EcoDistricts Organization Engagement and Governance June 2011, Version 1.1

www.pdxinstitute.org/ecodistricts Copyright Copyright © 2011 Portland Institute. All rights reserved.

Acknowledgements The EcoDictricts Toolkits were developed by the Portland Sustainability Institute (PoSI) in partnership with practitioners from the EcoDistricts Technical Advisory Committee (TAC) in 2010-2011. Its publication would not have been possible without the dedication of these many volunteers. PoSI staff led the development, writing and research. TAC members reviewed draft toolkits and, in some cases, provided content. In addition, a targeted group of topic area experts provided a peer review. PoSI would like to thank the following individuals and organizations for their contributions and dedication to this process:

Organization Working Group Jim Johnson (Chair), Oregon Solutions Paul Leistner, Portland Office of Neighborhood Involvement Jill Long, Lang Powell Tim O’Neal, Southeast Uplift Ethan Seltzer, Portland State University

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 2 Contents

Introduction ...... 4

Phase 1 – Engagement...... 6 Step 1. Engaging Stakeholders ...... 6 Determine Representatives in Your Community...... 6 Make an Inventory of Community Resources...... 7 Define the Message and Goals...... 7 Step 2. Creating an EcoDistrict Steering Committee...... 8 Step 3. Developing a Vision and Priorities...... 9 Create the EcoDistrict Vision ...... 9 Document Commitments...... 10

Phase 2 - Governance...... 11 Step 1: Determine Stakeholders’ Roles and Responsibilities ...... 11 Responsibilities and Tasks of the Governance Entity...... 11 Powers Needed to Achieve EcoDistrict Goals ...... 12 Step 2: Formalize the EcoDistrict Governance Structure...... 13 Why Create an EcoDistrict Governance Entity?...... 13 Organizational Options...... 15

Conclusion...... 24

Appendix A: Neighborhood Scale Engagement and Governance Case Studies...... 25

Appendix B: EcoDistricts Engagement Roadmap...... 27

Appendix C: Lloyd Crossing Governance Recommendations ...... 29

Appendix D: Organizational Documents ...... 31

Notes ...... 40

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 3 Introduction

Why Become an EcoDistrict? EcoDistricts™ are a comprehensive strategy to accelerate at the neighborhood scale by integrating building and infrastructure projects with community and individual action. They are the right scale to accelerate sustainability — small enough to innovate quickly and big enough to have a meaningful impact. An EcoDistrict is a neighborhood committed to sustainability with empowered people, green buildings and smart infrastructure. The EcoDistricts approach recognizes the potential for neighborhood- scale actions to meet sustainability goals by combining the “top-down” investment and policy commitments of a city and utilities with the “bottom-up” participation of neighbors motivated to improve the quality of their communities. EcoDistricts bring real projects that improve sustainability in your neighborhood — such as training and education; social marketing; demand management; resource sharing; performance dashboards; Project in Action: district energy; building retrofits; green infrastructure; wastewater treatment; and smart grid, to name a few. These projects all have Solarize Portland valuable outcomes to improve quality of life, like savings on utility bills, The Southeast creating jobs and building community neighborhood coalition has pioneered a solar Why Should You Care? bulk-purchasing It’s your community. And it can become a vital, sustainable place with program that brings environmental, social and economic returns for you and your neighbors. individual homeowners Sustainability requires careful and consistent coordination between together to purchase local property owners, community members, cities, and public and solar energy systems in private utilities. This suggests new relationships and a new organizing bulk to save money. structure to create the capacity to implement projects. The program was so successful that it has Building local capacity (to understand sustainability and to gain skills to manage projects) through engagement and local governance is also been rolled out in essential to achieving long-term sustainability goals in a community. Northeast Portland, EcoDistricts provide a way to guide and take advantage of individual Southwest Portland, and public investments to strengthen and enhance a neighborhood’s and Beaverton. sustainability. This capacity building includes two major components: www.solarizeportland.org 1. Engagement, through community outreach and partnerships, is critical to promote long-term neighborhood and community action. 2. A neighborhood governing entity — with the resources and skills to lead the EcoDistrict — is critical to implementing community priorities. This entity may be a new organization, it may grow from an existing neighborhood or business association, or it may be an alliance of organizations.

What’s Your Role? EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 4 As an EcoDistrict, your community commits to the following stepsi: 1. District Organization – engagement and local governance 2. District Assessment – setting the right project priorities 3. Project Feasibility – determining technical and economic feasibility of priority projects 4. Project Development – implementing high impact priority projects 5. District Monitoring – tracking performance to understand impact of projects As a community member, resident, property owner or developer, you are empowered through EcoDistricts. EcoDistricts provide an opportunity to shape your neighborhood and for you to become a leader. It means that you and your neighbors are willing to accept some risk in being the first to try a new approach, because you recognize the potential environmental, community and economic benefits of the approach when successful.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 5 Phase 1 – Engagement The Big Picture The purpose of engagement is to build interest in a neighborhood EcoDistrict and ultimately create buy-in for a shared vision. It is critical to the long-term goal of creating a local governance structure that continually works towards sustainability improvements on behalf of the neighborhood. It is important to remember that sustainability is ultimately about people and that the engagement phase of EcoDistricts is in many ways the most critical to success. EcoDistrict engagement presents an opportunity for building neighborhood capacity, because, as Ethan For Further Seltzer writes in Making EcoDistricts, “it is a scale at which citizens can be empowered, not just to interact with city agencies and public sector Information bureaucracies and legislative processes, but to interact in effective ways Consider the United with each other.”ii Way Cultural The process assumes that there are at least a couple of willing and Complementarity interested stakeholders in the district who want to work together to Model, which was create an integrated sustainability vision and action plan for their designed to facilitate community. new ways of thinking One you have a core group of EcoDistrict believers (or your public about and discussing sector planning partners), it is time to engage with your neighborhood different cultures: and develop an outreach plan. Keep in mind the unique dynamics of http://www.unitedway your community when identifying partners and stakeholders, to make twincities.org/ourimpa sure that your conversations are representative of the community’s ct/culturaldynamics_c wants and needs. omplementarity.cfm All of these community engagement activities require the EcoDistrict organizing leadership to do outreach and engagement to get the community involved in the process. This section will help you reach out to your neighbors and develop an action plan to identify your shared vision.

Step 1. Engaging Stakeholders

Determine Representatives in Your Communityiii You probably already have a good sense of the people in your community, in terms of demographics, interests, and needs. But given realistic time constraints you might have to focus on representative groups, recognizing that you can’t talk to all the thousands of neighbors in a residential district. Involve your community in determining which characteristics are important in a representative. You might want to know: • Age and other demographic characteristics • Geographic location

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 6 • Problems the community wants to solve • Educational needs/gaps • Recreational/fun interests • Sources of information the community consults • Ownership or rental of current property in the district • What group activities the community participates in • Community values and motivations • Specific behavior patterns related to environmental impacts Or you might want to focus on a specific group in your community, such as: • All business owners, or business owners in a specific area • Commuters, or all commuters by public transit or by bicycle • Homeowners, or all renters, or all residents, or all residents with children • Local decision-makers

In doing outreach, make sure that you are reaching a broad range of community stakeholders.

Make an Inventory of Community Resourcesiv Existing community resources and programs say something about a particular community. Consider these assets as well as existing plans and visions to inform your work. Some questions to ask may include: • What groups, agencies or other resources (such as the library or internet) already address EcoDistrict-related issues? • Are there grants, loans or other funding sources available in this area? For Further • Which existing activities may help build understanding about a Information topic like EcoDistricts (advisory group meetings, surveys, etc.)? See Our United • Are there skilled teachers and educators in the area of Villages’ approach to sustainability? “Asset Mapping” at: • Are there existing facilities available for public use? http://ourcommunityo • Is there neighborhood literature that addresses any type of utreach.org/. sustainability-related issue? • Is there community support for environmental initiatives?

Define the Message and Goals Determine what it is that you want to convey in your outreach conversations. What about EcoDistricts brings meaning and value to your community? What potential shared community goals are to be addressed? Consider the community’s interest in pursuing projects that support energy efficiency, more wildlife habitat, community services, education, etc. Describe the message and goals succinctly and be clear about related outcomes around equity and livability. EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 7 You might want to create a one-minute pitch to describe the message Lessons from you are conveying. It could be something like “EcoDistricts are a Portland’s Pilot: Foster strategy to improve neighborhood sustainability and livability. Our Green neighborhood has great potential, and we’re building a group of interested residents and businesses who want to work together to During community create an EcoDistrict vision and action plan, and to create projects like engagement sessions, green streets, smart grid, walkability, energy reduction competitions one successful and more.” EcoDistricts are a complex idea, so the more you can strategy is to focus on simplify and talk about outcomes and benefits, the better. the participating Once you have a sense of the people and resources in your community group’s self-identified and once you have a clear message, it is time to develop an outreach community priorities plan that includes key conversations with individual and group and work in small stakeholders. groups to identify the Your plan should include: top three projects that When and how to engage the community (for which tasks and at would satisfy both the • what point in the process) community priority as well as multiple • What you hope to accomplish with each conversation sustainability • The intended outcome of the engagement process (most likely, performance areas. an EcoDistrict vision and set of actions) This conversation is Now it is time to put your engagement plan into action. This means that effective for showing you and your EcoDistrict partners talk to the range of identified how environmental stakeholders to share your message and identify interested partners. goals can be met while also meeting identified community goals. Tools and Methods The engagement approach outlined in this toolkit provides one customizable framework for setting a course of action, but there are many other tools and methods that can inform such a process. One method is Civic Ecology, a framework based on the idea that the community is in control and seeking connections to bigger institutions and systems. The Civic Ecology engagement approach is informed by a series of questions that might be useful for this step: 1) Where are we now? 2) Where do we want to be in 5, 10, 20, 50 years? 3) How do we get to where we want to be? 4) How do we know if we are getting there? 5) Who wants to help find out? These may be useful framing questions for your process.v Other methods to consider include Regenesis Groups’ Story of Place and Noisette’s City Craft, which provide similar frameworks for engagement and capacity building.

Step 2. Creating an EcoDistrict Steering Committee Once you have engaged a critical mass of community stakeholders, it is time to create a Steering Committee of stakeholders (including a range of residents, businesses, property owners, etc.) who are committed to making your EcoDistrict a reality. You’ll have a sense of who these people are based on your initial conversations and outreach. You’ll need EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 8 to identify the best stakeholders, potential partners and leaders, and approach each person or group to recruit and engage them in the EcoDistrict process. To determine effective Steering Committee stakeholders, consider your initial outreach conversations and the range of organizations that your community trusts and uses. Consider inviting representatives from: • Existing municipal engagement processes (e.g. those active in Lessons from city planning processes, urban renewal advisory groups, etc.) Portland’s Pilot • Business associations Districts • Key business owners Portland pilot district • Community organizations (service groups, interest groups, etc.) stakeholders have • Neighborhood associations been inspired and • Local unions excited to organize around EcoDistricts. • Social service groups They see it as an • Under-represented groups such as minority and immigrant opportunity for their communities neighborhood to • Community leaders support a positive • Homeowners opportunity and to • Public sector and local government partners shape their own • Local developers sustainability agenda. • Artists Make sure that the Steering Committee is representative of the general population of the EcoDistrict, incorporating, for example, people of different races and ethnicity and people living below the poverty line. All neighbors should have the opportunity and access to participate in the working group, regardless of financial status. For equity purposes, consider valuing time contribution to the process in addition to dollar investments. This group of people must have the time, interest and ability to work hard in support of a shared vision. Their responsibilities include: • Engaging other community members • Developing the EcoDistrict vision • Establishing a governance structure • Assessing district conditions to determine project priorities • Managing implementation of EcoDistrict projects After the Steering Committee is recruited and engaged, its members will need to create a vision and determine project priorities.

Step 3. Developing a Vision and Priorities

Create the EcoDistrict Vision A shared vision will provide purpose and direction for the Steering Committee. The vision should be aspiration but include tangible values. EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 9 The steps for creating the vision may include: Lessons from • Reviewing and discussing findings from engagement discussions Portland’s Pilot: • Brainstorming potential ideas based on community-identified Gateway EcoDistrict priorities and performance-based recommendations Vision • Inviting each steering committee member to draft a vision, then The Gateway EcoDistrict integrating their key themes is a community-driven • Highlighting the outcomes of sustainability projects, such as initiative to organize, livability, job creation and asset building identify and implement While developing the vision, it is important for the Steering Committee projects, which will lead to regularly check in with the broader community and get their to a more sustainable feedback on the proposed approach. neighborhood where people want to live and Once the vision has consensus, the Steering Committee can develop work. It includes goals to achieve it. After forming a governance entity, described in the residents, small next section, the next step in EcoDistricts is to complete the EcoDistrict businesses, property Assessment Method™ to determine the high impact project priorities to owners and institutions meet the vision. The assessment can be completed in parallel with the that are committed to engagement process, or the new governance entity can undertake the improving the assessment. See the “EcoDistrict Performance Area and Assessment environment while Method” Toolkit for details. meeting long-standing neighborhood needs such as jobs, safety and Document Commitments affordability. With clarity on the vision and EcoDistrict priorities, you have a starting point for identifying the roles and responsibilities of the governance group that will guide the vision into implementation. The results of this engagement phase should be formalized through a Memorandum of Understanding (MOU) between stakeholders. The MOU will document the work to date, the agreed upon vision and potential project priorities. It should also include specific commitments from each member of the Steering Committee to support the next phases of EcoDistrict development. This may include monetary contributions or in kind resources such as staff time, meeting space or technical expertise. The MOU provides the clear signal towards creation of a governance entity.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 10 Phase 2 - Governance This section will help you clarify the responsibilities and skills necessary to achieve your EcoDistrict vision and priorities, determine which type of governance structure is best suited for your neighborhood and learn how to get started with formation. Keep in mind that the key is to identify the capacity and skills to carry out the ambitious tasks of the EcoDistrict. You may find that your existing neighborhood organizations fit this need or that there is value in creating a new EcoDistrict governance entity. In Making EcoDistricts: Concepts and Methods for Advancing Sustainability in Neighborhoods, Ellen Basset studies governance models through a series of case studies and provides five insights that you might consider in creating a governance structure: “Insight 1: Successful governance institutions have strongly shared goals; these emerge according to circumstances/felt need, and influence the form governance takes. Insight 2: Legitimacy is paramount; leadership must be representative and accountability to residents must be clear. Insight 3: All governance institutions are not created equal—the need for capacity building and commitment of government resources should not be underestimated. Insight 4: Respective responsibilities between institutions (within hierarchy and across same levels of power) must be clear. Insight 5: Evaluation must be built into governance experiments.”vi

Step 1: Determine Stakeholders’ Roles and Responsibilities

Responsibilities and Tasks of the Governance Entity Not all EcoDistricts are created equal. Some will immediately tackle large, complicated projects such as installing a district energy system, while others will focus on individual behaviors, such as household recycling. Given this, there is no one answer as to which type of organizational structure will be best for your governance group. Each district must consider its goals and resources to determine the right organizational structure. The central questions are: • How can we organize and manage this complicated set of activities that will be undertaken by a large group of individuals, business owners, property owners, nonprofits, public agencies and others in the EcoDistrict? • What system would best position leaders to achieve sustainability goals and objectives?

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 11 • How can we institutionalize the collaboration that will be necessary to achieve goals and objectives? These aspects of your EcoDistrict also need to be considered: • Flexibility: Does the entity need to be flexible? Will the district reach for a broad spectrum of goals over its existence or will it focus on one project? Will a broad membership need to be available? • Profit motive: Will there be a profit associated with the projects of the district? And if so, will that be shared with a larger group of members or is the profit a reward for the developer who puts in the time and energy to promote the district goals? For instance, if a large piece of infrastructure is to be placed into a district, a limited liability company (LLC) may need to be created for the project. An LLC would allow for ownership and financing of the project and for profit to be distributed in an amount equal to the money put in by early stakeholders. If there is likely to be a profit motive, it is important also to define what mechanisms will determine that this profit is equitably distributed and returned to the district and that the community enjoys the benefit. • Control: Who will control the EcoDistrict? Will it be a group of stakeholders funding infrastructure, or will it be a group of neighbors? How do the controlling interests exercise control?

Powers Needed to Achieve EcoDistrict Goals There are a variety of powers that are necessary and appropriate to achieve the projects and strategies outlined in your action plan.

Basic Powers Needed An entity that is organized to take on the goals, responsibilities and activities for sustainability projects within an EcoDistrict would need the following basic powers typical of any legal organization: • Design an organization that will best achieve the desired goals • Form a board of directors (or group of advisors) to oversee operations • Hire staff and consultants • Enter into contracts and agreements with private parties and government agencies • Hold title to real estate • Accept grants • Borrow funds • Purchase, construct, improve, operate and maintain sustainability projects within the EcoDistrict • Change the organization to meet changing market needs or changing priorities

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 12 The governance entity also has a responsibility to manage the next phases of EcoDistrict implementation: • District Assessment • Project Feasibility • Project Development • District Monitoring

Additional Powers Depending on the desires of the working group, it may also be helpful for the entity to have other powers as well: • Have memberships and grant members the power to elect the board of directors • Require that net proceeds (revenues exceeding expenditures) be shared with members and, potentially, be shared in proportion to inputs from members • Accept donations that are exempt from state and federal taxes • Sell revenue bonds • Levy taxes, fees and charges to serve as an incentive toward conservation

Powers Probably Not Needed Given the vision, the goals, and the responsibilities and activities described above, it is probably not necessary for the entity to have the following powers often found within governments: • Levy property taxes • Pass laws that require compliance • Condemn real property to force a change in ownership • Issue general obligation bonds • Have a board of directors elected by registered voters within the district

Step 2: Formalize the EcoDistrict Governance Structure There are many options for the structure of your EcoDistrict governing entity. This section covers the types of the relevant legal entities for creating a new organization and provides context on the potential for an existing organization to take on the responsibilities outlined above.

Why Create an EcoDistrict Governance Entity? There are likely numerous community governance entities that already exist in your city’s neighborhood or business association system:vii • Neighborhood associations EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 13 • District coalitions • Business district associations • City bureaus for neighborhood involvement • Community development corporations A neighborhood association could be a good choice to take on the tasks of EcoDistrict governance. This group is defined as an: “Organization formed by people for the purpose of considering and acting on issues affecting the livability and quality of their Neighborhood.” But neighborhood associations already have responsibilities to their community and may not be able to take on the tasks of designing, implementing and assessing additional projects — especially when that process involves monitoring performance areas and designing projects especially to maximize improvements in performance areas. Lessons from the Pilot Districts: Lloyd A district coalition could also be a good choice, but such groups cover a larger region than one neighborhood, so they are likely too broad for an The Lloyd District has EcoDistrict. Also, like neighborhood associations, district coalitions a Business already have other responsibilities and may not be able to take on Improvement District, additional project management and assessment tasks. which is both the Business district associations include powerful business community governance and leaders, which are often logical choices for EcoDistrict leadership. But finance structure for they, too, are often focused on other tasks. Business development and the Lloyd well-being would come first; community development and projects Transportation would be a secondary goal. EcoDistrict management requires not just Management community development, but also project design and management Association and from the perspective of sustainability and the performance areas. provides the basis of The primary goal of neighborhood offices is to facilitate citizen the EcoDistrict participation and improve communication between various community governance entity. A entities. It is not designed to focus on neighborhood improvement BID is a tax assessed projects such as changes in infrastructure or ecosystems. It would be ill strategy to generate equipped to manage and monitor such projects. funds in a district. The Community development corporations are varied in their goals, often Lloyd BID is the legal focusing on underserved or lower-income residents. It is possible that entity with the ability there is one in your community that could help with EcoDistrict to administer funds for responsibilities, but it is likely that it would not be flexible and the Lloyd EcoDistrict. supportive enough to be the best fit for EcoDistrict management. The question is whether these existing organizations have the capacity (both time and expertise) to take on the types of projects generated by your EcoDistrict action plan. An alternative would be for an existing community organization to serve as the umbrella legal entity, with a separate group of people acting as the leadership group for the EcoDistrict. For example, a district coalition could provide the nonprofit legal backing for a working group of committed stakeholders who have the time and interest to drive the project work.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 14 Organizational Options If an existing organization is not appropriate, what options are available? There are many legal entities that can be used to organize the stakeholders of an EcoDistrict and each district’s choice will be based on its goals and unique situation. The table below provides a list of entity types and some benefits and challenges associated with each. Following the table, five types of entities are described in more detail: • Project-specific organizing entity • Nonprofit corporation • Cooperative corporation • Building Owners Association • Certified B Corporation

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 15 Pros and Cons of EcoDistrict Governance Entity Options

Project-Specific Organizing Entity

Pros Cons

Clearly defined roles in response May not be fully representative to specific project May not be fully recognized by the Duration of organization limited to community achieving project goal May not have the authority to grow the project to meet a broader opportunity identified during the process Cost benefit of forming a new entity for one specific project may not be worth it

Existing Neighborhood Association

Pros Cons

Already in existence May not be flexible No fees to set up May be limited by existing mission Recognition by City and/or State May not provide for expanded membership Active membership May not allow for large-scale projects due to financial constraints Typically controlled by a leadership board

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 16 Existing Homeowner’s Association

Pros Cons

Already in existence Funds likely to be limited by the association’s bylaws No fees to set up Membership may need a majority Active membership vote to embark on projects, and it Likely to have some funds may be difficult to get enough votes

Typically controlled by a leadership board Usually concerned about actions within their own boundaries, which are often small

Limited Liability Company

Pros Cons

Simple to set up Financial ramifications for members Simple to maintain Requires accounting expertise for Flexibility in membership and tax reporting mission Controlled by a manager or Could accommodate a large-scale member with ultimate majority project controls Traditional entity for obtaining Profit-motivated financing and ownership of infrastructure

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 17 Building Owners Association

Pros Cons

Like an HOA but allows for Lack of a legal framework and lack participation from multiple of existing examples buildings and properties Inability of building owners to take Model currently being pursued by out additional debt Living City Block Existing building relationships (ownership structures, financial structures, etc)

Certified B Corporation

Pros Cons

Required to meet comprehensive Cost associated with set up and social and environmental maintenance performance standards Relatively new model Discounted tools and services from other B Corps Membership in a socially responsible business community

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 18 Corporation

Pros Cons

Provides formal entity Controlled by a majority shareholder Depending on the type of corporation, can provide shares to Tax consequences for owners owners Inflexible ownership structure Traditional entity for obtaining Very formal corporate financing and ownership of maintenance obligations infrastructure Outside professional help likely

needed More expensive to maintain and set up Typically motivated by profit

Nonprofit Corporation

Pros Cons

Able to raise money Very complicated reporting requirements with the IRS Must have public benefit mission Complicated maintenance Can have broad membership obligations Limited by public benefit rules

Cooperative Corporation

Pros Cons

Owned by the membership Costs associated with set up and maintenance Gives members power to use co- op services, which could be green Democratic control by related, such as buying solar membership panels for a reduced price Return surplus revenues

Exist solely to serve the membership

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 19 A Project-Specific Organizing Entity This type of entity is formed around a specific project, for example, to manage the operation of a heating district within a specific area. The organization could be a legal partnership between building owners or it could be a corporation or LLC formed to provide the service. Another example would be a partnership formed between two or more adjacent building owners who agree to work together on a stormwater management project involving their buildings. It should be noted that a project-specific organizing entity does not fit the general definition of an EcoDistrict mentioned earlier in this section; rather, it is more likely that the partnership or managing entity is simply another organization that would interact with an EcoDistrict board of directors and be one element of the EcoDistrict’s sustainability program. On the other hand, a project-specific entity could serve as the basis for a larger organization that could take on the full range of services envisioned for an EcoDistrict.

A State of Oregon Nonprofit Corporation with Variations of Federal Designationviii The State of Oregon allows nonprofit corporations to be formed for a variety of purposes through ORS Chapter 65. An EcoDistrict will likely choose to be either a Public Benefit Corporation and seek federal IRS 501(c)(3) tax-exempt designation or be a Mutual Benefit Corporation and seek federal IRS 501(c)(6) tax-exempt designation. (See the Lloyd District case study in Appendix B and the Lloyd TMA bylaws in Appendix C.) A 501(c)(6) designation is used for business groups such as chambers of commerce, professional and trade organizations, and economic development corporations. The articles of incorporation and bylaws of the corporation determine how a board is formed, how many directors are on it and their roles and responsibilities. Thereafter, new board members are usually invited by current board members to participate and then voted in by the existing board of directors. The formation process through Oregon law is relatively easy and is done by registering with the Secretary of State. Seeking tax-exempt status through the IRS is a much more complicated process. A nonprofit corporation has a wide variety of powers, similar to those of a regular corporation; e.g., it can sue and be sued; enter into contracts; hold title in real estate; borrow funds; sell products or services; build, construct, purchase, improve, operate and maintain all facilities necessary to serve the purpose of the corporation consistent with articles and bylaws; etc. It cannot compel or require membership or require certain actions of people or businesses within its area of operation. It cannot levy property taxes; is not subject to initiative, referendum, or recall; and is not subject to laws that cover local governments.

A State of Oregon Cooperative Corporation

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 20 ORS Chapter 62 guides the formation of a cooperative corporation. Cooperatives may be organized under this chapter for any lawful purpose or purposes, except for the purpose of banking or insurance. Co-ops are fairly common in Oregon. There are 18 electric cooperatives providing service in Oregon and numerous housing co-ops, food co- ops, etc. The articles of incorporation and bylaws of the corporation determine how a board is formed, how many directors are on it and the nature of their roles and responsibilities. Thereafter, new board members are usually voted in by members of the corporation. Members are defined by bylaws, but generally are people who desire to join and pay a membership fee. There is no requirement of membership. A cooperative is created by registering with the Secretary of State and complying with provisions of state law. It is not a difficult process. A cooperative has a wide variety of powers, similar to those of a regular corporation; e.g., it can sue and be sued; enter into contracts; hold title in real estate; borrow funds; sell products or services; build, construct, purchase, improve, operate and maintain all facilities necessary to serve the purpose of the corporation consistent with articles and bylaws; etc. A cooperative cannot compel or require membership or require certain actions of people or businesses within its area of operation. It also cannot levy property taxes and is not subject to initiative, referendum or recall laws. A cooperative corporation is also not subject to laws that apply to local governments. ORS 62.415 requires that the apportionment and distribution of net proceeds or savings of a cooperative shall be paid periodically to those persons entitled to receive them. How is a cooperative different from an Oregon public benefit nonprofit corporation? There are a number of differences: • Cooperatives have members, which are defined by the articles and bylaws; a co-op may charge a fee to become a member • Board members are elected by the cooperative, rather than by other board members • Any net proceeds (revenues in excess of expenditures) can be distributed to the members, including board members • Through articles and bylaws, co-ops can establish that net proceeds are to be distributed in proportion to the inputs of each member A cooperative can also become an IRS 501(c)(12) nonprofit. This would provide federal income tax exemption for the cooperative. Electric co- ops are commonly both Chapter 62 organizations and 501(c)(12) organizations. The purpose of a 501(c)(12) organization is to provide certain services to its members at the lowest possible cost. To qualify for and maintain exemption under section 501(c)(12), a cooperative must receive 85 percent or more of its income each year from members. The income must be collected solely to meet the cooperative’s losses and expenses. This may not be the best

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 21 arrangement for an organization formed to undertake a variety of sustainability activities. Appendix C of this document describes the types of organizational documents that help formalize the roles and responsibilities of an EcoDistricts governance entity.

Building Owners Association One governance model, which is being pursued by Living City Block (LCB),ix is an aggregation approach that provides a structure that resembles a home owners or building owners association. The idea is for these consortiums to function similarly to a home owners Association, in which a collection of building owners, businesses, and residents come together to act as a single entity t0 gain the economic benefits of sustainability investments. This “Building Owner’s Association” would provide the structure, framework and mechanism for EcoDistrict implementation and allow for risk mitigation, cost reductions, implementation efficiencies, and greater measureable impact. It would allow for an EcoDistrict governance entity to represent building owners and tenants, to negotiate and secure investments and pursue project opportunities that benefit the neighborhood. LCB is currently working on the development of the legal model with the help of its legal partners. They identified the following barriers to a BOA: 1. Lack of a legal framework and the lack of existing examples 2. Inability of building owners to take out additional debt 3. Existing building relationships (ownership structures, financial structures, etc) LCB anticipates having the first draft of the BOA contract ready for review by building owners and other partners in the Living City Block pilot program by mid 2011.x The next steps are to refine and sign the contract to formalize the Building Ownership Association by the end of 2011.

Certified Benefit Corporation A new type of corporation that may be well-suited for an EcoDistrict governance entity is a Certified Benefit Corporation, or B Corp, a model that uses business to solve social and environmental problems.

B Corporations are “unlike traditional businesses because they:

• Meet comprehensive and transparent social and environmental performance standards; • Meet higher legal accountability standards; • Build business constituency for good business

To become a B Corporation, you have to do three things:

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 22

1. Take and pass the B Impact Ratings System. This sets a benchmark for social and environmental impact for good companies. 2. Adopt the B Corporation Legal Framework to bake the mission of the company into its legal DNA. 3. Sign a Term Sheet that makes your certification official.”xi

The main reasons to become a B Corp are to leverage business influence to provide community and business benefit.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 23 Conclusion This resource is intended to provide EcoDistricts with the necessary tools to engage a community in developing a vision and formalizing a governance structure with the capacity and authority to guide the work into the future. While each EcoDistrict has unique needs and will have a wide variety of projects throughout its existence, there will be some shared approaches to the processes. Engagement, through community outreach and partnerships, is critical to promoting long-term neighborhood stewardship and community action. Governance is critical to realizing a community’s shared vision and to managing continuous improvements over time to ensure that the vision and performance goals are being met. Once you have established a governance structure, the next step towards developing an EcoDistrict is completing a district assessment. The “EcoDistrict Performance + Assessment MethodTM Toolkit” provides the steps and resources for setting project priorities.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 24 Appendix A: Neighborhood Scale Engagement and Governance Case Studies

EcoCity Cleveland, Ohioxii The Cleveland features an interesting partnership between EcoCity Cleveland, an environmental organization, and Detroit Shoreway Community Development Organization, a neighborhood- based development organization. The project was formalized in a commitment between the two organizations, and the process included a community advisory committee of residents and businesses in the neighborhood who informed the process. http://www.gcbl.org/

SmartTripsxiii SmartTrips is a comprehensive approach to reduce drive-alone trips and increase biking, walking, and public transit in targeted geographic areas of the city. It incorporates an innovative and highly effective individualized marketing methodology, which hand-delivers packets of information to residents who wish to learn more about all their transportation options including transit, walking, bicycling, carpooling, car sharing, and combining trips. The Transportation Options Division of the Portland Office of Transportation chooses an area of town with approximately 20,000 households each year to implement this program. Area selection is based on analyzing land use patterns, transit service availability, bike and walking infrastructure, and current transit or streetscape infrastructure investments such as new light rail or bicycle and pedestrian trails. http://www.portlandonline.com/transportation/index.cfm?c=43801

Block / Neighborhood Watchxiv Neighborhood Watch is a program designed to increase the safety and sense of community in neighborhoods by organizing and involving individuals and families in a united crime prevention effort. When neighbors take the responsibility to build and maintain livable and cohesive neighborhoods, those neighborhoods are less vulnerable to crime. Under Neighborhood Watch, involved neighbors collaborate with the City’s Crime Prevention Coordinators, police, neighborhood coalitions and associations, schools, parks personnel, area businesses, and others to create a united, secure, and peaceful community. With Neighborhood Watch, public safety is a community product of how community members engage with each other, not just a product of the police. Similar to EcoDistricts, Neighborhood Watch has metrics and assessment protocols (regarding crime statistics), and a goal (public safety). Also similar to EcoDistricts, Neighborhood Watch makes

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 25 improvements towards their goals through interventions in the existing socio-economic and institutional patterns. http://www.nnwi.org/

Main Streetxv The Main Street movement, led by the National Trust for Historic Preservation, recognizes the potential for action at the scale of a neighborhood. The approach is a unique economic development tool that allows cities and neighborhoods to revitalize their business districts by leveraging local assets - from historic, cultural, and architectural resources to local enterprises, networks, and community pride. It is a comprehensive strategy that addresses the variety of issues and problems that challenge traditional commercial districts. Like EcoDistricts, Main Street recognizes the importance of professional, neighborhood-based staff to guide and lead the governance structure. And similarly, the program’s success is based on the powerful communities streets. www.preservationnation.org/main-street

Vancouver Greenest Cityxvi In early 2009, Vancouver’s Mayor Gregor Robertson brought together a group of community sustainability leaders charged with figuring out what Vancouver needs to do to become the Greenest City in the world by 2020. One of the first actions of this group was to launch “Talk Green Vancouver,” a city-wide engagement process that asked citizens how to meet this goal.

Through the process, over 3,000 people participated in this online discussion, submitting, commenting and voting on more than 700 ideas. Over 3,700 people attended in-person events and discussions, and still others were reached through advertising campaigns and direct mail. The resulting recommendations were processed by various working groups and then unanimously adopted by City Council in January of 2011.

www.talkgreenvancouver.ca

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 26 Appendix B: EcoDistricts Engagement Roadmap A highly streamlined approach for the engagement phase of the EcoDistrict Organization process.

Pre-Meeting - Send invitations to: o Neighborhood association o Business association o Major property owners o PDC o Mayor’s Office and/or BPS o Others? - Outcomes: o Set date for Meeting 1 o Send invitations to all identified stakeholders

Meeting 1 (90 minutes) - Goal: Provide EcoDistrict background and context - Introduce stakeholders - Explain o EcoDistricts: What’s the opportunity? o Why is ____ a pilot district? o Engagement to governance process o Stakeholder roles o Desired outcome: MOU and SMA - Distribute Template MOU - Outcomes: o Shared template of MOU document, and solicit input . Draft project list . Draft Articles of Incorporation for SMA o Set date for Meeting 2 . Stakeholders to bring draft MOUs • (Between meetings; meet with stakeholders)

Meeting 2 (90 minutes) - Charrette style - What do we want to do? - Explain EcoDistrict performance areas - Brainstorm list of potential projects, categorized by performance area, to generate ideas & enthusiasm o Bring and incorporate existing plans & visions - Outcomes: o Generate (roughly prioritized) project list o Agreement for each stakeholder to propose draft MOU before next meeting EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 27

Between meetings distribute draft MOUs that include responsibilities of stakeholders, draft projects, and articles of incorporation for SMA.

Meeting 3 (90 minutes) - Goal: Present draft MOU - Discuss various stakeholders’ MOUs & roles o Discuss which institutions would contribute, and how o Negotiate and bring all parties on board - Follow up to finalize MOUs - Outcome: agreement on actionable next steps to follow from MOU signing

Meeting 4 (90 minutes) - Goal: Final MOU negotiations - Present final MOU - Present draft SMA foundational documents - Outcome: close to final MOU and agreement to sign individual commitments in following weeks

Final Outcome: Signed MOU to move forward with governance

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 28 Appendix C: Lloyd Crossing Governance Recommendations The Lloyd Crossing Sustainable Urban Design Plan & Catalyst Project was completed in 2004 and covers a 35-block urban ecosystem that is Portland’s Lloyd District. The document is probably one of the first efforts nationally to define an EcoDistrict and to establish a set of goals, objectives, and actions for a specific neighborhood or district.xvii The Plan recognizes that some sort of new organization will be needed to assist in meeting sustainability goals outlined in the document. The Plan states that, “A new entity is needed to facilitate the financing, construction, and maintenance of infrastructure and the implementation of sustainable development strategies and programs.” The Plan lists potential responsibilities/activities that might be undertaken by an organization: • Implementation of district-wide reduction programs for o Energy use o Wastewater o Potable water o Stormwater • Administration of a “green” power purchasing program on behalf of members • Financing, construction, and maintenance of district-wide green infrastructure • Administration of the trading of tax credits between members and partners outside of the district • Administration of Urban Renewal Funds, operational savings, tax incentives and other sources of revenue intended for environmentally sustainable projectsxviii The Plan calls the new organization a “Resource Management Association” (RMA). The Plan contains some suggestions of the responsibilities and likely activities of an EcoDistrict. A more recent example, also in the Lloyd District, builds on the previous plan and includes a vision statement, long-term goals and objectives, and baseline metrics. A three-year sustainability work program has also been developed. It includes the following components: • Sustainability Staff: hire an EcoDistrict Sustainability Director to coordinate EcoDistrict efforts with PDC, the City of Portland, Portland Sustainability Institute, Metro, Multnomah County and other agencies. Specifics tasks of the Sustainability Director include establishing a network of Sustainability Coordinators throughout businesses in the Lloyd District; coordinate and lead the development of a long-term and short-term sustainability plan for the EcoDistrict; assist the Lloyd TMA in reaching its EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 29 goals; monitor progress toward achieving EcoDistrict goals and objectives; refine and track baseline metrics; be the chief staff for the EcoDistrict to coordinate with agencies on the implementation of the EcoDistrict’s list of prioritized showcase projects, described below. • Green Streets: complete three to four demonstration green street conversions within the EcoDistrict; complete a District- wide Stormwater Master Plan; complete a district-wide habitat preservation plan. • Food Waste/Compost: complete a district-wide compost project to manage food waste on a local scale. Work with Metro, Portland Composts, and Zero Waste Alliance to determine comprehensive needs of the City of Portland for compost sites. Consider a partnership with PSU on this project. • Carbon and Energy: complete a solar PV roof installation on several sites within the EcoDistrict with contracts for third party purchase agreements and/or use in shared community improvements; complete a feasibility study to determine how many MWs can be produced and shared through roof installations. • Transportation: assist the Lloyd Transportation Management Association (TMA) staff in implementing the TMA’s annual goals and objectives to reduce VMT of work and non-work related trips resulting in reduced carbon emissions. This will be accomplished through planning that promotes public transportation and bicycle and pedestrian connectivity. Partner with PBOT on two initiatives: 1) metrics and strategies through the existing Climate and Transport Policies to create correlation between VMTs and of District; and 2) complete a low carbon mobility master plan for the EcoDistrict. • Marketing/Branding: define district identity through marketing and branding strategies; develop a plan that reflects the sustainability goals of the EcoDistrict and the City of Portland.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 30 Appendix D: Organizational Documents If an existing organization serves as the umbrella organization to the EcoDistrict effort, then it would be up to the organizing body of that group to decide whether their organizational documents need to be formally amended to reflect this new effort. For the most part, the EcoDistrict effort could probably be addressed by a subcommittee of the Board and some new rules of operation for that group. If it is deemed necessary or appropriate by the EcoDistrict organizers that some form of new legal entity—such as a nonprofit corporation—is needed to have the powers to reach the established goals for the group, then certain prescribed steps are necessary. Probably the most important step is the drafting of a set of Articles of Incorporation and a set of Bylaws for the new nonprofit organization. Organizers would begin their new organization by choosing a name and reserving it with the State of Oregon (or through trademark recognition if you want to reserve the name for use nationally). The next step is to file a set of Articles of Incorporation with the Secretary of State’s office in Salem. The Articles of Incorporation contain the major provisions of how the organization operates. For the most part, the Articles, by law, must contain certain language; there are other clauses that are appropriate, but are not necessarily required by law. The Bylaws of the nonprofit contain the rules and procedures by which the Board will operate the organization. From a legal standpoint, the Articles of Incorporation are most important, but the Bylaws really control the structure and operating procedures for the nonprofit—they establish the basic governance of the organization. An excellent reference book for beginning and operating a nonprofit corporation in Oregon is The Oregon Nonprofit Corporation Handbook by Cynthia Cumfer and Kay Sohl. The fourth edition (2005) contains 781 pages of explanation, advice, and model documents. Model Articles and Bylaws are included and optional language is described. If you are thinking about starting a new nonprofit corporation to support your EcoDistrict, then the Handbook is a “must-have.” An example of nonprofit Bylaws helps to illustrate how these rules and procedures control the governance of the organization. The Bylaws are for the Lloyd Transportation Management Association (TMA)xix and are included in this Appendix. Reading the various Articles of the Bylaws will help you understand the choices that are possible in how a nonprofit could be established.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 31

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 32

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 33

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 34

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 35

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 36

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 37

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 38

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 39 Notes

i Refer to EcoDistricts Framework and EcoDistricts Action Guide for more details on the steps for creating EcoDistricts ii Making EcoDistricts: Concepts and Methods for Advancing Sustainability in Neighborhoods. 2010, page 5. iii The Portland Office of Neighborhood Involvement (http://www.portlandonline.com/oni/) is an excellent resource for this process and has a considerable amount of information and key contacts in each neighborhood. iv National Extension Water Outreach Education: Facilitating Access to Resources and Best Education Practices, Inventory Resources: http://wateroutreach.uwex.edu/use/InventoryResources.cfm. v Making EcoDistricts: Concepts and Methods for Advancing Sustainability in Neighborhoods. 2010, page 2. vi Making EcoDistricts: Concepts and Methods for Advancing Sustainability in Neighborhoods. 2010, page 4. vii Standards for Neighborhood Associations, District Coalitions, Business District Associations, and the Office of Neighborhood Involvement, Developed by: Guidelines Review, Empowerment and Assessment Team (GREAT), a citizen-led committee of Portland neighborhood association, business association and at- large community leaders, 2005. viii Recommended guide to forming and managing an Oregon nonprofit corporation is “The Oregon Nonprofit Corporation Handbook,” by Cynthia Cumfer and Kay Sohl. Technical Assistance for Community Services, 2001. ix Living City Block is a multi-phased redevelopment project that will prove the case for making our cities radically more resource efficient, one block at a time. More at www.livingcityblock.org x Living City Block is pioneering the concept of Building Owners Association to take on sustainability and resources challenges for a range of building and property owners. xi Content from www.bcorporation.net xiihttp://www.ecocitycleveland.org/ecologicaldesign/ecovillage/history_eocvilla ge.html xiii http://www.walkinginfo.org/library/details.cfm?id=3961 xiv Office of Neighborhood Involvement, Establishing Your Neighborhood Watch: http://www.portlandonline.com/shared/cfm/image.cfm?id=79548

xv www.preservationnation.org/main-street xvi www.talkgreenvancouver.ca xvii “Lloyd Crossing Sustainable Urban Design Plan & Catalyst Project,” 2004, page 6. xviii “Lloyd Crossing Sustainable Urban Design Plan & Catalyst Project,” 2004, page 78. xix For more information about the Lloyd TMA, see http://www.lloydtma.org/.

EcoDistricts Toolkit Organization Development, June 2011, Version 1.1 40