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At last week's board meeting, the new commissioners of the Maine State Housing Authority (MSHA) learned about a speculative 20-year plan to weatherize all 476,729 single-family homes and 8,369 apartment buildings in Maine. Although started in 2009, the project has barely been mentioned during my 14 months on the board. Last week, we questioned what appears to be well over one million taxpayer dollars spent on carbon consultants, computer systems, and staffing connected to the plan.
The 9-page plan document describes a stunning $4 billion price tag for the weatherization venture -- 30% more than the entire annual state budget. The project is to be funded from three sources: $3.2 billion of revenue bonds sold to investors, and a combination of $757 million of taxpayer subsidies and futuristic carbon credit sales.
Although we asked for the plan details at the board meeting, few were forthcoming to the commissioners. We were told to expect a staff presentation at the March meeting.
Here's how I believe the Authority expects to fund the 20-years of weatherization...
MSHA sells $3.2 billion of "revenue bonds" to investors. The proceeds are used for $5-10,000 weatherization loans to homeowners that pay for the work. Homeowners repay the loans to MSHA, which then uses the cash to pay the interest and principal to the bondholders.
But, what happens if a homeowner doesn't repay his/her weatherization loan? Does MSHA rip out the installed insulation and try to resell it? This payment stream seems quite unlike a family paying off a home mortgage or car loan, where the dwelling or vehicle serves as ample collateral for the bank to loan the money. What security does the bondholder have that the interest and principal owed to him/her will be paid? I can imagine struggling families who qualify for the weatherization program having to choose between buying their basic needs, and making a weatherization loan payment. An easy decision for most as the payment gets put aside. Even if enough investors can be found to buy $3.2 billion of such high-risk revenue bonds, the interest rate would likely be so high that many Maine families might not be able to afford the loans.
The remaining $757 million taxpayer dollars needed to fund the 20-year weatherization plan is a financial mystery. The Authority is counting on government subsidies and Jetson-like carbon credit sales for this funding. In 2009, MSHA received $42 million of federal stimulus money to weatherize approximately 5,000 Maine homes. The $42 million has been spent; the one-time stimulus money is gone. With the federal government $16 trillion in debt, and our state government struggling to balance its budgets, where are the additional weatherization subsidies going to come from?
Lastly, MSHA has made a big bet on voluntary carbon credit trading to augment the taxpayer subsidies. Since 2010, the Authority has asked several thousand Maine homeowners to sign-over their "carbon credits" after each received approximately $6,500 of weatherization work. MSHA somehow quantifies the amount of reduced carbon emissions from burning less heating oil (or other fossil fuels) because of the additional insulation. Board members were told that MSHA has collected 7,000 tons of carbon credits. The weatherization plan relies on a projected $16 per ton value for each of those credits to help pay for the work. However, the global market for trading voluntary carbon credits has collapsed with the worldwide refusal to adopt expensive cap and trade laws. The Chicago Climate Exchange (CCX) has closed. The last carbon credits sold on the CCX were priced at roughly 5 cents per ton.
The time and resources to develop a $4 billion plan to weatherize Maine residential buildings has come with a cost to vulnerable Maine families and taxpayers alike. At last week's meeting, the MSHA board was told that $850,000 of taxpayer dollars has been spent so far on carbon consultants, computer systems, and related expenses. Another $250,000 will likely to be spent to fully develop the program, we were told. The new board members have asked for the financial records to see if even more has been spent.
All the while, 800 fellow Mainers sleep in homeless shelters on any given night. Thousands more wait for safe, warm affordable apartments to call home.
With so many Maine families-in-need, why spend nearly $300,000 of scarce taxpayer dollars for each 1,100-square-foot affordable apartment? Why spend almost $1 million in 2010 for "education and travel" expenses for the 140 MSHA employees? And, why spend more than $1 million (maybe a lot more) on a risky carbon trading bet based on unpredictable global forces over which MSHA has no control?
How about getting back to basics. Let's focus on the MSHA mission of moving thousands of Maine families off waiting lists and into affordable housing. And, let's wisely spend limited taxpayer dollars doing it.
Maine State Treasurer
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