July 5, 2013
Former Mayor Richard M. Daley and his investment firm Tur Partners have started another company, The Sustainability Exchange, to advise cities on how best to squeeze savings out of infrastructure retrofits and upgrades.
Daley and Tur’s chief executive, Lori Healey, have organized the exchange as a social enterprise known as an L3C, or a low-profit, limited liability company. It operates much like an LLC but adds one key advantage: Grant-making nonprofits can invest rather easily. (Typically private foundations only make grants to other charities.)
Daley and Healey launched the company last week and have yet to ink their first client. But Healey and Tur principal Michael Reinhold, the exchange’s president and chief operating officer, said they are in discussions with several cities, and they explained the problem they want to solve.
“We went to a medium-sized city who prides themselves as doing very well in sustainability,” Healey said. “And they were on their third consultant who was evaluating what type of system they should use for converting their streetlights to LEDs,” lights that use less energy than traditional incandescent bulbs. Healey added: “And one of the mayors we talked to didn’t know which consultant to believe because he felt they were always trying to sell him something from their own stable of (LED) products.”
Reinhold added that in Massachusetts the streetlights are owned by utilities, further complicating upgrades.
“So the first thing a city has to do is buy back the streetlights from the utilities,” he said. “They have to model out what the expected costs of that are, go through a whole analysis, and once they do that, they have to decide what kind (of LED) to use, what other features to put on it, what hours the lights will stay on, and so on and so forth.”
The exchange would help cities make all of those decisions and solicit bids from vendors to do the job — at no charge. The exchange would make money by taking a cut of the cost-savings from the new bulbs over several years.
“Why we think this makes sense — not necessarily for the Chicagos, New Yorks and LAs, but for smaller cities — is that by joining together on these projects they can drive down individual costs,” Healey said. “Financing becomes cheaper by bundling things together, and you get much bigger interest from bigger sources of capital.”
Daley’s name and network are opening doors to city officials and experts. In addition to LED lighting, Reinhold said, he envisions the exchange consulting on retrofits for government buildings; fleet conversions to electric and hybrid vehicles; anaerobic digesters, which convert waste to energy; upgrades to wastewater treatment facilities; and recycling programs.
Cities nationwide are moving to cut costs through more energy-efficient operations — and have succeeded to varying degrees, depending on political will, budget considerations, and staff interest and expertise. New York, for instance, is moving to require composting of food scraps. And while Chicago has a plethora of green roofs, it struggled for years to expand recycling citywide.
On the business end, small, venture-backed technology companies lack the lobbyists needed to persuade city officials to adopt new technologies, and they don’t have the money to wait out long procurement decisions.
“So much money is stuck in clean tech (startups), and venture capital firms can’t get it out,” Healey said. “You know why? Because they can’t get the technology adopted at the municipal level.”
Original article can be found online.