BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1873|
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                                 THIRD READING


          Bill No:  AB 1873
          Author:   Huffman (D)
          Amended:  8/9/10 in Senate
          Vote:     21

           
           SENATE GOVERNMENTAL ORG. COMMITTEE  :  8-0, 6/29/10
          AYES:  Wright, Harman, Calderon, Florez, Negrete McLeod,  
            Padilla, Price, Yee
          NO VOTE RECORDED:  Denham, Oropeza, Wyland

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  52-24, 6/2/10 - See last page for vote


           SUBJECT :    Property Assessed Clean Energy bonds

            SOURCE  :     Environmental Defense Fund 
                       Sonoma County


           DIGEST  :    This bill authorizes the State Treasurer, the  
          California Public Employees Retirement System, and the  
          State Compensation Insurance Fund to invest in Property  
          Assessed Clean Energy bonds.  

           Senate Floor Amendments  of 8/9/10 adds double-jointing  
          language to avoid a chaptering-out problem with SB 1407  
          (Senate Banking, Finance and Insurance Committee).

           ANALYSIS  :    Existing law authorizes cities, counties and  
          other public agencies to designate areas within which  
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          legislative bodies and willing property owners may enter  
          into contractual assessments to finance the installation of  
          distributed generation renewable energy sources or energy  
          or water efficiency improvements.

          Existing law declares legislative intent that the  
          authorization listed above should be used to finance the  
          installation of distributed generation renewable energy  
          sources and energy or water efficiency improvements that  
          are fixed to residential, commercial, industrial,  
          agricultural, and other real property.  Existing law  
          prohibits the authorization from being used to finance the  
          purchase of appliances or installations not fixed to real  
          property.

          Existing law requires the Treasurer to invest or make  
          deposits in banks and savings and loan associations of  
          revenues in the Pooled Money Investment Account in  
          accordance with designations specified by the Pooled Money  
          Investment Board.

          The Board of Administration of California Public Employees'  
          Retirement System (CalPERS) is authorized to make any  
          investment authorized by law, including, among others, an  
          investment in real property.

          The State Compensation Insurance Fund (SCIF) is authorized  
          to purchase general obligation bonds or other evidence of  
          indebtedness issued by the state.

          The Joint Exercise of Powers Act authorizes any separate  
          entity created pursuant to that act to invest any money in  
          the treasury that is not required for the immediate  
          necessities of the agency or entity, as the agency or  
          entity determines is advisable.

          This bill:

          1. Authorizes the State Treasurer, CalPERS, and SCIF to  
             purchase Property Assessed Clean Energy (PACE) bonds.

          2. Adds a new provision to the Joint Exercise of Powers Act  
             authorizing a joint powers authority (JPA) to purchase,  
             and a local agency to sell, the right, title, and  

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             interest in an assessment contract pursuant to an  
             agreement between the JPA and the local agency.

          3. Contains double-jointing language to prevent a  
             chaptering-out conflict with SB 1407 (Senate Banking,  
             Finance, and Insurance Committee),

           PACE Program:   This program permits local public agencies  
          and utility districts to provide up-front financing to  
          property owners to install solar or other renewable  
          energy-generating devices or make specified water or energy  
          efficiency improvements to their properties.  This  
          financing mechanism was first used by the City of Berkeley  
          through its Charter Cities authority, and then authorizes  
          statewide by AB 811 (Levine), Chapter 159, Statutes of 2008  
          and AB 474 (Blumenfield), Chapter 444, Statutes of 2009.   
          Under the program, a city, county, or other public agency  
          issues bonds and uses the proceeds to make loans to  
          property owners to finance energy retrofits.  These loans  
          are repaid by the property owner over 20-30 years via an  
          annual assessment on the owner's property tax bill.  The  
          assessment remains on the property even if it is sold or  
          transferred.  From the property owner's perspective, the  
          added property tax assessments are partly or fully offset  
          by energy savings resulting from the retrofit.  The loan  
          repayments from the property owners are dedicated by the  
          municipalities to the repayment of the revenue bonds.

           Comments
           
          According to the author's office, this bill intends to  
          expand the AB 811 (Levine) program throughout the state by  
          authorizing the State Treasurer, CalPERS and the SCIF to  
          purchase local PACE bonds, thereby lowering the interest  
          rates that local governments must charge homeowners, while  
          simultaneously creating a new, secure income stream for the  
          state of California.  In addition this bill allows a JPA to  
          act as a conduit for the loans, allowing local governments  
          to sell the loans to the private market.  The author's  
          office points out that Prop. 13 prohibits a local  
          government from selling loans directly to a private  
          investor (e.g., bank) so this would set up a process  
          whereby they can be transferred to an existing JPA and then  
          sold to private investors.

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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/3/10)

          Environmental Defense Fund (co-source)
          Sonoma County (co-source)
          Breathe California
          CIO
          California Building Industry Association
          California Business Properties Association
          California Chamber of Commerce
          California State Council of Laborers
          City of Palm Desert
          Planning and Conservation League
          Renewable Funding
          Sierra Club
          Sonoma County Water Agency
          State Building & Construction Trades Council
          Vote Solar


           ARGUMENTS IN SUPPORT  :    Proponents contend that this bill  
          will make contractual assessments more attractive to local  
          governments and homeowners by reducing the cost of the  
          loans made to homeowners to finance energy and water  
          efficiency improvements.  Proponents also emphasize that  
          making these loan programs more attractive and encouraging  
          local governments to use them will expand job growth at a  
          time we most need it and also help the state meet its  
          energy efficiency and renewable energy goals.

           ASSEMBLY FLOOR  : 
          AYES: Ammiano, Arambula, Bass, Beall, Blakeslee, Block,  
            Blumenfield, Bradford, Brownley, Buchanan, Caballero,  
            Charles Calderon, Carter, Chesbro, Coto, Davis, De La  
            Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes,  
            Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill,  
            Huber, Huffman, Jones, Bonnie Lowenthal, Ma, Mendoza,  
            Monning, Nava, Nestande, V. Manuel Perez, Portantino,  
            Ruskin, Salas, Saldana, Skinner, Smyth, Solorio, Swanson,  
            Torlakson, Torres, Torrico, Yamada, John A. Perez
          NOES: Adams, Anderson, Bill Berryhill, Conway, Cook,  

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            DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick,  
            Gilmore, Hagman, Harkey, Jeffries, Knight, Logue, Miller,  
            Niello, Nielsen, Norby, Silva, Tran, Villines
          NO VOTE RECORDED: Tom Berryhill, Lieu, Audra Strickland,  
            Vacancy


          TSM:do  8/10/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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