Thursday, February 12, 2009

Do John Buchanan & Joe Mosca Have A Conflict of Interest Problem On the Solar Panel Permits Question?

Tuesday's City Council meeting had an exciting moment or two. The invasion of the cigarette kids was certainly colorful. If only they could show that level of youthful energy and commitment to issues that don't involve addictive behaviors guaranteed to lop a few decades off your life. Or somebody else's. But the part of the meeting that this dedicated Channel 3 viewer found particularly engrossing dealt with the lowering or possibly even abolishing of permit fees for the installation of solar panels on private homes.

Now the issues are more complex than they might first appear. Certainly everyone should be in favor of energy technologies that will help liberate this country from its debilitating dependence on foreign oil. And what could be better than a technology that produces electricity without contributing to the air pollution problems that Los Angeles County is so famous for? I for one salute anyone making the considerable investment it takes to have such things added to their home energy arsenal. And since I have been told that putting 22 foot high wind turbines on my roof is legally out of the question, I might start looking into solar panels myself.

But, of course, politics intrudes, and as is usually the case it involves potential giveaways that could cause this city having to take a considerable hit to its already precarious finances.

A little history. In a last ditch effort to win the approval of the voters during our previous election cycle, the administration of former Mayor Enid Joffe (with the support of John Buchanan and Joe Mosca), saddled this city with a 3 year commitment to give rather large pay increases to our Police Department. Hailed at the time by Enid's fans as a "historic solution" to a long simmering pay dispute with our cops, to many it seemed that the then Mayor was actually ransoming our city's financial future in order to prolong her at risk political career.

And where it gets even worse is that we ended up getting hit with a tax increase to pay for it. Our User Utility Tax was expanded to take in all forms of energy and communications short of smoke signals, with the additional money raised being used to pay for Joffe's generosity towards our men in blue. The UUT hike was put to the voters for approval and, unlike this observer, most people voted for it. That the police would later turn around and sue us for even more money is an unintended consequence that I will happily rub your noses in at another time.

So anyway, now it is 2009, and we have John Buchanan and Joe Mosca passionately calling for a deep cut in the city permit fees that people pay when they install solar panels. Installing these things is no cheap proposition, and it is possible to spend as much as $50,000 for the honor, with city fees for both the permit and inspections coming to around $1,050. And what John and Joe want to do is impair this source of city income by either lowering or completely abolishing these fees.

And what is ironic here is that this hit to Sierra Madre's finances would also negatively impact our User Utility Tax moneys as well. A kind of double jeopardy that would now include the very taxes we had to hike in order to pay for the police department wage increases. You see, if more people get solar panels, it means more people who won't be buying taxable electricity. Which means they won't be taxed. That a city running a $3oo,000 deficit should be incentivizing people to install systems that will take away the ability to collect utility tax money is hard to fathom. Particularly when that city is as small and financially challenged as Sierra Madre.

And even if the funds were to come from the state through AB 811, would it be appropriate for these particular employees to also be the salesmen? After all, we pay state taxes as well.

Of course, what Buchanan and Mosca are really doing here is playing politics. This agenda allows them to grandstand on a "Green" platform while at the same time offering de facto tax cuts to that small portion of our town wealthy enough to afford this very expensive technology. And while in time it may become possible to tax solar produced electricity, it hasn't happened yet. So isn't this the kind of politics that got this country into the fiscal debacle we face today? Feel good palaver coupled with financial breaks and handouts for the well-to-do in the face of large fiscal deficits? Certainly a tactic George W. Bush would feel comfortable with.

On the potential conflict of interest problem, here's the skinny. Both John Buchanan and Joe Mosca are attorneys working for large energy corporations. John Buchanan is employed by Southern California Edison, a goliath with huge investments in solar energy technology. Joe Mosca is currently working for Sempra Energy, another energy mega-corporation that has made significant capital commitments to solar power. The patents these companies hold alone put them at the center of any solar technology considerations.

So here is my question. Why would these two city councilmen, both employees of corporations with massive investments in solar technology, be working so hard to get this city to financially incentivize those citizens willing and able to purchase solar energy systems? Doesn't this at the very least give the appearance of being a conflict of interest?

24 comments:

  1. Will the Edison Co. and Sempra Energy eventually be charging us for solar power?

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  2. I believe it is thru the sale of equipment and maintenance that the large energy corporations will make their money. Plus this is a fluid technology, and the money to be made thru constant upgrades will also make the venture lucrative. Otherwise why would they be involving themselves in an enterprise where their services might not be needed by homeowners in a decade or two? These are crafty folks who know how to cover their financial fannies.

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  3. Thank you for this column, Sir Eric.
    You sure opened my eyes!
    People had better wake up.

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  4. Check out the Business Section LA Times. Edison has just made a deal with BrightSource to supply the utility from 7 plants in the Mojave.

    I wonder if their building inspections fees were waived or reduced.
    http://www.latimes.com/business/energy/la-fi-solar12-2009feb12,0,459943.story

    As for a conflict of interest perhaps the California Fair Practices Commission should look in the that. The commission has found some of our most esteemed city leaders such as Bart Dolye to have had a conflict of interest. I am sure there have been others.

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  5. Amazing. Not quite sure what to say here.
    But it's always the same, right? We
    couldn't afford John and Joe then, and we
    can't afford them now.

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  6. Is our city broke or not?February 12, 2009 at 10:43 AM

    Thanks, Sir Eric. I knew it was a bad move to reduce or eliminate any fees for anything (even parades for beloved organizations) when the city is in such a financially precarious position. You pulled the information together in a most helpful way.
    Conflict of interest has rarely stopped anyone in Sierra Madre - one of the most notable examples being Council Member and ex Mayor Stockley voting on the One Carter Destruction project while being an employee of a bank that had a financial relationship with the developer.
    I share your opinion about the cigarette kids, and wish them better causes, and more education, in the future.

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  7. The council members surely have the appearance of a conflict or bias, probably not on the level of personal gain--I doubt it will affect them directly--at least on the Sierra Madre level--if a few more solar installations are made in this town. But their employers do have an interest and at the very least it makes for a case of bias, if not actual conflict of interest.

    As for the utility tax and the policy toward oil independence, I would have to hope that the parochial interest in maintaining a tax source would be trumped by the national interest in reducing oil dependence. To urge otherwise would suggest that the City's objective is to benefit from its citizens' negative financial position relative to energy use. Should significant revenues be lost due to solar panel installation, perhaps the City would have to find a different revenue source.

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  8. Hi,
    I am the homeowner who just installed solar on my home. I was at City Council and I'd like to respond to your article.
    1. I just called the division of Edison that handles homes with solar equipment. I asked them how Sierra Madre’s Utility Tax will be applied to my home. They confirmed what I had already been told. I WILL CONTINUE TO PAY THE SIERRA MADRE UTILITY TAX ON EVERY KILOWATT HOUR OF ELECTRICITY THAT I USE, INCLUDING THE ELECTRICITY THAT IS GENERATED FROM MY OWN SOLAR PV SYSTEM ON MY OWN ROOF. So, Mayor Macgillivray is uninformed and mistaken on the matter of the utility tax. I wanted to get back up and say something to correct her on Tuesday, but I thought better of it due to Mayor Zimmerman’s stern warning to keep our comments to 3 minutes. I was also surprised by her statement because Don Watts explained that the utility tax would still apply when the solar issue was first discussed at the November 25, 2008 City Council meeting.
    2. Solar is not just for the wealthy. Yes, the equipment is expensive, but there are new ways to finance it. For instance, www.solarcity.com offers no money down solar equipment leases. Other companies offer Power Purchase Agreements that reduce the cost of solar. That means the difference between putting solar on your roof or not may be whether a City wants to charge you thousands of dollars in permitting fees.
    3. You are incorrect about the permitting fees I paid. Our system was valued at $50,000 and our plan check and permits fees paid to Sierra Madre totaled $1505. I had originally paid over $2300 until Danny Castro in Development Services decided that they had incorrectly calculated the plan check fee. BY THE WAY, THIS HAS NOTHING TO DO WITH MY FEES. MY FEES ARE PAID, AND I AM NOT ENTITLED TO A REBATE OR REFUND OF FEES EVEN IF THE PERMITTING FEES IN SIERRA MADRE ARE REDUCED. RATHER, THIS IS ABOUT GETTING MORE SOLAR ON SIERRA MADRE ROOFTOPS.
    4. By the way, even with California Solar Initiative Rebates and Federal Tax Credits, our system will cost us over $40,000 and it will take several years for it to pay off.
    5. Back to my story, when I found out how much the permitting fees were, I did some research and found that the Sierra Club had a Northern California campaign to lower permitting fees and red tape to make it easier to put solar on roofs. Through the effort of the Sierra Club in Northern California, cities have lowered their fees and some have even waived the fees.
    6. I sent the Sierra Club’s Northern California Solar Permit Fee Study to all five Sierra Madre City Council members. The only one I heard back from was John Buchanan, which is ironic since I didn’t vote for him. He said he would put the matter on the agenda at City Council.
    7. I am unaware of any conflict of interest on the part of Joe Mosca or John Buchanan. Edison is required to administer rebates and net metering agreements with homeowners under California State Law. They are required to give me a net credit for the electricity I generate, but they are not required to rebate any money to me.
    8. I had no idea the matter would be so controversial.
    9. You are also incorrect that there was any discussion among the Council on February 10th regarding a possible complete fee waiver. The only matter before the Council was Resolution 09-08, which creates a fixed, combined permit and plan check fee of $515 for the installation of solar photovoltaic systems in Sierra Madre. The $515 figure was provided in a Staff Report in November 2008 as representing the average costs incurred by the City for plan review, permit issuance and inspection of solar photovoltaic systems in Sierra Madre. The Resolution was before the Council based on its majority vote on November 25, 2008 directing staff to prepare a resolution for a $515 flat fee.
    10. Why I am spending my free time on an issue that doesn’t directly impact me (as I said my fees are already paid and I’m not entitled to a refund):

    a) Sierra Madre’s fees are based on valuation. Because solar equipment is so expensive, valuation is not an appropriate way to calculate solar permitting fees. Under California State Law, Building Divisions of cities are not supposed to be operated as profit centers. Cities, BY LAW, are only supposed to charge enough fees to cover the costs of inspections and issuing permits. They are supposed to formulate fees that reflect the amount of work involved in issuing a permit.
    b) Valuation is generally used by cities because value of a project generally reflects the amount of work the city will have to do to plan check and inspect the projects. According to page 15 of the Culver City Solar guidelines, Valuation based permits work well for conventional projects because the overall cost can accurately represent the scale of the project. Fees based on valuation for solar PV installation do not work well because the equipment costs are much higher than with other projects of similar scope. An alternative permit fee scale for solar PV system installations was recommended. The guidelines noted that the scope of a solar PV installation is similar to that of installing a retrofitted residential HVAC system and stated that permitting costs for a PV system should be similar to those for an HVAC system. These guidelines recommended a fee schedule that maxed out at $400 for systems up to 10 kW.
    c) Cities all over Southern California are starting to look at this issue. For instance if I lived in Arcadia, I would have paid about $354 for my total plan check and permit costs. In Long Beach, I would have paid $598. In Manhattan Beach, I would have paid nothing (they waive fees). In Palos Verdes Estates, I would have paid $85. In Bradbury, I would have been charged only for an electrical permit (I’m not sure the amount but on a $27,000 system about $354.)
    d) The Sierra Club is currently doing a Southern California Solar Permit Fee Study. I’m one of the volunteers surveying cities. I’ve looked at about half the websites for cities in Southern California. Some cities do a great deal to promote solar, and some do nothing. How are we to achieve less pollution, reduce CO emissions, gain energy independence or even add electricity to the local grid to avoid rolling blackouts if cities such as our own consider adjusting their fees so that they are not gouging homeowners who install solar as if they are giving out a handout (Mayor Zimmerman’s word no mine)?
    e) I have more to say, but this is already to long. I think solar makes good sense for everyone. SMEAC endorses Resolution 09-08, and I hope all of you will consider what I’ve said and endorse it too. You may think our city can’t afford it, but I think we all cannot afford to wait and put off energy independence, a new economy based on alternative energy and a reduction in green house gases. Solar is one of the answers.
    f) More information see:
    For more information on the Northern California Solar Permit Fee Campaign:
    http://lomaprieta.sierraclub.org/global_warming/fee_study.htm
    http://lomaprietaglobalwarming.sierraclub.org/
    http://lomaprietaglobalwarming.sierraclub.org/solar.php
    http://norcalsolar.org/downloads/city_resources/WolkPVFeeLetter.pdf

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  9. Bart Doyle had a huge conflict of interest.
    The Building Industry Association!
    Karma Bell had a huge conflict of interest....her connection as an employee of the BIA.
    It's no surprise that "Dirts" Joe Mosca and John Buchanan also have a conflict of interest.

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  10. Great post, and thanks for taking the time. Question: I believe the issue over UUT taxes on energy produced by solar panels was correctly stated at the meeting. There is talk to the effect that taxes will be collected still be collected by Edison. But the problem is that nobody has really quite figured out how exactly that is to be done. Has that been explained to you?

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  11. I must be missing something here. How can
    Edison collect taxes on something they are
    not charging money for? Do they meter solar panels, and then collect on the amount of
    power used based on their rates? To call
    this a gray area might be exagerrating its
    clarity.

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  12. RE 11:16

    I am happy you are able to have solar panels. I wish everyone could be as lucky. The city must cover all its cost both direct and indirect for all projects and events. Haven't you heard the city is having financial problems like the rest of the country? It is not fair to all the residents if the city subsidizes anyone or any group no matter if it is, little league, solar installation or water for development.

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  13. Hi, Solar Homeowner again,

    This blog's mistakes have really done a disservice to this issue. I hope you all read my comment above.

    My solar pv system is tied to the Edison Grid through my meter. Edison knows what the system produces, how much electricity I use, etc. As I said above, I checked with Edison this morning. I will continue to pay the SM Utility Tax on ALL the electricity I use including the electric generated from solar.

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  14. SH: This is all new information. After all, you just found out about it from Edison this morning. Late breaking news, right? And you seem to know more than the city does right now. Have you called the City Manager yet and reviewed your bill with her? Because nobody there knows how this money is being collected or the procedures, or the forms. As was discussed at last Tuesday's meeting. And this still doesn't in anyway justify the abolition of the city fee.

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  15. Homeowner, many thanks for all of that information. You make an excellent case for the fee reduction. If the city were not so hurting for money this probably would never have become such a big deal.
    I wish I were in a position to do what you have done.
    Despite the fact that you say solar is not just for the wealthy, for many people it is simply not possible. Even an extra hundred dollars can be hard to come by - and it does seems that people who have money forget that.

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  16. Solar Homeowner....
    This was suggested by a mutual friend.
    "Maybe the answer is to allow for fee waivers for retrofits on existing homes but not in connection with new contruction or size increases"?

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  17. Hello Sir Eric

    It is Solar Homeowner again. In your last comment yesterday discussing the Sierra Madre UUT and solar photovoltaic installations in Sierra Madre, you stated “This is all new information. After all, you just found out about it from Edison this morning. Late breaking news, right?"

    In answer to your question, NO it is not “late breaking news” that the SMUUT would still apply to my entire electricity usage regardless of whether the electricity was generated by solar or pulled off the Edison Grid. That fact was explained by Edison during the installation process. The SMUUT’s continued application to solar generated electricity was also discussed by Don Watts at the Council’s November 25, 2008 meeting where they directed staff to prepare Resolution 09-08. Mayor PT Macgillivray was present at the November meeting so I was surprised when she professed her confusion over the issue.

    As I stated above, I wanted to correct MPT MacGillivray’s misstatement last Tuesday night but held back because I had already spoken and Mayor Zimmerman is very keen to hold discussion on this issue down to 3 minutes a person.

    It is a shame that MPT MacGillivray did not satisfy her questions before the latest meeting by checking how the SMUUT applies to the electricity generated in other residences in Sierra Madre that have had solar installations for quite some time. She could also have called Edison since Edison collects the SMUUT.

    Her statement regarding solar and the SMUUT have left the mistaken impression that solar is a drag on Sierra Madre’s City coffers. That’s completely wrong and a real disservice to the town.

    I checked my facts with Edison yesterday merely out of an abundance of caution to make sure that I had my facts straight, and Edison assures me that I do have the facts straight. The woman at Edison seemed to imply collection of these utility taxes was pretty standard practice and certainly not complicated or a mystery.

    As I said, my solar panels are not the first solar project in Sierra Madre, so there is some history of how the SMUUT tax has worked with residential solar in our town. In fact, the SMUUT and its application to solar is a red herring.

    The real issue is should our City permit fees for solar projects be based solely on valuation. The answer is no they should not.

    Why?

    Because such a city fee structure consistently over charges for plan check and permit fees on solar installations when it is only based on valuation.

    How?

    In general, permit fees based on valuation are deemed to produce a fair result because the value of the project generally reflects the work the City will have to do to issue a final permit (plan check, inspections, clerical, staff time and overhead.)

    Not so with a solar installations. Solar equipment is expensive, but installation is simple and quick. And, the simplicity and steps in a solar installation do not change whether the system is for 1 panel or 40 panels. The work to put them on a roof is about the same as installing a new HVAC (heating, ventilation and air conditioning unit) to an existing home.

    The City doesn’t do any more paper work, plan checking or inspections based on the size or the value of the system. The basic unfairness of consistently overcharging homeowners for permit fees on solar installations is one reason that cities all over California have adjusted how permit fees are charged on solar projects. Some cities charge a flat fee, some cities assign solar installations a minimal valuation, and some cities require only an electrical permit.

    In spite of the California legislature admonishing cities not to base fees on valuation, our city calculates it solar permit fees on the contract labor and materials. That means that the permit fees charged on solar installations create windfall profits for the city or, at the very least, results in solar permit fees actually subsidizing the permit fees for other types of projects.

    If you think that it is okay to overcharge some homeowners on permit fees because the city needs the money, I ask you to consider the following:

    1. Charging more for solar permit fees than the reasonable costs to administer the permit violates California Government Code Section 66014, which provides that fees associated with building inspections and building permits "shall not exceed the estimated reasonable cost of providing the service for which the fee is charged." Based on this Government code and current case law, the only remedy an overcharged homeowner has is to move to invalidate a city’s fee schedule. And, residents only have 120 days from the date the city approves a new fee schedule to bring such an action. That time period is long gone in the case of Sierra Madre’s fee schedule. Other than that, we must rely upon our City Council to remedy this wrong, to do the right thing and to pass Resolution 09-08.

    Still not convinced? Still think permit fees charged on solar cover only direct and indirect costs of administering the permit?

    2. According to our city’s staff report on this issue, the costs associated with an average solar permit are $515. I paid $1505 for my permit on a very average system. That’s close to $1000 more than the costs associated with my permit. Are you telling me that $1000 of indirect costs are the reasonable costs of providing the service for which these fees were charged?

    REMINDER: I AM NOT SEEKING A REFUND. MY FEES ARE PAID. THAT’S OVER. THAT’S DONE. REMEMBER, AN INDIVIDUAL HAS NO RIGHT TO A REFUND OF UNREASONABLE FEES ACCORDING TO CALIFORNIA LAW.

    THIS IS NOT ABOUT ME AND MY PROJECT. IT IS ABOUT WHAT SM HOMEOWNERS WILL PAY IN THE FUTURE WHEN THEY WANT TO PUT SOLAR ON THEIR HOMES. IT IS ABOUT WHETHER UNREASONABLE FEES KEEP SOLAR OFF THE ROOFS OF SIERRA MADRE HOMES. IT’S ABOUT WHETHER AVERAGE SIERRA MADRE RESIDENTS CAN TAKE ADVANTAGE OF THE SOLAR EQUIPMENT LEASES OUT THERE OR IF THE UNREASONABLE SOLAR PERMIT FEE CHARGES OF OUR CITY WOULD MAKE THAT IMPOSSIBLE TO DO. I CAN TELL YOU THAT IT CERTAINLY DOES.

    According to the Utility Consumers’ Action Network:

    “The contract valuation approach, especially when the system costs are used to determine the fees hinders the deployment of solar energy. Solar power is a substantial investment for consumers and additional costs prevent growth in renewable energy.”

    3. You don’t have to take my word for it. You can do your own research and look at what other cities are doing.

    You can do an online search for “solar permit fees”. You can read the Sierra Club Northern California Solar Permit Fee Study.

    Also the Utility Consumers’ Action Network study http://www.ucan.org/files/Solar%20Energy%20Permitting%20Fees%20whitepaper.doc

    You can look at Culver City’s solar installation guidelines. They state that the scope of work involved in a solar PV installation is similar to that of installing a retrofitted residential HVAC system and that permitting costs should be similar to those for an HVAC system. Their guidelines recommended a fee schedule that maxed out at $400 for systems up to 10 kW.

    Here’s a partial list of Southern California cities that understand solar permit fees based on valuation are not only unfair, but counterproductive to finding solutions to global warming, environmental pollution, promoting alternative forms of energy to create jobs and reduce our dependence on foreign oil: Long Beach, San Clemente, Palos Verdes Estates, Manhattan Beach, Hermosa Beach, Arcadia, and San Bernardino.

    4. Why are cities taking measures to charge reasonable solar permit fees? Besides the issue of fairness, the California legislature has expressed the intent that local agencies not adopt ordinances that create obstacles and unreasonable barriers to solar.

    CALIFORNIA GOVERNMENT CODE SECTION 65850.5
    (a) The implementation of consistent statewide standards to achieve the timely and cost effective installation of solar energy systems is not a municipal affair, as that term is used in Section 5 of Article XI of the California Constitution, but is instead a matter of statewide concern.
    It is the intent of the Legislature that local agencies not adopt ordinances that create
    unreasonable barriers to the installation of solar energy systems, including, but not limited to, design review for aesthetic purposes, and not unreasonably restrict the ability of homeowners and agricultural and business concerns to install solar energy systems. It is the policy of the state to promote and encourage the use of solar energy systems and to limit obstacles to their use. It is the intent of the Legislature that local agencies comply not only with the language of this section, but also the legislative intent to encourage the installation of solar energy systems by removing obstacles to, and minimizing costs of, permitting for such systems.

    Other small cities comply with the legislative intent of the California Solar Rights Act. Why can’t Sierra Madre? Sierra Madre’s City Council makes choices about the fee schedules just like other small towns.

    Other small towns with tight budgets that understand the importance of encouraging solar are only about 10 percent higher in their solar permit fee costs than their bigger counterparts.

    5. Resolution 09-08 is a big step towards showing both the State of California and President Obama’s administration that our city is serious about reducing its carbon footprint and encouraging solar energy. How do you expect Sierra Madre to be taken seriously in its applications for economic stimulus money intended to increase energy efficiency and promote alternative energy if they haven’t even brought the solar fees into compliance with the intent of California state law.

    Even if Resolution 09-08 passes, Sierra Madre’s solar permit fees will still be on the high side as compared to most other cities. But as several citizens voiced at last Tuesday’s Council meeting, given the economy and Sierra Madre’s current financial situation, we understand the need for the $515 figure.

    For more information on the Northern California Solar Permit Fee Campaign:
    http://lomaprieta.sierraclub.org/global_warming/fee_study.htm
    http://lomaprietaglobalwarming.sierraclub.org/
    http://lomaprietaglobalwarming.sierraclub.org/solar.php
    http://norcalsolar.org/downloads/city_resources/WolkPVFeeLetter.pdf

    Sir Eric, I hope you will post a new article about this issue that corrects the mistakes in this piece and sets the record straight. I also encourage you to contact Mosca and Buchanan and ask them about any conflict of interest concerns you may have. Finally, I encourage you to follow the links that I supplied in my comments.

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  18. Certainly not surprised that Edison has informed you that their technology is not designed to help you beat the tax man. What else would you expect them to say? A problem here is City Hall is on a 4 day weekend and there is no way any of this can be verified. And like I said, I'm all about reducing carbon footprints and all, but I don't see that as a reason why City fees shouldn't be paid. If everybody wearing a do-gooder hat can go to the City and demand that they be let off the hook on paying their due we'll never get out of this fiscal mess we're in. Definitely will be another article on this, but not before Tuesday.

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  19. This comment has been removed by a blog administrator.

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  20. Elevate the discussion, pleaseFebruary 16, 2009 at 6:41 PM

    Anon @4:28, your projection is showing.

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  21. Post 2/16 at 4:48 pm:

    Okay, this is either, Joe, Matt, Harri S. or Glennie boy.
    My top two suspects.....Joe and Matt.

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  22. 4:28 deleted due to homophobic hate speech.

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  23. 6:41 and 6:58 - looks like somebody is back from a long weekend ..

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  24. The Sierra Club recently published a dfinitive solar PV permit fee comparison of southern California cities. See this report at:
    http://angeles.sierraclub.org/energy/pvfeereport.asp
    - Kurt Newick, Sierra Club survey team leader

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