BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1340
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                                Felipe Fuentes, Chair

                    SB 1340 (Kehoe) - As Amended:  August 2, 2010 

          Policy Committee:                               
                        Local Government                      7-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No


          This bill allows two existing state programs to subsidize and  
          finance, respectively, installation of electric vehicle charging  
          infrastructure.  Specifically, this bill:

          1)Makes available funding through the Alternative and Renewable  
            Fuel and Vehicle Technology Program (ARFVT Program) to  
            homeowners who purchase plug-in electric vehicles, to  
            subsidize the cost of installing a residential plug-in  
            electric vehicle charging station.

          2)Allows installation of electric vehicle charging  
            infrastructure to be financed through the use of bond funds  
            secured through voluntary property assessments ("PACE bonds").

          3)Limits the use of PACE bond financing to situations in which  
            the use of such financing does not result in a property  
            owner's annual property taxes and assessments exceeding five  
            percent of the property's appraised value.

           FISCAL EFFECT  

          1)Negligible costs to the Energy Commission to include  
            residential plug-in electric vehicle charging stations among  
            the types of projects eligible for AB 118 funding.

          2)Cost pressure of an unknown amount, potentially in the  
            millions of dollars, resulting from expansion of the types of  
            projects eligible for funding from these programs.


                                                                  SB 1340
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           1)Rationale  .  The author notes that consumers will be less  
            likely to switch to electric vehicles, which the author  
            anticipates being introduced to market soon, if they face  
            expensive upgrades to their homes' electrical systems in order  
            to fuel these cars.  The author further notes that  
            installation of such electrical upgrades does not qualify  
            under existing programs that might be used to ease homeowners'  
            financial burden.  The author intends this bill to increase  
            the financing options available to homeowners who purchase  
            electric vehicles by allowing them to qualify for funding  
            under the Energy Commission's ARVTF Program and for the use of  
            PACE bond financing. 

           2)Background  .

              a)   AB 118 (N??ez, Chapter 50, Statutes of 2007)   In 2007,  
               the Legislature enacted the California Alternative and  
               Renewable Fuel, Vehicle Technology, Clean Air, and Carbon  
               Reduction Act of 2007. The act created two new programs-the  
               ARFVT Program, to be administered by the Energy Commission,  
               and the Air Quality Improvement Program, to be administered  
               by the Air Resources Board. The programs are funded  
               primarily by increases in various vehicle, vessel, and  
               other air quality-related fees that are projected to raise  
               upwards of $150 million annually for each of eight years. 
                The act identifies the primary goals of the ARFVT Program  
               as development and commercialization of technologies for  
               renewable and nonpetroleum fuels that help to achieve the  
               state's climate change goals. The act states that the  
               program is not to prefer any particular vehicle or fuel  
               technology. Rather, the program is to provide financial  
               incentives, such as grants, loans, and loan guarantees for  
               specified types of projects that meet specified criteria,  
               including furtherance of a number of air quality and other  
               environmental and energy goals. 

              b)   PACE Bond Financing  .  The PACE 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 Berkeley through its  


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               Charter Cities authority, and then authorized 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  

               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.  

               Some have expressed concern that use of PACE bond financing  
               results in an additional burden to homeowners who must pay  
               increased property assessments as a result of the voluntary  
               use of such financing.  This bill attempts to address such  
               concerns by limiting the use of PACE bond financing to  
               situations where its use will not result in excessive  
               property taxes or assessments.  

           Analysis Prepared by  :    Jay Dickenson / APPR. / (916) 319-2081