BILL NUMBER: AB 2045 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Rendon
FEBRUARY 20, 2014
An act to add Chapter 12.5 (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 2045, as introduced, Rendon. Energy improvements: 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 Real Property Energy
Retrofit Financing Act of 2014 and would require the commission to
establish the Nonresidential Real Property Energy Retrofit Financing
Program. The program would provide financial assistance, through
authorizing the issuance of, among other things, revenue bonds, to
owners of eligible real properties, as defined, 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 eligible real property
for which the improvements are performed. The bill would require a
loan servicer to collect installment payments from owners of eligible
real properties whose applications have been approved by the
commission. The bill would require the State Board of Equalization to
collect repayment installments that are delinquent.
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 Real Property 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 commission to deposit the installment payment
received from the owners of eligible real properties 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.
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 12.5 (commencing with Section 25987.1) is added
to Division 15 of the Public Resources Code, to read:
CHAPTER 12.5. NONRESIDENTIAL REAL PROPERTY ENERGY RETROFIT
FINANCING
Article 1. General Provisions and Definitions
25987.1. This act shall be known, and may be cited, as the
Nonresidential Real Property Energy Retrofit Financing Act of 2014.
25987.2. The purpose of this chapter is to facilitate private
financing to enable nonresidential real property owners 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 real properties 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 real
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 real properties 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 owners of nonresidential real properties who participate
in the program established pursuant to this division 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) "Alternative 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 eligible real property 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 real property
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, 2015, 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, other than that
used in cogeneration gas-fired technology.
(3) Nuclear fissionable materials.
(4) Coal.
(g) "Delinquent repayment installment" means a due and payable
repayment installation that was not paid within the time specified in
the schedule for repayment.
(h) "Demand response" means reductions or shifts in electricity
consumption by customers in response to either economic or
reliability signals.
(i) "Due and payable" means the date as specified in the schedule
for repayment for each repayment installment.
(j) "Eligible real property" means a nonresidential building that
completed construction on or before January 1, 2015, and is located
within the boundaries of the state.
(k) "Energy remittance repayment agreement" means a contractual
agreement between an owner of an eligible real property 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 real property specially benefited by the project for which
the commission will make reimbursement or a direct payment to the
party financing the project, 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 project less any rebates, grants,
and other direct financial assistance received by the owner pursuant
to other law, a loan loss reserve fee, in an amount to be established
by the third-party administrator in consultation with the commission
and any warehouse financier under contract entered into pursuant to
paragraph (3) of subdivision (a) of Section 25987.25, to insure
against nonperformance of the loan and other losses of the program,
and a program administrative cost fee.
(l) "Energy efficiency specialist" means an individual or business
authorized or certified by rules of the commission to analyze,
evaluate, or install a project.
(m) "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.
(n) "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 real property.
(o) "Loan loss reserve fee" means a fee that serves as collateral
in the event of a loan default.
(p) "Nonresidential Real Property Energy Retrofit Bond" means a
bond issued pursuant to Section 25987.31 that is secured by an energy
remittance repayment agreement lien on real property and is entered
into voluntarily to finance the project.
(q) "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, 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.
"Participant" includes a subsequent owner taking title to real
property subject to an energy remittance repayment agreement lien.
(r) "Portfolio" means an aggregation of approved applications.
(s) "Program" means the Nonresidential Real Property Energy
Retrofit Financing Program established by the commission in
accordance with Section 25987.7.
(t) "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.
(u) "Project" means an improvement to an eligible real property
that constitutes a water efficiency improvement, renewable energy
improvement, or building energy efficiency improvement.
(v) "Qualified applicant" means a person or business entity who
does all of the following:
(1) Owns an eligible real property that has a ratio of loan
balance to its appraised value not to exceed 85 percent, which is
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 real property that has
priority over all other deeds of trust or mortgages recorded against
the eligible real property has consented in writing to the recording
of an energy remittance repayment agreement lien pursuant to this
division against the eligible real 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
lien in the amount of the energy remittance repayment agreement on
the real property pursuant to this chapter.
(3) Meets standard of credit worthiness that the commission may
establish.
(w) "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.
(x) "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 energy source,
are permanently affixed to, or located on, the real property, and
directly benefit an eligible real property or that are installed on
the customer side of a meter of an eligible real property and that
produce renewable energy 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.
(y) "Repayment installation" means the monthly amount specified
pursuant to the agreed schedule for repayment approved by the
commission.
(z) "Third-party administrator" means an entity selected by the
commission through a request for a proposal to manage project
applications and make recommendations to the commission as to an
individual project's compliance with this chapter.
(aa) "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
applications approved pursuant to Section 25987.20.
Article 2. Nonresidential Real Property Energy Retrofit
Financing Program
25987.5. The purpose of the Nonresidential Real Property Energy
Retrofit Financing Program is to help provide the special benefits of
water efficiency improvements, renewable energy improvements, and
building energy efficiency improvements to owners of eligible real
properties 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, consistent with Section 25987.9, the Nonresidential
Building Real Property 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 real property to use one or more energy efficiency
specialists to retrofit or benefit the property with one or more
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 agreement liens recorded against
the real properties benefited by the projects in the portfolio.
(b) The program shall provide financial assistance for projects
when the total energy and water cost savings realized by the real
property owner, and any successor or successors to the real 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 one
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 lien on the
eligible real property that is being retrofitted or benefited.
25987.9. By July 1, 2015, 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 real properties 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 owners of real properties in
evaluating projects. The third-party administrator shall provide a
loan servicer to service the loans. 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 liabilities.
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 an eligible real property 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 owner.
25987.12. (a) An owner of an eligible real property undertaking a
project 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 lien against the eligible real
property 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 LIEN AGAINST THE ELIGIBLE REAL PROPERTY. UPON THE
APPROVAL BY THE COMMISSION OF THE APPLICATION AND THE RECORDATION OF
THE ENERGY REMITTANCE REPAYMENT AGREEMENT LIEN, A LIEN IN THE AMOUNT
SPECIFIED IN THE ENERGY REMITTANCE REPAYMENT AGREEMENT SHALL BE
RECORDED ON THE PROPERTY TO SECURE THE AGREEMENT.
25987.13. The owner of an eligible real property shall include
all of the following information in the application:
(a) The name, business address, and email address of the owners of
the eligible real property.
(b) The names of all entities that hold a secured lien on the
eligible real property and their contact information.
(c) The total dollar amount of liens that have been recorded
against the eligible real property.
(d) An appraisal of the value of the eligible real property 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 project to be funded.
(f) The name of the financial institution providing interim
financing for the project or the warehouse line of credit developed
pursuant to Section 25987.26.
(g) The structure of the loan financing the project.
(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 specialist to
quantify the costs of the project, and total energy and water cost
savings realized by the owner or his or her successor during the
effective useful life of, and estimated carbon impacts of, the
project, 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. 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:
(a) The eligible real property.
(b) The transactional activities associated with the project,
including the transactional costs.
(c) Other information deemed necessary by the commission or the
third-party administrator.
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,
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 with monthly
repayment installments required by the energy remittance repayment
agreement, including the interest charged, administrative cost fee,
and loan loss reserve fee.
(b) (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 building energy
efficiency and renewable energy improvements, 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.
(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.
(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.
(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.
(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.
(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.
(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.
(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).
(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.
25987.18. (a) Prior to approving an application for inclusion
into a loan portfolio and the recordation of the energy remittance
repayment agreement lien, 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 real property.
(3) The amount required to be repaid secured by the energy
remittance repayment agreement lien proposed to be recorded against
the eligible real property.
(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 lien on the
eligible real property 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 real
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, 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 record the energy remittance repayment agreement lien against
the eligible real property.
(b) The commission shall specify the amount required to be paid
pursuant to the energy remittance repayment agreement lien, the
schedule of repayment that details the monthly repayment installment
amount and due date, 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 lien
recorded pursuant to this section 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.
(5) The amount of the lien.
(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.
25987.22. (a) No later than 30 days after the approval of an
application, the commission or the third-party administrator shall
record with the county in which the eligible real property is located
the energy remittance repayment agreement lien. The third-party
administrator shall notify the commission upon the recordation of the
energy remittance repayment agreement lien.
(b) Within 60 days of the notice of recording of the energy
remittance repayment agreement lien, the commission shall include the
approved application in a portfolio posted on the commission's
Internet Web site.
25987.23. (a) The commission shall deposit into the
Nonresidential Real Property Energy Retrofit Debt Servicing Fund
established pursuant to Section 25987.38, or the accounts within the
fund, any moneys collected pursuant to this chapter.
(b) This chapter shall not 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 real
properties 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 commission.
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, 2016.
(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 eligible real property, 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. 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.
(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 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 program and measure
the total energy savings achieved by the program.
(B) Determine the median, average, and aggregate amount financed
by an applicant for eligible improvements to different building types
under 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."
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 (12) of subdivision (b) 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 improvements and of the energy remittance repayment agreement
lien.
(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, 2016, and no later than June 30
of every fifth year thereafter, the California State Auditor shall
conduct, or cause to be conducted, a performance audit of the
program. Notwithstanding Section 10231.5 of the Government Code, the
California 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 Real Property 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 in excess of the amount provided in Section
25987.29.
25987.31. (a) On a semiannual basis, the authority shall conduct
a meeting to adopt a resolution authorizing the issuance of
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) If there is insufficient project valuation or insufficient
demand for the revenue bonds authorized by this chapter, the loan
servicer shall continue to collect the energy remittance installment
payments that become due and payable and service the loans, and the
board shall continue to collect delinquent repayment installments.
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. The
trust agreement or the resolution providing for the issuance of the
bonds may pledge or assign the revenues to be received pursuant to
this chapter, to be financed out of the proceeds of the bonds. The
trust agreement or resolution providing for the issuance of the bonds
may contain 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 provisions specifically
authorized by this chapter to be included in any resolution or
resolutions of the commission authorizing bonds. 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 indemnifying bonds or pledge securities as may be
required by the authority. Any 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 trust agreement or
resolution may contain 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 political
subdivision, but shall be payable solely from the funds provided by
this chapter. All 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 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 and any
interest accrued or to accrue to the earliest or subsequent date of
redemption, purchase, or maturity of the bonds.
(b) The proceeds of any 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 outstanding bonds either on their earliest
or any subsequent redemption date or upon the purchase or retirement
at the maturity thereof and may, pending application, be placed in
escrow to be applied to purchase or retirement at maturity or
redemption on a date as may be determined by the authority.
(c) Pending use, any 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 the 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 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 proceeds and interest, income, and
profits, if any, earned or realized on the investments may be
returned to the authority for use by it in any lawful manner.
(d) These 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 the 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 bonds qualify or
are eligible for those 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, 2015, 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 Real Property Energy Retrofit Debt
Servicing Fund
25987.38. (a) The Nonresidential Real Property 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 years 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 Real Property Energy Retrofit Debt Servicing Fund.
The commission shall deposit the portion of the repayment
installation 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 years 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 under the energy remittance repayment agreement, including
accrued interest, liquidated damages, 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 Real Property Energy Retrofit Debt Servicing Fund.
The commission shall deposit into the account the program
administration fee and liquidated damages collected pursuant to this
chapter. Notwithstanding Section 13340 of the Government Code, moneys
in the account shall be continuously appropriated without regard to
fiscal years to the authority, the commission, and the board for the
costs of implementing this chapter.
Article 5. Miscellaneous
25987.41. (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.