BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1271 HEARING: 4/9/14
AUTHOR: Leno FISCAL: No
VERSION: 2/21/14 TAX LEVY: No
CONSULTANT: Grinnell
CALIFORNIA ALTERNATIVE ENERGY AND TRANSPORTATION FINANCING
AUTHORITY
Adds legislative appointees to CAEATFA's board.
Background and Existing Law
Housed in the office of the State Treasurer, the California
Alternative Energy and Advanced Transportation Financing
Authority (CAEATFA) provides financing through conduit or
revenue bonds, loan guarantees, loan loss reserves and a
sales and use tax exemption for facilities that use
alternative energy sources and technologies. The
Governor's budget proposes a total of $27.5 million for
CAEATFA in 2014-15, funded primarily through transfers from
the California Energy Commission.
While the Legislature created CAEATFA in 1980, it didn't do
much until 2008, when Governor Arnold Schwarzenegger and
State Treasurer Bill Lockyer announced that CAEATFA would
use its existing authority to grant a sales and use tax
exemption for normally taxable manufacturing equipment
purchased by Tesla Motors under a sale-leaseback agreement.
Subsequently, the Legislature directed CAEATFA to
administer three new programs, in addition to its conduit
bond authority:
A $10 million loan loss reserve program that
directs the state to reimburse the original mortgage
lender for the costs associated with the Property
Assessed Clean Energy program assessments during a
foreclosure (SB 96, Committee on Budget and Fiscal
Review, 2013).
A $25 million loan loss reserve program to backstop
loans made by participating financial institutions for
energy efficiency improvements and distributed
generation technology (ABx1 14, Skinner, 2011).
Sales and use tax exemptions for manufacturers of
SB 1271 - 2/21/14 -- Page 2
renewable technology (SB 71, Padilla, 2010), and
advanced manufacturing (SB 1128, Padilla, 2012).
CAEATFA's board, composed of the Treasurer, Controller,
Director of Finance, Chairperson of the Energy Commission,
and President of the Public Utilities Commission, decides
which projects to assist. The Author wants to add
legislative appointees to the CAEATFA board, similar to
other authorities within the Treasurer's Office.
Proposed Law
Senate Bill 1271 adds one person appointed by the Senate
Committee on Rules, and one person appointed by the Speaker
of the Assembly to CAEATFA's board.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "The
California Alternative Energy and Advanced Transportation
Financing Authority (CAEATFA) is responsible for
incentivizing projects to develop alternative sources of
energy. CAEATFA has had a successful track record in
evaluating and granting tax treatments and funding which
have been extremely important to numerous companies. Some
of these companies focus on bringing manufacturing which
creates jobs in the state, like solar panel manufacturing
plants. Other programs administered by CAEATFA allow
homeowners and businesses to access loans under the
Property Assessed Clean Energy (PACE) program to finance
energy efficiency and renewable energy components. Since
its establishment, and especially following the
implementation of SB 71 (2009) and SB 1128 (2012), the
authority of CAEATFA and its funding ability have
dramatically expanded. The Authority now controls
expenditures of over $125 million annually. Like the CA
Film Commission, CA Coastal Commission, CA Transportation
Commission, and High Speed Rail Authority, CAEATFA is
structured to promote a certain interest throughout the
SB 1271 - 2/21/14 -- Page 3
state. However, unlike the aforementioned commissions,
CAEATFA's board does not contain legislative appointees to
aid in the authority's decisions. Due to CAEATFA's
additional responsibilities, it is desirable and prudent
that the Legislature be involved in the decision processes
to ensure funding is properly allocated. By adding
legislative appointees, the Legislature will have the
ability to maintain oversight to ensure the expanded
authority of CAEATFA is fully and correctly executed. The
programs administered by CAEATFA are the nuts and bolts
implementation of the State's greenhouse gas reduction and
clean energy goals. For this reason as well, legislative
appointments created by SB 1271 would bring an important
perspective to the board."
2. On the margin . The Legislature has directed CAEATFA in
recent years to administer multimillion dollar economic
development, renewable energy, and energy efficiency
programs. While Assembly and Senate appointees will
likely give CAEATFA more legislative input on its
allocation decisions, will SB 1271 truly improve oversight?
CAEATFA must annually justify its costs each year as part
of the budget process, where legislators assess how well it
delivers legislatively enacted programs when allocating
operational and programmatic funding. Additionally, policy
committees can hold oversight hearings at any time on
CAEATFA and its programs, as this Committee and the
Committee on Energy, Utilities, and Communications did for
the SB 71 program in October, 2011.
The Committee may wish to consider the marginal value added
of legislative appointees to the CAEATFA board.
Support and Opposition (04/03/14)
Support : The Vote Solar Initiative.
Opposition : None received.