Amended in Assembly January 6, 2014

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 Bill No. 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. begin delete Energy: energy assessment: nonresidential buildings: end delete begin insert Energy improvements: end insert 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 begin delete Building end delete begin insert Real Property end insert Energy Retrofit Financing Act of begin delete 2013 end delete begin insert 2014 end insert and would require the commission to establish the Nonresidential begin delete Building end delete begin insert Real Property end insert Energy Retrofit Financing begin delete Program and to develop a request for proposal for a 3rd-party administrator by July 1, 2014, to develop and operate the end delete begin insert Program. The end insert program begin delete to end delete begin insert would end insert provide financial assistance, through authorizing the issuance of, among other things, revenue bonds, to owners of eligible begin delete nonresidential buildings end delete begin insert real properties, as defined, end insert 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 begin delete deed of the property end delete begin insert eligible real property end insert for which the improvements are performed. The bill would require begin delete the State Board of Equalization end delete begin insert a loan servicer end insert to collect installment payments from owners of eligible begin insert real end insert properties whose applications have been approved by the commission. begin delete 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 delete begin insert The bill would require the State Board of Equalization to collect repayment installments that are delinquent. end insert

begin delete The bill would require the commission to meet for the purpose of approving applicants to participate in the program. end delete 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 begin delete Building end delete begin insert Real Property end insert 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 begin delete State Board of Equalization end delete begin insert commission end insert to deposit the installment payment received from the owners of eligible begin delete buildings end delete begin insert real properties end insert 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.

begin delete

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.

end delete begin delete

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.

end delete begin delete

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.

end delete

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

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

SECTION 1.  

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

 

Chapter  13. Nonresidential begin delete Building Assessment end delete begin insert Real
Property Energy Retrofit end insert Financing

 

Article 1.  General Provisions and Definitions

 

25987.1.  

This act shall be known, and may be cited, as the
Nonresidential begin delete Building end delete begin insert Real Property end insert Energy Retrofit Financing
Act of begin delete 2013. end delete begin insert 2014. end insert

25987.2.  

The purpose of this chapter is to facilitate private
financing to enable begin delete private end delete nonresidential begin delete building end delete begin insert real property end insert
owners begin delete and eligible public entities end delete to invest in clean energy
improvements, renewable energy, and conservation; to incentivize
private equity managers to invest in clean energy improvements,
integrate the smart energy economy, and stimulate the state
economy by directly creating jobs for contractors and other persons
who complete new energy improvements; and to reinforce the
leadership role of the state in the new energy economy, thereby
attracting energy manufacturing facilities and related jobs to the
state.

25987.3.  

The Legislature finds and declares all of the following:

(a) Nonresidential begin delete buildings end delete begin insert real properties end insert represent a huge
opportunity to significantly increase energy efficiency and reduce
greenhouse gas emissions. To do this, California needs to address
the design, construction, and operation of these buildings.

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

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

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

(2) Many owners of eligible nonresidential begin delete buildings end delete begin insert real
properties end insert are unable to fund a new energy improvement because
the owners do not have sufficient liquid assets to directly fund the
improvement or are unable or unwilling to incur the negative net
cashflow likely to result if the owner uses a typical existing loan
program to fund the improvement.

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

(e) The begin delete nonresidential building end delete owners begin insert of nonresidential real
properties end insert who participate in the program established pursuant to
this division begin delete to assist them in completing new energy
improvements, including building energy efficiency improvements
and renewable energy improvements, to the building end delete shall do so
voluntarily.

25987.4.  

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

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

(2) The system shall be sized appropriately to offset part or all
of the applicant’s own energy demand for the permanent fixtures
that consume energy, as if all cost-effective energy efficiency
measures have been installed, and shall be located on the same
property where the begin delete applicant’s own energy demand end delete begin insert eligible real
property end insert is located.

(b) “Applicant” means a person, or an entity or group of entities,
engaged in business or operations in the state, whether organized
for profit or not for profit that owns a nonresidential begin delete building end delete begin insert real
property end insert and applies for financial assistance from the commission
for the purpose of implementing a project in a manner prescribed
by the commission.

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

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

(e) “Building energy efficiency improvement” means one or
more installations or modifications that are permanently affixed
to the building or located on the premises of the building site, for
which a building permit is issued after January 1, begin delete 2014, end delete begin insert 2015, end insert to
an eligible building that either qualifies for an investor-owned
utility or publicly owned utility energy efficiency program or is
designed to reduce the energy consumption of the building, and
that may include, but is not limited to, all of the following to the
extent they qualify:

(1) High-efficiency mechanical equipment.

(2) High-efficiency electrical equipment.

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

(4) High-efficiency water heating.

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

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

(7) Automatic energy control systems.

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

(9) Caulking and weather stripping.

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

(11) Energy recovery systems.

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

(13) Building commissioning or retrocommissioning.

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

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

(2) Natural gas, including liquefied natural gas begin insert , other than that
used in cogeneration gas-fired technology end insert .

(3) Nuclear fissionable materials.

(4) Coal.

begin insert

(g) “Delinquent repayment installment” means a due and
payable repayment installation that was not paid within the time
specified in the schedule for repayment.

end insert begin delete

(g)

end delete

begin insert (h) end insert  “Demand response” means reductions or shifts in electricity
consumption by customers in response to either economic or
reliability signals.

begin insert

(i) “Due and payable” means the date as specified in the
schedule for repayment for each repayment installment.

end insert begin delete

(h)

end delete

begin insert (j) end insert  “Eligible begin delete building” end delete begin insert real property end insert begin insert ” end insert means a nonresidential
building that completed construction on or before January 1, begin delete 2014, end delete
begin insert 2015, end insert and is located within the boundaries of the state.

begin delete

(i)

end delete

begin insert (k) end insert  “Energy remittance repayment agreement” means a
contractual agreement between an begin delete eligible building end delete owner begin insert of an
eligible real property end insert and the commission, secured by a lien, as
described in Section 25987.21, recorded in the county where the
property is situated and on an eligible begin delete building end delete begin insert real property end insert
specially benefited by begin delete a new energy improvement end delete begin insert the project end insert for
which the commission will make reimbursement or a direct
payment to the party financing the begin delete energy improvements end delete begin insert project end insert ,
and “contractual energy remittance” means that reimbursement or
direct payment. The amount to be repaid pursuant to the energy
remittance repayment agreement shall include the costs necessary
to finance the begin delete building energy efficiency improvements end delete begin insert project end insert
less any rebates, grants, and other direct financial assistance
received by the owner pursuant to other begin delete law and end delete begin insert law, end insert a loan loss
reserve fee begin insert , end insert in an amount to be established by the third-party
administrator in consultation with the commission and begin delete the end delete begin insert any end insert
warehouse financier under contract entered into pursuant to
paragraph begin delete (8) end delete begin insert (3) end insert of subdivision (a) of Section 25987.25 begin insert , end insert to insure
against nonperformance of the loan and other losses of the program,
and a program administrative cost fee.

begin delete

(j)

end delete

begin insert (l) end insert  “Energy efficiency specialist” means an individual or
business authorized or certified by rules of the commission to
analyze, evaluate, or install a begin delete renewable energy source, building
energy efficiency improvement, or water efficiency improvement
for eligible property end delete begin insert project end insert .

begin delete

(k)

end delete

begin insert (m) end insert  “Financial assistance” means either of the following:

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

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

begin delete

(l)

end delete

begin insert (n) end insert  “Loan balance” means the outstanding principal balance of
loans secured by a mortgage or deed of trust with a first or second
lien on eligible begin insert real end insert property.

begin delete

(m)

end delete

begin insert (o) end insert  “Loan loss reserve fee” means a fee that serves as collateral
in the event of a loan default.

begin delete

(n)

end delete

begin insert (p) end insert  “Nonresidential begin delete Building end delete begin insert Real Property end insert Energy Retrofit
Bond” means a bond issued pursuant to Section 25987.31 that is
secured by an energy remittance repayment agreement begin insert lien end insert on begin insert real end insert
property begin insert and is end insert entered into voluntarily to finance the begin delete installation
of renewable energy sources, building energy efficiency
improvement or retrofits, or water efficiency improvements end delete begin insert project end insert .

begin delete

(o)

end delete

begin insert (q) end insert  “Participant” means a person, or an entity or group of
entities, engaged in business or operations in the state, whether
organized for profit or not for profit, that, as a qualified applicant begin insert , end insert
is approved for financial assistance pursuant to Article 2
(commencing with Section 25987.5) and has entered into an energy
remittance repayment agreement with the commission for the
purpose of implementing a project in a manner prescribed by the
commission. begin insert “Participant” includes a subsequent owner taking
title to real property subject to an energy remittance repayment
agreement lien. end insert

begin delete

(p)

end delete

begin insert (r) end insert  “Portfolio” means an aggregation of approved applications.

begin delete

(q)

end delete

begin insert (s) end insert  “Program” means the Nonresidential begin delete Building end delete begin insert Real Property end insert
Energy Retrofit Financing Program established by the commission
in accordance with Section 25987.7.

begin delete

(r)

end delete

begin insert (t) end insert  “Program administration cost fee” means a fee imposed for
the costs incurred by the commission, the authority, and the State
Board of Equalization to administer the program.

begin delete

(s)

end delete

begin insert (u) end insert  “Project” means an improvement to an eligible begin delete building end delete begin insert real
property end insert that constitutes a water efficiency improvement,
begin delete alternative source of energy, end delete begin insert renewable energy improvement, end insert or
building energy efficiency improvement.

begin delete

(t)

end delete

begin insert (v) end insert  “Qualified applicant” means a person or business entity who
does all of the following:

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

(2) Timely submits to the commission a complete application,
which notes the existence of any priority mortgage or deed of trust
on the eligible property and the identity of the holder of the
mortgage or deed of trust, to join the program and consents to the
levying of a begin delete special assessment end delete begin insert lien in the amount of the energy
remittance repayment agreement end insert on the begin insert real end insert property pursuant to
this chapter.

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

begin delete

(u)

end delete

begin insert (w) end insert  “Renewable energy” means heat, processed heat, space
heating, water heating, steam, space cooling, refrigeration,
mechanical energy, electricity, fuel cells, or energy in any form
convertible to these uses, and including energy storage
technologies, that does not expend or use conventional energy
fuels, and that uses any of the following electrical generation
technologies:

(1) Biomass.

(2) Solar thermal.

(3) Photovoltaic.

(4) Wind.

(5) Geothermal.

begin delete

(v)

end delete

begin insert (x) end insert  “Renewable energy improvement” means one or more
fixtures, products, systems, or devices, or an interacting group of
fixtures, products, systems, or devices, that use an alternative
begin delete source of energy end delete begin insert energy source end insert , are permanently affixed begin delete to end delete begin insert to, or
located on, end insert the begin delete building or located on the premises of the building
site, end delete begin insert real property, end insert and directly benefit an eligible begin delete building end delete begin insert real
property end insert or that are installed on the customer side of a meter of an
eligible begin delete building end delete begin insert real property end insert and that produce renewable energy
begin delete from renewable resources, including, but not limited to,
photovoltaic, solar thermal, small wind, biomass, fuel cells, or
geothermal systems such as ground source heat pumps, as may be
approved by the commission end delete .

begin insert

(y) “Repayment installation” means the monthly amount
specified pursuant to the agreed schedule for repayment approved
by the commission.

end insert begin delete

(w)

end delete

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

begin delete

(x)

end delete

begin insert (aa) end insert  “Warehouse financier” means a financial entity, bank, or
pension fund, chosen by the commission through a request for
proposal to provide an ongoing and revolving source of financing
for begin delete projects end delete begin insert applications end insert approved pursuant to Section 25987.20.

 

Article 2.  Nonresidential begin delete Building end delete begin insert Real Property end insert Energy
Retrofit Financing Program

 

25987.5.  

The purpose of the Nonresidential begin delete Building end delete begin insert Real
Property end insert Energy Retrofit Financing Program is to help provide
the special benefits of water efficiency improvements, begin delete alternative
energy, end delete begin insert renewable energy improvements, end insert and building energy
efficiency improvements to owners of eligible begin delete buildings end delete begin insert real
properties end insert who voluntarily participate in the program by
establishing, developing, financing, and administering a program
to assist those owners in completing improvements.

25987.6.  

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

25987.7.  

(a) The commission shall establish, develop, finance,
and administer, begin delete pursuant to end delete begin insert consistent with end insert Section 25987.9, the
Nonresidential Building begin delete Energy end delete begin insert Real Property end insert Retrofit Financing
Program. The commission shall provide general direction and
oversight to the authority and board as they complete duties
specified in this chapter. The program shall be designed to provide
financial assistance for an owner of an eligible begin delete building end delete begin insert real
property end insert to use one or more energy efficiency specialists to retrofit
begin insert or benefit end insert the property with one or more begin delete alternative energy sources
or end delete renewable energy improvements, building energy efficiency
improvements, or water efficiency improvements, by applying to
the commission for inclusion of the owner’s project in a portfolio
that will be financed through the use of the revenue bonds issued
pursuant to this chapter. These bonds shall be secured by revenues
generated through energy remittance repayment begin delete agreements end delete
begin insert agreement liens end insert recorded begin delete on the buildings end delete begin insert against the real
properties end insert benefited by the projects in the portfolio.

(b) The program shall provide financial assistance for
improvements when the total energy and water cost savings
realized by the begin insert real end insert property owner, and any successor or
successors to the begin insert real end insert property owner, during the useful life of the
improvements, as determined by an analysis required pursuant to
subdivision (i) of Section 25987.13 are expected to equal or exceed
the total costs incurred by the owner pursuant to the program.

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

(d) (1) Within six months after the first two years of
implementation of the program established pursuant to subdivision
(a) or after the expenditure of the first two hundred fifty million
dollars ($250,000,000) of proceeds authorized pursuant to Section
25987.29, whichever occurs earlier, the commission shall prepare
and make publicly available a report on the efficacy of the program
in achieving the purposes of the program as specified in Section
25987.5 and recommendations that would enhance the ability of
the program to achieve those purposes.

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

(3) Prior to the additional expenditure of the proceeds authorized
pursuant to Section 25987.29, the commission shall hold at least
begin delete a end delete begin insert one end insert public hearing and take public comments on the report.

25987.8.  

To receive financial assistance pursuant to this
chapter, a qualified applicant shall contractually agree to the
recording of an energy remittance repayment agreement begin insert lien end insert on
the eligible begin delete building end delete begin insert real property end insert that is being retrofitted begin insert or
benefited end insert .

25987.9.  

By July 1, begin delete 2014, end delete begin insert 2015, end insert the commission shall develop
a request for proposal to develop the program by a third-party
administrator. The third-party administrator shall administer the
program and establish an automated, asset-based underwriting
system for all eligible begin delete buildings end delete begin insert real properties end insert in the state. The
third-party administrator shall provide consultation to the
commission in developing guidelines for the program. The
third-party administrator shall provide an independent energy
advisor to assist begin delete building end delete owners begin insert of real properties end insert in evaluating
begin delete proposals for energy efficiency and renewable energy
improvements end delete begin insert projects end insert . begin insert The third-party administrator shall provide
a loan servicer to service the loans. end insert The party selected as the
third-party administrator shall only be selected if the program
proposal submitted by the party requires all costs, including startup
costs of the program, to be covered by the loan recipients, the
administrator, the bond purchasers, or some combination thereof.
The program selected shall not include General Fund costs or
begin delete liabilities, with the exception of loans from the General Fund
pursuant to Section 25987.41 utilized for startup costs. end delete begin insert liabilities. end insert

25987.10.  

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

25987.11.  

The third-party administrator shall disclose to an
owner of begin delete a nonresidential building end delete begin insert an eligible real property end insert all
fees imposed pursuant to this chapter, including the loan loss
reserve fee, the program administration cost fee, and the interest
rate charged, prior to the submission of an application by the
begin delete building end delete owner.

25987.12.  

(a) An owner of an eligible begin delete building end delete begin insert real property end insert
who wishes to undertake an improvement shall submit to the
third-party administrator an application to participate in the
program.

(b) The submission of an application is deemed to be a voluntary
agreement by the owner for the commission to record the energy
remittance repayment agreement begin delete on the deed of end delete begin insert lien against end insert the
eligible begin delete building end delete begin insert real property end insert upon the approval of the application.

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

SUBMISSION OF THIS APPLICATION CONSTITUTES THE
VOLUNTARY CONSENT OF THE APPLICANT FOR THE
RECORDATION OF THE ENERGY REMITTANCE
REPAYMENT AGREEMENT begin delete ON THE DEED OF end delete begin insert LIEN
AGAINST end insert THE ELIGIBLE begin insert REAL end insert PROPERTY. UPON THE
APPROVAL BY THE COMMISSION OF THE APPLICATION
AND THE RECORDATION OF THE ENERGY REMITTANCE
REPAYMENT begin delete AGREEMENT, end delete begin insert AGREEMENT LIEN, end insert A LIEN IN
THE AMOUNT SPECIFIED IN THE ENERGY REMITTANCE
REPAYMENT AGREEMENT SHALL BE begin delete SECURED BY end delete begin insert end insert
begin insert RECORDED ON end insert THE PROPERTY begin insert TO SECURE THE
AGREEMENT end insert .

25987.13.  

The owner of an eligible begin delete building end delete begin insert real property end insert shall
include all of the following information in the application:

(a) The name, business address, and email address of the owners
of the eligible begin delete building. end delete begin insert real property. end insert

(b) The names of all entities that hold a secured lien on the
eligible begin delete building end delete begin insert real property end insert and their contact information.

(c) The total dollar amount of liens that have been recorded begin delete on end delete
begin insert against end insert the eligible begin delete building. end delete begin insert real property. end insert

(d) An appraisal of the value of the eligible begin delete building end delete begin insert real
property end insert that has been conducted within the past six months or
during an appropriate timeframe consistent with industry practices
for underwriting of nonresidential buildings.

(e) A detailed description of the begin delete alternative sources of energy,
and building energy efficiency and renewable energy improvements
being end delete begin insert project to be end insert funded.

(f) The name of the financial institution providing interim
financing for the begin delete improvements end delete begin insert project end insert or the warehouse line of
credit developed pursuant to Section 25987.26.

(g) The structure of the loan financing the begin delete alternative sources
of energy, and building energy efficiency and renewable energy
improvements end delete begin insert project end insert .

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

(i) An analysis performed by an energy efficiency begin delete and renewable
energy end delete specialist to quantify the costs of begin delete the alternative sources of
energy, and building energy efficiency, renewable energy, and
water efficiency improvements, end delete begin insert the project, end insert and total energy and
water cost savings realized by the begin delete owner, end delete begin insert owner end insert or his or her
successor during the effective useful life of, and estimated carbon
impacts of, the begin delete improvements, end delete begin insert project, end insert including an annual
cashflow analysis.

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

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

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

25987.14.  

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

begin delete

(1)

end delete

begin insert (a) end insert  The eligible begin delete building. end delete begin insert real property. end insert

begin delete

(2)

end delete

begin insert (b) end insert  The transactional activities associated with the eligible
improvements, including the transactional costs.

begin delete

(3)

end delete

begin insert (c) end insert  Other information deemed necessary by the commission or
the third-party administrator.

begin delete

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

end delete

25987.15.  

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

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

(1) The applicant is a qualified applicant.

(2) Prior to receiving funding for renewable energy improvement
begin delete or alternative energy sources end delete , the applicant shall show both of the
following:

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

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

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

25987.16.  

(a) Upon the mutual agreement of the participant
and the third-party administrator, the third-party administrator
shall establish an annualized schedule for the repayment begin insert with
monthly repayment installments end insert required by the energy remittance
repayment agreement, including the interest charged, administrative
cost fee, and loan loss begin insert reserve end insert fee.

begin delete

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

end delete begin delete

(c)

end delete

begin insert (b) end insert  (1) The period for repayment of the energy remittance
repayment agreement shall not exceed the effective useful life of
the improvements or 20 years, whichever is shorter.

(2) The calculated effective useful life of the begin delete alternative source
of electricity, and end delete building energy efficiency and renewable energy
improvements begin insert , end insert shall be calculated using methodologies adopted
by the commission, in consultation with the Public Utilities
Commission.

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

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

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

begin delete

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

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

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

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

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

end delete begin insert

(c) The loan servicer shall collect the repayment installments
that become due and payable. Funds collected shall be remitted
to the commission. A repayment installment is delinquent upon the
failure of the participant to pay any installment due and payable
pursuant to the schedule for repayment. The loan servicer shall
notify the board of the delinquency.

end insert begin insert

(d) (1) The board shall collect the repayment installments that
are delinquent. Funds collected shall be remitted to the
commission. The collection provisions contained in the Fee
Collection Procedures Law (Chapter 4 (commencing with Section
55121) of Part 30 of Division 2 of the Revenue and Taxation Code),
to the extent feasible or practical, shall apply to the collection of
the delinquent repayment installments. For the purposes of chapter,
reference in the Fee Collection Procedures Law to “fee” shall
include the repayment installment imposed by this chapter and
references to the “fee payer” shall include a participant required
to pay the repayment installment imposed pursuant to this chapter.
For the purposes of collection, a delinquent repayment installment
is a final liability of the participant.

end insert begin insert

(2) The board shall assess liquidated damages on the delinquent
repayment installment of 10 percent of the unpaid installment.
Within 60 days of a failure to pay the delinquent repayment
installment, the board shall issue a demand letter to the participant,
with written notice provided to the commission, and provide the
participant with 30 days from the date of the demand letter to cure
the delinquency before the board commences further action to
collect a delinquent repayment installment.

end insert begin insert

(3) The board may periodically consult with the commission on
the status of the energy remittance agreements with outstanding
delinquent repayment installments. If the board deems that
available remedies to collect the delinquent repayment installments
on an energy remittance repayment agreement have been
exhausted, to the extent feasible or practical, and the delinquency
cannot be cured, the board shall inform the commission in writing.
At a business meeting, the commission may declare the entire
outstanding energy remittance repayment agreement balance,
including any interest due, liquidated damages assessed, and costs
of collection incurred, immediately due and payable and direct
the board to take action to satisfy the energy remittance repayment
agreement lien. The board may contract with a foreclosure service
provider to carry out the foreclosure on behalf of the commission.

end insert begin insert

(4) Revenues generated from the sale of the eligible real
property shall be distributed to satisfy liens on the eligible
buildings in accordance with the priority of the liens as provided
by law.

end insert begin insert

(5) The board shall perform the collection of delinquent
repayment installments and the foreclosure duties imposed by this
chapter as a ministerial function on behalf of the commission.

end insert begin insert

(6) The board may prescribe, adopt, and enforce guidelines
relating to the collection of the delinquent repayment installments.
The guidelines adopted pursuant to this section shall be exempt
from the Administrative Procedures Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code).

end insert begin insert

(e) Upon the full repayment of the balance of the energy
remittance repayment agreement lien, accrued interest, and
liquidated damages, the commission shall record with the county
in which the eligible real property is located a release of the energy
remittance repayment agreement lien.

end insert

begin delete

25987.17.  

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

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

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

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

end delete

25987.18.  

(a) Prior to approving an application for inclusion
into a loan portfolio and the recordation of the energy remittance
repayment begin delete agreement, end delete begin insert agreement lien, end insert or a modification of an
approved application, the commission shall conduct a public
meeting on the proposed application or modification.

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

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

(1) The name of the qualified applicant.

(2) The address of the eligible begin delete meeting. end delete begin insert real property. end insert

(3) The amount required to be repaid begin insert secured end insert by the energy
remittance repayment agreement begin insert lien end insert proposed to be recorded begin delete on end delete
begin insert against end insert the eligible begin delete building. end delete begin insert real property. end insert

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

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

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

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

(d) The notice shall inform the lienholder that any complaints
or objections to either the approval of the application and the
recordation of the energy remittance repayment agreement begin insert lien end insert on
the eligible begin delete building end delete begin insert real property end insert or the modification of an
approved application shall be submitted, in writing, to the
commission not less than 10 days prior to the public meeting.

25987.19.  

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

(a) Whether applicants are legal owners of the underlying begin insert real end insert
property.

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

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

(d) Whether applicants have applied for incentives, if they are
available begin insert , end insert through the energy efficiency programs offered by an
electrical or gas corporation or a publicly owned utility.

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

25987.20.  

(a) The commission shall approve an application
at a business meeting. Upon approval of an application, the
commission shall begin delete authorize a recording of end delete begin insert record end insert the energy
remittance repayment agreement begin delete on the deed of end delete begin insert lien against end insert the
eligible begin delete building. end delete begin insert real property. end insert

(b) The commission shall specify the amount required to be
paid begin delete to the board end delete pursuant to the energy remittance repayment
begin delete agreement, end delete begin insert agreement lien, end insert the schedule of repayment begin insert that details
the monthly repayment installment amount and due date end insert , and the
interest rate charged.

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

25987.21.  

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

(1) The assessor’s parcel number.

(2) The owners of record.

(3) The legal description.

(4) The street address.

begin delete

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

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

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

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

end delete begin insert

(5) The amount of the lien.

end insert begin insert

(b) The energy remittance agreement lien shall have the force,
effect, and priority of a judgment lien from the time of recording
in the county where the real property is located.

end insert

25987.22.  

(a) No later than 30 days after the approval of an
application, the commission begin insert or the third-party administrator end insert shall
begin delete forward the agreement and any other information necessary to
collect the installment repayments to the board which shall end delete record
with the county in which the eligible begin delete building end delete begin insert real property end insert is
located the energy remittance repayment agreement begin delete on the deed
of the eligible building. end delete begin insert lien. end insert The begin delete board end delete begin insert third-party administrator end insert
shall notify the commission upon the recordation of the energy
remittance repayment begin delete agreement. end delete begin insert agreement lien. end insert

(b) Within 60 days of the notice of recording of the energy
remittance repayment begin delete agreement, end delete begin insert agreement lien, end insert the commission
shall include the approved application in a portfolio posted on the
commission’s Internet Web site.

25987.23.  

(a) The begin delete board end delete begin insert commission end insert shall deposit into the
Nonresidential begin delete Building end delete begin insert Real Property end insert Energy Retrofit Debt
Servicing Fund established pursuant to Section 25987.38 begin insert , or the
accounts within the fund, end insert any moneys collected pursuant to this
chapter.

begin delete

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

end delete begin delete

(c) Nothing in this

end delete

begin insert (b) end insert begin insert   end insert begin insert This end insert chapter shall begin insert not end insert be construed to require investor-owned
utilities or municipal utilities to serve in the role as a third-party
private guarantor or loan servicer or otherwise provide credit
support for the loan program.

25987.24.  

(a) A local government that has issued revenue
bonds pursuant to a program providing financial assistance to
owners of nonresidential buildings undertaking a renewable energy,
water efficiency, or energy efficiency retrofit improvement on the
begin delete buildings end delete begin insert real properties end insert may apply to the commission for
participation in the program.

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

(c) Upon the purchase of the revenue bonds issued by the local
government by the authority, the authority succeeds to all rights
conferred upon the bondholder by those revenue bonds and the
local government shall remit revenue that is used to secure those
revenue bonds to the begin delete board end delete begin insert commission end insert .

25987.25.  

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

(1) (A) Analyze and evaluate standards for nonresidential
energy building retrofits previously developed by various national
and international organizations to provide uniformity and
transparency for financial institutions evaluating loan proposals
for energy improvements to nonresidential buildings. To the extent
that the commission determines necessary, this evaluation shall
be completed not later than January 1, begin delete 2015. end delete begin insert 2016. end insert

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

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

(3) Develop a request for proposal to contract with one or more
financial institutions to secure a short-term, revolving credit facility
(warehouse line of credit) for the purpose of creating an interim
financing mechanism for the loans that would be aggregated for
the purposes of issuance of a revenue bond pursuant to Section
25987.29. The warehouse line of credit shall be drawn by the
third-party administrator for origination of direct loans to qualified
applicants.

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

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

(2) Hold at least one public hearing.

(3) Adopt guidelines and standards for the purposes of
implementing this chapter at a publicly noticed meeting offering
all interested parties an opportunity to comment. For the initial
adoption of the guidelines and standards, the commission shall
provide a written public notice at least 30 days prior to the meeting.
For the adoption of any substantive change to the guidelines and
standards, the commission shall provide a written public notice at
least 10 days prior to the meeting. Notwithstanding any other law,
guidelines or standards adopted pursuant to this section shall be
exempt from the requirements of Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code. begin insert In implementing the requirements of this chapter, in the
interest of promoting consistency across the demand-side
management programs statewide, the commission shall seek to
harmonize these requirements, to the greatest extent practicable,
with the rules and requirements of the Public Utilities Commission
for its nonresidential energy efficiency, distributed generation,
demand response, and other demand-side management programs. end insert

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

(5) Establish standard metrics for estimating performance of
eligible improvements for different building types begin delete and different
profits of energy consumption end delete to be used in underwriting loans
made pursuant to the program.

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

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

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

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

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

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

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

(B) Determine the begin delete average amount, in aggregate, paid to
contractors and financial institutions pursuant to end delete begin insert median, average,
and aggregate amount financed by an applicant for eligible
improvements to different building types under end insert the program. Make
data on program participation publicly available in a timely manner
and in an aggregate format that would not provide identifying
information about individual customers of the electrical and gas
corporations and include, at a minimum, the types of energy
efficiency measures installed, the location of each customer
receiving ratepayer-funded energy efficiency assistance, the amount
of funds expended at each site, the expected annual energy savings
and reduced energy usage expected in kilowatthours or therms.
Unless the affected person, customer, or entity consents, the
information, data, and reports required to be provided pursuant to
this section shall not include any of the following:

(i) Personal information as defined in subdivision (e) of Section
1798.80 of the Civil Code.

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

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

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

25987.26.  

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

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

begin insert end insert

25987.27.  

(a) From the date upon which financial assistance
is approved by the commission pursuant to Section 25987.20 and
for all subsequent transactions entered into pursuant to this chapter,
a seller of real property subject to an energy remittance repayment
agreement shall deliver to the buyer an energy remittance
repayment agreement notice and disclosure as adopted by the
commission pursuant to paragraph begin delete (9) end delete begin insert (12) end insert of subdivision begin delete (a) end delete begin insert (b) end insert
of Section 25987.25.

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

(2) The information in the notice and disclosure form is deemed
sufficient to provide notice to the buyer of the existence of the
energy begin delete improvements, end delete begin insert improvements and of end insert the energy remittance
repayment begin delete agreement, and the repayment obligation that will be
assigned to, and assumed by, the buyer upon taking title end delete begin insert agreement
lien end insert .

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

25987.28.  

No later than June 30, begin delete 2015, end delete begin insert 2016, end insert and no later than
June 30 of every fifth year thereafter, the begin insert California end insert State Auditor
shall conduct, or cause to be conducted, a performance audit of
the program. begin delete The end delete begin insert Notwithstanding Section 10231.5 of the
Government Code, the end insert begin insert California end insert State Auditor shall prepare a
report and recommendations on each audit conducted and present
the report and recommendations to the President pro Tempore of
the Senate and the Speaker of the Assembly.

 

Article 3.  Nonresidential begin delete Building end delete begin insert Real Property end insert Energy
Retrofit Bond

 

25987.29.  

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

25987.30.  

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

25987.31.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(h)  begin delete Should there be end delete begin insert If there is end insert insufficient project valuation or
insufficient demand for the revenue bonds authorized by this
chapter, the begin delete board end delete begin insert loan servicer end insert shall continue to collect the energy
remittance begin insert installment end insert payments begin insert that become due and payable end insert and
service the loans begin insert , and the board shall continue to collect delinquent
repayment installments end insert . Failure to sell the revenue bonds shall not
create any liability for the state.

25987.32.  

In the discretion of the authority, any bonds issued
under the provisions of this article may be secured by a trust
agreement by and between the authority and a corporate trustee
or trustees, which may be the authority or any trust company or
bank having the powers of a trust company within or without the
state. begin delete Such end delete begin insert The end insert trust agreement or the resolution providing for the
issuance of begin delete such end delete begin insert the end insert bonds may pledge or assign the revenues to
be received pursuant to this chapter, to be financed out of the
proceeds of begin delete such end delete begin insert the end insert bonds. begin delete Such end delete begin insert The end insert trust agreement or resolution
providing for the issuance of begin delete such end delete begin insert the end insert bonds may contain begin delete such end delete
provisions for protecting and enforcing the rights and remedies of
the bondholders as may be reasonable and proper and not in
violation of law, including particularly begin delete such end delete provisions begin delete as have
herein above been end delete specifically authorized begin insert by this chapter end insert to be
included in any resolution or resolutions of the commission
authorizing bonds begin delete thereof end delete . Any bank or trust company doing
business under the laws of this state which may act as depositary
of the proceeds of bonds or of revenues or other moneys may
furnish begin delete such end delete indemnifying bonds or pledge begin delete such end delete securities as may
be required by the authority. Any begin delete such end delete trust agreement may set
forth the rights and remedies of the bondholders and of the trustee
or trustees, and may restrict the individual right of action by
bondholders. In addition to the foregoing, any begin delete such end delete trust agreement
or resolution may contain begin delete such end delete other provisions as the authority
may deem reasonable and proper for the security of the
bondholders. Notwithstanding any other law, the authority shall
not be deemed to have a conflict of interest by reason of acting as
trustee pursuant to this chapter.

25987.33.  

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

25987.34.  

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

(b) The proceeds of any begin delete such end delete bonds issued for the purpose of
refunding outstanding bonds, notes, or other securities may, in the
discretion of the authority, be applied to the purchase or retirement
at maturity or redemption of begin delete such end delete outstanding bonds either on their
earliest or any subsequent redemption date or upon the purchase
or retirement at the maturity thereof and may, pending begin delete such end delete
application, be placed in escrow to be applied to begin delete such end delete purchase or
retirement at maturity or redemption on begin delete such end delete begin insert a end insert date as may be
determined by the authority.

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

(d)  begin delete All such end delete begin insert These end insert bonds shall be subject to the provisions of
this division in the same manner and to the same extent as other
bonds issued pursuant to this chapter.

25987.35.  

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

25987.36.  

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

25987.37.  

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

(b) No later than February 1, begin delete 2014, end delete begin insert 2015, end insert the commission shall
apply to the United States Department of the Treasury under the
Energy Tax Incentives Act of 2005 (Title XIII of Public Law
109-58) for the authority to issue tax advantage bonds under the
federal Clean Renewable Energy Bonds program or any other
applicable programs.

 

Article 4.  Nonresidential begin delete Building end delete begin insert Real Property end insert Energy
Retrofit Debt Servicing Fund

 

25987.38.  

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

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

25987.39.  

The Loan Loss Reserve Account is hereby
established in the Nonresidential begin delete Building end delete begin insert Real Property end insert Energy
Retrofit Debt Servicing Fund. The begin delete board end delete begin insert commission end insert shall deposit
the portion of the begin delete contractual energy remittance end delete begin insert repayment
installation end insert that is the loan loss reserve fee into the account.
Notwithstanding Section 13340 of the Government Code, the
moneys in the account are hereby continuously appropriated to
the authority without regard to fiscal begin delete year end delete begin insert years end insert for the purposes
of paying outstanding balances due under an energy remittance
repayment agreement on a building that has been foreclosed upon
if the proceeds generated from the foreclosure proceedings are
insufficient to pay any past due payments begin delete past due end delete under the
energy remittance repayment agreement, including accrued interest,
begin delete penalties, end delete begin insert liquidated damages, end insert and fees. All interest and income
derived from the deposit and investment of moneys in the account
shall be credited to the account, and all unexpended and
unencumbered moneys in the account at the end of any fiscal year
shall remain in the account.

25987.40.  

The Administration Account is hereby established
in the Nonresidential begin delete Building end delete begin insert Real Property end insert Energy Retrofit Debt
Servicing Fund. The begin delete authority end delete begin insert commission end insert shall deposit into the
account the program administration fee begin delete collected pursuant to
subdivision (b) of Section 25987.23 and penalties collected
pursuant to Section 25987.16 end delete begin insert and liquidated damages collected
pursuant to this chapter end insert . Notwithstanding Section 13340 of the
Government Code, moneys in the account shall be continuously
appropriated begin insert without regard to fiscal years end insert to the authority, the
commission, and the board for the costs of implementing this
chapter.

begin delete

25987.41.  

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

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

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

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

end delete

25987.42.  

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

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