There’s Nothing Magical About Vermont (Episode 46)

But today, we’re gonna build on John’s enthusiasm and excitement for cat videos, also for the internet now being a force for good. We want to talk about a state that’s doing some really great things on policy that’s actually helping local communities to maximize their local resources to be really great places to live in.

This is the first of a few shows we’d like to do in which we pick a geography and we talk about a number of policies that they’ve done over the years. And to just foreshadow that, we know that we want to talk about North Dakota because they have a number of really innovative policies that were really bringing benefits to them long before all of the fracking and the oil boom. I think sometimes people misidentify a source of their strong economy as just the oil boom.

But we’re going to talk about three issues, one from each of our programs, and I think Stacy, yours is the one that really helps set a frame overall. What is Vermont doing to make sure that local businesses can really do well?

And so Vermont adopted this policy, and it is a policy that requires anything large, so if you want to build a big housing subdivision or a large store or shopping center, anything that’s over a certain size, you not only have to go through the local planning process in that particular community, but you also have to go through a regional review where all of the communities in that region review the project recognizing that because it’s large, it’s gonna have this effect on the whole region.

What’s great about it is … and I should say the review includes looking at things like how much tax revenue will this generate versus how much will it cost us to provide public services, what are the benefits to the community that come from this, what are the economic benefits versus some of the economic costs, that kind of thing, as well as the environmental impact of a project.

And what’s nice about it is that it means that developers, and I’m thinking particularly of big box and shopping mall developers, they can’t come into a region and say to a community, “Hey, we want to build this big store and if you don’t accept us on our terms, exactly what we want to do, we’re just gonna build it in the next town over,” and they can pit towns against one another. Vermont doesn’t have that problem.

We see a lot of development in other places where yeah, this is good for this particular suburb, but it hurts the region as a whole, and this makes communities think, as I said, collectively together about what’s really in their best interest, and it gives them leverage, ’cause not only can they say no, but they can also say to the developer, “Here are the terms. Here are the things you need to change about this project to make it work.” And they have the power to do that in a way that’s very difficult for an individual community to do.

And now in most regions of the country, if you say that to Wal-Mart, they say, “No, sorry. We’re just gonna build in the next town over, and because we’re gonna build such a huge store, it’s gonna have this effect that’s gonna be for miles and miles and miles, and it’s still gonna kill off your local businesses even if you don’t take us directly.”

And so it gives communities a lot of leverage, and the result in Vermont is that Wal-Mart has only five stores in the state, and three of those stores are in small existing buildings downtown. Only two of them are sort of the more traditional kind of Wal-Mart, and even those are smaller than usual that you see in other parts of the country. This is true for all the other big box stores. They’re in Vermont, but not in a way that just totally overwhelms the local economy. So they’re a part of it, but they’re not this dominant force the way they are elsewhere.

One effect of that is that Vermont has more small businesses per capita than any other state in the country.

There are a lot of different regulations and rules in Vermont, but what I think is interesting is that the kinds of policies that they’ve seemed to have adopted, at least the evidence of the fact that they have lots of small businesses and really have a growing number of small businesses and a very healthy local economy in that regard, the evidence is that their policies have been thoughtful and that even if there’s a bit of a hassle that’s an inevitable part of that for local business owners, what they succeed in preserving is an environment that’s actually very conducive for local businesses.

I decided to spend a little bit of time actually dissecting that, and so I created some maps of the U.S. that show number of small businesses per capita, and also the change in small businesses, so looking at over the last 10 years which states are really seeing growth in small businesses. It was fascinating ’cause it was almost in many ways a reverse … like Texas is one of the … It’s really right at the bottom in terms of being small business friendly when you look at, well how many small businesses are actually there? And Vermont’s at the top.

So it suggests that regulation isn’t so simple, that the solution isn’t about more or less regulation, but really what kinds of rules are you writing and are you writing rules that actually create, in the case of land use rules, a built environment that’s very conducive to local entrepreneurs or are you by having no rules creating a very sort of sprawling environment that for a lot of reasons works better for big national chains. It’s an environment that local entrepreneurs have a very hard time getting a foothold in. I think you really see that when you actually look at the hard numbers.

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But speaking about these rankings, John, tell us what we should be looking at in terms of an important ranking coming out of Vermont with clean energy.

In Burlington, which is of course up near the northern end of Vermont and the northern part of the country, ranks 11th in the United States in solar PV capacity per capita, which means that it’s one of the solar hotspots in the country despite having one of the weaker solar resources.

I think the lesson with Burlington is similar to Stacy’s experience with retail development, which is that it’s really policy that helps set up the appropriate environment for the growth of local clean energy, and not as much the quality of the resource.

There’s a couple things. One is that the state requires that utilities that procure renewable energy like solar do sell from small scale sources, and there are about 20 states that have similar policies across the country.

A second key piece is having what’s called shared renewable energy, or community renewable energy, which is to say that for folks who don’t have a sunny rooftop, that there’s a way for them to invest in a solar array maybe down the block or maybe on a church nearby or in an open field near town to get a share of their electricity from solar without having to buy it themselves.

So those are kind of the policies that support that kind of distributed solar development that allow Burlington to develop a lot of solar in a way that other cities might not, despite not having as sunny a locale as other places that are very successful with solar.

I think there’s two other things going for Vermont that are not happening in other states. One is that they have a presumptive approval for small scale solar that they don’t have in other states. So if you put a solar array on your roof, normally you would have to go through a regulatory process to get approval to connect that to the grid, and what Vermont has adopted state-wide is a policy called presumptive approval, which means that if nobody objects, like the utility company or anybody else within 10 days, then that project is approved and you get to install it and connect it to the grid. And so that really helps streamline the process.

The second thing that’s going on in Vermont is that in many states, in 30 different states like Vermont, utilities are monopoly corporations, and so they have a reserved service territory, a reserved population that can only buy power from them, and it’s the only state that has a company, Green Mountain Power, that is a benefit corporation. It’s registered as a benefit corporation, and I think that really changes the perspective and the service that you get from that kind of company that can focus more on things that customers are interested in.

So if you think about Ben & Jerry’s, it’s about eating delicious ice cream, but that that money is going to other social goods. That’s the same idea here with the utility company is that they can think beyond the bottom line of its shareholders to the environmental benefits, to the benefits of the communities that they serve. And you definitely see that in the kinds of things they’re doing. They are increasing compensation for customers that have solar on their rooftop, when in other states those utility companies, same utility companies are fighting to reduce that compensation. They’ve mapped out their local grid system to make it easier for people to identify where they can install solar, and they’re also financing things for customers like batteries or cold climate heat pumps, ways for them to save energy or to become more resilient, and that the utility is helping provide to those folks that are helping them to pay for them over time.

And so I think that is both exciting that a utility company can come to that realization, but also a little frustrating when you realize there’s not necessarily anything that we can do from the outside to get other companies to do the same.

And yet I’m trying to figure out what lessons we could really draw for other states.

There are plenty of utilities in Vermont, other utilities, different kinds of utilities with different ownership structures as well as other utilities similar to Green Mountain Power that oppose a lot of the things that they’re doing, that don’t offer them to their customers, that have testified in front of public regulators against the kinds of things that Green Mountain Power is doing or the kinds of policies that they have favored to allow customers to produce more of their own energies.

So I think that offers a couple lessons. One is that it’s not necessarily something special to Vermont because these other utilities in Vermont are not doing these things, and so I don’t think it means that you have to be in a particular state, in a particular geography, or particular demographics in order to have this kind of customer focus. And in fact, there’s a lot of discussion about energy as a service instead of energy as a commodity in the electricity business, and there’s a lot of utilities out there, at least speaking from the top, like they care about this kind of thing, that they want to be customer focused.

But what we’ve seen is that when the rubber hits the road, when we get to where regulations are being set or when we’re at the legislature, those utilities are pretty consistently against the policies that would be considered customer-centric, like Green Mountain Power has supported.

I know that not everything turned out the way that folks hoped there, and I’m curious have they been able to make something of that anyway?

Later mayor … several years later, basically I would say destroyed the project. Others would say that Burlington Fiber had some problems already even before that relating to how it was built in a costly manner to provide incredible benefits, but in a way that would have been very difficult for it to become financially feasible even if it was well run.

So Burlington actually went from being in some ways a role model to being a strong disappointment for those of us that would like to see municipal networks, although within Burlington, the results were also mixed in the sense that it had a lot of debt and it was not able to pay back all of its debt. It had to break a contract with Citi Bank, although Citi Bank being a huge, nasty company that didn’t properly review its lending, I don’t feel particularly bad for them.

But at any rate, it created some economic hardship in the city’s budget because of bad decisions that were made, is now being privatized, but has really helped local businesses and local residents with lower bills and much better services. So it’s a mixed bag on the whole in the end.

Now, with municipal broadband networks, they are also typically expected to pay 100% of their costs, and they’re often built, when they’re built in a city-wide fashion, with an expectation that there will be a lot of borrowing and that will be paid back entirely with the cost of the network.

There are some communities, including in western Massachusetts and Colorado, Michigan now, where communities are saying, “We’re gonna build networks like we build our roads,” which is to say they are partially funded by user fees. And in the case of a network, it would be overwhelmingly funded by user fees, but not entirely, which is to say that a city government might subsidize a network with some other form of taxpayer dollars in the way that we do our roads, because our roads create all kinds of indirect benefits, spillover benefits. We can’t really recover those directly, so we just fund them out of the tax base.

But I want to make sure that we get to the thing that I really wanted to talk about in Vermont —

They had a number of funders step up, and that’s gone on to broaden very, very widely. They started building a network that’s now connecting people in more than 25 towns, including … I don’t remember how it is off the top of my head, but a not insubstantial number of towns entirely for every resident within the community.

It’s a nonprofit approach, and these communities actually share ownership in it. That’s been an incredibly successful project, full fiber optic network. It’s incredibly exciting. That actually led to state legislation that allowed other communities to aggregate their communities together and form communications union districts. I have to be a little cautious with that because other states have local improvement districts or local utility districts or special improvement districts. In Vermont, it’s called communication union districts.

But the rest of Vermont that’s not in Chittenden County there where Burlington is, it’s hard to build a municipal network at the scale you’re talking about, 2600 people. You know, for a municipal network, you’re often looking at 10,000 people, 20,000 people as kind of a minimum. There have been success stories that are smaller than that, but it’s much harder. So this brings those people together and allows them to create that scale by forming their resources together basically … and there’s another project in central Vermont that’s taking off on that.

One of the things that I’ve noticed when I visited Vermont and doing work there over the years is that there’s an incredible civic infrastructure there. There are lots of community organizations. Not just formal kind of state-wide nonprofits, but also just local grassroots groups, people organize, put together meetings, do things really … there’s a lot of social and civic capital it seems that exist in that state.

It strikes me that if we were to go looking, we would probably find that a lot of the good policies that have come out of the state have really arisen that way more than anything else … and it’s a reminder that democracy works best from the bottom up.

But nonetheless, the bureaucracy of the state government and the governor, I think they have learned and they’re looking at this approach and thinking, “Wow, this is pretty good.” And so some of the state subsidy programs to build infrastructure are going to EC Fiber and may be available then to other projects like it. But it certainly was a slog to get there.

One of the things that I’ve really loved about Vermont in getting to know it is this public meeting, the town meeting day where they talk about these things. A lot of these votes have to happen at town meeting day, where people come together face to face, it’s a reasonable number of people, many of them know their families and things like that. It’s kind of in some ways an idealized version of what we think of with New England direct democracy and that sort of thing. So, that’s inspiring.

But the other piece of it is is that a lot of times, these people are very fiscally conservative, and I think sometimes people get a wrong picture of Vermont because it is a very progressive state in many ways, but many of the conversation that I’ve seen happen are about how to make sure that you’re really being fiscally conservative and fiscally responsible and not overpaying for things, which is I think one of the reasons that the Burlington telecom problems really rippled across the state and may have harmed some other efforts, because people took it really seriously.

And I don’t know if either one of you has seen that, but I don’t think of this as a state that raises taxes very easily. They have strong fights about it.

So part of what drove Vermont to have a sort of sharper land use policy was this sense of we can’t afford that, we have to be smart about our dollars, and that means we have to make smart decisions about what’s gonna be the durable kind of development that’s gonna last well into the future and be efficient in the sense that we’re gonna get a lot of value out of it economically for what we have to put in in terms of infrastructure.

So I think that’s absolutely right. The state, you’re right, it has this reputation as being very liberal, but you spend time there, you recognize that a lot of it is actually very conservative in a very historic sense of what conservative means.

So if you really want the details, you should check that out. But I want to end with a question to Stacy, because I’ve been thinking about this. ILSR, the Institute for Local Self-Reliance was formed specifically out of the idea that if you wanted to be locally self-reliant, you didn’t have to move to Vermont. We want to celebrate Vermont, and they’re doing a lot of things we should learn from, but we want to say that you can do these things in Portland Maine, in Minneapolis and St. Paul Minnesota, and in much larger places.

So I wonder if you can just reflect on that a little bit.

It really speaks to the importance of kind of hands-on democracy and the role that we all have in that. And I think I also want to say that while there’s something about a small place, like a state government in a state the size of Vermont is very accessible to people in a way that’s maybe not true in a bigger state, that cities can also work this way … that what you can do at the neighborhood level and the accessibility of your city council and the powers that cities have is also right there for the taking for people organizing and getting hold of.

So I think the lessons here really can apply in any kind of geography.

So I’ll just say this. Some people have criticized it for bringing a little bit too much Game of Thrones sex, nudity, violence to a sci-fi series, but as I’ve said to a few people, in a future in which there’s very little consequence for our action and people can basically kind of be re-booted, I actually think there’s maybe too little sex and violence based on when I think of the human character.

But I’ve found the books to be incredibly engrossing and very, very good reading for sci-fi. So if anyone’s looking for that sort of thing, I highly recommend it.

Thank you all for tuning into this episode of Building Local Power. You can find links to what we discussed today by going to our website, ILSR.org and clicking on the show page for this episode. That’s ILSR.org. And while you’re there, you can sign up for one of our newsletters and connect with us on social media.

And once again, please help us out by rating this podcast and sharing it with your friends. This show is produced by Lisa Gonzalez and Nick Stumo-Langer. Our theme music is Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I’m Stacy Mitchell. I hope you’ll join us again in two weeks for the next episode of Building Local Power.