use that C-PACE program, that capital's not coming into the district, correct?

Absolutely.

Yeah.

Um Mr.

Schatz, let me kind of turn to you and kind of follow the same line.

I mean, we have heard the last couple of years, both with just the broader economic conditions that are here in the district in the region to some degree across the whole country, um, but specific here, we kept hearing we're not seeing the type of capital investment in the district, we're not seeing capital investment in the district, and you just highlighted two major projects $500 million worth of private capital investment in the district.

So is do you believe that this is the the work through the green bank and with C-PACE, this is um, is this indicative that there is capital to be invested in the district?

And it's really more about setting up the right tools and avenues by which we're able to leverage that right now.

But what tell me more about why I'm gonna continue to hear that capital's not investing in the district, and then yet we're able to help celebrate 500 million dollars worth of private capital invest in the district?

Well, um, the C-PACE program uh has taken off nationally, everywhere has seen a lot of growth.

The district itself has seen probably the most if you if you look at the total addressable market.

Um the district has seen just a major upswing in the amount that can go through or that is going through the C-PACE program specifically.

And I think that reflects um a few things.

The broader macro environment for the economics of these deals is has changed dramatically over the last year.

Um the capital markets side of things is they're looking for places to invest that are um and and instruments to use that are safe and secure um in this kind of environment, and CPACE represents that, and especially the district's structure for CPACE itself, um, a bonding structure as it has is highly secure.

Um, and I think that the way that the district, the the district's program is enabled, set up, and um it's it's designed to be sustainable in a way that is drawing in investment for this particular uh tool.

And I see no reason to think that that will change.

Um I also think that the one of the projects, uh, you know, the Geneva project that Mr.

Pestronk um has been a part of and it's his project, um, is an office to multifamily conversion a segment of the market that is just uh exploding with a lot of activity right now, and I think we'll continue to see um those kinds of projects and and the benefits that they have.

Thanks.

And then specific to the district, when you think about other places, other jurisdictions that are trying to use C-PACE, what sets the district apart?

Is it that we are um like are all C-PACE programs around the country seeing the same experience?

Is it just kind of a it's a new tool and we just happen to be on the front edge of it, or are we doing something better or different than other jurisdictions that would be trying to also utilize CPACE?

I do think that the year over year, CPACE has grown over the last five years, 40% every single year nationally, um, and I think the district in particular, um, what it is doing right is number one, raising a bond cap um proactively to enable deals like the Geneva and all of the deals to come because the CAP limited the amount of um of deals that could continue to go through this mechanism.

Um so I I New Veen Green Capital applauds the district for taking that action and doing it swiftly to meet a very, very tight timeline for um for that project and for all the subsequent projects.

Um, so I think that that is a major policy move that the district did um to enable more deals.

Um and I also think that the DC Green Bank itself um has uh uh created a reputation as a clearinghouse and a trusted um administrator that when they say they can execute a deal within 30 days and we are on a 30 day timeline, uh they're able to get it done.

And that means a lot to private investment uh communities who and investors who are looking for places to go is consistency.

And uh I think the DC Green Bank has shown that.

Got it.

All right.

Thank you very much.

Um Mr.

Campbell, good to see you again.

I think the last time we were together was uh on the rooftops.

Uh so I appreciate the the rooftop climbing around tour over there on Howard's campus.

Um, while we have you here, not necessarily a green bank question, but kind of a question just around once we get the financing, once we figure it all out, we obviously have a whole interconnection issue.

Can you share anything about some of the either successes or challenges that you had around being able to move towards the full interconnection for the investment that you helped put together?

Sure.

Um actually um interconnection can be very challenging.

Um, one of the things I mentioned in my testimony earlier was we were proud of having local um DC-based companies and diverse companies uh assistance with the project and building it out.

And one of the companies that I'd like to um highlight, Prime Partners Engineering, specializes in interconnection consulting and engineering.

And so we engaged in them early on, knowing that interconnection can be a bottleneck in the project.

Um, and they work very closely with Pepco, um, where we were able to successfully um, you know, get interconnection for all of the numerous projects that are being built on Howard's campus.

And it's a challenging project because Howard has a master meter, so all the buildings kind of run through one meter, and prime partners engineering, again, a local CBE minority-owned company was able to cut that time in half.

And so we've had a very good experience in this particular instance with um interconnection, but a large part to who we hired to manage that process, knowing it it can't be a bottleneck.

Yeah.

Did you say Howard University is master meter?

The entire campus is on one meter.

They have it's a it's a yeah, it's uh it's interesting uh setup.

They also have on campus um, you know, facilities as well, to one of which the Van S campus where we're building um a solar car was actually built in the solar carport there.

Wow, okay.

Um you touched on your testimony, but I want to also just kind of give you a chance to kind of reiterate this.

I mean, part of the reason why these investments um are so important is certainly we're able to help um reduce costs, for example, for affordable housing.

And I think the green bank's got a long list of projects that have helped reduce costs overall for affordable housing or the utility costs once people are actually in.

Um we also have examples of working with local businesses so that the you know, the solar array, for example, um over the Howard Theater, is gonna help sustain that building as well as lower costs for Howard, obviously an institution that we value greatly and we want to make sure we're helping their affordability.

What are some of the energy utility bill savings that this array is predicted to bring to Howard University?

In other words, how are we helping make sure that they're also lowering their cost of doing business?

Great question.

Um estimated over the duration of what's called a power purchase agreement, uh 20 agreement with However to provide them with solar, they'll save over one point um five million dollars in savings.

And um, and even in you know, in a market where prices of electricity is going up.

Um we have not reduced the rate, and so Howard is getting a significant savings of which they are uh very much appreciated.

So it was, I guess that it was a um smart fiscal decision for them, not just on top of you know doing what's right from a sustainability perspective.

Yeah, absolutely.

And that I mean, when I think about the university, that puts them in a position to be able to reinvest that 1.5 million savings back into students' education, the campus educators.

So it's a smart financial decision.

And if I could just add one other point to outside on top of the 1.5 million savings, like I mentioned, students have also gotten jobs, internships, but it's also risen Howard's profile as an HBCU that's forward thinking with sustainability, has helped them in other areas, demonstrating that we have solar to be able to get grants and other financing as well.

So outside of just the significant financial savings they're getting, it's also provided other tangible benefits that the university has been able to monetize.

Yep, absolutely.

Okay, thank you very much.

Um, and Mr.

Bonner, I appreciate your testimony.

Um, I we can certainly ask the green bank when they testify um about their ideas and from an FTE perspective, it's not necessarily the council's direction of FTEs at the Green Bank, but we can certainly ask them a little bit about um a conversation or the ability to explore what that kind of what you were talking about.

The coalition was was requesting or looking at.

Yeah, I mean, I think we also just want to connect um this idea where we've done this great job of creating this public finance institution.

I have heard some things and I meant to say did my testimony, so I appreciate this moment.

But um, you know, we want to make sure we have a draw schedule.

We want to make sure that these types of projects are really producing the outcomes uh that they want, that they have the kind of rigorous oversight.

Um, uh, but I I really want us as a city to not just kind of do little nice projects here and there, which is great, but as we see with so many other things, like we need to think about the system that it sits in.

And I think there's so much more capacity, um, wealth and financial um infrastructure that we could be building or could turn this into.

So I really just want to encourage uh you as well as the rest of the council and the green bank to think bigger, um, whatever that might look like.

Got it.

I appreciate it.

Thank you very much.

Um, all right.

I appreciate everybody's testimony here in the conversation.

Um I'll mention this at the at the end of the hearing, but for Mr.

Holcomb or for anybody else.

Uh we keep the record open through Monday, um, or sorry, through Thursday.

Got it through Thursday, May 14th.

Uh so public testimony can continue to be submitted there, but we'll refer to that again once we get to the at the end of the hearing as well.

Um, so thank you all very much.

We're now gonna move to the Green Finance Authority and the witnesses.

So we'll bring up Brandy Collander and anybody else from your team that you'd like to bring in.

Excellent.

So, what I'll do is turn it over to you to be able to present your testimony, and if you'll just introduce your team when you do that, and then we'll turn to questions following that.

Um, red light means on.

Um, so good morning to you.

Good morning.

Thank you for having us.

Um, and thank you for the opportunity to appear uh before the committee today.

My name is Brandy Collander, and I serve as the executive chief officer for the Green Finance Authority, more commonly known as the DC Green Bank.

I want to thank Chair Allen, the members of the committee, and my fellow district residents for the opportunity to represent our DC Green Bank today, highlight the impact of our work on the district's economy and communities, and discuss how we can best support the mayor and council's goals of increasing the district's resilience, driving economic development, accelerating small business growth, and making the city more affordable for all of its residents.

And I will underscore affordability throughout our time together today.

Last month, the mayor released a proposed budget focused on growing the DC economy, keeping and attracting residents and attracting new businesses and jobs.

DC Green Bank accomplishes all of these goals, and we have a track record to prove it.

And we're really proud of that.

We're a small but nimble team, but we believe in the work that we do.

To date, DC Green Bank has financed $90 million in projects across all eight wards, catalyzing nearly $1 billion in additional investment in resilience, affordable housing, solar energy, and stormwater retention.

In addition, through the DC PACE program, which was discussed with some of our witnesses, we facilitated an additional $600 million in financing for energy efficient buildings.

These investments have created or preserved more than $1,100 affordable homes, created more than 7,000 jobs, and installed enough solar energy to power 2,300 homes.

I'll highlight a few of our current recent projects that illustrate how our financing is building the future of the district and improving the lives of its residents.

We recently closed on financing the Waymark, which is a new 109-unit affordable housing district next to the Benning Road Metro station in Ward 7.

More than its resilience and energy efficiency features, full electrification, a highly efficient HVAC system, solar panels, a green roof, the list truly goes on.

This building is designed to help families thrive.

Forty-nine of the units will be two or three bedrooms, providing much needed affordable homes for families.

And the development is just a block away from the metro, giving them full access to the city.

This is our second deal with the NRP Group, which is also about to complete Emblem, which is another transit-friendly, family-oriented, affordable housing development in NOMA.

Through the power of this continued partnership, we are transforming the district and delivering both physical and economic resilience to the community.

At this point in DC Green Bank's maturity, we're seeing the completion of projects that we financed.

And this is a tremendous milestone and it's a tangible example of us moving forward beyond proof of concept.

These are real projects delivering on the promise despite funding uncertainties.

Earlier this year, we celebrated the opening of Cycle House, a net zero all affordable development in Ward 5 along North Capitol Street.

This was coming out of Snowmageddon.

This building provides 18 affordable homes in a rapidly developing area, helping people stay in the neighborhood and increasing access to the jobs and opportunity this growth offers.

Just a block over on Q Street, our team also celebrated the groundbreak the groundbreaking, excuse me, of a new affordable development from Mikasa, from which we provided free development financing.

This building will provide 29 affordable homes in a nearly net zero building and host a community space.

We're proud to see our investments turning into visible and impactful changes to our community.

Over Earth Week, our team joined one of our borrowers, Green Compass to help plant trees at a church in Ward 7.

Green Compass installs a stormwater retention system, they reduce flood risk, cut pollution, and importantly, they cut water bills for local organizations.

These projects also deliver local jobs to the landscapers who dig the holes, install the systems, and plant the gardens in these retention systems.

This work is possible through DC's pioneering stormwater credit system and DC Green Bank's financing for brand new business models like Green Compasses that are helping us create a district that is ready for whatever the future may bring.

In addition to our direct financing, we've seen tremendous growth in the DC PACE program.

As I shared the last time I was before this committee, we recently closed the largest C-PACE deal in history.

This $465 million dollar loan is financing the biggest office conversion in DC's history, creating hundreds of new homes and transforming underutilized office space.

As markets shift and credit gets more expensive, we're seeing increased interest in PACE financing from borrowers and capital providers.

This is a very important tool.

Over the past nine months, our team has optimized the PACE program and pounded the pavement to bring more lenders into the program.

Pace is helping more deals pencil out while also providing incentives for investment in more resilient buildings.

We expect to see the PACE market continue to grow as we revitalize downtown and grow DC as a sports and entertainment destination.

Through our financing, we're driving affordability and economic growth in DC.

On Earth Day, we gathered a diverse group of partners to talk about how we build a more affordable future for DC, and the unanimous answer was investing in resilience in clean energy now.

DC Green Bank's investment are creating the businesses and buildings that homes need to deliver affordability for many years to come.

Our team has the unique expertise in financing resilient projects and provide support through that process that traditional lenders simply do not.

As DC Green Bank has moved into a new phase of our maturity, we have also had to adjust our operations to continue to thrive and mature.

As I have already detailed, we have moved beyond a proof of concept into having a proven track record that demonstrates the impact and value of our model.

To support our continued operations at scale, we've made personnel and operational changes to ensure continued excellence during a dynamic and evolving time in our industry.

DCGB spent several months reviewing job descriptions, considering the roles that could be outsourced to obtain greater efficiency, and design a new organization that will have the roles and the skills that we need to best fulfill our mission.

This includes shifting job responsibilities to have the staff necessary to deploy funds and a more rigorous third-party underwriting process.

By calibrating and recalibrating our team and resetting expectations with our clients and partners to support our maturity and growth, the bank ensures its valuability, its future viability by reducing dependence on the district and remaining true to its mission.

These changes position the DC Green Bank for continued success in deploying capital to build a more affordable and resilient district.

At the same time, we've also started pursuing additional revenue sources.

The goal for the DC Green Bank since its inception has always been for the organization to be self-sustaining after being ceded by funding from the district.

Last year, DC Green Bank received funding to explore the issuance of a green bond.

We thank you for your partnership.

A green bond would provide consistent capital for DC Green Bank's direct lending, ensure that we have the ability to serve as a catalyst for resilient development while maintaining fiscal responsibility and transparency to bondholders and district stakeholders.

The Green Bond is a driver of economic development.

Funds would go to projects that will add value to the district by hiring local residents and growing our tax base.

States across the country have used green bonds successfully to support resilient infrastructure projects.

Most notably, the Connecticut Green Bank has raised funds through Green Liberty Notes to finance projects that will help small businesses lower their energy expenses by investing in efficiency.

The state of Iowa and Atlanta's MARTA system have also issued bonds to finance projects that increase their resilience.

This is a well-established path to raise funds to invest in building the future of communities.

Since the fall, we've been working with Outside Council to explore how a green bond would work, including the organizational structure, the risks, the reporting requirements necessary.

We've briefed our team.

We appreciate your office's continued support and willingness to meet with our team and experts to discuss this process.

We look forward to continuing that close collaboration and keeping you all informed as we continue to move this process forward.

We're certainly learning together.

At the same time, DC Green Bank relies on the collaboration of a network of district agencies and local organizations to do our work.

The DC SEU is an especially important partner in our work, providing incentives and technical assistance that keep project costs low.

And while there's still much work to be done, we're optimistic about the possibility of green bond funding and DC Green Bank to continue to fulfill our mission.

As we navigate these critical budget discussions, DC Green Bank will continue to collaborate with the council, Mayor Bowser, our agency colleagues, business leaders, and a great network of local partners to find solutions to invest in a more prosperous future for all Washingtonians.

We welcome the opportunity to explore avenues to diversify funding streams and continue to support communities across the district.

This will ensure the continuity of our vital work and support your shared goals of economic growth, affordability, resilience, and building the economy and workforce of the future.

In closing, I want to thank the committee for its commitment to collaborating with the DC Green Bank and our team to build a more prosperous future for all Washingtonians.

I appreciate the opportunity to speak on behalf of our outstanding staff and committed board members.

Thank you.

Thank you very much.

Alright, so we're gonna jump into some questions.

I'm gonna start um with maybe some of some clarifying questions around the budget book that was presented within the mayor's budget, and then we'll kind of get into some other questions around the SETF and green bond, and we'll kind of move our way through.

So one of the things that we looked at in the budget presentation, the budget book shows the green bank's operating budget for FY27 is 3.75 million dollars.

Last year during budget oversight, we established the Green Bank began a new budget practice working with the CFO.

In the past, it was essentially just a record of past transfers to the bank of local funds.

So the green bank's operating budget for the entire for the Green Finance Authority, is it 3.75 million dollars, or is that a reflection of the intention of the local fund to transfer to the Green Finance Authority?

I'm going to um uh it is a reflection of, but I'm also going to pass to our CFO Greg Hagen.

Good afternoon, Chairman.

Uh Greg Hagar, CFO of DC Green Bank.

Uh, it is the latter.

It is a reflection of the expected transfer from the SETF in fiscal year 26.

Our operating budget is not represented uh in the overall district budget.

I had a hunch.

Okay.

So what does the operating budget look like for the green bank then as we look towards FY27?

Assuming this 3.75 million is approved and comes in.

Over the last few years, we've worked really hard to uh rationalize our operating budget and reduce it from what was previously six million to currently 4.5 million, and we expect that uh to sustain for for the immediate future 4.5 to 5 million.

Right.

I'm gonna grant a little plus or minus percentage, but that your your goal is in that 4.5 to 5 million.

You're currently at 4.5, but we're in the process of hiring additional team members to help uh continue executing in our mission, but we don't expect the cost basis to exceed 5 million.

Okay, got it.

Um when we think about FY27.

So if I'm thinking about beginning our year beginning October 1st, how much capital says the operating?

How much capital does the bank expect to have available to deploy in a relationship to the operating of the 4.5?

So we currently have uh roughly uh 4 million restricted for uh existing loans that are pending draw.

So that's one bucket, and then we have a separate bucket for loans that haven't closed that are in the process of closing.

The total represents roughly 4 million.

I'm sorry, the total, I miss that last part.

The total represents roughly 4 million.

So it is a combination of uh loans that we expect to close in the near future, and then existing loans that are pending future draws.

Got it, okay.

Thank you.

Um, and so when we think about the operating budget going back to that, so that 4.5 million, the operating budget is gonna come from local funds that could be transferred, and then fees on loans and actions that take place.

Are there any other places where funds would come into the Green Finance Authority for operating expenditures?

Uh no, there will be no additional sources.

However, uh, the way we budget, um, we we have intentionally not relied on local transfers uh given the volatility that we've experienced in the past.

So almost a hundred percent of our cost basis is is funded through uh organically uh driven revenue and our existing portfolio.

Uh we we also have been pretty intentional about raising additional sources of capital outside the district given past volatility.

So we've been very successful as you've heard today with the optimization of the CPACE program as well as our federal grants.

Got it.

Okay.

When you think about FY27, you talked about Ms.

Collander about the strategic optimization initiative that you and the board have undertaken around organizational structure and operating model.

How do you feel like the FY27 budget supports that operational strategic optimization?

Well, it was made with that in consideration.

There was no way to disentangle the two, if you will.

I think at the core, just as a frame, when you think about the proof of concept that we've talked about a little bit over time and the self-sustainability that we've mentioned in previous hearings and over the years, what's exciting about our point in maturity today is that we believe that we've been able to navigate quite a bit.

So the district's volatility I think is also directly tethered to what's happening at the federal level.

We operate quite a few federal programs still, and there's been disruption there, but we do still operate quite a few federal programs.

As we think about how do we make sure that we are effective and successful, it has required a recalibration in our approach to the work.

And so when it comes to our ability to today think about tomorrow, we do that with much less reliability, frankly, on the district's financial support.

And we also say that with the humility and respect and appreciation of how much the district has poured into making us get to this point of our maturity.

We also think the reality is that there is a super um incredible moment that we have here to be able to be very intentional about uh instruments like CPACE, where in the past we were averaging around 25 million a year, we have been very intentional and and I credit the team and also the focus, and I, you know, we're we're super uh thoughtful about incorporating third-party underwriting expertise in a way that has not been deployed in the past, which is a growth opportunity for us, as well as making sure that our PACE prospects are able to be more aggressive.

So beyond the cap that we had that we worked in partnership with you to be able to scale so we can attract more of these projects, we are also just intentional as an organization about scaling pace in a way that we haven't before and have a team that can now do that.

Right.

And thank you.

And the more correct me if I'm wrong here, but the more that we grow the capacity for CPACE projects, because the green bank also is able to then derive uh essentially a servicing fee correct from that CPACE, as we scale up more opportunities for CPACE, it also means more revenue operating capacity comes into the green bank, correct?

Correct.

All right.

So as we think about our operating budget, then like how much comes in from loan servicing for CPACE, or have we not yet seen the loan servicing.

Every deal is different.

So yeah, so every deal is different, so it depends on the deal.

So there is volatility in that, but part of what we're doing.

It feels like it's kind of a dependent upon the year, depending upon what closes, it has some level of volatility or bumpiness.

Well, so I will say, um, and we're more conditioned to this, but like when it comes to deals, there's there's just volatility.

So this is this is the the world in which we live.

Um but part of what we are also sensitive to is um there are there are a few things that you can count on for sure, right?

And so it has been nice to be able in the past to count on that consistency, whether it came to our federal um regulatory trajectory, our federal grants, our city grants.

Um, we have just frankly taken the sort of leadership disposition as an organization in alignment with the board to say we're we're of age now where we ought to try things to do things differently, and so it's not just because we are hoping that there will be more pace deals, it's because we're doing the outreach to support them, we're creating the partnerships that will scale them, we're doing the infrastructure work to allow for larger pace deals.

Similarly, the bond, as I mentioned, is another mechanism that will allow us to also have additional revenue streams.

So what we're doing is just setting up new instruments that allow us to um support our sustainability.

Absolutely.

And we're gonna get to the bond in just a little bit.

Um, but just make sure we understand that kind of the operating impact.

Is the is the servicing fee can like the size of the deal is gonna be volatile or unpredictable, perhaps.

But is the servicing fee a fixed as a 1% on all projects?

Does that vary based on size of projects or is it established like that's a standard is a 1% servicing fee?

Sort of a hybrid, do you want to take it?

Uh yes.

Uh it it is sort of a hybrid.

So there is a uh a 1% uh like administrative fee that that we earn once we close the deal for all the work and energy that goes into getting the deal to finish.

There's a 25 basis point fee that we earn consistently over the life of the loan for our work to service uh that loan between the lender and the city.

All right.

So you just okay, um, is the 25 basis points that's consistent and more reliable than the administrative fee that we earn at close?

Yeah, and that's what you anticipated where I was just about to say, which is so the basis point gives you a more predictable and sustainable uh revenue stream that's gonna come in.

The service fee, it's helpful and substantial, but it's gonna have a bumpiness to it based on which projects are closing and the size of that project.

That's correct.

And to close the thought loop, it is the ongoing service fee that we that we leverage in our budget exercise, not the one-time administrative fee.

Okay.

And just so I understand, does the does the administrative fee, that service fee, does that come in like at closing at the date of closing?

Is it something that that is uh comes in multiple payments?

How how does that work so that you kind of think through the predictability of when it comes in?

It's shortly after closing.

Okay, so it comes in as a single payment.

Correct.

Historically, the administrative fee would take roughly two years uh to begin.

So the administrative fee immediately, uh, but historically the 25 base basis consistent fee would take roughly two years uh to come in.

Oh, so that would be historically historically that would isn't the that basis fee just takes longer to kick in, and then it's but then it's going to be going for a longer period of time.

Okay, got it.

All right, that's helpful, thank you.

Um, all right, let me turn to SETF allocations for a second.

Um, so our FY27 proposed budget shows the green bank is slated to receive $3.75 million dollars from the SETF.

Um I'm happy it wasn't zeroed out, I guess.

Uh, but it's still I've got to point out that's half of what the green bank was supposed to receive as laid out in law of seven uh seven million dollars.

Um, so in essence, this is flat funding from what was approved last year.

Would that be the best way to describe it?

That it's it's not a cut, it's not increase, but essentially is maintaining the cut that took place last year.

The schedule transfer is consistent.

Uh what is not consistent is is the cash that we actually receive.

So there's the promise, and then there's the receipt of cash.

Yep.

Right.

So for the fiscal year that we're in currently, as we talked about at the oversight hearing.

So the first, well, the payment could be made day one of the new fiscal year, but the way that the mayor's office has chosen to submit this is to split the payment into two pieces.

They now call it the first half and the second half payment.

Uh the story kind of has changed over the years, but the first half payment came in shortly before the oversight hearing.

Magic how that happens.

Um, but the second half payment has not come for FY26, correct?

That's correct.

Uh I would say that the uh timing of receipt uh is not as clean as first half and second half.

For example, in fiscal year 25, we received the 2.1 million after fiscal year end.

Yep.

And so we operated for the entire year before the first transfer was received.

Um had it been uh first half and second half, uh we could have used that um more prudently or we could have budgeted uh more prudently if we could have relied on that type of timing.

But unfortunately, that has not been the case.

Yeah.

Um yeah, I I mean I think we're on the same page on this.

You know, I as a bank, it's very different than um, for example, when we um appropriate a certain amount of funds for an agency, and they know they can rely on the fact that the money will be coming in, and so they can make decisions based off of that.

As a green bank, you can't loan money you don't have.

You can't do that.

And so if the district decides to appropriate the dollars, but the mayor's office doesn't get it out the door and just sits on it till the end of the fiscal year, it's essentially tying your hands for an entire year because you cannot deploy it, which I know has impacts on the uh the small businesses that you work with, the deals that you can consider.

So I think we're on the same page here that this needs to be in a more smooth and predictable way, even if it is broken up into a first half, second half, make it an actual first half, second half, because that's not what we have right now.

Okay.

All right, we talked about in your testimony you shared a little bit about the um the work exploring the green bond.

So the 250,000 the council allocated for establishing and implementing the green bond was only just transferred.

Like do you has that been received?

Yes, that was received.

And approximately when was that received?

Approximately around December of last year.

Okay, all right.

So from uh operations of being able to do that work that you want to be able to do over the course of the fiscal year, did the timing of that transfer hold you back, or you had a fair degree of confidence, or did you wait till December and then you started the work?

Like, kind of getting again at the predictability and reliability of when those payments come.

To be fair, it's a bit of a hybrid.

I mean, we we are still doing the due diligence.

The approach to the work that we take is um we're gonna find a way to get it done.

So there are sort of two different things at play here.

There's the ability to have that money in the bank accruing interest, and your point is well taken.

That is difficult to do until the transfer has been made.

Um and then there is us pioneering and demonstrating leadership in different ways because we uh feel the need to have to.

Um, but also we think that it's part of our charge, quite frankly.

I think that part of what we're excited about is um this is we think a story of success.

Our um expectation of the amount of funding has dwindled since inception from 15 to 10 to 7 to what we ultimately receive.

Um and we are just we're so uh we're we're forced to be sort of nimble, we're not a DOEE, we don't have the layers of sort of resources, um, and we're not an agency to be fair, right?

But what that ultimately means for us is we have to recalibrate an organization that is more business oriented and can think about how do we maximize the value or create new instruments to attract that business.

Okay, got it.

Um this is more of an back to kind of operating budget question just for a quick second.

Um the new offices, we think about the structure you have right now, the offices you're in right now, the lease that the green bank has runs for a certain period of time, I believe.

Rent is about $300,000 per year, and I think it's a typo, so we can follow up with the afterwards, but it looks like it says that it's ending in 1931.

So I think it's just a typo.

But how long is the lease that we have for the office right now?

It was originally a seven-year lease uh that we began last year.

Okay, got it.

Um, you know, as an aside, when the CFO has a lease for $26 million dollars that no one's using $300,000 per year, does not jump out to me as a huge problem.

Um, okay.

Now let's talk about CPACE and a little digging a little more there.

Um this was a banner year uh in terms of the green bank's ability to um close on about 465 million dollars worth of deals, which is fantastic, and that was the New Vene Green Capital deal.

Um I mean I think we, unless it's been outpaced somewhere else.

This was the time at least was the largest in the country uh in terms of deals.

Still is all right, that's good.

Um, only we can break our own records, so that's good.

Um so we've heard from our public witnesses talking about really what I heard from them uh was a big belief that this is only got more room to grow, that it's gonna be a financing tool and ability to attract capital into the district, and in particular when we kind of hear other corners telling us that capital doesn't want to come in the district, this could be a very effective tool to help make sure that is happening for major projects.

Um, so it seems like CPACE has become a preferred financing option to the green bank.

Is that fair?

And is CPACE a preferred financing option that we're seeing in other green banks?

Like how are we stacking up to other green banks when it comes to either utilization or vision around CPACE?

That's a great question.

Um, I think that there's a few things happening at once.

Um, you have uh a new uh federal administration that has um frankly differing views with respect to the trajectory of clean energy and the perception around clean energy or what constitutes clean energy, and that is inherently going to be disruptive when it comes to the systems that clean energy drive with respect to the infrastructure that has to be built.

We also noticed during the summer, um, a lot of bumpiness, if you will, around immigration policy and the ability to build on time.

Um, and so there's a confluence of disruption in the market.

I think we're now at a place that's not stasis, but it's definitely there's confidence that you can get back out there again.

There's confidence that things will be built, there's confidence that there will be bridging uh gap mechanisms like C-PACE that allow you to take the friction out of some of the initial upfront costs of things that are going to improve the longevity of that infrastructure.

And a lot of times what we say, sort of in the most basic sense is we're building infrastructure for tomorrow for the future.

We're not building the infrastructure that your insurance check is gonna have you build it back to specs from many, many moons ago.

The goal is to actually build it to be more resilient, more sustainable, and we take the friction out of doing that.

Um, and we're in a swim lane that will never compete with traditional banks because we also literally work hand in glove with you to provide the technical assistance to do that with unique instruments that allow you to do that at scale.

So we do think that that's what's unique about our role in this ecosystem.

Um, one of the public witnesses uh, Mr.

Pastronk mentioned, you know, during the groundbreaking, they were working on that project from different directions for years, and so it was nice when we finally got connected because it allowed us to scale that partnership more quickly.

That said, that could not have been done without our partnership with you all, because it did require a neck bracing timeline of being able to uh have a legislative adjustment.

And for me, that is the success of the power of partnership, but also we can get it done in DC, right?

We have a great team, you all have a great team, and that project going anywhere else other than the district was frankly a huge motivation for me because we believed in the partners, we believed in the tenants of the project, and we knew that it would be a pioneering example, and it is the largest CPACE deal in history.

You would be curious to see the number of additional headlines that have come from hundreds of millions of dollars of projects for CPACE.

Because now once someone shows you that it's possible, you can only continue to do more of the same.

So the answer to your question is yes.

I think because someone took a leadership role, and I think we should all share in that collective success, others are now doing it as well.

I think there are other mechanisms like green bonds, and so that's a place where I expect us to be able to hopefully, you know, um join others in being able to do that.

I think others either overrely, frankly, on remaining subsidized in perpetuity, which I think can continue to create bumpiness as there are changes, or they allow their pipeline to self-sustain them.

And those are generally sort of the trajectories of green banks.

Okay, excellent, thank you.

Um, when we look at our CPACE program, obviously lending of any type has volatility and risk.

What are some of the risks that we should be thinking about from C-PACE?

Um, so we've talked about the upsides, and it seems like it's uh, you know, you can find more favorable terms uh than standard financing with C-PACE.

Um, obviously it's space where if a jurisdiction is innovative and has created a Green Finance Authority and Green Bank, we've got great opportunities there as well.

Um you mentioned part of, you know, with the federal administration right now, which introduces a lot of volatility in our lives.

Um, is there risk that the federal um federal agencies or federal administration could change a program in a way that all of a sudden hampers our ability to utilize this?

Is there other risks that we should be trying to think about?

Um I I've been raised to say never say never, but I will say I think what is so attractive about C-PACE is the way that it removes the friction, if you will, of making those deeper investments for more resilient infrastructure, is it lives with the property itself.

And so oftentimes, you know, and we we believe in this work, so I will say there are times where we will partner with a new developer, someone who's never developed anything in their lives, but we're we're in the foxhole together, and sometimes it doesn't work out, right?

Um, and sometimes you're working with a more mature developer, and sometimes something happens on their end with the infrastructure itself and it doesn't work out.

In both cases, they are then in default, right?

We then have much more exposure.

Um that is part of the work.

In the PACE instance, it actually lives with the property.

So the next person who picks up that property and someone inevitably will, right?

The project that they're um picking up has these attributes that will live with the property assessment.

Got it.

And so, and you can I think you were kind of getting there on this too.

When we think about a C-PACE deal, the district isn't the lender.

Correct.

So in the case, sorry, yeah.

So in the case of the Geneva project, um, we partnered as the city administrator of PACE.

Matt and his team are the post brothers, they're building the project, New Vene Capital.

That's where they are, they are the bank behind it.

Got it.

And so who holds the greatest amount of risk, for example, then?

Is it if the district's not the lender, so the district doesn't carry the risk, and I think uh uh I can't remember if it's Matt or somebody kind of referenced that as well.

Is the Green Finance Authority holding that risk, or is it you facilitated New Veen in this example holding the risk?

More the latter, um, to the extent that there's risk, but again, it lives with the property, so but more the latter.

Okay, got it.

Um we've referenced this already.

We obviously took legislative action to change the cap that that we have, which I obviously allows that project to move forward.

Um, and you know, again, I think one, we were able to move nimbly to make that happen in partnership, and I'm really glad we were able to get that done.

And uh we see the results already with a major project.

I think that the logic behind the initial cap was probably well intended of saying, you know, uh it's new and it's much newer at the time, and so wanted to see proof of concept, and so I I think it makes sense.

Um if the district does not permanently change, um, what are the risks that uh that we then see in the marketplace?

Um thank you for the question.

Um the brass taxes folks will go elsewhere.

You know, they'll go down the road, maybe Baltimore, maybe Virginia.

Um, building in the district is a unique opportunity, and I think people seek it out for that reason.

Um, and then there are some nuances, whether it's height restrictions or just sort of the the ecosystem from a governance perspective, um, and we really work hard to attract new types of capital projects.

What I know for sure is that that was certainly a cap, and we've run this all the way down that was designed to support something that was new and innovative, proof of concept, and not having a permanent cap removal will uh stifle the potential of the project.

So, right now the cap um was 250 million.

In the past, as I mentioned before, we were averaging around 25 million, but that was us just getting running.

We've made so many changes internally in the last 10 months alone around how we pursue PACE that that's why you're seeing that growth.

And so I would imagine us averaging probably at least around a hundred million or so in PACE every year moving forward, best case scenario, as the baseline, and that allows us to do a lot more over time.

Not having that cap will stifle us because we can easily do.

I mean, we're gonna go beyond the Geneva project threshold that you shared earlier before the close of the year is my expectation.

And you know, without a justifiable strong policy reason for not having uh for having rather a cap, it's sort of confusing as to why we would limit ourselves.

Well, and you anticipate my next question, which is gonna be if we're looking at a decision around should we institute a new but much higher cap versus no cap at all, how do we evaluate kind of risk reward of either those two decision points?

Um it sounds like you're saying you don't believe there's much of a value in any cap because we'd be limiting, but with your skeptical hat on, is there any value in having a cap, even if it were a very high cap that either limits risk or exposure, not doesn't sound like much to the district.

Does it risk limit or exposure to the Green Finance Authority?

Does it help risk or limit exposure among other lenders?

What are your thoughts on that?

Um I spent quite a bit of time with your team workshopping this in December.

So thank you again for the question.

I believe that it would be arbitrary, and I don't believe that good policy is founded on arbitrary baselines.

So in short, um, and I I led with I've thought about this so that I don't sound like I'm just rushing to uh the decision point, but um, having really spent time thinking this through, I don't.

As you mentioned, there's going to be volatility year after year.

So in more bullish years, and I do not anticipate a half a billion dollar project every year, so I'm self-aware in that regard.

I think it's really smart because you're gonna see the halo effect of others that feel like, okay, the water's warm, let's get out there.

And this is sort of behavioral.

Real estate can be that way.

So to have the opportunity to um run as fast as you can run, frankly, in any given year, you should absent an actual reason, and we have not identified one.

So there's not, you know, again, the cap was initially, there's not a cap on how much how many real estate transactions we can have in any other regard, and so I don't see why it would be applied here.

Um if someone were to introduce a policy justification for why, then I think that would be the right conversation for us to have.

But it truly was implemented as it's early, we don't know enough about this, it's proof of concept, they're new.

Absent that, which we've proven otherwise, and we have a very, I mean, I literally have to physically wet sign and go to a notary for pace deals.

The mayor literally has to sign each one.

So it is a it's it's not a typical transaction.

There's a lot of scrutiny.

Yeah.

Um, I appreciate it.

I know we spent some time kind of talking about that outside of here as well.

Um part of the sometimes I ask questions and know the answers too because we uh need to put it on the record so it helps build out our legislative record uh to be able to make those changes.

So thank you for walking through that.

It's especially as we kind of talked about in some earlier questions.

When we these deals don't create a risk to the district, and as you talked about, the risk really uh either lives with the lender but is then captured in a different way in the building itself.

Um there's not much of a policy argument of just finding just a different number but a higher number.

Because at some point, that's a bit arbitrary.

Um if it were if a cap helped make sure that we were limiting the district's exposure and risk, um, if it was helping substantially lower the risk of the Green Finance Authority, because I don't want the Green Finance Authority to have some kind of volatile happen thing happen and all of a sudden all the other projects come under risk and financial stress.

Maybe that would make sense to limit some type of financial cap.

But I don't see, I share your opinion on this.

I don't really see a uh policy rationale and reason to just put a different number on it.

Um I think we're on the same page there, but I appreciate you just laying it out so that it's it's clear for our legislative record on that.

Thank you.

Um, all right, let's talk about green bond self-green bond financing now.

Um so we talked about this a good bit last year.

We're feeling like we're plugging away, we're we're making progress.

So we talked about the work that you started last fall, the funding from the council uh to be able to start putting uh more capacity to help research this and then moving into what potentially could be something that we want to add into the budget this year.

So the green bank is unique in that allocations are used to capitalize the bank for its own series of investments.

So, in a sense, the money allocated to the bank year over year kind of never goes away, it returns back to the bank in terms of payments from borrowers.

So when we think about moving towards self-sufficiency and what role a green bond can help in that, um what would I think of today, now as the green bank's portfolio size?

Like how would we describe that right now?

Uh the total amount of capital I'll stand in currently is roughly 60 million.

Six zero?

Six zero.

Okay.

Uh, but then you add in the potential draws that the uh closed loans have in the pipeline, and so it's only set to grow, not to mention the pipe the deals that are set to close.

Got it.

Okay.

Um when we think about like what is the rate of return aggregated across that portfolio?

It averages around 5%.

Uh our target is roughly five and a half.

And it's it's it's that average return that allows us to break even and achieve positive cash flow uh starting in fiscal year 25, and we expect that positive cash flow to reoccur going forward.

All right.

And earlier we talked about the basis points and servicing fee that comes from a CPACE program that comes back in.

So how do we, or I guess we are budgeting for those uh rate of return that comes back in?

That then is coming back to feed into um operating expenses for the green bank, or that's coming back in to then become capital and go back out.

Both.

Both, yeah.

So uh cash paid back in will support our overall cost basis as well as fund future loans.

Okay.

So can you you you touched on your testimony, so I just want to pull it out a little bit more from a timeline perspective.

You've been studying this since the fall.

We were talking about it before then, of course, but kind of the next level of earnestness kind of kicked in then.

Um, what is a timeline look like to you?

If if everything fell into place the way you would want, yeah, what does it look like from a timeline to actually have the green bank be able to move forward with a green bond?

So our target is the tail end, basically end of year, first quarter of the following calendar year.

All right.

Repeat that again.

So the goal would be that we would have the green bond exercise closed by the end of 2026 or early calendar year of 2027.

So what we're focusing on right now is basically creating the RFP that would go out this summer.

Then we'd use that fall time frame to finish that process of seeking the right bank partners, underwriters, etc., so that it would be like finalized and closed out and working.

There are already discussions happening with different rating agencies now.

Got it.

And then to be able to go out and actually um, I guess you go through the RP process and then issue a green bond.

That is within the green finance authorities' existing budget, or that would be um budget that is necessary through the council's budget process right now to then be able to have the funding available to then help manage the debt service on a bond issuance.

This is a little bit of a hybrid answer, but um we uh are requesting the city via our conversations with you, make a 2.5 million dollar investment in the green bond itself.

We think that does a few things.

Um that number is basically a number that we think would be respected as like a considerable contribution for a $50 million dollar bond, prospectively.

Um we also think about what we've received over the last couple of years, and start instead of the the 15, the 10 million or the seven, and that we're just aiming for something that's reasonable and achievable.

Um it does not need to be that number, but what that does is it shows that there's uh confidence from the city on what we're growing and what we're building as a tool, um, and show it it's it's effectively um demonstrating your commitment to support it.

Got it.

And then with our crystal ball look even forward into the future, so if the approved budget puts in that 2.5 million dollars, you're now moving forward to issue a green bond and manage that.

Um, what would be would the expectation continue to be that we need to transfer SETF dollars as well to continue that level of investment, or when we talk about self-sufficiency, especially given the bumpiness and volatility that we've experienced with those dollars getting actually transferred, you start to see less and less reliance on that stream coming in because now you have a much more predictable and frankly controllable um green bond?

It's hard to interpret it any other way, frankly, when you just have to deliver.

Um, and so I think we would continue to talk to you all in partnership to figure out how best to navigate that.

We believe that this is important for us to build out and we have the statutory authority to do it for all the reasons we've stated already.

So um it's why we budget the way we do, and it's why we're doing the exploration and the seed capital that we appreciate your support in providing has allowed us to move that due diligence forward.

So our target is to move forward, um, and we're just hoping that we can do it in partnership with how we get to that capital, whether it's the 2.5 or whatever figure seems reasonable and achievable, um, we would work with you in partnership.

Okay.

Is there is there a pathway to self-sufficiency without a green bond?

Um, or does it just look a lot different without it?

Uh, financially, Chairman, we we are currently self-sufficient.

Uh, we are we have achieved positive cash flow in fiscal year 25, and based on existing our existing portfolio and expected revenue, I expect that to continue going forward.

The green bond will supercharge how how fast we can accelerate the growth of our overall portfolio.

Okay.

Well, I'm gonna have a colleague who hears that and says, well, then why do I transfer anything from the SETF to you?

So this is not because we always are able to depend on it.

Um, and frankly, it's the commitment that's been made, right?

So part of the reason for the changes in the organization are to reflect the fact that we have to operate in a way that relies on us being able to be self-sustainable.

Um, what we don't want to do is be in a position where we cannot continue to support the work that we're doing with our borrowers, and so that's the work that we set out to do every day.

I think the commitment that we have, and this would be a conversation that um I think we need to have more conversations around what is possible to facilitate that, but ultimately what we could do is different than what we are doing.

We're doing the best that we can with the resources that we have.

So to the colleague who were to ask, well, why am I transferring anything?

It's because there was a commitment that was made with an expectation that we would be able to do certain things at a different scale.

We're obviously not doing that, but what we are doing is figuring out other ways to get it done, and we shouldn't be punished for that success, right?

I think a different conversation is uh ripe for us to have around what does make sense given the the recent trajectory of the funding, yeah.

Does the is there an argument though you would make that the transfer that does come from the SETF gives you greater capacity?

And then also does it give you greater capacity to focus on, and I'm not trying to make this in any negative way.

Like the the Geneva is a big big project.

Does it give the ability to focus on some of the smaller scale projects that still have deep impact, but aren't necessarily gonna be the scale of a Geneva?

Does that transfer and that funding help you be able to accomplish those things and prioritize that?

So can I start?

I'm gonna two different questions I heard in there.

Um I'll take the second, you can take the first.

But the the we are a mission-based organization, and so I want to be super clear that you know, yes, we can serve Matt and his team, and we can serve Deacon Carl, who is uh the deacon at the church that we mentioned in our testimony, who walks us in as we're doing a tree planting to the boiler room and he's trying to think through the next project, right?

And we've already got solar panels on that church.

That is our job.

That's never going to change.

We're committed to that.

The board is committed to that, the team that we attract is committed to that work.

Also, we could frankly never compete with traditional banks.

That's not our charge.

That's not our mission at all.

So we're inherently always going to do everything from the Howard Theaters to the Geneva projects to the church boilers.

Um, so I just want to make sure that that is crystal clear.

Um, I will say the same thing over and over again, but it allows us to be able to do both because both are core to our mission, and that's the demographic that we serve.

So at our current uh financial size, you know, we can sustain current operations and nurture our present portfolio.

Additional contributions, uh, very similar to the bond will add flexibility, uh, increase the pace and size of impact of future investments.

Uh, and so I believe that objective is aligned with both of our priorities.

Got it okay.

Thank you.

Um, when we think about, and I'm gonna kind of pull back a little bit here.

We think about just our green bank overall.

You know, I have talked to my colleagues, to constituents, to stakeholders.

To me, this is a really great return on investment.

Um, the public dollar that goes in based on which year we're talking about can be matched as high as 12 to 1 or 8 to 1, whatever the exact number is, it's a really good return on investment, no matter what, whether it's eight or 12.

Um we, you know, you can run through you mentioned multiple projects, you can continue running through projects where um, and I hear this from the development side of the community as well, but for the Green Finance Authority and the Green Bank, this deal wouldn't get done, or the contours of this deal wouldn't have gotten done, right?

Um we obviously are in time and a period where from an economic development perspective, um, we have unemployment that has risen uh above the national average for the first time in 25 years.

We have thousands of DC residents and households that have lost jobs.

Um we have deep instability from the federal side with what our workforce looks like, which then hits our economy and revenue that comes back into the district.

So we have all these kind of factors that are playing into the overall economics of not just DC, but the region as well.

Our neighbors in Maryland, Virginia are feeling that as well.

And I try to tell my colleagues, but we do have kind of this bright spot, and that is our green bank and the projects that we see taking place there.

So when people say, Well, I used to see construction cranes on the skyline, I just don't see any anymore.

It's not quite true, actually, because we we do have projects that are that are happening.

Um everything's gonna be a point in time, but if you as you think about how many construction projects are currently moving forward that include DC green bank financing, how do you respond to a question like that?

How do you do you have a specific number?

Do you talk about an average?

Um the green bank's participation in projects, um, it may not even be the majority lender within a project, but it's one that helps a deal close or helps it have additional capacity.

You're touching a lot of projects.

How do you help talk about what you how many different projects you're a part of and helping actually be a catalyst for growth, which is what we want?

Yeah, um, so we're in different positions in different projects, so we are on purpose diversified not only in our engagement, but in our position.

So in some places we're more subordinate than in others.

Um, and and it depends on sort of the the purpose for us uh partnering, if you will.

It could be, you know, pretty bespoke, it could be a project that was toiling for years and years, and there's a bridge financing mechanism, and we can enhance some of the sustainability infrastructure resilience attributes.

It could be for something that's very, very small scale where it's a new developer and they just don't have the full faith and credit of a traditional bank, but we can find a way to partner with them.

Um sometimes we can find opportunities for partners that we've worked with to work together.

So it really does, it does depend.

I think the um, you know, you've we've we've talked a little bit about like the leverage ratio in the past, but I think the the part that is difficult is that we can service different types of demographics.

And so we always encourage people to first come and just talk to us because what we will do is at least give you clarity around whether or not a partnership makes sense.

Sometimes the answer is no, sometimes the answer is not right now, but we can work with you to build the sort of muscle and provide the technical assistance to potential borrowers so that they understand legally what's required, they understand from an underwriting perspective what's required.

Um sometimes this is where DCSC was a really great partner because we can get them through the financing, we can get them through the development itself, and then on the back end, they've got these great rebates and other resources that can be used to make it pencil.

So it really, it really does depend.

I don't have a number at any point in time around all of the projects.

Um we know where we are actively engaged, of course, but sort of in the aggregate of what's moving in the city, there's a lot always moving in the city.

Yeah, got it.

Um yeah, I I just want us to continue to highlight that because as we as we think about what is for on in the district's scope of the budget, yeah.

It's a our investment in the green bank is a fairly modest investment, to be frank.

Um the return we get is not modest.

The return we get back is deeply substantial.

And we're all gonna be clear-eyed about a difficult budget that we're trying to navigate, but we're also trying to think about for every dollar that we put forward, what does it yield back to us?

And does it create new housing?

Does it create new jobs?

Does it help lower utility costs?

And I think that the investments we make in the green bank translate back into that, and that's something that we want to continue to highlight, uh, especially and increasingly in a time where we are having to make difficult choices.

Um, I guess that touches on another part that I feel like constantly gets posed as a false choice to policymakers and to leaders, and frankly, then to community.

And that is that investments in sustainable in sustainable energy, investments in climate are antithetical to growth or affordability.

That if we're trying to invest in sustainable elements of a building, all you're doing is just driving the cost up.

Let's just wait and maybe do that when the economy is better.

Um, and I think we have project after project after project where we show it's not just lifetime savings to construction, but it is savings to the people that might call it home, um, or to the business that is just trying to make do.

It's why I kind of wanted to ask the question about Howard University, for example, an institution that we all have a deep value in making sure is uh on great ground for the future.

So 1.5 million in savings and lower bills means 1.5 million that they can put back into the future and sustainability of that university.

Um for the higher theater, the savings can be created, help just afford to be able to be there as the institution for us, right?

And when we talk about housing, making these investments means lower utility costs, lower bills for the people that are gonna call it home that we want to be able to call home.

So is the I was struck when we had the um the sustainable energy utility hearing the other day, they have kind of compiled, for example, um, the lifetime energy savings that they're able to help show.

So they're able to help document and be able to show, okay, for the investment you've made of X, we've created this hundreds of millions of savings overall.

Has the green bank been able to capture that in terms of kind of lifetime savings?

Because I I think we want to continue to help share.

This is what it's like again.

I I don't have, when we talk about installing solar, it has been quite a while since someone has come to me and said, Councilmember, I'm putting solar on my rooftop because I'm really concerned about my carbon footprint.

Yeah.

What they tell me is, council member, I want to put solar on my rooftop because these bills are too damn high, and I need to control my costs, and I want to be able to help generate energy, control my savings, and lower my costs.

And so I think it's important we talk about it this way.

Because I agree we are making sustainable and climate action decisions, but we got to translate it to people.

So can you, Sherlett, how are you helping capture that in a way to help tell the story of savings, be it to residents or to businesses or to government.

I really appreciate the question because in exercise to take this feedback because I've I've heard this before, not just from you.

And part of it is, you know, we're a small organization, so it can be obscure for some people, but once you've partnered with us, you know us well.

And on Earth Day, we this was the whole impetus for having this event.

It was an event of a scale that we've never done before.

It was held at Howard Theater.

Um Chip Ellis was was um conflicted today, but otherwise was gonna join as a public witness as well.

And it was an affordability frame.

It was an Earth Day, of course, event.

Um, but the focus was affordability, and there were three panels.

We did a panel where we had some of our developers, all of various scale and projects participate, and they spoke very uh candidly about affordability challenges.

And we said, you know, this is a place where we want you to speak truthfully about what you're struggling with because the absence of being able to do that means it's 10 years before another developer can learn from you.

So we want you to be able to learn in real time.

We had Groundswell Community Solar do a panel where they had residents talk about um their affordability pinch points as well as uh Chris from Uprise talk about the power of solar development, um, and others, and then we also had um the chamber of commerce participate because it was really important to, you know, we're partnering with businesses, and there's just a uh um a reality around making sure that partnership feels good to everyone involved, and so we're leaning into it instead of running away from it, right?

That does not serve anyone, and uh your team was there, so we appreciate that.

It was really I think a hallmark moment for us to be able to showcase that in a place where we have finance solar panels, a battery storage system, so we're showing you how we do the work.

Um, and we're gonna continue to put that collateral out there so that it sort of lands with people.

Um, in my testimony, I mentioned that we finance 90 million in projects across all eight wards, catalyzing it over um a billion in additional investments, and then we we sometimes speak to the leverage ratio, but I I've sort of moved us away from that largely because I don't think it lands with the layperson.

My general disposition is you don't have to want to partner with us just because you are committed to a climate transition.

It's sort of like church, come to us whosoever will as you come, right?

Um, we will we will convert because it just makes sense, and so um we want to make sure that we can have an open tent approach to pull people in our sort of event on the 22nd was an opportunity to do that at a different scale.

Um, and we'll continue to lean into thought leadership and convenings to help reach different people.

Yeah, I appreciate that.

When we talked early on in your tenure, I talked about like we've we've got to this conversation and kind of this false choice that gets put in front of us, is it's been there for a while.

So it also takes time to kind of change minds.

And I think predominantly, I will hear what we had heard in the past from many in the business community that say an investment like this is gonna cost more, and that's gonna be a challenge, I think, for us as a growing economy.

And I think we are helping show through projects that you've been able to highlight and others, and I think it's also um, you know, I I appreciate we talked about this, and I kind of challenge like what can we do to get in front of these businesses, partner with them.

You've done that, which I appreciate because I think it does pay dividends back for them to see these projects, understand the impact on this, and um that these are investments with a big rate of return.

It's um, yeah, it's not unlike also people that you know they just kind of like their flip phone because they just like their old flip phone, you know, like at some point you're moving.

Um, and so that transition, it's coming.

We're here when they're ready, right?

And so there it's it's gonna come, it's gonna happen, and it there may be multiple reasons why they eventually get to where they're going, but it's gonna get there, and I think the arguments around affordability are a big one.

You know, I'll highlight, you know, another project that I think is worth bragging on, right?

Like the V Steep, the V Street project of Ward 5.

Yeah, right?

I mean, that's a thousand households, and it's gonna save $7.5 million over the next 20 years.

Like that, when we talk about affordability in our city, these are projects that deliver that.

And it's for residents, it's for businesses.

So I think we have to continue carrying that message forward.

I think it's a really important part of how we both show people there is a return on investment, but also we're being a good steward of your tax dollar.

Yeah.

The tax dollars we put into you have a high rate of return and generate not just the private investment.

I'm I'm saving people money.

And we are, and that's what we want to do.

Yeah, that's an important way.

Um, you know, uh I wish that we had, you know, when we allocate the funds through the SETF to you that they came in a smooth and predictable way early in a year.

Um I think we undermine ourselves by not getting it there, right?

Again, I can allocate the dollars, but you're a bank.

You literally can't do anything with it until it shows up in your account.

And when it comes at the end of the fiscal year, or even after, I mean, we are, it's not just one hand behind your back, we're going into time too, trying to get you to do it.

So I uh am encouraged and excited about working with you on the green bond.

Um, I think this can be a really innovative tool.

Want to continue working with you on the CPACE and how that continues to grow.

Again, I think this is a space when just keep hearing people say nobody wants to invest in DC.

Not true.

We actually have some really great projects we can show you, and we're working on innovative tools to do that.

DC is a great place to do business, and let me show you how we're being innovative in making that happen.

Um, so I think we're turning the tide on that conversation with tools like this.

I want to see um the green bank kind of keep getting pushed out there as a model of how we're getting it done, how we're making it happen, how we're seeing those investments in the district.

So look forward to continuing to work with you throughout this budget and and beyond.

So thank you very much.

I don't have any further questions at this time on the budget.

Um I know we can follow up with you afterwards if there's any follow-ups uh that we need.

So I want to thank both of our public and our agency witnesses for testifying today.

Um, this is gonna conclude our sixth and second to last budget oversight hearing of the Committee on Transportation and the Environment on the Mayor's FY27 proposed budget.

And again, for anybody who wanted to submit additional testimony on the budget, the committee is gonna be accepting written testimony until next Thursday, May 14th.

And you can do so at limbs.dccouncil.gov backslash hearings.

The next hearing of this committee will be on Monday, May 11th at 9 30 a.m., the committee will hear from both public and government witnesses on the budget for the public service commission.

There being no further business for the committee.

And this budget oversight hearing of the committee on transportation and the environment is now adjourned.

Thank you all very much.