BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2597|
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THIRD READING
Bill No: AB 2597
Author: Ting (D), et al.
Amended: 6/5/14 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMM. COMMITTEE : 9-1, 6/17/14
AYES: Padilla, Block, Cannella, Corbett, De León, DeSaulnier,
Hill, Pavley, Wolk
NOES: Fuller
NO VOTE RECORDED: Knight
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/19/14 - See last page for vote
SUBJECT : Energy: PACE program
SOURCE : Renewable Funding, LLC
Sonoma County Energy Independence Program
Western Riverside Council of Governments
DIGEST : This bill modifies the California Alternative Energy
and Advanced Transportation Financing Authority's (CAEATFA)
underwriting standard for the Property Assessed Clean Energy
(PACE) program by providing that financing cannot exceed 15% for
the first $700,000 of the value of the property and 10% for the
remaining value of the property, and substitutes the term "loan"
with "financing" within various parts of the PACE program.
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ANALYSIS :
Existing law:
1. Authorizes cities, counties, and other local public agencies
and utility districts to provide up-front financing to
property owners to install renewable energy-generating
devices, make specified water or energy efficiency
improvements, or install electric vehicle charging
infrastructure on their properties through a system of
voluntary contractual assessments which is repaid, with
interest, through property tax assessments. The programs are
commonly referred to as PACE programs.
2. Creates CAEATFA with myriad programs including the PACE Loan
Loss Reserve Program to reduce the administrative costs of
PACE programs and provide a reserve fund to mitigate risk to
first mortgage lenders related to PACE assessments.
Eligibility for the reserve program is limited to loans less
than 10% of the property value and for distributed generation
renewable energy sources, electric vehicle charging
infrastructure, or energy or water efficiency improvements.
This bill increases the loan cap to 15% of the assessed value of
the property for the first $700,000 in property value, maintains
the existing 10% cap on property values over $700,000, and caps
the loan to value ratio at 100% of the value of the property.
Background
CAEATFA . This body was created in 1980 with an authorization of
$200 million in revenue bonds to finance projects utilizing
alternative sources of energy, such as cogeneration, wind and
geothermal power. It was renamed in 1994 as the California
Alternative Energy and Advanced Transportation Financing
Authority and its charge expanded to include the financing of
"advanced transportation" technologies.
During the energy crisis of 2001, its authority was again
expanded, this time to provide financial assistance to public
power entities, independent generators, and others for new and
renewable energy sources, and to develop clean distributed
generation.
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CAEATFA consists of five members: the Director of Finance, the
Chairman of the California Energy Commission, the President of
the Public Utilities Commission, the State Controller, and the
State Treasurer. Its current mission is to provide financing
for facilities that use alternative energy sources and
technologies. CAEATFA also provides financing for facilities
needed to develop and commercialize advanced transportation
technologies that that conserve energy, reduce air pollution,
and promote economic development and jobs and support energy
efficiency financing efforts.
Comments
In 2013, the Legislature created the PACE Loss Reserve Program
administered CAEATFA and authorized a $10 million reserve fund
to keep mortgage interests whole during a foreclosure or a
forced sale. Statute limits the value of assessments receiving
assistance to less than 10% of the property value. This
restrictive criteria precludes property owners in less affluent
areas from participating in PACE and does not match current PACE
program practices.
This bill clarifies that PACE assessments are special tax
assessments, rather than loans, and updates the value of
eligible improvements financed by PACE to up to 15% of the
property value for the first $700,000 of property value. Any
remaining value on the property after the initial $700,000 will
remain at the existing 10%.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/30/14)
Renewable Funding, LLC (co-source)
Sonoma County Energy Independence Program (co-source)
Western Riverside Council of Governments (co-source)
Breathe California
California Municipal Utilities Association
California State Association of Counties
Sierra Club California
ASSEMBLY FLOOR : 75-0, 5/19/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
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Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Olsen, Pan,
Patterson, Perea, John A. Pérez, V. Manuel Pérez, Quirk,
Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, Atkins
NO VOTE RECORDED: Donnelly, Mansoor, Nazarian, Nestande,
Vacancy
JG:d 7/1/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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