Okay, welcome to financial planning day. We are very lucky to have assessor Torres with us today, and he'll be talking about property tax changes for the county of San Francisco. We have, he's got a lot of material to cover today and so you can put any questions in the chat function and I'll be monitoring that and then when we get to the end if we have, if I see questions that we haven't covered, we'll try to get through those. Thank you so much for joining us today assessor Torres. Thank you so much for having me Karen. I'm very very excited to be here for this online financial planning day. Good afternoon everyone. My name is Joaquin Torres and I'm your elected assessor recorder here in the city and county of San Francisco and I wanted to say thank you again for joining us on file on this financial planning day session that specifically covers what's known as proposition 19. If you have any of that I just want to say in the chat section my staff will be putting up contact information where you can reach out to us. So that when I say those things that you don't have to just jump for them, they'll also be in the chat section as well. So you can pick those up and know how to reach out to us with additional questions that you may have around this issue. You can reach out to us on our website, etc, and you'll find that information in the chat section. So I very much want to thank of course the organizers Chris Remedios, Aaron Christianson who just introduced me, and of course the San Francisco Public Library for hosting what I know has been a great event, and creates a valuable bridge for our residents, you to connect with experts on key personal financial topics. And I see the next slide please. I just want to provide a disclaimer. You often hear that this kind of disclaimer with sections such as these in podcasts where financial information or legal information is provided and shared as a narrative. So financial information is provided as general information about proposition 19. It's not intended to be a legal interpretation or be taken as official guidance or relied on for a purpose but as instead presented as a summary of information for you. Proposition 19 is a constitutional amendment in California. So additional legislation regulations statewide guidance are what's expected to clarify its implementation, and we get that guidance from the state Board of Equalization. So there's a conflict between the information that we provide here, and the proposition or any legal authorities implementing or interpreting the proposition, the text of the proposition and the other implementing or interpretive authorities will prevail and take precedent and so we encourage you to take time to consult with an attorney is appropriate for advice on your specific situation. Next slide please. So we're going to do a general overview where I can share some of the latest updates from my office property and transfer tax revenue data, and then we're going to spend the bulk of time on proposition 19. So just take a note that this is a slightly longer presentation so I can, it can include some common scenarios, and some of the frequently asked questions that we often get and we talk about proposition 19. And if you still have some questions, please reach out to us at assessor at SF gov.org assessor at SF gov.org, which we'll put in the chat. So, and we can also share this presentation with all of you so why don't we go ahead and get started. Next slide please. So, what is the office of the assessor recorder, it can be broken down essentially to the activities that you see here. We identify discover and assess all real property. We're responsible as well for transfer tax collection, which is the only tax rule that we have directly. We grant all property tax exemptions as required by law, and we record and maintain public documents. So we provide the most stable and secure source or the basis for the most stable and secure source of funding for the city and county of San Francisco, which then goes right into the general fund dollars that pay for all the vital public services that we rely on to have a healthy, vibrant and successful city. Next slide please. So, as you've heard I have two roles to the office on the assessor, I'm the recorder so we assess and record. And we ensure that there's a strong basis for the city's financial resiliency as I mentioned. And on the assessor side, as I mentioned, we value all the property in the county all real property apply those exclusions and exemptions is required by state law. And it's about 211,000 parcels throughout the entire city and county. So just think of you're on a block or if you're at a park and you're overlooking the city someplace or looking, looking around at a certain view of the city and you see all that property in totality about 211,000 parcels, as well as about 37,000 business personal property accounts. And the latest data reflects years long culmination of the great work of the team at the office of the assessor recorder. A great group of professionals who are dedicated to doing this accurate and diligent work. We do it in a timely way, we do it in a fair way and we do it in a transparent way. And that's the continued mission that we have that guides us. The total assess value of all of those properties and parcels that I mentioned is about $332 billion. That's assess value. Then after a tax rate is applied to that value. It ends up being as it did recently, meaning about $3.7 billion in property tax revenue for again those fundamental services. Now, such as education or schools or parks or roads emergency services that deal with issues providing resources for small businesses to nonprofits and other vital services that people provide for us again for San Francisco. In addition to doing that basic work of making sure we have that assessed value on a roll is what we call it. We apply all the legal exemptions that are required by law and that's about $20 billion of exemptions just for this year. And that ends up equaling about $230 million in property tax savings for homeowners, disabled veterans, churches, schools, museums, affordable housing projects and charitable organizations. So last earlier this year in July, we mailed out the annual notices of assessed value, which includes those exemption values. So, as you receive these, receive this information from our office, just make sure you're noticing that value that's placed in that notice because that is what forms the basis of what eventually will be your tax bill that is sent to you by the treasurer and tax collector. So again, any questions just go ahead and reach out to us. Then on the recorder side again just an overview of what we do, we're responsible for recording over 200 types of documents, real estate transactions deeds trusts, we hold that information which is searchable and we're seeking to increase access to that information, and then also marriage certificates. In the fiscal year of 21-22, we collected over $3,345 million in transfer tax. So transfer tax on the recorder side is created whenever there's a transaction properties change hands. And that is both in a real physical way and sometimes in a paper way when there's a legal entity that is switching operational control. So that then results in the transfer tax being applied. So, we want to make sure that everyone is also paying their fair share. And we audit transfer tax documents from large corporations, legal entity ownership, and really make sure that we are capturing value that may be under reported. So since 2015 when we started taking this closer look and really making sure people were paying their fair share, we recovered and have recovered over $72 million in additional revenue for the general fund. So that's essential from our perspective in terms of making sure that people are paying their fair share, and that we are doing our due diligence by abiding by the law to make sure we can capture that that resource for the benefit of you. All right, next slide please. So that's an overview of the office now let's move into what we want to talk about today, specifically changes the state constitution that occurred back in November of 2020. And that is proposition 19. As I mentioned, it's a state ballot measure that passed in November of 2020, and that changed the state's constitution specifically article 13 a proposition 13 property tax law that is the essentially the tone that guides us when it comes to property taxes state rules codes that we need to follow. So before and since its passage, many people have been reaching out to our office to clarify what it means. They want help and understanding what, what and how their transfer desires have been impacted in some way. And it makes sense because it is a very complicated law, and it changed the rules for two types of reassessment exclusions. There are two components to proposition 19, the base year value transfer. And then the other one is the intergenerational transfer exclusion, or what's called the parent to child and grandparent grandchild transfer exclusion. So it's a little wonky and I'll try to do my best to break this down in in the most simple and direct manner possible. So find that factor base year value that I'm talking about. If you're a property owner on your notice of assessed value. And again, that is something that happens on an annual basis in July. So look for that if you don't receive it, and you're expecting one, please do reach out to our office to make sure that something hasn't been missed in the mailing process, or otherwise. Remember to check that value it's important for you to always do that mistakes can occur, even with the best of systems. So please do pay attention to that and reach out to us so if there's any corrections that need to be made, we can take care of that. And again, as I mentioned, any questions, reach right back out to us. Next slide please. Okay. So, what is the base year value transfer. The base year value law allows eligible homeowners, when they move to another home to transfer their existing low factor base year value to that replacement home. Why is that important, because if I bought a home for $200,000, let's say, and I want to move to a different area. It's going to be a change in ownership, a change in ownership triggers a reassessment or reassessment measures market rate value at that time. And we all know how expensive homes are these days. And you can imagine how much your property tax obligation may increase this component of a law addresses that. So the law now requires at least one event, an event sale purchase of your home to occur on or after April 1 of 2021. This date is then the operative date for the base year value transfer, and transfers can occur anywhere in the state, and each eligible homeowner can transfer that base year value up to three times. So there's no longer a limit to the market value of the replacement property before there was so that's one good change. And before proposition 19, the replacement home had to be at or below the original homes market value to qualify. And each provides more flexibility and where you can go and making sure that you can still take advantage of that same property tax savings that proposition 13 had given you by maintaining a cap on how much on an annual by how much on an annual basis, your, your assessed value could increase. So provides more flexibility to preserve that factor base year value for the replacement home. And the next slide who's eligible. So a homeowner has to meet one of the following criteria, age 55 and older, severely and permanently disabled, or a victim of a wildfire or natural disaster. So, those are some of the requirements, as it relates to your person. And then there's about the replacement home and the timeline, the replacement home has to be purchased or newly constructed within two years of the sale of that original home. And the homeowner must occupy the, the original and the replacement dwelling as a principal residents right so typically that is defined as where you select where your homeowner's exemption is going to be because that is your home that's where you live. And that's the principal residents. Next slide please. So, if you are curious as to what does severely and permanently disabled mean, according to the law in this case, you can see here on this slide I'll give you a moment to read that. All right next slide please. All right the filing period, just to kind of keep in your head because there's a lot of a lot of technicalities here. You don't have to remember all the rules but you need to know where to go to find that information to make sure that you're in accordance with the law. Do that due diligence either directly or with someone that you're working with to make sure that you understand what your obligations are and there are many timelines, details, information, additional actions that you have to take. You want to make sure that you kind of write those down. So you have a place to make sure on a checklist to make sure that you know that you've covered those bases. So to qualify for the base year value transfer, you have to file a claim for the transfer within three years after the purchase or completion of construction of that replacement dwelling. So you got to file that claim for the transfer within three years after the purchase or completion of construction of that new home. And then if you miss a deadline there's some perspective relief that may be available to you that is available to you. Next slide please. Okay, so here's an example. There's no limit to the market value of the replacement property. So any amount of the replacement property above that original properties market value is added to the assessed value for a new base year value. So here's an example of what that means. Let's say there's an eligible homeowner, you're right, you qualify over age 55, who purchases a replacement home for $1.5 million. Four months later, she sells her home for $1.2 million. I don't know why that's going to happen but let's just say it does. Her original home has a taxable value or factor base year value of $250,000 that was the amount that the value was at and she wants to transfer that low base year value to her new home. So in this case, Proposition 19 can be some benefit, can provide some benefit. The replacement home exceeds 100% of her original home's market value. So even though you had the flexibility to choose that home, which you did not before, there's still a ramification to making that choice. So because the overage or the excess market value is going to be added to her original taxable value. In this example, you would see that the excess is $300,000, it's $1.5 million minus $1.2 million. And then that $300,000 will be added to that original factor base year value that you were carrying that lower amount of $250,000, and that gives you $550,000. That's going to be the basis on which your tax rate is applied and then that will lead you and lead you with the tax bill. Note that while the tax, while the base year value is not $250,000 in this case, it's also not $1.5 million or whatever that market value would be of the newly purchased home. Which is what it would have been without this provision applied. So there is significant savings there. And by about three times and that can make a huge difference on an annual basis, but when you have to come up with those dollars to pay your property taxes, two times per year, which is what the treasure and tax collector notices you send you the bill about right. Next slide please. So let me go over some of the frequently asked questions that we have around some of these base year value transfers. So one is I'm 54 years old. If I sell my home right now, and I buy the replacement dwelling after I turn age 55, will I be eligible to transfer the base year value. The answer that is no. Very specifically you must be age 55 or over when you sell that original primary residence to qualify. So you must have a replacement residence prior to age 55, but you must be age 55 or older on the sale of the original primary residence. Some of these elements don't always make sense. But those are the rules. And that's, that's what the, that's what the voter passed and then there's been clarifying letters to us from the Board of Equalization to clarify that this impact is the rule. Sometimes that is a case where you're like boom, why is why is that flexibly allowed here versus there. The answer is because it's in the law. Next slide please. Timing. How long do I have to buy replacement home after selling my original home. So two years to purchase a replacement property that you will use the primary residence that's what the law states. Next question. So, let's say due to coven 19, you've not been able to construct replacement property is there an exception. And that's been a debate it's been going on in the state legislature, but it hasn't been resolved yet. The two year requirement is is what is binding in the state constitution. And as of today, there are no exceptions. So that's where we are right now. Next slide. So let's say that there's a couple, they bought that home and they divorce as part of that divorce the principal residents that they lived in was sold. And the owners be able to transfer their share of the back of the base year value to their respective replacement residences, aka can you cut it up in someone and then transfer that cut up that cut up a base year value and apply it to a new home. The answer is no. And it may transfer the original properties base year value. If both parties qualify, they must mutually decide who is going to get that benefit. Next slide please. Can I have a co owner question. Can I have my child on title with me. The answer. Yes, if you and your child purchase the property together from a third party. There is no requirement that the claimant be the sole owner of either the original primary residents or the replacement primary residents. So, again, there's these nuances in the law that you want to pay attention to. If you're ever confused, ask the question so you can get clarity on what the answer will be to make sure you have a smooth this process possible. Next question please. And the answer which is I sold my home, and I purchased a 50% interest in my friends residents. Am I able to transfer my base year value to my 50% interest. And the answer is no replacement residents did not undergo 100% change in ownership. So that is what is required that 100% change in ownership. So that is the base year value transfer section of proposition 19. And if there's time at the end of the presentation will very happy to answer any more questions about that but again, if you don't, don't be shy, just go ahead and reach out to us and send us information of prop 19 is very complicated very complex it takes many times to go over it. Whether you are a presenter on it or whether you are on the practical side of it of trying to determine how it will apply to your situation. Reach out to us because it does help us inform how we want to share information. How we provide narrative and summary about proposition 19 and what the rules are. All right, so now we're going to go to the second part of proposition 19. And that is known as the intergenerational transfer exclusion. So let's talk about that. This is one of the more controversial elements proposition 19 among many communities not only in San Francisco but statewide because it changes the rules that apply to transfers between parents and children and grandparents and grandchildren. This provision of the law became operative about three months after the law passed. And that was in February, February 16 of 2021. And it limits the property types and the value amount that a family can transfer to their children before a property reassessment is triggered, which then has an implication on your property taxes. So, for example, proposition 19 now says commercial property is no longer eligible for that exclusion benefit. Commercial properties no longer eligible for that exclusion benefit that was taken away, which the voters voted on by 51%, a simple majority during November of 2020. The property has to qualify as a family home or principal place of residence, and there is a cap to the amount excluded from the reassessment. So we're going to go into that here in just a moment so next slide. So, here's a qualifies as a child for proposition 19. The definition of a child includes a person born of the parent, a stepchild, an inlaw child adopted or a foster child. Next slide please. So qualifications again principal place of residence right this is where you live this is the home you have. It's clear when that is the case. So to be eligible, the person transferring the property, the transfer or must have lived in that property as their primary home. The one who receives the property, the transferee must also claim that residence as their principal place of residence. So not a vacation place. It's an income property that she'll rent on the market, but it is your principal place of residence. The transferee must file for the homeowners exemption within one year of the home transfer. So you need to file for that homeowners exemption to make sure that you can notice on there that it is your primary place of residence the verification process goes on, but that is something that you must do. As a transferee.  Within one year of the home transfer. This is important because it's the requirement that stated in the California constitution again in that law, and there is no exception. Next slide please. Okay, principal place of residence. So how do you show that how do you verify that you show that by filling out the homeowners or the disabled veterans. So you can go to our website SF Assessor.org SF Assessor.org. And you can just fill out the you can find those forms click on the form section, pull the ones out that you know are yours, confusing to you just call us reach out to us stop by and ask. And it's important to know that an accessory dwelling unit, otherwise known as an ADU and junior or junior ADU, those are eligible as a principal place of residence. So should a transferee, again the one who receives wish to occupy one of the units as their primary residence, the family, the family home with the you is eligible for proposition 19. I know it gets a little wonky. I'm not going to go much further into that but if you have questions about that specific provision, reach out to us. See if you don't find the answers in the questionnaires, but again we're always here to take your calls. Next slide please. So there are some filing requirements that you want to keep at the top of your mind because they must be met. So I wrote some different timing deadlines here. There's an exemption form for principal place of residency, a one year deadline, and number two, there's an exclusion from reassessment claim, which has a three year deadline from the time of transfer. So this deadline only applies the property has not been sold. So again, if deadlines are missed, there's prospective relief from the data filing, only if the property is still owned by the transferee. And just remember, those timelines are reported because the relief that you are seeking cannot be provided retroactively if you miss those deadlines. Okay, so let's go over some examples. Here's one. So there's a parent. They transfer their principal residence to their child on this very specific date, let's say March 1 2021. The child moves into the property and files for the homeowner's exemption and reassessment exclusion on February 1 2022. So those claims have been filed in a timely manner, the child is eligible for the exclusion as of the date of transfer on that date of March 1 2021. So both claims are timely file eligibility occurs as of March 1 2021. That's when the property transfer. Next slide please. So here's an example of someone who missed a deadline file. And let's say a parent passes away and you know, this is something that happens, a parent passes away on June 15 of 2021, June 15 2021. The estate plan that was created leaves real property to a child. The exclusion from reassessment was filed on January 22 of the following year, six months after the transfer occurred. The child moves into the home and files a homeowner's exemption on August 2 2022. But that's over one year after the date of the transfer. So the exclusion claim, that was timely file, but the homeowner's exemption claim wasn't because it didn't, it wasn't filed in that one year period. So the child can be eligible for prospective relief in the future. And the exclusion would apply as of the next lean date, which is the first of the year of every single year. The 2022 lean date for that 2022 2023 fiscal year. So it gets very complicated very quickly with the most simple of two, two options that you have there. You want to make sure that you are paying attention to those deadlines, because missing them can have implications for you financial. So what would happen here is that the child would have to pay a supplemental assessment for the year. Which would be something that could have been avoided if you had timely file those documents. All right, next slide please. So this is about the value cap. So you had heard before what the rules were in the other provision in relationship to base your value transfers where you were able to take that factor base your value that $250,000 amount. Move it to the new property, and then anything over the market rate value of that, the, the market rate value of the new property that was over the selling price of the original property that Delta would then be applied to your factor base your value. So you still get a benefit, you have more flexibility in choosing maybe a more expensive property, but you'd still will be able to balance what your obligation to be financially because the rule provided for that. But now let's look at this version. So proposition 19 apply requires our office to apply a valuation test to the reassessment claim exclusion claim. The value cap for the exclusion is a sum of the factor base your value, plus a million dollars. So the factor base your value yet a million dollars on top of that, and that becomes the value cap and we'll show right now how that plays out. So any excess beyond that market value cap is then added to the new base your value as a new properties base your values so somewhat of a similar formula there, but let's take a look at it a little more closely. Next slide please. So, a death occurs on this date, June 2 2021. The factor base your value of the home is $800,000, and the market value of the home is $1.6 million. So the property qualifies as a family home. So first step, and the eligible transfer ease file both claims on April 15 of 2022. So to calculate the value cap we take that factor base your value that $800,000. We, we add the base your value of $800,000 to one million, and that we get the value cap $1.8 million. No additional market value added if the market value does not exceed the value cap. And in this case, since the $1.6 million market value is less than the value cap of $1.8 million. There's nothing else added there's no adjustment required to the factor base your value. So essentially you're under that value cap. No worries. The child's base your value of $800,000 is maintained with a new transfer of the property, and it's the same as what her parents or what their parents were paying during that during that that last year before there's that adjustment that happens each year based on what your obligation is, but that is measured per proposition 13 on an annual basis, slight increase, but that's also cat. That's for different conversation but just want to give you a sense of this example. All right, so let's look at a different example. Next slightly thank you. So, let's say the death date occurs on April 3 of 2021. We know the factor base your value for that home is $400,000 of the market value of the home is $1.6 million. So the home qualifies as a family home right principle place of residence and the eligible transfer these file claims on January 15 2022. So that within the deadlines in timeline so that part is taken care of. Now we have to do the value cap. How do you do that $400,000 plus a million dollars and get $1.4 million. So what do we say the market value of the home was $1.6 million. In this case exceeds that value cap. So it's the 1.6 million is greater than the value cap so what's the excess $200,000 that $200,000 excess is then added to the $400,000 base factor base your value for a new number a new assess value of $600,000. So that becomes the basis for the new taxable value as of the transfer date. So, again, it's not the $1.4 million of value assess value that's going to be grounding what your tax obligation will be, but it's also not the $400,000 value. If you have a new number applied you add additional $200,000 based on the rule to get that $600,000 number, but still much much less than what that $1.4 million base would have provided in terms of a much higher property tax obligation you would have without proposition 19. Let's go over a few questions. So we have an own owner occupied multi unit property so we all know in San Francisco there are many property types, you have multi unit buildings, somewhere owner occupied and then transfer down to the next generation. So how would proposition 19 impact an owner occupied multi unit building. The answer is that the child receiving the property would need to move into the unit that was previously the parents principal residents in order to take advantage of the parent child exclusion from reassessment under the proposition. The rest of the property, however, the rest of the property so you have a 10 unit building, one of them was your parents, they transfer that one same unit to you, you occupy that unit. That's the only place where you are going to benefit from proposition 19. The remainder of the multi unit building is going to be increased to fair market value. And that will in that value will determine what's taxed so pretty, pretty big change there in terms of how you as a transferee who receives a property is going to have to think about your financing in relationship to receiving the benefit of just that one unit in comparison to the whole building and what your obligations are going to be again planning is important understanding the rules is important and making sure that you were doing the due diligence to understand what your financial obligations are going to be in this new environment. Next slide please. Okay. My mother's trust leaves her home to me and my two siblings equally. Will this property be subject to reassessment as of our mother's passing. Whether it is, again, at least one of the children or the qualified airs must occupy that home within one year as their principal primary residence. Both the homeowners exemption and proposition 19 exclusion claim must be timely file to qualify for exclusion from reassessment as of the date of death. So again, someone has to move into that into that home and it must be the principal residence. I'll give an anecdotal. Someone had parents who passed away in Los Angeles. Both, both children did not live in Los Angeles. They realized that they did not have the opportunity to move there as a principal primary residence, and they knew that then that property, since it would not be a principal primary residence was going to be reassessed to market value and the property tax obligation was not going to make them return and for them financially and they didn't have the time to manage it in a way that would have it make sense with them. So they decided to sell it. That's one of the implications played out in real time real life examples of choices that people have to make based on the costs that they're going to have to assume because of these changes. Next slide please. So once again, deadline deadline deadline make sure you know if those are don't assume that one deadline applies equally across the board for every choice you have to make. We wish that were the case but it is not right you have to make sure you understand what the different deadlines are. So again, here's one other question about that. When inheriting a home is there a specified amount of time that one needs to claim a residence as their principal residents to meet the criteria exclusion criteria prop 19. When you say exclusion criteria, that just means that you're not going to be subject to reassessment to market value when excluded from that so you can benefit from the factor base your value the lower amount carrying forward in your new in your new environment. And for you as a transfer or receiver of a new home. So the answer here is the homeowners exemption needs to be claimed within one year of the date of the transfer. If inherited if an if inheriting the date of transfer in a case like this would be the date of death in which that in which that transfer occurred is one example the date of the death is one example of that. The parent child exclusion claim must be filed within three years of the date of the transfer, or prior to the transfer to a third party. So you want to make sure that you're understanding those two different components, an exemption that has to be filed within one year, and an exclusion claim that has three years from the date of the transfer. So here's another question to elderly siblings, they live in the same house, they own this property together, and it is their only property. If one sibling passes away with the property tax be reevaluated or reassessed based on market value of their house. The answer to that is no, the transfer of a co 10c interest from one co tenant to the remaining co tenant, which occurs due to the death of one co tenant on or after January 1 of 2013 may be excluded from reassessment, if certain conditions are met. So there's some more information you want to look at there, and you can visit this section on our website SF assessor.org for more information and more information on the filing requirement so again, keep on asking the questions as you're going through these iterations. These different scenarios that you want to be prepared for, so that you understand what to do in that moment, and you can be prepared. I have, I have one more that's about life estate did we pass that was our previous slide on life estate. No, but I will read this one anyway so we don't have this slide. So, if the recipient so this is different that's not on the slides here. So the creation of a life estate remainder to the descent, descent, descent, descendants child files indeed reflecting this is this considered a change in ownership triggering a reassessment. So the creation of a life estate and property is a change in ownership at the time of transfer, unless the instrument creating a life estate reserves such a state in the transfer in the transfer or the transfer spouse. So this one gets very complicated upon termination of such a reserved life estate, the vesting of a right to possession or enjoyment of a remainder men other than the transfer or the transfer spouse is a change in ownership mouthful. I know you're going to want to reach out to us and make sure that we can give you the information that you can look at that will guide you or your agent in determining the particulars of your individual case. So the bottom line on this slide is the information about additional resources that you can get. This is the end the proposition on prop 19. So as I mentioned because it can be very complicated based on certain questions or scenarios that you have my staff is available in the office to help you understand. I've frequently asked questions and guidance that you see here, and there's a link to the board of equalization pages that provides even more in depth information on proposition 19. And then one final thing, as I mentioned SF assessor.org is our website. And just remembering this in general, separating apart from this. This is just a reminder of key dates to keep in mind that applies statewide all 58 counties of California. We begin our work with a lean date on January 1. For every property whether it's real property business personal property or possessory interest. Our office looks at the assess value determines it based on that lean date of January 1. And then our exemptions deadline is February 15. Next, on the timeline we have June 30. That's the date that we close the role that role provides the information about total assess value at that moment in time. So that we can at a city can plan for its financial choices that it wants to make based on the expectations of value on the role. In July, as I mentioned at the end of July, everyone who owns real property will receive a notice in the mail, a notice, not a bill of notice of assess value in the mail. And it'll tell you the assess value for the year, and include the exemption that you are noted to receive that year as well. So again, just make sure you read that to make sure it's accurate. Then again in October, you're going to get the bill from the treasurer in the tax collector's office. And as I mentioned before you have two installments and what you pay that one amount, that total amount. The first one in December and the second in April. For those who have property and possessory interest interest, they can expect to receive a notice and a tax bill in July. And so that due date is sooner. So just make sure you're paying attention to what exact type of notice you're getting than the associated bills, because there are some different due dates, hence paying attention to timelines, deadlines is so so important. Next slide. Again, you have any questions or available in person by phone or by email. We'll put this in the chat section. Please go ahead and reach out to us when you have a moment. I do make do make note of hours if you're recording you want to come in earlier than 5pm. If you have some of that business to take care of, because we do close those services an hour earlier. So we're ready for the next day. Well, thank you very very much for your time. I think we're at time. But if there's any additional questions out there I'm happy to answer any right now there might be quick to answer, or we can conclude. And as I mentioned, we're always available. Thank you so much assessor Torres. We have a lot of questions that came through the chat I think most of them, there was your FAQs were very good and really got to a lot of those questions. And so I think we'll call it there I will say, I'm a financial planner and so I talk with clients often who are going through transferring properties between generations are moving. And so I've called the assessor's office with a number of clients and every time I've been very impressed by our dedicated civil servants and they know things right off the bat I think I'm giving them a corner case and they like nope very clearly it's over here don't worry yes I can give it's a really wonderful team you've got there so highly recommend emailing calling them, I've always been impressed. Oh thank you so much Karen and and again if you if you have an experience you're not satisfied with. I want to know that to our team wants to know that too. So we can adjust because that informs how we provide clear information to you accurate information to you so you can make the best choices in your interest so thank you, Karen very much for saying that. Thank you assessor tourists thank you everyone for participating up next we have a tax update with Larry pond, and we still have one on one sessions going with financial planners for the rest of the day so please stick around. Thank you everyone. Thank you everyone.


ahead and begin. Now that we have four fifths of the commissioners, if everyone could mute their computers, that would be fantastic. Thank you so much. Commissioner Shagnan notified both myself as well as the clerk last week, Thursday or Friday, that he would not be able to attend. So we are four commissioners today. So with that, we are recording. Excellent. Thank you so much. Welcome to the regular meeting of the Board of Electric Commissioners. This is Wednesday, February 10th, 2021. We're a little bit late. Apologies for not being as useful with your time. We're still figuring out Zoom and Teams and logins, etc. First up on the agenda is the agenda itself. If there are any modifications to the agenda, we have seven items currently. If anyone has anything that should be recommended or modified, now is a good time to do it. Hearing none, I'm going to move on to agenda item number two, minutes of the January 13th, last month, 2021 meeting. Again, this is an opportunity to comment on content-related changes if there are text, like text edit changes that is something we can just do directly with the BED staff because there are so many words to keep track of. So any particular content-related changes? Going once? Going twice? Move to accept as presented. And a second. Now you have to under yourself. Second. All in favor. And we'll take a roll call. Thank you, Lori. Commissioner Herendine. Hi. Commissioner Modi. Hi. Commissioner Stevens. Hi. Commissioner Whitaker. Hi. Thank you. Thank you, Kirk. Next up is the commissioner's corner. This is an area for discussion and general raising of questions. If we've heard things from constituents in repairs in our neighborhood who have specific questions, this is a great time to raise them. Yeah, I was just going to ask relative to the packet that we got, it would appear that our, did our Moody's rating go up in a positive way? And maybe he'll address that in his report, but I happen to catch this A3 rating. I'm glad to speak to it now. No, our rating did not change. We had a, what typically happens around this time of year is that Moody's does a sector review of all of their different utility portfolios and ensures that they're being consistent with their methodologies, but it's not intended to be a ratings review. And they do a short press release just making a few comments about that, which part of which was shared with you in the packet, but no change in the ratings. We remain where we've been. Okay. Others? Commissioner Herendine. We have to press on mute. There you go. Okay. In the minister too small, in the minister too small items. One I'd ask about the question of Hula and the degree to which their GS thermal is so efficient, because basically it's so close to the lake. Again, James is going to get back to me someday, please. Second, I asked a question about the overall growth issue balancing off the installation of heat pumps against overall growth and gas hookups and all that. And Darren said someday he'd get back to me on that and someday would be fine. Just a reminder. That's all. Thank you. So Darren, James, do you have a sense on when someday might be reasonable given your current workload? I'll start, Darren, before the next meeting should be doable. This month has been kind of ugly. And on the question of the gas hookups and the heat pumps, I know we discussed it last time. And I think we had kind of mentioned that we track it or we're looking to track it more based on usage, which we're going to be doing as part of the net zero update that we're hoping to have ready sometime in March. We don't typically track the actual kind of permit data in terms of like how many buildings have come online that are hooked up to natural gas. We're trying to track on the usage side. If you're interested in getting the permit data, we can certainly reach out to the Department of Permits and Inspections and see if they have something there or see if our counterparts at VGS have something. We certainly, we don't have that information handy, but we can look into it if that's of interest. Unmute. If it's a VGS question, let me handle it with them. Okay. Never mind the permits. I'm just interested in the actual hookups. And James, the question I'm asking is very simple. When you're 50 feet from the lake and you dig a hole, you probably have lake water in it. And there's probably some communication between the lake and the hole, which means in some sense, hypothetically, when you do that geothermal that close to the lake, you're actually sticking the thing in the lake. That's all. I'm just wondering if they're so super efficient because they're near the lake. That's on generalization and drafting the email right now to find out. All right. Okay. Sorry about the delay. No, no. Fine. Okay. Thank you. Are there commissioners present? Question? Mr. Whitaker, you just started off on my screen. Do you have a question? No, I was just saying I have got no questions. Just acknowledging that you asked. Thank you. So I do have a follow-up question, which is, I've now been asked four times in the last five months by someone in the neighborhood in the Lincoln area about concerns with our net zero city goal for 2030 and how people who are on limited financial streams, how they might actually invest in this area. And so I'm just raising this up again. My response to that particular person has been that the first release of our roadmap is more about, technologically wise, how we can get from A to Z. And that following that, we need to start to begin to help through financing, through creative public private partnerships. But I'd like to flag that this isn't going to go away and we should definitely dig into this. I am keeping an eye very much so on Department of Energy and whatever the current federal administration might roll out. But I'm looking very much to how do we make this, we all know that the upfront cost is a hurdle. We also know that the savings over the lifetime of the investment are definitely worth the investment. So just flagging that I would love to address this moving forward. I feel like during COVID it's particularly challenging. So I might just raise this and we can revisit perhaps quarter three of 2021. I would just, I appreciate that issue being raised. I think we actually are offering a number of programs that are specifically aimed at helping our low and moderate income customers. Some of them are seeing some levels of success and in some of them the offering is there but the uptake hasn't been there and we're interested in that as well. With heat pumps and with electric vehicles, we're seeing the percentage of the rebates that are going to low and moderate income customers increasing. Under the green stimulus, I believe we've had 36 low moderate income customers who have qualified for the enhanced rebates for heat pumps, for example, over this most recent period. And obviously when we do things relative to the electric transit buses that can benefit the broader community be more accessible. During green stimulus, we launched 0% income qualified loan programs with the credit unions, three different credit unions, enhanced incentives for efficient appliances, as well as other technologies. I think part of it as well is the policy piece that we're working on with the city. Chris Burns and Jen Green in particular on our team supporting the mayor's proposal to have weatherization standards for all rental properties that would apply across the city and bring the benefits of that investment to renters all across the city. So I think that there's a combination of policy and incentives that we're driving at. We had a great event for our staff this past week focused on equity with Jeremy Hayes, who is formerly with Green For All. And we listened to a podcast that he had done on these questions of how to design programs and meet the needs of broader community members, low moderate income BIPOC community members. And we had a one hour discussion with them facilitated by Jen. And the message that he gave us was very much that this effort is something that is continuous. You have to continue to build in structures into your programs that can support equity as well as engage with the community and continue to focus on it. So we're, I think, very committed to the structural focus continuing to be there. But I do believe that some of those efforts are seeing some success and others are not yet and we're curious to learn more as to whether those programs just aren't structured in a way that meets the needs of the community or perhaps because of COVID it's too challenging for certain folks to participate, which is also understandable. Thank you. Really appreciate that. I know that Mike Kenrick has sent out gobs of information about all these different announcements. If it's possible to send a really pithy overview of the efforts and where we're seeing traction and when we're not seeing traction, what our next steps are, that would be great because I would love to communicate back to this person who, in my response, you know, we have nine years and we have nine years to get there and we're going to get there. And so it would be really helpful if I had like a pithy right up and I apologize for giving you more work. And thank you, General Manager Springer. Other comments from the corner? Well, I guess I'm commenting back to you, Gabrielle, but that's okay. Yes. First of all, the bill's stopper about the whopping rebate for heat pump got my attention and maybe some other people too. I took that rebate. Thank you. And I just got my tax form so I can pay taxes on it. So yes, I appreciate it. And thank you, BED. I have it mentioned in the past and we've kind of said it's coming, I think, maybe with Synapse, this idea of a really careful metric of how we're doing physically, not, never mind the money, but in BTUs and pounds of carbon and all that. So I see how that fits in. Yeah, that's exactly what we're working on for. We have the 2018 data from the roadmap, so we are working on a 2019 and 2020 update. For, with Synapse, we've already contracted, the work is already underway, we are hopeful to release that sometime in March. And that'll be, I mean, just for kind of comparison, the state emissions inventory is only current through 2016. That was the latest data from the state. For Burlington, we'll have data that's really current as of three months ago. So I think we're going to be in a good place to really evaluate some of our efforts based on that update. Great. That's impressive. Thank you. Yes. I read the energy action network updates and I'm like, it's so late. It's four years ago. So kudos to you all. Other comments from commissioners in the commissioners' corner? So moving on to the GM update, Darren, this is you, followed by financials. Excellent. Thank you so much. So I think we touched briefly on the green stimulus announcement, but I do want to spend just another minute on that. We have essentially announced that we will continue the green stimulus programs into 2021. And we're working through our Act 151 filing on continuing some of them even beyond that, and maybe having a three-year period where we could support activity levels for heat pumps, for other technologies as well at the levels that we've had in the green stimulus. So we're waiting for some activity on that at the PUC. But just again, on heat pumps, we've seen with the Tier 3 rebates for residential customers a 5x increase in installations comparing the period when the green stimulus was in effect since June of 2020 with the period prior when we first launched that incentive, which was September of 2019 through May of 2020. When we launched the roadmap, we had our first Tier 3 incentive for heat pumps for residential customers. So the heat pump incentive is working. The bill stuffer that Commissioner Herendine mentioned is our effort to continue to get more customers interested. I've heard about this from folks in the community. We've had great uptake on it. And again, we had 36 customers who qualified for the low moderate income incentive under that program as well. So we're working to get that out to all members of the community. I'm going to come back to district energy. I'm going to do that update last because I'm going to give a little bit of a lengthier update on that since we weren't able to talk about it in public session at our last meeting. And I have since been able to talk about it at City Council and we've since made an announcement. So going to a couple of other items. The thermal energy ballot item. I believe Chair Stebbins asked if we could talk about that this evening. I'm actually going to be at the NPA meeting later this evening talking about that with Bill Ward from the Department of Permitting and Inspections. Bill and I have been doing a little bit of a topic. We were at the all NPA meeting last night and we along with Jen Green did a half hour forum TV that was that's up on the rip out their existing heating systems and go back to the old resistance electric heat. B is proposing that that would be very much against our efforts to move towards modern and efficient heating technologies we're doing at the NPA meeting. Well, why don't I pause there and see if there are questions on that before I go on to the other items. Thank you. I know you can see me generating here. First of all, could you give me the reference to the reference again on those well those references. And then you know the obvious question to ask is when you do the balance. I presume that the FR station that's happening is for the entire state far beyond the land that we actually impact say when we get our fuel. Is that correct? That's correct. Okay. Okay. The reference is the Agency of Natural Resources greenhouse gas emissions inventory. And it's the most recent update which runs through 2016 and it's appendix B and C if you're interested. Happy to send you a link, Commissioner Herrington, after the meeting as well. Thank you. That would likely be helpful. Thank you, Jim Slinger. Nice to see you digging in because I know you're you're right on these numbers. So really appreciate your follow up on this. I wonder if other commissioners have questions. Reality is whenever we turn on a light, whenever we power an electric vehicle, we're drawing from something. So it's balancing the pros and cons of those different generating resources. And we're always having to make those judgment calls. So General Manager Springer, thank you so much. I personally think that our current portfolio is given where we've come from in the 80s and the 70s, it's it's really well positioned. And can we always improve? Of course, and we will continue to. And I also really appreciate the charter update. This is outside your purview. I to the other commissioners and watching, I explicitly asked for this because it does kind of play into what the world of BED might have to work with. And so I felt like it was important to have commissioners understand what the dynamics and what the discussion is at hand. Personally, I've not heard any concerns about the proposed changes with regards to the thermal world, particularly because if there is a carbon price place at any point, it does have to come back to Burlington residents to vote. I think this is exactly how we should be moving forward.  But I think we also need to have this discussion and the careful consideration and deliberation. Darin, normally you have other oral updates. Are there other things you'd like to highlight? Yes, let me continue to a couple of other items. One of which is we are continuing on the legislative side to track activity related to a rearage assistance. We offered testimony on this in the Senate Finance Committee and also spoke to it in another committee that was on unrelated testimony on Senate natural resources and energy. We spoke to this issue as well. There seems to be broad interest. Currently there is a discussion around a package from prior federal legislation that is meant to assist renters. There may be certain housing and utility or rearage assistance available for renters with certain criteria in the not distant future. If that becomes available, our team is prepositioned to reach out to folks who may be affected. I know our customer care team is prepared for that and our finance team is prepared for that. So we will certainly move as quickly as possible if that assistance becomes available. And we've also shared all of the utilities have shared with the federal delegation the need for further broad assistance on rearages. The need statewide I believe is at a minimum around 16 million of overdue or back payment rearages that are above and beyond what would normally be expected at this time of year. So we're obviously a part of that. But for all the utilities to be coming together making this pitch to the state and federal delegations is important and I think we're hopeful there will be additional assistance for our customers. May I ask a question? So we have our typical budget adjustment process in which we sort of drew up last year's fiscal year checkbook and right now several committees in the legislature are looking at what to do with our current funds and there are quite a few funds from the federal level to address COVID relief. Do you feel that there's a chunk set aside to address this specific question? As far as I'm aware there may be funds that are going to be set aside to address it as it relates to renters of certain qualifications or maybe income qualifications associated with that which I think we know with COVID that some of the income qualifications can be challenging because somebody who may have been earning a certain amount last year may not be earning that now and so how those are sorted out could be meaningful but we see a broad need. It's residential and commercial. It's really significant and so I think there's potentially some help on the horizon for renters but I don't believe there is dedicated funding at the moment for a broader package although there is certainly a lot of conversation around it. I've heard conversation and I'll just say this for 10 seconds around various investments for businesses but I'm not hearing that it's particularly related to the past bills, electricity related. Yeah and I think there may be a hope and expectation that if the current $1.9 trillion federal package moves forward that that has a significant allocation for state and local government and that that resource perhaps could have a portion of it utilized for this purpose. We'll keep an eye. Absolutely. One personnel note that I know you all will be sad to hear about because we were certainly sad about it as well is Andrea McNeill has moved on from BED and returned to VGS. If you're looking for someone to blame you can talk to our friend Neil Lunderville but Andrea was a great person to work with obviously here at BED and we wish her well in returning to VGS and we have posted for the position we will be keeping that posting up through the end of this month and we have an advertisement out in several different publications so we will be recruiting for that position and looking to fill it in the coming months and in the interim Emily Stebbins-Wiloch will provide the financial updates as she will this evening and is helping to manage our finance team during the transition period. So that brings me I think to the end of my list outside of District Energy which I would if you wouldn't mind I'd love to spend a few minutes providing a public update to the commission. I know we had a chance to talk about it a little bit last meeting in executive session. Since that time earlier this week on the 8th we had a public announcement that the different parties to the district energy work Burlington Electric, the city of Burlington, VGS, Evergreen Energy, University of Vermont Medical Center have signed a letter of intent to advance this project from what had been phase two which ran from February of 2020 essentially into January of 2021 and take it now to phase three which is going to run for the next three to six months. And I think if I can let me see if I can share my screen here I have a graphic that is helpful in looking at the structure that we are proposing for district energy. Let me see if I can pull that up here. Are you all able to see this graphic? Yes but if you could zoom that would really help my very young eyes. I am happy to. Let's see if we can make it a little larger there. Is that a little bit better? That is better thank you. Great so I'll walk through describing this as part of the work we did in phase two was really to develop an operating model that would overcome some of the constraints that we've seen with district energy proposals previously. And so the concept here is McNeil obviously is the starting point with the McNeil joint owners. We would have waste heat as well as additional steam provided from the McNeil facility to Evergreen Energy. Evergreen is our partner in this effort. They have expertise operating and owning a district energy systems around the country. Most notably they have a kind of flagship biomass district energy facility in St. Paul Minnesota that is well regarded and has a good track record. So under this model Evergreen would be a not-for-profit entity. They would develop a not-for-profit entity that would own and operate the district energy system. They would provide the financing for the system. They would manage the construction of the system. There would be no upfront funding or financing required of the city of Burlington under this structure. So important risk mitigation for that. We would have Evergreen now selling the output of the district energy to VGS and the district energy, the physical delivery of which would happen at University of Vermont Medical Center and potentially other buildings in close proximity. We continue to have conversations with University of Vermont and continue to explore whether there's an option to add buildings to the proposed system. So VGS would purchase the energy which would be delivered at UVMMC and potentially other buildings in the area and then this is where it becomes a little more innovative in its structure. And we're really building here off of kind of proven models cow power, community solar, Vermont gas, its own renewable natural gas program that exists today. The energy is one attribute but there would be a DES renewable credit created as part of this and that credit would be available to purchase by local businesses, local customers and residents, by the medical center, by the city of Burlington, by any entity essentially in the community that wants to participate in district energy. And just like with cow power or community solar, you can pay a little bit more on your bill and have a certain amount of your energy and your attributes be coming from the district system as opposed to the underlying fuel source. So you're essentially helping to offset your own carbon footprint with your heating by purchasing these DES renewable credits. This makes this a true community project where for the first time everybody has a chance to buy in and make part of the investment that will be needed to keep this going and everybody will have an opportunity to benefit from it as well. Importantly in this structure, this last piece here which is labeled six, if there were unutilized credits in this system, if in a given year we didn't have full subscription of all the available DES renewable credits, VGS would purchase essentially or excuse me, would take those credits and use them in its own portfolio and so they would count towards VGS' broader renewable and climate goals. So they'd be providing a very important backstop for the system to ensure that we had enough subscription overall of these DES renewable credits. I'm going to unshare my screen now and come back to the meeting here. So I think just a couple other pieces just to mention on district energy. The phase two work did include an updated pricing and an updated energy production estimate. The pricing was updated after an RFP that Evergreen ran to get indicative pricing from contractors. We see there is some increase in the price relative to phase one but we continue to see a much less expensive project than the version we were considering in 2017 and 2018 and we are seeing a little under three quarters of the fossil fuel and emissions reduction benefit in this version compared to the more expensive version we looked at in the 2017-2018 timeframe. For reference this would cost about 60% of the price of that project but deliver almost three quarters of the fossil fuel reduction. So continues to be cost effective compared to the prior model that we had considered. So over the next three to six months in phase three we will be working with the McNeil joint owners on a potential thermal energy supply agreement for McNeil to provide thermal energy to the district system. VGS will be talking to regulators about their proposed role under this structure. We'll be working with Evergreen. They'll be looking at securing the financing and setting up the nonprofit structure and continuing to do the final interoperability and engineering analyses with UVMMC and other customers to ensure this can be a reliable system. We'll be working with the city to see what the financial appetite is to have the city buy in to the district energy system through these DES renewable credits. We'll be talking with other customers as well about that possibility. We'd love to have a few anchor customers going into it that are committed to the system. And as I mentioned we'll continue to talk with UVM as well about any opportunities there might be for them to participate under this model. And we're hopeful that within three to six months we'll be reporting back to you all and to the city council and we'll be if we are successful under this phase three we would be coming back to the council at some point and the commission on a few of these key questions with potential binding commitments to consider. So I'll stop there. Glad to answer any questions and glad we could provide this update as well so close to the timing of the announcement. Thank you. For the listeners questions, comments. Well does anybody else want to go before I start before I start? But you've already started. Keep going. Okay. I think I know the several answers that are appropriate but what's the elevator speech on why VGS is even in on it? So VGS I think has its own really ambitious new renewable and net zero goals. And this project represents I think a good opportunity to have a local renewable energy project that they can facilitate participate in. It helps their portfolio move in the direction that I think they want to move it in. And from our perspective they're providing a really key role in being you know in providing a purchase agreement with Evergreen for the energy and the attributes and then helping to facilitate the individual customers participating through their individual VGS accounts. Is it also that for many customers the district heat is not going to totally replace gas so that they'll still have some gas and VGS will be selling both? Well I think if you look at it from the kind of like an emissions reduction standpoint in the commercial sector in Burlington this would be about 11 and a half percent reduction in emissions in Burlington in the commercial sector. So it's a big step towards reducing fossil fuel use in the city. I think the model that we've come up with here says that instead of allocating all of that emissions reduction and all of the cost premium to any individual customer such as UVM Medical Center we're sort of spreading the benefit and the investment over a broader potential group of participants but either way the physical impact of it is the same. If the system operates the way that we've designed it you're going to be using you know 11 and a half percent less in the commercial sector in terms of kind of avoided you know emissions avoided fossil fuel use. And I think it's fair to say they were already spending significant funds in the decarbonization through the RNG and this becomes a local way to work in the decarbonizing the thermal sector. Okay so but but they are also just in some sense a middleman which has a cost associated with it I assume or doesn't. Well they'd be they'd be facilitator and they would they would be purchasing and delivering essentially the energy and the attributes. But as mentioned they would also potentially be having some of those attributes flow to their system and I do believe that they are committing to some serious renewable goals and you know the electric sector has a diverse array of renewable options right now. We have a number of technologies that we can look at. I think in the thermal space it's more of an emerging field and certainly there is renewable natural gas. There's some opportunities potentially with hydrogen but this represents a big opportunity I think to move in the direction that they want to move and so I think that their motivation is partly based on that. Okay but for the only client we have at the moment is the medical center. Would VGS have any serious role in that one or are we talking about other potential clients later on? If the medical center was the host of the district energy system and we did not add any other buildings this model would still work and VGS would still participate under the same type of structure. If we add UVM buildings for example then you're really just looking at having an expanded steam system and that operationally Evergreen would need to manage that perhaps a little differently. The financing and construction and routing would be a little different but VGS's role as described in this model would be similar in either scenario. They would have a purchase agreement and then they would facilitate the distribution of the district energy credits. Okay the credits I understand but I still don't understand why if we had only the single client at the medical center VGS would need to do anything. Well absent VGS participating in that way you would have to have some sort of an agreement between Evergreen and the medical center to have a separate fuel delivery. VGS is already the fuel provider for the hospital. You also would lose out on that ability to kind of have the DES renewable credits available to everybody with a VGS customer account. Yeah and that's I think that's the big in my mind Darren the big sort of one of the big break points here is that this allows UVMMC to decarbonize for less than the full size of the district energy system in year one which is perhaps a bigger bite than they may want to take in year one. It spreads that ability to deal with that that premium. It's not a premium against RNG but it's a premium against non-renewable natural gas and it gives you ability to move that around a little broader. Okay thank you that leads to my second question there are three don't panic. The renewable energy credits whatever they're called in this particular system we start with owning them right and we could retire them but we're once again discussing the idea of selling them and trading them which is something that we we do at BED and we touch on every once in a while about some distant futures date in which we might actually retire them but likewise here are we going to commit right from the start to trading them and also along that line if we sell them and we still want to be renewable where do we buy them? So this is a little different than the renewable energy credit discussion in the electric sector. This is more of a closed loop system there's not a market currently for tradable thermal renewable energy credits. That's not something that there's no need for GIS like there is for the electric sector where you can go and trade you know thermal credits. So what we're really talking about is having those credits be purchased by customers in Burlington or potentially benefiting customers in the VGS service territory but in either respect we're talking about the benefits staying in Burlington and or in Northwestern Vermont essentially. So the emissions reduction that's associated with the project if we have enough customers who are subscribing in Burlington then the emissions reductions can potentially stay all in Burlington. If in a given year half of that is subscribed in Burlington and half goes unsubscribed for example then VGS would have that come into their portfolio benefiting not just Burlington but their other customer base as well from an emissions standpoint but we are not talking about having these credits be monetized and sold out of the state of Vermont for example that's not something that is part of this model. Mr. Herndy if I can add the phrase I've heard is are you buying credits associated with projects that have already been built which might be renewable energy credits or are you are you incentivizing new projects to be created and in this scenario this doesn't exist. So we would be incentivizing these decreases in carbon emissions and therefore it's not quite an apples to apples comparison with renewable energy credits. Yeah we actually in this structure don't take ownership of them at any point unless we subscribe our own retail gas accounts to it Burlington Electric is not at any point the holder of these thermal credits. Why not? Because Vermont gas is acquiring the the thermal and renewable full output of the the district energy system and then they're splitting that apart for cost recovery. All right well but if I'm starting from scratch I say we don't have them because we contract to give them away or sell them but if you start from scratch we do have them right? No not under this model under this model they would go to folks who are purchasing them as part of it. Burlington Electric the city of Burlington would likely make a commitment to purchase a certain quantity. Other customers in Burlington could make a commitment to purchase a certain quantity but there would be these are all voluntary commitments that folks would make under this model and that what that does is it spreads the cost of the system and doesn't force any one customer to absorb that entire premium. But I appreciate the point you're making and I do I want to reemphasize the emissions reduction benefit here regardless of of the kind of distribution of these credits among the different customers are staying in Burlington and or in the you know VGS service territory depending on how much voluntary subscription there is versus how much goes unsubscribed. So this is not something where we're selling credits outside of the state of Vermont that that will not be a part of this project. There's no structure to do so. We're tied to Vermont because it would be a unique Vermont creation. Mr. Harringine you said two out of three questions. What's your third? Yeah this is the usual nerdy one. There's some numbers about energy supplied in the most recent memo so I tweaked them a bit and decided that I could increase the thermal efficiency suitably defined of the McNeil plant from the usual 25% up to about 30% by crediting that energy delivery you talked about. I know I've asked this question before but I'm popping it out there again. Is that a reasonable number and I guess that's for James at some future date. If you supply that much heat and you call heat well depending on how you reckon 5% increase 25 to 30. The immediate main is the recovery of the waste heat which isn't occurring right now. I mean that is a the clear win is this structure includes recovery of waste heat that is this point lost to everybody. As to whether that exact math is correct or not I'd have to do the check but you know the waste heat we've kept managed and we've made sure that the waste heat recovery is remaining a part of all iterations of this project for that reason. Okay but it's a ball I mean 5% is a ballpark it's not 40% right. No that's correct. I don't think it's in that no I think it's closer you're not but if you want me to actually check the number I certainly could. When we've talked about it previously that's very much in the ballpark of the estimates that we were looking at. Okay thank you. Given that we're 26 minutes late I do want to just ask Commissioner Whitaker, Commissioner Moody do you have questions you'd like to raise and then otherwise we'll move on to agenda item number six. I'm good thanks. Thank you. Thank you. Okay and I just want to add that this particular discussion has only been going on for a couple of decades so I suspect we can continue it next month as well and really appreciate General Manager Springer and James Gibbons for following up on Commissioner Herendine's additional questions. We did not yet get to the financials will that be Emily? So segueing over to Emily Emily thank you for pinch hitting again and again and again. You're muted. Thanks no worries let me pull up my screen here. Okay so you should see a graph with green and purple and gold bars yes? Yes great. So I'm going to start where we haven't been able to show you for a few months I don't think which are the monthly impacts of the COVID-19 pandemic on our loads. We were able to restore our cell relay out at the airport to pick up the additional meters that we were hand reading for a period of time while while that router was down. So we now have analysis through the end of January. Sorry can you scroll down a yes perfect. So yeah yeah blue orange. We now have numbers through the end of January showing residential sales in green, commercial sales in purple and then the total system energy in gold. So I think the last report you get on this was perhaps the September figures so you can kind of see where we've been through the fall and January. Residential still above normal, commercial still below normal and then the total system also still below normal but kind of bouncing around in the two to three percent range through the winter so far. So and that's you know this is no surprise I think given the sales to customers numbers that you've been seeing through this period as part of the financial review so the aggregate sales have been down with the residential higher offset by lower commercial. So you know we're continuing to monitor this. We are forecasting currently for this trend to basically continue through I would say March and then maybe with warmer weather things sort of start to look a little bit more like the summer but there's a number of factors where you know with if students in college remain on the campus right that's a different picture than it was during the summer and in the spring so if you know they continue to be successful with residential learning as they were through the fall like that will have an impact as well. But we're currently forecasting sort of you know around the two or three percent aggregate drop level for the next couple months. Questions on that? If none I will switch over to the December results. Yeah switch. Okay and I have switched and can you see the financial review now? Great thanks. Okay so for the month of December we had a net loss of $684,000 compared to our budgeted net loss of $455,000 so we've closed December $230,000 worse than budget. Drivers of that are where we just left off the sales to customers down $153,000 with commercial down greater than residential so residential doing a little bit of an offset but not enough to turn this into positive territory. Other revenues were favorable by $154,000 mostly driven by EU as you know well by now there isn't a corresponding offset under operating expenses which is tucked into this line against those revenues. Power supply revenues were on budget with zero coming down now into the expense side. Power supply expenses were favorable by $65,000 that was a combination of things. Fuel expense was down because McNeil was offline compared to budget so McNeil production was down about 14 percent so we saved on fuel those offset by higher purchase power and transmission expense primarily driven by ISO New England transmission costs. In the operating expense we're favorable here by $183,000 some of that is timing of outside services and largely EU and we had some favorable variants due to timing with our tier three expenses. Coming down let's see gain loss of disposition this $35,000 is strictly timing we'll see an offset to that in January. Coming down to other income we the city instituted a hazard pay bonus for folks who met certain criteria for working on site during COVID-19 which we participated in so there was an unexpected expenditure related to that in the other income and then the rest of that is less customer contributions to capital projects which has also been a recurring theme this year as capital projects have been delayed due to COVID. So on the year we are on an actual net income of $582,000 compared to our budgeted target of $943,000 so 361 worse than budget and we had been forecasting kind of a turn into negative territory based on our sort of load analysis right assuming that sales continued to be depressed due to COVID after a better than budget start to the year we have been below budget starting in December with that continuing as particularly as sales continue to be down and customer contributions are down and other effects of COVID continue. Questions on this before I go down to capital.  Yeah I was just yeah what are the what are sort of the implications for this for falling behind that's my question. Yeah the so one implication is and you'll see this below in the day's cash on hand we're watching that figure carefully so basically you know we're taking in less than we're spending can you know as we fall behind that's that's the results and that's will affect our day's cash on hand and our liquidity. I think I'm sorry I didn't catch that. You just have to scroll down so that that appears. Oh yes okay I wasn't planning to go there now but I certainly can if that's of interest so so our cash as of December was 7.8 million dollars compared to our budget for cash at this point was 1.3 million greater than that most of that difference however is due to our starting cash position on July 1 being worse than we had planned for it to be also because of COVID expenses kind of affecting the latter half of FY 20 so we ended 20 in a worse cash position than we had forecast or budgeted to. So you can see here our day's cash on hand our 105 we want to be no less than 90 so we're still safely well safely above that but as we forecast every month and monitor we're certainly watching that number and while I'm here on the metrics I will point out that we've added this column here the three-year average column this is a new addition to the table. We put this here because the Moody's scorecard that they use in computing our ratings uses a three-year average of these numbers as opposed to a single point in time fiscal year end figure so that's relevant not for the debt service coverage ratio because this is a target set by our general bond resolution for the revenue bonds but for these two the oops sorry that's not helpful the adjusted debt service and the day's cash on hand Moody's does use these two and and the three-year average is what they look at so we we added that as additional information for you and then I'll so that's one of the implications but I'm just you know like how long can you go where you're spending more than you're taking in and what's what's the short term? Yeah I mean I think so we are forecasting more rigorously than we ever have before so every month we are reporting actuals to the leadership team and we are asking folks to you know monitor spending submit updates add things that are you know we're unplanned that need to be covered emergency needs and also you know trim or delay or defer or cut things that are we're planned that can be done without or potentially deferred until FY 22 so I think you know we're we're managing it actively and I you know we have a line of credit right that would be obviously a very last resort but we do have a five million dollar line of credit with Key Bank so that's available to us in an emergency situation but I don't foresee us needing that. Mr. Whitaker. Yeah that's helpful I'm yeah it's helpful and I know it's only we're only in not even done with Q1 so there's plenty of time. Oh actually no because this is until June 30th so. Correct right we're halfway yeah. Yeah I'm anticipating you'll give a little bit of perhaps next month a snapshot in terms of that all the additional analyses you've been doing and I know there was quite a bit in the update but I think for potential viewers that would be super helpful just to show how you guys are you know scenario A scenario B scenario C planning for things moving forward. I think if I if I could just add for the commission I think we're doing a heck of a job managing the impacts of COVID on FY 21. I think to get to the points that you're I think getting at is going to be what happens in FY 22 because we are seeing the continued impacts of COVID both on the sales to customers with the rearages and then as well we've seen the capital project disruption that's continued due to supply chain impacts and customer capital projects not moving forward so we are going to be you know working on our budget for FY 22 over the coming couple of months and would expect to provide something in draft form to the commission in April in advance of a final budget in May and these are all questions that we're going to be exploring you know looking ahead trying to get a sense of the continued COVID impacts conscious that we haven't raised rates in 12 years and looking at what the needs may be and I think as we dive deeper into the FY 22 budget process while simultaneously monitoring how we're doing in 21 some of the picture will become clearer for us in terms of what the right next steps will be. Thank you. Yeah and there's also you know a lot of questioning of as to how Burlington Electric has managed to keep rates exactly where they've been at for 12 years so frankly as someone who goes grocery shopping regularly I am paying more for most of my groceries than I did 12 years ago so I think that conversation is likely ripe to emerge and be held here as well as beyond and before the PUC. Other questions from the commissioners otherwise Emily we made you jump around other other key points you would want to highlight in the in the recorded session. Just yeah the only remaining piece that is normally covered for you all that I didn't get to yet is the capital spending we are about 51 percent overall spent through the capital budget on the year at the halfway point we're about we're continuing to track about a million dollars below budget as we're forecasting operating we are also actively forecasting capital projects as well and many of these notes here are similar to reports we've received in previous month the you know generation and production capital projects have been there's been some timing that's affected them but they are moving forward for the most part distribution has a little bit of timing going on and in the general category IT forward we are nearing kickoff but are not quite kicking off yet and that was budgeted throughout the year so that's probably the single biggest timing factor affecting the general line and then the data center which actually we're going to talk about in the next agenda item has had two-thirds of that amount spent with one-third remaining that concludes my report if there are no more questions I'm hearing silence so thank you Emily really appreciate it and appreciate you doing double duty as well we're going to move on to agenda item number six this is the velco data center co-location agreement this is a discussion and a vote and Emily's backup along with Sue Fritz so thank you very much and apologies that we are late certainly no worries so there was a memo on this in your packet which I'm happy to pull up if that would be helpful I think for viewers that would be okay I can do that and just walk you through all right are you able to see that now yeah but you have to zoom in some more yeah probably at 40 so please okay so you've seen in our in the financial review the capital project report has included a data center item um in the the general capital spending category it's a project that Sue and our IT team have been working on um actually in the planning stages going back a few years I think or at least a couple years with uh and you know in this in the FY 21 budget we committed funds to kind of move forward and purchase equipment so what we're talking about here are the servers the equipment that support our business infrastructure so our email system our file directory our our you know customer and financial systems so business infrastructure not skater not yeah not not skater operational generational technologies is what we're talking about so our current hardware is is old and end of life we need to buy new equipment and in part of that we were evaluating you know where is the best place to put this equipment and as you may or may not know care taking of of servers is a servers are are are finicky and sensitive objects they don't react react well to static electricity they don't react well to temperatures that are too cold or too hot they don't like water they don't like humidity they benefit from a climate controlled highly secure facility and you know more and more companies particularly those with with the business need right for highly reliable you know nearing 100 uptime right for services and connectivity place these systems or place this equipment in facilities that are designed and custom built for that purpose and we have a current server room and that are 585 pine street headquarters it's served us fine but it's not optimal for the equipment and its sensitivity so we looked at options and as it happens velco of which you know be ed is a part owner along with the other distribution utilities in vermont constructed a new state-of-the-art data center in rutherland and they in discussions with them profit or proposal for us to collate collocate our equipment there and after evaluation of the options including another local data center provider here in the burlington area the velco location is is by far the most financially advantageous and it is far more modern and secure and it's really custom built for this purpose as a you know compared to our pine street space so what we're seeking from the commission tonight is a recommendation to take to the board of finance a an agreement to co-locate our equipment at the pinnacle data center facility in rutherland owned by velco it's a license to grant us use of rack space and provide associated power to that equipment cooling cross connect services there's a one-time setup fee for velco to assist us with installing that equipment and configuring it it would be an initial agreement of this says five years that we've actually subsequently been talking with velco about maybe taking that down to three years and we will have terms in the agreement where we would be able to cancel with 120 days prior notice to give us time to find a new space for that equipment and velco with one year's notice to give us even more time to plan for a new space for that equipment the fees associated with it are a one-time fee as i said a setup fee of 9100 dollars and monthly recurring fees so basically rent for the space of just over 1300 1350 dollars a month there are provisions you know power is a major operating expense for the data center so velco has has sought and we've agreed to allow them to adjust the fees annually if the increase in power expenses exceeds the cpi so there are terms that that allow for modest escalation of the monthly fee and this was an expense that we had budgeted for as part of our fyi-21 budget so that is really the high level summary here's our the requested action and the motion and then i think with that i'll just ask sue if i missed anything major um or anything you would like to add and then we'll take questions no emily i think you did a great job uh well welcome to take any questions if they have them hi this is bob so right now theoretically we're paying nothing of course we really are paying something uh so my usual question is there any downside to this you know you we're not paying nothing i mean most organizations our size are very challenged to keep up with the hvac and other um capital expenses for running a data center we literally don't even have the physical room that has adequate space for the right type of coolant airflow and that type of thing so it is actually quite expensive to run a data center and this is actually a really great deal because of the partnership that we have with velco um downsides you know we've tried to mitigate any downside there's a very redundant very redundant networking infrastructure that we're putting in place to ensure that we don't lose connectivity to that site i think that would be the only downside that i would come up with is anytime you put something off site it's farther away and there's more risk to maintaining access but we have redundant connectivity to the site and it's pretty robust okay thank you other questions questions this seems um like it it makes sense to me and and financially it's it's uh not a massive burden and and su given your answers with regards to location i feel like there's some uh you know general sensibility to this i wonder if folks are feeling like it might we are is anyone comfortable with making that motion i am i recommend that city council authorize the general manager of bed to execute a co-location master services agreement with velco subject to review and approval of the city attorney's office i'll second that all in favor lord if you don't mind taking velco commissioner herindy hi commissioner moody hi commissioner stephens hi commissioner whitaker hi thank you slam dunk thanks very much thank you loving your pictures a little close to home right now uh so last on the agenda is the uh commissioners check-in thank you sue also for joining in uh are there any follow-up comments uh questions from the commissioners or the staff okay so uh bed staff thank you i i know you guys are like pulling everything together and still advancing every every type of incentive you possibly can and i i greatly appreciate it um if anyone wants to make a motion to adjourn so moved and a second and lori who second who gave me a second a second bethany thank you i saw a nod from commissioner herindy but it's better to have it be verbal commissioner herindy commissioner moody hi commissioner stephens hi i'm going to share with her whitaker hi thank you we adjourned at six fifty eight perfect thank you guys be well thank you thank you thank you