BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1873
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1873 (Huffman)
          As Amended  August 9, 2010
          Majority vote
           
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          |ASSEMBLY:  |52-24|(June 2, 2010)  |SENATE: |24-10|(August 18,    |
          |           |     |                |        |     |2010)          |
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           Original Committee Reference:   NAT. RES.  

           SUMMARY  :  Authorizes the State Treasurer, the California Public  
          Employees Retirement System Board (CalPERS), and the State  
          Compensation Insurance Fund (SCIF) to purchase bonds issued to  
          finance the installation of distributed generation renewable  
          energy sources or energy or water efficiency improvements  
          through local property assessed clean energy (PACE) programs,  
          and makes related findings.  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 interest in an assessment contract pursuant to an agreement  
          between the JPA and the local agency.

           The Senate amendments  add a new provision to the Joint Exercise  
          of Powers Act authorizing a JPA to purchase, and a local agency  
          to sell, the right, title, and interest in an assessment  
          contract pursuant to an agreement between the JPA and the local  
          agency.  Senate Floor amendments of 8/9/10 add double-jointing  
          language to avoid a chaptering-out problem with SB 1407.  This  
          bill will only become operative if both SB 1407 and this bill  
          become effective on or before January 1, 2011 and if this bill  
          is enacted after SB 1407.

           EXISTING LAW  :

          1)Authorizes cities, counties and other public agencies to  
            designate areas within which 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.

          2)States legislative intent that the authorization listed above  
            should be used to finance the installation of distributed  
            generation renewable energy sources and energy or water  








                                                                  AB 1873
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            efficiency improvements that are fixed to residential,  
            commercial, industrial, agricultural, and other real property.  
             Prohibits the authorization from being used to finance the  
            purchase of appliances or installations not fixed to real  
            property.

          3)Makes findings and declarations concerning the need for energy  
            and water efficiency improvements in order to address global  
            climate change, the deterrent effect of high up-front costs on  
            making those improvements, and the need to authorize an  
            alternative procedure for authorizing assessments to finance  
            the cost of energy efficiency improvements in order to make  
            them more affordable and promote their installation.

           AS PASSED BY THE ASSEMBLY  , this bill authorized the Treasurer,  
          CalPERS, and SCIF to purchase bonds issued to finance the  
          installation of distributed generation renewable energy sources  
          or energy or water efficiency improvements through PACE  
          programs, and makes related findings.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, this bill has  
          negligible state costs.

           COMMENTS  :  Under PACE programs, the property owner or owners  
          within a designated area choose to assess themselves for the  
          cost of energy efficiency improvements or distributed renewable  
          energy, such as solar.  The local government then provides the  
          up-front funds for the project, and the property owners pay an  
          annual assessment until those funds, plus interest, are repaid.   
          The underlying purpose is to create a means by which a project  
          that provides both a public benefit and an incidental benefit to  
          particular property owners can be financed without imposing the  
          cost on property owners in other parts of the city who derive no  
          benefit.

          Chartered cities have broad authority to create special  
          assessment districts.  Berkeley was the first city in the nation  
          to launch a PACE program and used a special assessment district  
          to establish a financing mechanism in which individual property  
          owners can voluntarily participate and repay improvements  
          through a special property tax assessment.

          This bill authorizes the Treasurer, CalPERS, and SCIF to  
          purchase local AB 811 bonds, which may lower the interest rates  








                                                                  AB 1873
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          that local governments must charge homeowners, while  
          simultaneously creating a new, secure income stream for the  
          state of California.  CalPERS' general authority already permits  
          investment in this type of bond, as long as they find the  
          investment consistent with their fiduciary duty.  

           
          Analysis Prepared by  :  Jessica Westbrook / NAT. RES. / (916)  
          319-2092 


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