Green public financing for Philly public schools
I started this newsletter trying to figure out how to get public financing for Philadelphia public school infrastructure. We've got a massive problem here: the buildings are toxic, hurting kids and teachers and staff. The problem is at least $5 billion big: that's the amount an independent analysis handed to the district in an assessment of its facilities in terms of maintenance backlog (which is on top of yearly maintenance). This problem is something of an opportunity for those interested in education justice and climate justice: we could embark on a massive construction project to fix up Philly's schools and reduce their emissions. How cool would that be?
I started in 2020 by proposing that the Federal Reserve's Municipal Liquidity Facility open and relax its eligibility criteria to let school districts borrow at no cost. Republican austerity goblin Pat Toomey ended that possibility by demanding the closure of the MLF.
Since then I've been on the hunt. I thought the Department of Energy might have a program, but no deal. I helped with the Green New Deal for Schools legislation which called for federal equity grants, but it got killed in reconciliation negotiations (even though it still has the most co-sponsors of any GND proposal). In the intervening period I've explored how school building finance works and what socialists should say and do about it. I've tracked green bond deals in Philly too, testifying at city council hearings on the issue of transformative school facilities finance. Other than proposing we advocate for a National Investment Authority, or trying to get a meeting with the Philly Fed, I haven't seen a viable path to the kind of green revenue stream the district needs for its buildings. But last week a new possibility emerged that actually seems viable.
Big green loan for big green schools project
As I wrote about last week, the Inflation Reduction Act establishes a national green bank through the Greenhouse Gas Reduction Fund. The bank has a pool of $27 billion, eight of which is meant for poor and disadvantaged communities to get financing for green infrastructure. The fund is a kind of national green bank incubator, structured to work with existing green banks at the state and local levels to secure financing for projects that lower emissions.
At first I wasn't sure how this would work. But after talking with some folks involved, it looks like there are at least two concrete options to figure out how to get Philly a public loan for a green school infrastructure project.
The first real option is for the district to work with Inclusive Prosperity Capital (IPC) to borrow a syndicated loan from existing state-level green banks, like the ones in New York, Connecticut, DC, Rhode Island, and California. A syndicated loan is one structured by multiple institutions. This kind of deal is exactly IPC's thing. Given that the state banks are now backed up by the GGRF's funding, we could push for low/no cost in terms of fees and interest rates, saving millions of dollars on the deal. We could take advantage of PA's Guaranteed Energy Savings Act to do the project too. Rather than $60 million of green bond money, we could do a bigger series of loans, perhaps $350 million/year over five years, all for green projects.
But the syndication strategy might not even be necessary. Last year, the Philadelphia Energy Authority opened the Philadelphia Green Capital Corporation "to provide low-cost financing options for energy efficiency and renewable energy projects in the Philadelphia region. As the non-profit green bank affiliate of the Philadelphia Energy Authority (PEA), PGCC's vision is to spur the growth of a thriving clean energy market that serves all Philadelphians." The PGCC's navigator loan is open to "non-profit properties," for which schools might qualify. None of the other products seem like a good fit, and it's something to explore. It would certainly be easier if there were a green bank specifically serving the region who could get GGRF backing to do a deal with the district.
Next steps-conversations
As I see it, I think the next steps right now are to have conversations with everyone who might be interested in backing this kind of project. But we have to do it right, not just doing a complicated financial deal behind closed doors and then announcing a 'victory' before anyone has a chance to understand or participate in the conversation. I think the groups involved largely break down into borrowers, lenders, and community members (or those served by the borrowers and lenders). I think traditionally the borrowers and lenders get together, plan the deal, and leave it at that without really getting the community involved. So let's change that.
First and foremost, we'd want to talk to the coalitions of organizers and activists who have been working on this forever. There's an entire movement ecology to consult, involve, and center. Our City Our Schools, particularly the Parent Home and School Council, would be go-to groups, but also Philadelphia Student Union. The teacher's union, the PFT (especially Jerry Roseman), along with the administrators' union CASA would be part of this conversation, along with all the groups that are part of the Fund Our Facilities coalition. In our DSA chapter, we worked on a Green Freedom Budget for Schools and have a lot of research completed specifically for this kind of project. The Debt Collective would be helpful partners in making sure the credit is as low-cost as possible. The Action Center for Race and the Economy (ACRE), and their local roundtable the Progressive Revenue Project (who created Tax the Rich PHL), would be great given their expertise and resources. Of course, the People's Facilities Master Plan group spearheaded by Akira Rodriguez should be an active and central participant on the planning and expenditure side.
On the borrowing side, there are finance officers in the school district itself to see if they'd even consider it. I think specifically the CFO, Uri Monson, as well as the head of Capital Projects, Ahmed Sultan. I imagine the Board of Education, superintendent Watlington, and the Mayor's Office of Education would be involved. I wonder if the building trades would also be brought in on this side? We'd need to put together a budget proposal for the lenders, which would include price estimates for specific projects at specific schools using specific providers of green infrastructure. Elected officials at the city council, state house, and state senate level would certainly help figuring everything out and getting the right groups together in the right order. I think Philadelphia's 'squad' would be interested in this clearly.
On the lender side, we'd need to talk to the green bank people at every level: the IPC, the PGCC, and the administrators working on the GGRF. I think involving the folks at the Philadelphia Public Banking Coalition, who span a lot of these boundaries, would be very helpful too since there's a lot of expertise about public banking in that group.
Much of this strategic thinking follows the path we laid out in our campaign to get an MLF loan for Philadelphia. We've still got a lot of connections to most of the parties listed above from that effort. While that didn't get very far--the situation was so fluid--I think this proposal holds more promise. We've got a little time to figure it all out while the IRA goes through Congress and GGRF administrators figure out how to do what they're going to do. Stayed tuned!