Amended in Assembly April 23, 2013

Amended in Assembly April 1, 2013

Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 122


Introduced by Assembly Member Rendon

January 14, 2013


An act to add Chapter 13 (commencing with Section 25987.1) to Division 15 of the Public Resources Code, relating to energy, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 122, as amended, Rendon. Energy: energy assessment: nonresidential buildings: financing.

Existing law requires the State Energy Resources Conservation and Development Commission to implement a program to provide financial assistance for energy efficiency projects.

This bill would enact the Nonresidential Building Energy Retrofit Financing Act of 2013 and would require the commission to establish the Nonresidential Building Energy Retrofit Financing Program and to develop a request for proposal for abegin delete third-partyend deletebegin insert 3rd-partyend insert administrator by July 1, 2014, to develop and operate the program to provide financial assistance, through authorizing the issuance of, among other things, revenue bonds, to owners of eligible nonresidential buildings for implementing energy improvements for their properties. The bill would require that the bonds be secured by the recording of an energy remittance repayment agreement lien, as defined, on the deed of the property for which the improvements are performed. The bill would require the State Board of Equalization to collect installment payments from owners of eligible properties whose applications have been approved by the commission.begin insert The bill would require the commission, within 6 months after the first 2 years of implementation of the program or after the expenditure of the first $250,000,000 of the proceeds derived by issuance of the revenue bonds, whichever is earlier, to prepare and make publicly available a report on the efficacy of the program in achieving the purposes of the program and recommendations that would enhance the ability of the program to achieve those purposes. The bill would prohibit the commission from additional expenditure of the proceeds until the commission holds at least one public hearing and take public comments on the report.end insert

The bill would require the commission to meet for the purpose of approving applicants to participate in the program. The bill would authorize the California Alternative Energy and Advanced Transportation Financing Authority, on behalf of the commission, to issue and renew the negotiable revenue bonds to generate moneys to finance energy improvements for approved applicants.

The bill would establish the Nonresidential Building Energy Retrofit Debt Servicing Fund in the State Treasury and the Loan Loss Reserve Account and Administration Account within the fund. The bill would require the State Board of Equalization to deposit the installment payment received from the owners of eligible buildings into the fund and certain fees collected into the specified accounts. The bill would continuously appropriate the moneys in the fund and the accounts to repay the principal and interest on the bonds, and to cover the administrative costs incurred by the authority, the commission, and the State Board of Equalization, thereby making an appropriation.

The bill would require the Director of Finance to transfer, as a loan, up to $1,000,000, to the authority, and up to $7,000,000, to the commission, from the General Fund for the purposes of implementing the program. The bill would require the loans to be repaid on or before January 1, 2024.

Existing law establishes incentives in the form of grants and loans to low-income residents, small businesses, and residential property owners for constructing and retrofitting buildings to be more energy efficient.

The bill would require the State Energy Resources Conservation and Development Commission, to the extent it determines necessary to effectively complete it duties under the act, to analyze and evaluate specified standards developed for nonresidential energy building retrofits.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Chapter 13 (commencing with Section 25987.1)
2is added to Division 15 of the Public Resources Code, to read:

3 

4Chapter  13. Nonresidential Building Assessment
5Financing
6

6 

7Article 1.  General Provisions and Definitions
8

 

9

25987.1.  

This act shall be known, and may be cited, as the
10Nonresidential Building Energy Retrofit Financing Act of 2013.

11

25987.2.  

The purpose of this chapter is to facilitate private
12financing to enable private nonresidential building owners and
13eligible public entities to invest in clean energy improvements,
14renewable energy, and conservation; to incentivize private equity
15managers to invest in clean energy improvements, integrate the
16smart energy economy, and stimulate the state economy by directly
17creating jobs for contractors and other persons who complete new
18energy improvements; and to reinforce the leadership role of the
19state in the new energy economy, thereby attracting energy
20manufacturing facilities and related jobs to the state.

21

25987.3.  

The Legislature finds and declares all of the following:

22(a) Nonresidential buildings represent a huge opportunity to
23significantly increase energy efficiency and reduce greenhouse
24gas emissions. To do this, California needs to address the design,
25construction, and operation of these buildings.

begin delete

26(b) The lack of accessible and affordable financing for energy
27efficiency retrofits results in energy-inefficient buildings that are
28estimated to consume up to 50 percent more energy than required
29to achieve the same level of comfort. Energy use in the building
30sector accounts for approximately 20 percent of global emissions
31of carbon dioxide, or 10 billion tons, annually.

32(c) It is possible to retrofit the California nonresidential building
33stock to use, on average, at least 50 percent less energy by 2050
P4    1through the wide adoption of deep energy retrofits that save more
2energy and increase profits for building owners.

3(d)

end delete

4begin insert(b)end insert Investment in building performance upgrades is an intelligent
5business decision. Building performance upgrades lower operating
6costs, improve occupant comfort, hedge against utility price
7increases, demonstrate commitment to tenant well-being, reduce
8exposure to regulation, help the environment, and ultimately boost
9property values.

begin delete

10(e)

end delete

11begin insert(c)end insert It is in the best interest of the state and its citizens to enable
12and encourage the owners of eligible nonresidential property to
13invest in new energy improvements, including building energy
14 efficiency improvements that qualify for investor-owned utility or
15publicly owned utility programs, water efficiency improvements,
16and renewable energy improvements, by enacting this division to
17establish, develop, finance, implement, and administer a new
18energy improvement program that provides for both building
19energy efficiency improvements and renewable energy
20improvements and to assist those owners who choose to participate
21in the program to complete new energy improvements to their
22properties because of the following:

23(1) New energy improvements, including building energy
24efficiency improvements and renewable energy improvements,
25can provide positive cashflow when the costs of the improvements
26are spread out over a long enough time that a building’s cumulative
27utility bill cost savings exceed the amount of the liens recorded
28on the eligible building to ensure payment for the improvements.

29(2) Many owners of eligible nonresidential buildings are unable
30to fund a new energy improvement because the owners do not
31have sufficient liquid assets to directly fund the improvement or
32are unable or unwilling to incur the negative net cashflow likely
33to result if the owner uses a typical existing loan program to fund
34the improvement.

begin delete

35(f)

end delete

36begin insert(d)end insert Reduction in the amount of emissions of greenhouse gases
37and environmental pollutants, resulting from increased efficiencies
38and the resulting decreased use of traditional nonrenewable fuels,
39will improve air quality and may help to mitigate climate change.

begin delete

40(g)

end delete

P5    1begin insert(e)end insert The nonresidential building owners who participate in the
2program established pursuant to this division to assist them in
3completing new energy improvements, including building energy
4 efficiency improvements and renewable energy improvements, to
5the building shall do so voluntarily.

6

25987.4.  

Unless the context otherwise requires, for the purposes
7of this chapter, the following terms have the following meanings:

8(a) (1) “Alternative sources of energy” or “alternative energy
9sources” means energy from renewable cogeneration or gas-fired
10cogeneration technology that meets the greenhouse gas emissions
11and efficiency standards applicable to the Self-Generation Incentive
12Program in effect at the time of the application, energy storage
13technologies, or energy from solar, biomass, wind, or geothermal
14systems, or fuel cells, the efficient use of which will reduce the
15use of conventional energy fuels.

16(2) The system shall be sized appropriately to offset part or all
17of the applicant’s ownbegin delete electricityend deletebegin insert energyend insert demandbegin insert for the permanent
18fixtures that consume energy, as if all cost-effective energy
19efficiency measures have been installed,end insert
and shall be located on
20the same property where the applicant’s ownbegin delete electricalend deletebegin insert energyend insert
21 demand is located.

22(b) “Applicant” means a person, or an entity or group of entities,
23engaged in business or operations in the state, whether organized
24for profit or not for profit that owns a nonresidential building and
25applies for financial assistance from the commission for the
26purpose of implementing a project in a manner prescribed by the
27commission.

28(c) “Authority” means the California Alternative Energy and
29Advanced Transportation Financing Authority established pursuant
30to Section 26004.

31(d) “Board” means the State Board of Equalization.

32(e) “Building energy efficiency improvement” means one or
33more installations or modificationsbegin insert that are permanently affixed
34to the building or located on the premises of the building siteend insert
, for
35which a building permit is issued after January 1, 2014, to an
36eligible building that either qualifies for an investor-owned utility
37or publicly owned utility energy efficiency program or is designed
38to reduce the energy consumption of the building, and that may
39include, but is not limited to, all of the following to the extent they
40qualify:

P6    1(1) High-efficiency mechanical equipment.

2(2) High-efficiency electrical equipment.

3(3) Capturing or reducing heat gain or solar shading, including
4the roof and south and west walls, and not just glazing.

5(4) High-efficiency water heating.

6(5) Insulation in walls, roofs, floors, and foundations and in
7heating and cooling distribution systems.

8(6) Fenestration and door replacements, and door modifications
9that reduce energy consumption.

10(7) Automatic energy control systems.

11(8) Heating, ventilating, or air conditioning and distribution
12system modifications or replacements.

13(9) Caulking and weather stripping.

14(10) Replacement or modification of luminaries to increase the
15energy efficiency of the system, or additional lighting controls to
16reduce electric lighting during periods of vacancy.

17(11) Energy recovery systems.

18(12) Daylighting systems and associated lighting controls for
19daylight harvesting.

begin delete

20(13) A modification, installation, or remodeling approved as a
21utility cost-savings measure by the commission or the Public
22Utilities Commission and utilized by investor-owned utilities and
23energy efficiency specialists participating in their Energy Efficiency
24programs.

end delete
begin delete

25(14) Plug load solutions.

end delete
begin delete

26(15)

end delete

27begin insert(13)end insert Building commissioning or retrocommissioning.

28(f) “Conventional energy fuel” means any of the following:

29(1) A fuel derived from petroleum deposits, including, but not
30limited to, oil, heating oil, gasoline, and fuel oil.

31(2) Natural gas, including liquefied natural gas.

32(3) Nuclear fissionable materials.

33(4) Coal.

34(g) “Demand response” means reductions or shifts in electricity
35consumption by customers in response to either economic or
36reliability signals.

37(h) “Eligible building” means a nonresidential building that
38completed construction on or before January 1, 2014, and is located
39within the boundaries of the state.

P7    1(i) “Energy remittance repayment agreement” means a
2contractual agreement between an eligible building owner and the
3commission, secured by a lien, as described in Section 25987.21,
4recorded in the county where the property is situated and on an
5eligible building specially benefited by a new energy improvement
6for which the commission will make reimbursement or a direct
7payment to the party financing the energy improvements, and
8“contractual energy remittance” means that reimbursement or
9direct payment. The amount to be repaid pursuant to the energy
10remittance repayment agreement shall include the costs necessary
11to finance the building energy efficiency improvements less any
12rebates, grants, and other direct financial assistance received by
13the owner pursuant to other law and a loan loss reserve fee in an
14amount to be established by the third-party administrator in
15consultation with the commission and the warehouse financier
16under contract entered into pursuant to paragraph (8) of subdivision
17(a) of Section 25987.25 to insure against nonperformance of the
18loan and other losses of the program, and a program administrative
19cost fee.

20(j) “Energy efficiency specialist” means an individual or
21business authorized or certified by rules of the commission to
22analyze, evaluate, or install a renewable energy source, building
23energy efficiency improvement, or water efficiency improvement
24for eligible property.

25(k) “Financial assistance” means either of the following:

26(1) Loans, loan loss reserves, interest rate reductions, secondary
27loan purchase, insurance, guarantees or other credit enhancements
28or liquidity facilities, contributions of money, property, labor, or
29other items of value, or any combination thereof, as determined
30and approved by the commission.

31(2) Other types of assistance the commission determines are
32appropriate.

33(l) “Loan balance” means the outstanding principal balance of
34loans secured by a mortgage or deed of trust with a first or second
35lien on eligible property.

36(m) “Loan loss reserve fee” means a fee that serves as collateral
37in the event of a loan default.

38(n) “Nonresidential Building Energy Retrofit Bond” means a
39bond issued pursuant to Section 25987.31 that is secured by an
40energy remittance repayment agreement on property entered into
P8    1voluntarily to finance the installation of renewable energy sources,
2building energy efficiency improvement or retrofits, or water
3efficiency improvements.

4(o) “Participant” means a person, or an entity or group of
5entities, engaged in business or operations in the state, whether
6organized for profit or not for profit, that, as a qualified applicant
7is approved for financial assistance pursuant to Article 2
8(commencing with Section 25987.5) and has entered into an energy
9remittance repayment agreement with the commission for the
10purpose of implementing a project in a manner prescribed by the
11commission.

12(p) “Portfolio” means an aggregation of approved applications.

13(q) “Program” means the Nonresidential Building Energy
14Retrofit Financing Program established by the commission in
15accordance with Section 25987.7.

16(r) “Program administration cost fee” means a fee imposed for
17the costs incurred by the commission, the authority, and the State
18Board of Equalization to administer the program.

19(s) “Project” means an improvement to an eligible building that
20constitutes a water efficiency improvement, alternative source of
21energy, or building energy efficiency improvement.

22(t) “Qualified applicant” means a person or business entity who
23does all of the following:

24(1) Owns an eligible building that has a ratio of loan balance to
25its appraised value not to exceed 85 percent and subject to
26adjustment by the program administrator at the time the person’s
27program application is approved, as shown in the records of the
28county assessor, unless the holder of the deed of trust or mortgage
29recorded against the eligible property that has priority over all
30other deeds of trust or mortgages recorded against the eligible
31property has consented in writing to the recording of an energy
32remittance repayment agreement pursuant to this division against
33the eligible property.

34(2) Timely submits to the commission a complete application,
35which notes the existence of any priority mortgage or deed of trust
36on the eligible property and the identity of the holder of the
37mortgage or deed of trust, to join the program and consents to the
38levying of a special assessment on the property pursuant to this
39chapter.

P9    1(3) Meets standard of credit worthiness that the commission
2may establish.

3(u) “Renewable energy” means heat, processed heat, space
4heating, water heating, steam, space cooling, refrigeration,
5mechanical energy, electricity, fuel cells, or energy in any form
6convertible to these uses, and including energy storage
7technologies, that does not expend or use conventional energy
8fuels, and that uses any of the following electrical generation
9technologies:

10(1) Biomass.

11(2) Solar thermal.

12(3) Photovoltaic.

13(4) Wind.

14(5) Geothermal.

15(v) “Renewable energy improvement” means one or more
16fixtures, products, systems, or devices, or an interacting group of
17fixtures, products, systems, or devices, thatbegin insert use an alternative
18source of energy, are permanently affixed to the building or located
19on the premises of the building site, andend insert
directly benefit an eligible
20building or that are installed on the customer side of a meter of an
21eligible building and that produce renewable energy from
22renewable resources, including, but not limited to, photovoltaic,
23solar thermal, small wind, biomass, fuel cells, or geothermal
24systems such as ground source heat pumps, as may be approved
25by the commission.

26(w) “Third-party administrator” means an entity selected by the
27commission through a request for proposal to manage project
28applications and make recommendations to the commission as to
29individual project’s compliance with this chapter.

30(x) “Warehouse financier” means a financial entity, bank, or
31pension fund, chosen by the commission through a request for
32proposal to provide an ongoing and revolving source of financing
33for projects approved pursuant to Section 25987.20.

34 

35Article 2.  Nonresidential Building Energy Retrofit Financing
36Program
37

 

38

25987.5.  

The purpose of the Nonresidential Building Energy
39Retrofit Financing Program is to help provide the special benefits
40of water efficiency improvements, alternative energy, and building
P10   1energy efficiency improvements to owners of eligible buildings
2who voluntarily participate in the program by establishing,
3developing, financing, and administering a program to assist those
4owners in completing improvements.

5

25987.6.  

The commission shall have and exercise all rights
6and powers necessary or incidental to or implied from the specific
7powers granted to the commission by this chapter. Those specific
8powers shall not be considered as a limitation upon any power
9necessary or appropriate to carry out the purposes and intent of
10this chapter.

11

25987.7.  

(a) The commission shall establish, develop, finance,
12and administer, pursuant to Section 25987.9, the Nonresidential
13Building Energy Retrofit Financing Program. The commission
14shall provide general direction and oversight to the authority and
15board as they complete duties specified in this chapter. The
16program shall be designed to provide financial assistance for an
17owner of an eligible building to use one or more energy efficiency
18specialists to retrofit the property with one or more alternative
19energy sources or renewable energy improvements, building energy
20efficiency improvements, or water efficiency improvements, by
21applying to the commission for inclusion of the owner’s project
22in a portfolio that will be financed through the use of the revenue
23bonds issued pursuant to this chapter. These bonds shall be secured
24by revenues generated through energy remittance repayment
25agreements recorded on the buildings benefited by the projects in
26the portfolio.

27(b) begin delete(1)end deletebegin deleteend deleteThe program shall provide financial assistance for
28improvements when the total energy and water cost savings
29realized by the property owner, and any successor or successors
30to the property owner, during the useful life of the improvements,
31as determined by an analysis required pursuant to subdivision (i)
32of Section 25987.13 are expected to equal or exceed the total costs
33incurred by the owner pursuant to the program.

begin delete

34(2) The commission may waive the requirements of paragraph
35(1) by adopting a specific finding that additional improvements
36may be undertaken that significantly increase energy efficiency
37and improve public health.

end delete

38(c) In developing rules to certify an energy efficiency specialist,
39the commission shall consult with the Public Utilities Commission,
40the investor-owned utilities, the contractor community, and other
P11   1entities the commission deems appropriate and consider existing
2trade certifications or licensing requirements applicable to
3occupations that perform work contemplated pursuant to this
4chapter.

begin insert

5(d) (1) Within six months after the first two years of
6implementation of the program established pursuant to subdivision
7(a) or after the expenditure of the first two hundred fifty million
8dollars ($250,000,000) of proceeds authorized pursuant to Section
925987.29, whichever occurs earlier, the commission shall prepare
10and make publicly available a report on the efficacy of the program
11in achieving the purposes of the program as specified in Section
1225987.5 and recommendations that would enhance the ability of
13the program to achieve those purposes.

end insert
begin insert

14(2) The commission shall post the report on its Internet Web
15site.

end insert
begin insert

16(3) Prior to the additional expenditure of the proceeds
17authorized pursuant to Section 25987.29, the commission shall
18hold at least a public hearing and take public comments on the
19report.

end insert
20

25987.8.  

To receive financial assistance pursuant to this
21chapter, a qualified applicant shall contractually agree to the
22recording of an energy remittance repayment agreement on the
23eligible building that is being retrofitted.

24

25987.9.  

By July 1, 2014, the commission shall develop a
25request for proposal to develop the program by a third-party
26administrator. The third-party administrator shall administer the
27program and establish an automated, asset-based underwriting
28system for all eligible buildings in the state. The third-party
29administrator shall provide consultation to the commission in
30developing guidelines for the program.begin insert The third-party
31administrator shall provide an independent energy advisor to assist
32building owners in evaluating proposals for energy efficiency and
33renewable energy improvements.end insert
The party selected as the
34third-party administrator shall only be selected if the program
35proposal submitted by the party requires all costs, including startup
36costs of the program, to be covered by the loan recipients, the
37administrator, the bond purchasers, or some combination thereof.
38The program selected shall not include General Fund costs or
39liabilities, with the exception of loans from the General Fund
40pursuant to Section 25987.41 utilized for startup costs.

P12   1

25987.10.  

The third-party administrator shall establish
2underwriting guidelines that consider an applicant’s qualifications,
3and other appropriate factors, including, but not limited to, credit
4reports and loan-to-value ratios, consistent with good and
5customary lending practices, necessary for the authority to obtain
6a bond rating for bonds issued pursuant to Article 3 (commencing
7with Section 25987.29) for a successful bond sale.

8

25987.11.  

The third-party administrator shall disclose to an
9owner of a nonresidential building all fees imposed pursuant to
10this chapter, including the loan loss reserve fee, the program
11administration cost fee, and the interest rate charged, prior to the
12submission of an application by the building owner.

13

25987.12.  

(a) An owner of an eligible building who wishes to
14undertake an improvement shall submit to the third-party
15administrator an application to participate in the program.

16(b) The submission of an application is deemed to be a voluntary
17agreement by the owner for the commission to record the energy
18remittance repayment agreement on the deed of the eligible
19building upon the approval of the application.

20(c) The application form developed by the third-party
21administrator shall include a statement in no less than 12-point
22type stating the following:


24SUBMISSION OF THIS APPLICATION CONSTITUTES THE
25VOLUNTARY CONSENT OF THE APPLICANT FOR THE
26RECORDATION OF THE ENERGY REMITTANCE
27REPAYMENT AGREEMENT ON THE DEED OF THE
28ELIGIBLE PROPERTY. UPON THE APPROVAL BY THE
29COMMISSION OF THE APPLICATION AND THE
30 RECORDATION OF THE ENERGY REMITTANCE
31REPAYMENT AGREEMENT, A LIEN IN THE AMOUNT
32SPECIFIED IN THE ENERGY REMITTANCE REPAYMENT
33AGREEMENT SHALL BE SECURED BY THE PROPERTY.


35

25987.13.  

The owner of an eligible building shall include all
36of the following information in the application:

37(a) The name, business address, and email address of the owners
38of the eligible building.

39(b) The names of all entities that hold a secured lien on the
40eligible building and their contact information.

P13   1(c) The total dollar amount of liens that have been recorded on
2the eligible building.

3(d) An appraisal of the value of the eligible building that has
4been conducted within the past six months or during an appropriate
5timeframe consistent with industry practices for underwriting of
6nonresidential buildings.

7(e) A detailed description of thebegin insert alternative sources of energy,
8andend insert
building energy efficiencybegin insert end insertbegin insertand renewable energy end insert
9 improvements being funded.

10(f) The name of the financial institution providing interim
11financing for the improvements or the warehouse line of credit
12developed pursuant to Section 25987.26.

13(g) The structure of the loan financing thebegin insert alternative sources
14of energy, andend insert
building energy efficiencybegin insert and renewable energyend insert
15 improvements.

16(h) Any information that the commission or third-party
17administrator requires to verify that the owner will complete the
18project.

19(i) An analysis performed by an energy efficiencybegin insert and renewable
20energyend insert
specialist to quantify the costs of thebegin insert alternative sources
21of energy, and buildingend insert
energybegin insert efficiency, renewable energy,end insert and
22water efficiency improvements, and total energy and water cost
23savings realized by the owner, or his or her successor during the
24effective useful life of, and estimated carbon impacts of, the
25improvements, including an annual cashflow analysis.

26(j) Copies of an application that have been made for energy
27efficiency incentives identified pursuant to subdivision (d) of
28Section 25987.19 for any applicable retrofits.

29(k) Other information deemed necessary by the commission or
30the third-party administrator.

begin insert

31(l) The total amount of the loan requested showing any and all
32adjustments to reduce the loan amount after all federal, state,
33local, and ratepayer-funded incentives have been applied.

end insert
34

25987.14.  

(a) In addition to the information required under
35Section 25987.13, an applicant shall provide in the application a
36detailed description of all of the following:

37(1) The eligible building.

38(2) The transactional activities associated with the eligible
39improvements, including the transactional costs.

P14   1(3) Other information deemed necessary by the commission or
2the third-party administrator.

3(b) An applicant shall agree in the application to remit repayment
4installments due by an electronic funds transfer under procedures
5prescribed by the board.

6

25987.15.  

(a) The third-party administrator shall make
7recommendations to the commission regarding the approval or
8disapproval of an application.

9(b) The commission may approve and accept an applicant into
10the program if both of the following conditions are met:

11(1) The applicant is a qualified applicant.

12(2) Prior to receiving funding for renewable energy improvement
13or alternative energy sources, the applicant shall show both of the
14following:

15(A) Evidence of intent to make feasible energy efficiency
16upgrades recommended by the analysis required pursuant to
17subdivision (i) of Section 25987.13.

18(B) Evidence of intent to enroll in eligible demand response
19programs, if appropriate.

20(c) The commission shall determine appropriate guarantees
21necessary to ensure cost neutrality of the improvements that may
22include the requirement that the owner of the eligible building
23obtain insurance issued by an A.M. Best “A” or better rated
24insurance carrier or a similar product as approved by the
25commission.

26

25987.16.  

(a) Upon the mutual agreement of the participant
27and the third-party administrator, the third-party administrator
28shall establish an annualized schedule for the repayment required
29by the energy remittance repayment agreement, including the
30interest charged, administrative cost fee, and loan loss fee.

31(b) The board shall collect the repayment installments that
32become due and payable.

33(c) (1) The period for repayment of the energy remittance
34repayment agreement shall not exceed the effective useful life of
35the improvements or 20 years, whichever is shorter.

36(2) The calculated effective useful life of thebegin insert alternative source
37of electricity, andend insert
building energy efficiencybegin insert and renewable energyend insert
38 improvements shall be calculated using methodologies adopted
39by the commission, in consultation with the Public Utilities
40Commission.

begin insert

P15   1(A) The commission shall hold at least one public hearing on
2the useful life of the improvement to take public and industry
3comments on the commission’s determinations.

end insert
begin insert

4(B) The commission shall update the useful life of improvements
5as new information becomes available and when new technologies
6become available and shall make this information publicly
7available on its Internet Web site.

end insert
begin insert

8(C) The commission shall remove any improvements from its
9information on improvements if the improvement is no longer
10available or if the commission determines that manufacturer defects
11disqualify the improvement from loan eligibility.

end insert

12(d) Upon the failure of the participant to pay any installment
13toward the repayment of the energy remittance repayment
14agreement when the installment becomes due and owing pursuant
15to the schedule for repayment, the board shall assess a penalty on
16the delinquent payment of 10 percent of the unpaid installment.

17(e) Within 60 days of a failure to pay the scheduled energy
18remittance payment, the board shall issue a demand letter to the
19participant with notice provided to the commission and provide
20the participant with 30 days to cure the default.

21(f) (1) If the participant fails to cure the default within the time
22allotted, the board may declare the entire outstanding energy
23remittance repayment agreement balance, including any interest
24due, penalties assessed, and costs of collection incurred,
25immediately due and owing and foreclose on the energy remittance
26repayment agreement by either judicial or nonjudicial foreclosure.

27(2) Revenue generated from the sale of the eligible building
28shall be distributed to satisfy liens on the eligible building in
29accordance with the priority of the liens as provided by law.

30(g) Upon the full repayment of the balance of the energy
31remittance repayment agreement, and interest and penalties that
32had accrued, the board shall notify the commission of that
33repayment. Within 30 days of the receipt of the notice, the board
34shall record with the county in which the eligible building is located
35a release of the energy remittance repayment agreement.

36

25987.17.  

(a) A participant shall remit repayment installments
37due by an electronic funds transfer to the board under procedures
38prescribed by the board.

39(b) Any participant remitting amounts due pursuant to
40subdivision (a) shall perform electronic funds transfers in
P16   1compliance with the due dates prescribed in the schedule for
2repayment. Payment is deemed complete on the date the electronic
3funds transfer is initiated if settlement to the state’s demand account
4occurs on or before the banking day following the date the transfer
5is initiated. If settlement to the state’s demand account does not
6occur on or before the banking day following the date the transfer
7is initiated, payment is deemed to occur on the date settlement
8 occurs.

9(c) Any participant who remits a repayment installment by
10means other than appropriate electronic funds transfer shall pay a
11penalty of 10 percent of the repayment installment incorrectly
12remitted.

13(d) The board may prescribe, adopt, and enforce guidelines
14relating to the collection of the energy remittance repayment
15installments. The guidelines adopted pursuant to this section shall
16be exempt from the requirements of the Administrative Procedure
17Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
18Division 3 of Title 2 of the Government Code).

19

25987.18.  

(a) Prior to approving an application for inclusion
20into a loan portfolio and the recordation of the energy remittance
21repayment agreement, or a modification of an approved application,
22the commission shall conduct a public meeting on the proposed
23application or modification.

24(b) The commission shall post a notice of the hearing on the
25commission’s Internet Web site and provide the notice, in writing,
26to all lienholders of the eligible building no later than 30 days prior
27to the public meeting.

28(c) The notice shall specify all of the following:

29(1) The name of the qualified applicant.

30(2) The address of the eligible meeting.

31(3) The amount required to be repaid by the energy remittance
32repayment agreement proposed to be recorded on the eligible
33building.

34(4) The date and place of the public meeting.

35(5) The schedule for repayment of the contractual energy
36remittance and associated costs as agreed upon between the
37qualified applicant and the commission.

38(6) The interest rate assessed pursuant to the energy remittance
39repayment agreement.

P17   1(7) A detailed description of the proposed modification, if
2applicable.

3(d) The notice shall inform the lienholder that any complaints
4or objections to either the approval of the application and the
5recordation of the energy remittance repayment agreement on the
6eligible building or the modification of an approved application
7shall be submitted, in writing, to the commission not less than 10
8days prior to the public meeting.

9

25987.19.  

In evaluating the eligibility of an applicant, the
10commission shall consider the creditworthiness of the applicant
11and the effectiveness of the improvements applying the following
12criteria, which may include, but not be limited to, all of the
13following:

14(a) Whether applicants are legal owners of the underlying
15property.

16(b) Whether applicants are current on any outstanding mortgage
17and property tax payments.

18(c) Whether applicants are in default or in bankruptcy
19proceedings.

20(d) Whether applicants have applied for incentivesbegin insert, if they areend insert
21 available through the energy efficiency programs offered by an
22electrical or gas corporationbegin insert or a publicly owned utilityend insert.

23(e) Whether improvements financed by the program follow
24applicable standards including any guidelines adopted by the
25commission.

26

25987.20.  

(a) The commission shall approve an application
27at a business meeting. Upon approval of an application, the
28commission shall authorize a recording of the energy remittance
29repayment agreement on the deed of the eligible building.

30(b) The commission shall specify the amount required to be
31paid to the board pursuant to the energy remittance repayment
32agreement, the schedule of repayment, and the interest rate charged.

33(c) The commission shall approve a modification of an approved
34application at a business meeting.

35

25987.21.  

(a) The energy remittance repayment agreement
36lien that is secured by a lien recorded pursuant to this section, shall
37have a prominent header on the document that reads “Energy
38Remittance Repayment Agreement Lien” in 14-point type and
39contains all of the following information related to the affected
40real property:

P18   1(1) The assessor’s parcel number.

2(2) The owners of record.

3(3) The legal description.

4(4) The street address.

5(b) Except as otherwise required by law, the energy remittance
6repayment agreement shall be superior in priority to all subsequent
7liens recorded on the deed of the eligible building except where
8the first mortgage is refinanced, in which case the energy
9remittance repayment agreement shall remain secondary to the
10primary mortgage.

11(c) The sale of the eligible building to enforce the payment of
12general ad valorem taxes shall not extinguish the energy remittance
13repayment agreement recorded on the eligible building.

14(d) In the event of foreclosure, the energy remittance repayment
15agreement installments shall not be due and owing during such
16time when the building is owned by a financial institution taking
17title by way of foreclosure. The installments owing pursuant to
18the energy remittance repayment agreement shall, however,
19continue to accrue and shall become due 60 days after a new,
20nonfinancial owner takes title.

21(e) Notwithstanding any other law, in the event of a foreclosure
22of the property, the energy remittance repayment agreement shall
23not be extinguished, unless the outstanding balance of the energy
24remittance repayment agreement, including the interest accrued
25and all penalties and fees assessed prior to the foreclosure, is fully
26paid through the foreclosure proceeding.

27

25987.22.  

(a) No later than 30 days after the approval of an
28application, the commission shall forward the agreement and any
29other information necessary to collect the installment repayments
30to the board which shall record with the county in which the
31eligible building is located the energy remittance repayment
32agreement on the deed of the eligible building. The board shall
33notify the commission upon the recordation of the energy
34remittance repayment agreement.

35(b) Within 60 days of the notice of recording of the energy
36remittance repayment agreement, the commission shall include
37the approved application in a portfolio posted on the commission’s
38Internet Web site.

P19   1

25987.23.  

(a) The board shall deposit into the Nonresidential
2Building Energy Retrofit Debt Servicing Fund established pursuant
3to Section 25987.38 any moneys collected pursuant to this chapter.

4(b) The board may charge a program administration cost fee on
5the owner of an eligible building to cover its costs as well as the
6authority’s and the commission’s costs in implementing this
7chapter.

8(c) Nothing in this chapter shall be construed to require
9 investor-owned utilities or municipal utilities to serve in the role
10as a third-party private guarantor or loan servicer or otherwise
11provide credit support for the loan program.

12

25987.24.  

(a) A local government that has issued revenue
13bonds pursuant to a program providing financial assistance to
14owners of nonresidential buildings undertaking a renewable energy,
15water efficiency, or energy efficiency retrofit improvement on the
16buildings may apply to the commission for participation in the
17program.

18(b) Upon the approval of an application submitted by the local
19government, the authority may purchase all those outstanding
20revenue bonds issued by the local government.

21(c) Upon the purchase of the revenue bonds issued by the local
22government by the authority, the authority succeeds to all rights
23conferred upon the bondholder by those revenue bonds and the
24local government shall remit revenue that is used to secure those
25revenue bonds to the board.

26

25987.25.  

(a) To the extent that the commission determines
27necessary to effectively complete the duties specified by this
28chapter, the commission shall do all of the following:

29(1) (A) Analyze and evaluate standards for nonresidential
30energy building retrofits previously developed by various national
31and international organizations to provide uniformity and
32transparency for financial institutions evaluating loan proposals
33for energy improvements to nonresidential buildings. To the extent
34that the commission determines necessary, this evaluation shall
35be completed not later than January 1, 2015.

36(B) The evaluation shall review existing protocols or a
37combination of elements of existing measurement protocols and
38shall be made available in an electronic format to financial
39institutions and local governments initiating loans pursuant to this
40chapter.

begin delete

P20   1(2) Establish those standards, guidelines, and procedures,
2through regulation, including, but not limited to, standards of credit
3worthiness for qualification of program applicants, that are
4necessary to ensure the financial stability of the program and
5otherwise prevent fraud and abuse.

6(3) Establish those measurement and verification standards
7necessary to ensure that the building energy efficiency
8improvements financed pursuant to this chapter are realized at a
9level specified by the commission.

10(4) Consider reliance on existing trade certifications or licensing
11requirements applicable to occupations that perform the work
12contemplated under this chapter.

13(5) Establish qualifications for the certification of contractors
14to construct or install building energy efficiency improvements.

15(6) Contract with a party, public or private, to do any of the
16following:

17(A) Ensure that appropriate and reasonable steps are taken to
18monitor and verify the quality and longevity of building energy
19efficiency improvements financed pursuant to this division and
20measure the total energy savings achieved by the program.

21(B) Monitor the total number of program participants.

22(C) Determine the average amount, in aggregate, paid to
23contractors and financial institutions pursuant to the program.
24Notwithstanding the California Public Records Act (Chapter 3.5
25(commencing with Section 6250) of Division 7 of Title 1 of the
26Government Code), upon a finding pursuant to Section 6255 of
27the Government Code that the public interest is served by not
28disclosing information clearly outweighs the public interest served
29by disclosing information, the commission shall not disclose
30payments made by an applicant or a program participant to
31individual contractors or financial institutions.

32(D) Calculate the number of jobs created by the program, the
33number of defaults by program participants, and the total losses
34from the defaults, and calculate the total dollar amount of bonds
35issued by the authority to reimburse program participants.

36(7)

end delete

37begin insert(2)end insert Developbegin insert, in consultation with the Department of Real Estate
38and representatives from the commercial real estate industry,end insert
a
39model energy aligned lease provision that modifies, upon the
40agreement between the owner and tenants of an eligible building,
P21   1a commercial lease agreement allowing the owners to recover the
2costs of the renewable energy, water efficiency, or energy
3efficiency retrofit improvements that result in operational savings
4based on the useful life of the retrofit while protecting tenants from
5underperformance of the building energy efficiency improvements.

begin delete

6(8)

end delete

7begin insert(3)end insert Develop a request for proposal to contract with one or more
8financial institutions to secure a short-term, revolving credit facility
9(warehouse line of credit) for the purpose of creating an interim
10financing mechanism for the loans that would be aggregated for
11the purposes of issuance of a revenue bond pursuant to Section
1225987.29. The warehouse line of credit shall be drawn by the
13third-party administrator for origination of direct loans to qualified
14applicants.

begin delete

15(9) Adopt a standard notice and disclosure form for the purposes
16of Section 25987.27.

end delete

17(b) In implementing this chapter, the commission shall do all
18of the following:

19(1) Consult with the Public Utilities Commission, representatives
20from the investor-owned and publicly owned utilities, local
21governments, real estate licensees, commercial builders,
22commercial property owners, small businesses, financial
23institutions, commercial property appraisers, energy rating
24organizations, and other entities the commission deems appropriate.

25(2) Hold at least one public hearing.

26(3) Adopt guidelines and standards for the purposes of
27implementing this chapter at a publicly noticed meeting offering
28all interested parties an opportunity to comment. For the initial
29adoption of the guidelines and standards, the commission shall
30provide a written public notice at least 30 days prior to the meeting.
31For the adoption of any substantive change to the guidelines and
32standards, the commission shall provide a written public notice at
33least 10 days prior to the meeting. Notwithstanding any other law,
34guidelines or standards adopted pursuant to this section shall be
35exempt from the requirements of Chapter 3.5 (commencing with
36Section 11340) of Part 1 of Division 3 of Title 2 of the Government
37Code.

begin insert

38(4) Establish loan limits for each type of eligible improvements
39for commercial or public buildings.

end insert
begin insert

P22   1(5) Establish standard metrics for estimating performance of
2eligible improvements for different building types and different
3profits of energy consumption to be used in underwriting loans
4made pursuant to the program.

end insert
begin insert

5(6) Establish standard assumptions to be used for estimating
6the energy benefits of improvements that shall include a reasonable
7assumption for the cost of kilowatthours and therms and a
8reasonable assumption of future expectations of the rate these
9costs will increase.

end insert
begin insert

10(7) Establish those standards, guidelines, and procedures,
11through regulation, including, but not limited to, standards of
12creditworthiness for qualification of program applicants, that are
13necessary to ensure the financial stability of the program and
14otherwise prevent fraud and abuse.

end insert
begin insert

15(8) Establish those measurement and verification standards
16necessary to ensure that the building energy efficiency
17improvements financed pursuant to this chapter are realized at a
18level specified by the commission.

end insert
begin insert

19(9) Consider reliance on existing trade certifications or licensing
20requirements applicable to occupations that perform the work
21contemplated under this chapter.

end insert
begin insert

22(10) Establish qualifications for the certification of contractors
23to construct or install building energy efficiency improvements.

end insert
begin insert

24(11) Contract with a party, public or private, to do any of the
25following:

end insert
begin insert

26(A) Ensure that appropriate and reasonable steps are taken to
27monitor and verify the quality and longevity of building energy
28efficiency improvements financed pursuant to this division and
29measure the total energy savings achieved by the program.

end insert
begin insert

30(B) Determine the average amount, in aggregate, paid to
31contractors and financial institutions pursuant to the program.
32Make data on program participation publicly available in a timely
33manner and in an aggregate format that would not provide
34identifying information about individual customers of the electrical
35and gas corporations and include, at a minimum, the types of
36energy efficiency measures installed, the location of each customer
37receiving ratepayer-funded energy efficiency assistance, the
38amount of funds expended at each site, the expected annual energy
39savings and reduced energy usage expected in kilowatthours or
40 therms. Unless the affected person, customer, or entity consents,
P23   1the information, data, and reports required to be provided pursuant
2to this section shall not include any of the following:

end insert
begin insert

3(i) Personal information as defined in subdivision (e) of Section
41798.80 of the Civil Code.

end insert
begin insert

5(ii) A customer’s electrical or gas consumption data as defined
6in subdivision (a) of Section 8380.

end insert
begin insert

7(iii) Other information excluded from public disclosure pursuant
8to the California Public Records Act (Chapter 3.5 (commencing
9with Section 6250) of Division 7 of Title 1 of the Government
10Code).

end insert
begin insert

11(12) Adopt a standard notice and disclosure form for the
12purposes of Section 25987.27.

end insert
13

25987.26.  

Credit issued under the warehouse line of credit
14shall not be deemed to constitute a debt or liability of the state or
15of any political subdivision thereof, or a pledge of the full faith
16and credit of the state or of any political subdivision, but shall be
17payable solely from the funds provided therefor. All credit
18instruments shall contain a statement to the following effect:


20“Neither the faith and credit nor the taxing power of the State
21of California is pledged to the payment of principal and interest
22on this credit instrument.”

23

25987.27.  

(a) From the date upon which financial assistance
24is approved by the commission pursuant to Section 25987.20 and
25for all subsequent transactions entered into pursuant to this chapter,
26a seller of real property subject to an energy remittance repayment
27agreement shall deliver to the buyer an energy remittance
28repayment agreement notice and disclosure as adopted by the
29commission pursuant to paragraph (9) of subdivision (a) of Section
3025987.25.

31(b) (1) Upon the delivery of the completed notice and disclosure
32form to the buyer of real property, the seller and his or her agent
33is not required to provide additional information relative to the
34energy remittance repayment agreement.

35(2) The information in the notice and disclosure form is deemed
36sufficient to provide notice to the buyer of the existence of the
37energy improvements, the energy remittance repayment agreement,
38and the repayment obligation that will be assigned to, and assumed
39by, the buyer upon taking title.

begin insert

P24   1(3) The commission or the third-party administrator shall report
2periodically, but no less often than once annually, on the number
3and amount of loans that are made available in areas of the state
4where climate conditions are more extreme and in disadvantaged
5communities.

end insert
6

25987.28.  

No later than June 30, 2015, and no later than June
730 of every fifth year thereafter, the State Auditor shall conduct,
8or cause to be conducted, a performance audit of the program. The
9State Auditor shall prepare a report and recommendations on each
10audit conducted and present the report and recommendations to
11the President pro Tempore of the Senate and the Speaker of the
12Assembly.

13 

14Article 3.  Nonresidential Building Energy Retrofit Bond
15

 

16

25987.29.  

The authority, on behalf of the commission, may
17incur indebtedness and issue and renew negotiable bonds, notes,
18debentures, or other securities of any kind or class. All
19indebtedness, however evidenced, shall be payable solely from
20moneys received pursuant to this chapter and the proceeds of its
21negotiable bonds, notes, debentures, or other securities and shall
22not exceed the sum of two billion dollars ($2,000,000,000).

23

25987.30.  

The Legislature may, by statute, authorize the
24authority to issue bonds, as defined in Section 25987.31 in excess
25of the amount provided in Section 25987.29.

26

25987.31.  

(a) On a semiannual basis, the authority shall
27conduct a meeting for the purpose of authorizing the issuance of,
28by the adoption of a resolution, negotiable bonds, notes, debentures,
29or other securities (collectively called “bonds”) for the purposes
30of generating sufficient moneys to fund the approved applications
31in the portfolio at the time of the meeting or to repay an outstanding
32balance of the participant on whose behalf the commission has
33provided funds through the warehouse line of credit. In anticipation
34of the sale of bonds as authorized by Section 25987.29, or as may
35be authorized pursuant to Section 25987.30, the authority, on behalf
36of the commission, may issue negotiable bond anticipation notes
37and may renew the notes from time to time. The bond anticipation
38notes may be paid from the proceeds of sale of the bonds of the
39authority in anticipation of which they were issued. Notes and
40agreements relating to the notes and bond anticipation notes
P25   1(collectively called “notes”) and the resolution or resolutions
2authorizing the notes may contain any provisions, conditions, or
3limitations that a bond, agreement relating to the bond, and bond
4resolution of the authority may contain. However, a note or renewal
5of the note shall mature at a time not exceeding two years from
6the date of issue of the original note.

7(b) Every issue of its bonds, notes, or other obligations shall be
8general obligations of the authority payable from revenues or
9moneys received pursuant to this chapter. Notwithstanding that
10the bonds, notes, or other obligations may be payable from a special
11fund, they are for all purposes negotiable instruments, subject only
12to the provisions of the bonds, notes, or other obligations for
13registration.

14(c) Subject to the limitations in Sections 25987.29 and 25987.30,
15the bonds may be issued as serial bonds or as term bonds, or the
16authority, in its discretion, may issue bonds of both types. The
17bonds shall be authorized by resolution of the authority and shall
18bear the date or dates, mature at the time or times, not exceeding
1930 years from their respective dates, bear interest at the rate or
20rates, be payable at the time or times, be in the denominations, be
21in the form, either coupon or registered, carry the registration
22privileges, be executed in a manner, be payable in lawful money
23of the United States of America at a place or places, and be subject
24to terms of redemption, as the resolution or resolutions may
25provide. The sales may be a public or private sale, and for the price
26or prices and on the terms and conditions, as the authority shall
27determine after giving due consideration to the recommendations
28of any participating party to be assisted from the proceeds of the
29bonds or notes. Pending preparation of the definitive bonds, the
30authority may issue interim receipts, certificates, or temporary
31bonds that shall be exchanged for the definitive bonds. The
32authority may sell bonds, notes, or other evidence of indebtedness
33at a price below their par value. However, the discount on a security
34sold pursuant to this section shall not exceed 6 percent of the par
35value.

36(d) A resolution or resolutions authorizing bonds or an issue of
37bonds may contain provisions that shall be a part of the contract
38with the holders of the bonds to be authorized, as to all of the
39following:

P26   1(1) Pledging the moneys collected pursuant to this chapter from
2the portfolio of approved applications that are funded by the bonds,
3to secure the payment of the bonds or of any particular issue of
4bonds, subject to the agreements with bondholders as may then
5exist.

6(2) The setting aside of reserves or sinking funds, and the
7regulation and disposition of the reserves or sinking funds.

8(3) Limitations on the right of the authority or the commission
9or their agent to restrict and regulate the use of the project or
10projects to be financed out of the proceeds of the bonds or any
11particular issue of bonds.

12(4) Limitations on the purpose to which the proceeds of sale of
13an issue of bonds then or thereafter to be issued may be applied
14and pledging those proceeds to secure the payment of the bonds
15or the issue of the bonds.

16(5) Limitations on the issuance of additional bonds, the terms
17upon which additional bonds may be issued and secured, and the
18refunding of outstanding bonds.

19(6) The procedure, if any, by which the terms of a contract with
20bondholders may be amended or abrogated, the amount of bonds
21the holders of which must consent to the amendment or abrogation,
22and the manner in which that consent may be given.

23(7) Limitations on expenditures for operating, administrative,
24or other expenses of the authority or commission.

25(8) Defining the acts or omissions to act that constitute a default
26in the duties of the authority or commission to holders of its
27obligations and providing the rights and remedies of the holders
28in the event of a default.

29(e) The authority, the commission, and any person executing
30the bonds or notes shall not be liable personally on the bonds or
31notes or be subject to personal liability or accountability by reason
32of the issuance of the bond or note.

33(f) The authority shall have power out of any funds available
34for these purposes to purchase its bonds or notes. The authority
35may hold, pledge, cancel, or resell those bonds, subject to and in
36accordance with agreements with bondholders.

37(g) The commission, the authority, and the board may enter into
38a memorandum of understanding providing for the transfer of
39energy remittance payments between the three agencies in
40furtherance of this chapter.

P27   1(h) Should there be insufficient project valuation or insufficient
2 demand for the revenue bonds authorized by this chapter, the board
3shall continue to collect the energy remittance payments and
4service the loans. Failure to sell the revenue bonds shall not create
5any liability for the state.

6

25987.32.  

In the discretion of the authority, any bonds issued
7under the provisions of this article may be secured by a trust
8agreement by and between the authority and a corporate trustee
9or trustees, which may be the authority or any trust company or
10bank having the powers of a trust company within or without the
11state. Such trust agreement or the resolution providing for the
12issuance of such bonds may pledge or assign the revenues to be
13received pursuant to this chapter, to be financed out of the proceeds
14of such bonds. Such trust agreement or resolution providing for
15the issuance of such bonds may contain such provisions for
16protecting and enforcing the rights and remedies of the bondholders
17as may be reasonable and proper and not in violation of law,
18including particularly such provisions as have herein above been
19specifically authorized to be included in any resolution or
20resolutions of the commission authorizing bonds thereof. Any bank
21or trust company doing business under the laws of this state which
22may act as depositary of the proceeds of bonds or of revenues or
23other moneys may furnish such indemnifying bonds or pledge such
24securities as may be required by the authority. Any such trust
25agreement may set forth the rights and remedies of the bondholders
26and of the trustee or trustees, and may restrict the individual right
27of action by bondholders. In addition to the foregoing, any such
28trust agreement or resolution may contain such other provisions
29as the authority may deem reasonable and proper for the security
30of the bondholders. Notwithstanding any other law, the authority
31shall not be deemed to have a conflict of interest by reason of
32acting as trustee pursuant to this chapter.

33

25987.33.  

Bonds issued under the provisions of this article
34shall not be deemed to constitute a debt or liability of the state or
35of any political subdivision thereof, other than the authority, or a
36pledge of the faith and credit of the state or of any such political
37subdivision, but shall be payable solely from the funds herein
38provided therefor. All such bonds shall contain on the face thereof
39a statement to the following effect: “Neither the faith and credit
40nor the taxing power of the State of California is pledged to the
P28   1payment of the principal of or interest on this bond.” The issuance
2of bonds under the provisions of this article shall not directly or
3indirectly or contingently obligate the state or any political
4subdivision thereof to levy or to pledge any form of taxation
5whatever therefor or to make any appropriation for their payment.
6Nothing contained in this section shall prevent or be construed to
7prevent the authority from pledging its full faith and credit to the
8payment of bonds or issue of bonds authorized pursuant to this
9chapter.

10

25987.34.  

(a) The authority is hereby authorized to provide
11for the issuance of bonds of the authority for the purpose of
12refunding any bonds, notes, or other securities of the authority
13then outstanding, including the payment of any redemption
14premium thereon and any interest accrued or to accrue to the
15earliest or subsequent date of redemption, purchase, or maturity
16of such bonds.

17(b) The proceeds of any such bonds issued for the purpose of
18refunding outstanding bonds, notes, or other securities may, in the
19discretion of the authority, be applied to the purchase or retirement
20at maturity or redemption of such outstanding bonds either on their
21earliest or any subsequent redemption date or upon the purchase
22or retirement at the maturity thereof and may, pending such
23application, be placed in escrow to be applied to such purchase or
24retirement at maturity or redemption on such date as may be
25determined by the authority.

26(c) Pending such use, any such escrowed proceeds may be
27invested and reinvested by the authority in obligations of, or
28guaranteed by, the United States of America, or in certificates of
29deposit or time deposits secured by obligations of, or guaranteed
30by, the United States of America, maturing at such time or times
31as shall be appropriate to ensure the prompt payment, as to
32principal, interest, and redemption premium, if any, of the
33outstanding bonds to be so refunded. The interest, income, and
34profits, if any, earned or realized on any such investment may also
35be applied to the payment of the outstanding bonds to be so
36refunded. After the terms of the escrow have been fully satisfied
37and carried out, any balance of such proceeds and interest, income,
38and profits, if any, earned or realized on the investments thereof
39may be returned to the authority for use by it in any lawful manner.

P29   1(d) All such bonds shall be subject to the provisions of this
2division in the same manner and to the same extent as other bonds
3issued pursuant to this chapter.

4

25987.35.  

Bonds issued by the authority are legal investments
5for all trust funds, the funds of all insurance companies, banks,
6both commercial and savings, trust companies, savings and loan
7associations, and investment companies, for executors,
8administrators, trustees, and other fiduciaries, for state school
9funds, and for any funds which may be invested in county,
10municipal, or school district bonds, and such bonds are securities
11which may properly and legally be deposited with, and received
12by, any state or municipal officer or agency or political subdivision
13of the state for any purpose for which the deposit of bonds or
14obligations of the state, is now, or may hereafter be, authorized by
15law, including deposits to secure public funds if, and only to the
16extent that, evidence of indebtedness or debt securities of the
17participating party receiving financing through the issuance of
18such bonds qualify or are eligible for such purposes and uses.

19

25987.36.  

The state hereby pledges and agrees with the holders
20of the bonds and with a participant with an approved application
21that the state will not limit, alter, restrict, or impair the rights vested
22in the authority or the commission or the rights or obligations of
23a person or entity with which the commission contracts to fulfill
24the terms of an agreement made pursuant to this chapter. The state
25further agrees that it will not in any way impair the rights or
26remedies of the holder of the bonds until the bonds have been paid
27or until adequate provision for payment has been made. The
28authority may include this provision and undertaking for the
29authority in its bonds.

30

25987.37.  

(a) Bonds issued pursuant to this division shall be
31exempt from all taxation and assessment imposed pursuant to state
32law.

33(b) No later than February 1, 2014, the commission shall apply
34to the United States Department of the Treasury under the Energy
35Tax Incentives Act of 2005 (Title XIII of Public Law 109-58) for
36the authority to issue tax advantage bonds under the federal Clean
37Renewable Energy Bonds program or any other applicable
38programs.

 

P30   1Article 4.  Nonresidential Building Energy Retrofit Debt
2Servicing Fund
3

 

4

25987.38.  

(a) The Nonresidential Building Energy Retrofit
5Debt Servicing Fund is hereby established in the State Treasury.
6Notwithstanding Section 13340 of the Government Code, the
7moneys in the fund are hereby continuously appropriated to the
8authority without regard to fiscal year for the purposes of paying
9the principal and interest on bonds issued by the authority pursuant
10to Section 25987.29, servicing the warehouse line of credit, and
11defraying any direct and indirect costs incurred by the Treasurer
12in executing duties required by this chapter.

13(b) All interest and income derived from the deposit and
14investment of moneys in the fund shall be credited to the fund,
15and all unexpended and unencumbered moneys in the fund at the
16end of any fiscal year shall remain in the fund.

17

25987.39.  

The Loan Loss Reserve Account is hereby
18established in the Nonresidential Building Energy Retrofit Debt
19Servicing Fund. The board shall deposit the portion of the
20contractual energy remittance that is the loan loss reserve fee into
21the account. Notwithstanding Section 13340 of the Government
22Code, the moneys in the account are hereby continuously
23appropriated to the authority without regard to fiscal year for the
24purposes of paying outstanding balances due under an energy
25remittance repayment agreement on a building that has been
26foreclosed upon if the proceeds generated from the foreclosure
27proceedings are insufficient to pay any past due payments past due
28under the energy remittance repayment agreement, including
29accrued interest, penalties, and fees. All interest and income derived
30from the deposit and investment of moneys in the account shall
31be credited to the account, and all unexpended and unencumbered
32moneys in the account at the end of any fiscal year shall remain
33in the account.

34

25987.40.  

The Administration Account is hereby established
35in the Nonresidential Building Energy Retrofit Debt Servicing
36Fund. The authority shall deposit into the account the program
37administration fee collected pursuant to subdivision (b) of Section
3825987.23 and penalties collected pursuant to Section 25987.16.
39Notwithstanding Section 13340 of the Government Code, moneys
40in the account shall be continuously appropriated to the authority,
P31   1the commission, and the board for the costs of implementing this
2chapter.

3

25987.41.  

(a) The Director of Finance shall transfer, as a loan,
4up to one million dollars ($1,000,000) from the General Fund to
5the board to implement this chapter.

6(b) The Director of Finance shall transfer, as a loan, up to seven
7million dollars ($7,000,000) from the General Fund to the
8commission to implement this chapter.

9(c) Any loan made pursuant to this section shall be repaid on
10or before January 1, 2024, with interest at the pooled money
11investment rate, from energy remittance repayment collected
12pursuant to this chapter.

13(d) If the fees authorized for collection pursuant to subdivision
14(b) of Section 25987.23 are not sufficient to support the loans made
15pursuant to this section, the Director of Finance shall discuss
16alternative repayment terms with the borrowing agencies.

17

25987.42.  

(a) The commission, the board, and the authority
18shall be authorized to promulgate necessary regulations to
19implement and administer this chapter.

20(b) Guidelines for the purposes of implementing this chapter
21shall be adopted by the commission, board, or authority at a
22publicly noticed meeting offering all interested parties an
23opportunity to comment. For the initial adoption of the guidelines
24and standards, the commission, board, or authority shall provide
25a written public notice at least 30 days prior to the meeting. For
26the adoption of any substantive change to the guidelines and
27standards, the commission, board, or authority shall provide a
28written public notice at least 10 days prior to the meeting.
29Notwithstanding any other law, guidelines or standards adopted
30pursuant to this section shall be exempt from the requirements of
31Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
323 of Title 2 of the Government Code.



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