THE WEST ADAMS OPPORTUNITY
California is a global leader in clean energy, creating models that are replicated around the world. Yet recent research by UCLA highlights that California’s clean energy programs mainly benefit the affluent. Improving energy efficiency offers the most leverage to reduce consumption, yet it remains elusive to disadvantaged communities. Take, for example, the Los Angeles neighborhood of West Adams:
68% households make less than $50,000 per year
75% households makes less that $75,000 per year, the living wage
29% households are black, 53% households are Latinx
38% family households are single-parent
20% household income spent on energy (electricity, natural gas, gasoline)
Less than 1% have solar panels
West Adams is one of the first neighborhoods in Los Angeles. Once affluent, now West Adams is known for its lower-income districts. Most are modest homes, built in the 1920s and 30s, long before there were energy standards specified in the building code. With such a rich history, one would think West Adams would be a target of clean energy programs. Yet, it has been passed by.
On August 14th, 2020, a deadly heatwave, the worst two decades, causes rolling blackouts and dangerous conditions.
On August 16th, 2020,
West Adams hit 95 degrees,
with a real feel of 104 degrees.
Only 30% L.A. households that
make less than $50,000
have air conditioning
thirdACT announces the launch of ELEVATE AMERICA: WEST ADAMS EDITION. Our goal is to transform 100 existing homes into models of Zero Energy. The DOE defines a ZE home as “a high-performance home so energy efficient all or most annual energy consumption can be offset with renewable energy.” Renewable energy is provided with solar. The efficiency comes from upgrading basic systems such as roofing, insulation, windows, and air conditioning. We then decarbonize the homes by swapping out natural gas for all new modern electric appliances.
We choose West Adams because arguably these residents stand to reap the tremendous financial benefit from reduced energy consumption, now and over time. In doing so, we are transforming a neighborhood without displacing it. We are building wealth, increasing disposable income, protecting households from the rising costs of energy, and so importantly, we are providing safe, comfortable, and resilient homes.
We also choose West Adams because even today it is a landmark neighborhood. Its location is right where the world can see and experience it. It's just outside downtown L.A., adjacent to USC. It's 19 minutes from LAX and visible from most flights. Anyone driving on the 10 can see it. It really is the heart of Los Angeles.
Designed to recycle philanthropic capital
Rather than direct philanthropy here and investment there, the ELEVATE AMERICA: WEST ADAMS EDITION combines philanthropy and investment towards a single, comprehensive impact initiative. What makes this so special is that it's designed to recycle philanthropic capital. This is achieved by tapping into the value created from the net-zero transformation, all while driving energy resiliency and household worth in the West Adams neighborhood.
How does this work?
The grant is simply an investment with a -100% financial return because, by design, there is no return on this capital. Today, more and more donors seek opportunities where the grant, by design, is used for investment. This provides impact and return. This is the recoverable grant. Recoverable grants take on some form of investment, so that the return allows the donor to recycle the capital into future impact activities.
The WEST ADAMS EDITION is a recoverable grant. It is designed to invest in the community and over time, return some capital to the donor. We do this in an innovative and thoughtful way.
With the WEST ADAMS EDITION, the homeowner agrees to pay a set percentage of their property's future sale proceeds in exchange for the funding of improvements now. Rather than marking up the amount of the repayment, we mark it down 25%. This simple reduction combined with the compound effect of appreciation, over time, enables the investment to provide fair and reasonable return while providing West Adams homeowners immediate and enduring economic impact.
As an example, the typical home in West Adams is valued at $850,000. It will take roughly $100,000 to transform this home to net-zero energy. This represents about 12% of the property's current value. With a 25% discount, this investment is made in exchange for 8% of the property's future sale proceeds. The homeowner benefits from the improvements from day one. There’s no debt, no payments, and unlike a loan, the financing does not appear on the owner's credit report. Homeowners keep any cash rebates from their local utility programs, any tax incentives, and of course, all energy produced, and all energy saved. Furthermore, homeowners can refinance their mortgages, possibly at better rates with the new net-zero status.
Homeowners retain complete control over their properties. They sell when they want, to whom they want, and for the price they want. When they sell their property, a portion of the sale goes back to the donors, who can recycle this capital into other philanthropic initiatives.
Why does this work?
Taking a reduced flat percentage might sound like a loss but it is everyone's gain. The program is designed to keep people in their homes, not to displace them. Over time, homes tend to appreciate, and if they do, an appreciating asset means, little by little, a greater return when that property sells. Any of these proceeds are returned to your DAF sponsor or foundation.
Benefits for West Adams Homeowners
The ELEVATE AMERICA: WEST ADAMS EDITION places equity and asset-building at the center of the program. The program aims to wipe out the entire energy utility bill, effectively saving $200-400 per household, per month, every month. This is far more substantive than the recent federal financial assistance programs. And it’s far more enduring. These technologies provide savings for years to come. It’s all done without the burden of debt, periodic payments, or out-of-pocket costs.
In addition to these benefits, the Los Angeles Department of Water and Power offers cash rebates, effectively paying homeowners with these upgrades. We estimate the average WEST ADAMS EDITION household will receive just over $3400 in cash utility rebates. The average Federal Investment Tax Credit is expected to exceed $5000. These benefits make the program a real, positive game-changer from day one.
And the benefits go well beyond cost savings. According to the Centers for Disease Control and Prevention, extreme heat now causes more deaths in U.S. cities than all other weather events combined. Los Angles experienced its first 100 degree day in April this year. Extreme heat not only means hotter days, it also means hotter nights. For some, there is little relief. Modern air conditioning provides a level comfort so that households can be healthy and productive. But to be efficient, AC is only part of the solution. One needs insulation, efficient windows, and a cool roof - all the upgrades included in the WEST ADAMS EDITION.
When you support the WEST ADAMS EDITION, you are:
Transforming the first existing neighborhood in the nation to net-zero energy
Reducing household costs substantively, for years to come
Preserving affordable housing, keeping people in their homes and in their neighborhood
Combating community deterioration
Providing households 100% clean energy
Enabling households to use adequate air conditioning without the worry of a steep energy bill
Sheltering households from the rising costs of energy
Providing living wage, green-collar jobs for installers
Preparing households for the future of transportation
Validating a model to be replicated in other communities, cities, and states
Aligning with the United Nations Sustainable Development Goals: Clean Energy 7.1, Sustainable Development 11.1, Climate Action 13.1
It's impossible to live sustainably without
In 2020, having a cool, safe environment has never been more essential. Some communities have not had equal access to air conditioning and affordable energy, much less clean energy. The current crisis offers an incredible opportunity to bring fresh ideas to the table. When I first learned that grants can invest as well as give, I thought to myself, why not combine these powers into one project? The West Adams Edition is the perfect opportunity.
Most of the buildings that are going to be here in 2050 are here today. We cannot rely on new construction to get us to net-zero energy.
We can do this now. And we need to. Power was shut down again across Los Angeles on Thanksgiving day. Many more face shutoffs over the weekend. The challenges we've faced in 2020 seem unending.
By supporting the WEST ADAMS EDITION, you're not just supporting one neighborhood. This project proves a model that will be replicated across countless communities. You're supporting so much more than West Adams.
When was the last time you did something for the very first time? Now is that time.
It's so simple. Click HERE to start.
For the full project overview, FAQs,
please contact me:
Founder and CEO
“The old playbook is let's set up a loan fund to help a CDFI in a black community and we will have done our best.
The New Playbook needs to place equity and asset-building at the center. To do that, making available expensive debt is not going to help.”
CEO, Ford Foundation
It's expensive to be poor.
What kind of philanthropist are you? The ELEVATE AMERICA:
WEST ADAMS EDITION fits into so many themes:
Racial equity: Supporting disadvantaged communities
Health: Fostering healthy, safe, and comfortable environments for children and families
Affordable housing: Preserving affordable housing and combating community deterioration
Environmental justice: Decarbonizing homes and transportation for all
West Adams is worthy of clean, affordable energy. Now, that is philanthropy that everyone can feel good about.