Amended in Senate June 9, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 450

Introduced by Assembly Member McCarty

February 23, 2015

begin delete An act to amend Section 39712 of the Health and Safety Code, relating to greenhouse gas. end delete begin insert An act to amend Sections 5898.12, 5898.21, 5898.24, 5898.28, and 5899.2 of, and to add Section 5899.4 to, the Streets and Highways Code, relating to contractual assessments. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 450, as amended, McCarty. begin delete Greenhouse gas: energy efficiency: financing. end delete begin insert Contractual assessments. end insert

begin insert

The Improvement Act of 1911 authorizes the legislative body of any public agency, as defined, to determine that it would be convenient, advantageous, and in the public interest to designate an area within the public agency, as specified, within which authorized public agency officials and property owners may enter into voluntary contractual assessments to finance, among other improvements, the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property, as specified. The act prohibits the use of voluntary contractual assessments to finance facilities for parcels in connection with the initial construction of residential buildings unless the initial construction is undertaken by the intended owner or occupant.

end insert begin insert

This bill would authorize the use of voluntary contractual assessments to finance authorized improvements in connection with the initial construction of residential buildings with 3 or fewer units if the initial construction of the residential buildings are undertaken by the intended owner or occupant. The bill would authorize the use of voluntary contractual assessments to finance authorized improvements in connection with the initial construction of nonresidential buildings or residential buildings with 4 or more units. The bill would authorize the use of voluntary contractual assessments by one or more property owners to finance authorized improvements on real property other than the property on which the assessment is levied.

end insert begin insert

The act authorizes a public agency to issue bonds to finance improvements that are repaid through voluntary contractual assessments.

end insert begin insert

This bill would specify that the interest rate on a bond that is payable from one or more contractual assessments levied on nonresidential or residential property with 4 or more units is considered to be fixed as long as the interest rate on each unpaid contractual assessment that secures the bonds is fixed at the time of the bond issuance.

end insert begin insert

The act authorizes a public agency to transfer its right, title, and interest in and to any voluntary contractual assessments if bonds are not issued. The act requires the public agency and transferee to enter into an agreement that, among other things, identifies the specific period of time during which the transfer of voluntary contractual assessments will be operative.

end insert begin insert

This bill would additionally require the agreement, among other things, to identify the amounts to be paid by the transferee as consideration for the transfer. The bill would authorize public agencies to issue bonds to repay a transferee of the right, title, and interest in and to any voluntary contractual assessments that were transferred.

end insert begin insert

The act specifies that, with respect to bonds issued to finance improvements to nonresidential property or residential property with 4 or more units, the redemption premium associated with a redemption of bonds as a result of a contractual assessment repayment is to be determined by agreement of the public agency issuing the bonds, the property owner, and the initial purchaser of the bonds.

end insert begin insert

This bill would specify that, with respect to bonds payable from contractual assessments levied on residential property with 3 or fewer units, the redemption premium associated with a redemption of bonds as a result of a contractual assessment prepayment is to be determined by agreement of the public agency issuing the bonds and the initial purchaser of the bonds, but not to exceed 5%. The bill would specify, with respect to bonds that are payable from contractual assessments levied on nonresidential properties or residential properties with 4 or more units, the manner in which the redemption premium associated with a redemption of bonds as a result of a contractual assessment prepayment is to be determined.

end insert begin delete

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation.

end delete begin delete

Existing law authorizes a public agency to issue revenue bonds (PACE bonds) that are secured by a voluntary contractual assessment agreed to between the public agency and a property owner to finance the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently affixed on the owner’s real property.

end delete begin delete

Existing law requires the California Alternative Energy and Advanced Transportation Financing Authority to develop and administer a PACE Reserve program to reduce the overall costs to property owners of PACE bonds by providing a reserve of no more than 10% of the initial principal amount of the PACE bonds.

end delete begin delete

This bill would authorize the use of the moneys in the Greenhouse Gas Reduction Fund to provide funding for the implementation of the PACE Reserve program.

end delete

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 5898.12 of the end insert begin insert Streets and Highways Code end insert

begin insert is amended to read: end insert

5898.12.  

(a) It is the intent of the Legislature that this chapter
should be used to finance public improvements to lots or parcels
that are developed and where the costs and time delays involved
in creating an assessment district pursuant to other provisions of
this division or any other law would be prohibitively large relative
to the cost of the public improvements to be financed.

(b) It is also the intent of the Legislature that this chapter should
be used to finance the installation or prepaid service contract, or
both, of distributed generation renewable energy sources or energy
efficiency improvements that are permanently fixed to residential,
commercial, industrial, agricultural, or other real property.

(c) It is also the intent of the Legislature to address chronic
water needs throughout California by permitting voluntary
individual efforts to improve water efficiency. The Legislature
further intends that this chapter should be used to finance the
installation of water efficiency improvements that are permanently
fixed to residential, commercial, industrial, agricultural, or other
real property, including, but not limited to, recycled water
connections, synthetic turf, cisterns for stormwater recovery, and
permeable pavement.

begin delete

(d) It is also the intent of the Legislature that a public agency
in the process of establishing an assessment program, to the extent
feasible, use a good faith effort to provide advance notice of the
proposed program to water and electric service providers in the
relevant service area, as set forth in Section 5898.24, to allow the
most efficient coordination and collaboration between the public
agency and water and electric service providers.

(e)

end delete

begin insert (d) end insert  This chapter begin delete shall not end delete begin insert may end insert be used to finance begin delete facilities for
parcels end delete begin insert authorized improvements end insert in connection with the initial
construction of a residential begin delete building, unless end delete begin insert building with three
or fewer units, only if end insert the initial construction begin insert of the residential
building end insert is undertaken by the intended owner or occupant.

begin insert

(e) This chapter may be used to finance authorized
improvements in connection with the initial construction of a
nonresidential building or a residential building with four or more
units.

end insert

(f) This chapter shall not be used to finance the purchase or
installation of appliances that are not permanently fixed to
residential, commercial, industrial, agricultural, or other real
property.

(g) Assessments may be levied pursuant to this chapter only
with the free and willing consent of the owner of each lot or parcel
on which an assessment is levied at the time the assessment is
levied.

begin insert

(h) This chapter may be used by one or more property owners
to finance the improvements authorized by this chapter that are
permanently affixed on real property other than the property on
which the assessment is levied.

end insert begin insert

(i) An improvement is permanently affixed to real property for
purposes of this chapter even though the improvement may be
temporarily removed for repairs or maintenance.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 5898.21 of the end insert begin insert Streets and Highways Code end insert begin insert is
amended to read: end insert

5898.21.  

Notwithstanding any other provision of this chapter,
upon the written consent of an authorized public agency official,
the proposed arrangements for financing the program pertaining
to the installation of distributed generation renewable energy
sources or energy or water efficiency improvements that are
permanently fixed to real property may authorize the property
begin delete owner end delete begin insert owner, the owner of the attached system, or a designee of
that owner, end insert to purchase directly the related equipment and materials
for the installation of distributed generation renewable energy
sources or energy or water efficiency improvements and to contract
begin delete directly end delete begin insert directly, or pay, end insert for the installation of distributed
generation renewable energy sources or energy or water efficiency
improvements that are permanently fixed to begin delete the property owner’s end delete
begin insert the end insert residential, commercial, industrial, agricultural, or other real
property.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 5898.24 of the end insert begin insert Streets and Highways Code end insert begin insert is
amended to read: end insert

5898.24.  

(a) A legislative body shall publish notice of a hearing
pursuant to Section 6066 of the Government Code, and the first
publication shall occur not later than 20 days before the date of
the hearing.

begin delete

(b) A legislative body shall provide written notice of a proposed
contractual assessment program to all water or electric providers
within the boundaries of the area within which voluntary
contractual assessments may be entered into not less than 60 days
prior to adoption of any resolution pursuant to Section 5898.26.

end delete begin delete

(c)

end delete

begin insert (b) end insert  (1) A legislative body administering a voluntary contractual
assessment program shall designate an office, department, or
bureau of the begin delete local end delete begin insert public end insert agency that shall be responsible for
annually preparing the current roll of assessment obligations by
assessor’s parcel number on property subject to a voluntary
contractual assessment.

(2) The designated office, department, or bureau shall establish
procedures to promptly respond to inquiries concerning current
and future estimated liability for a voluntary contractual
assessment. Neither the designated office, department, or bureau,
nor the legislative body, shall be liable if any estimate of future
voluntary contractual assessment liability is inaccurate, nor for
any failure of any seller to request notice pursuant to this chapter
or to provide the notice to a buyer.

begin delete

(d)

end delete

begin insert (c) end insert  For purposes of enabling sellers of real property subject to
a voluntary contractual assessment to satisfy the notice
requirements of Section 1102.6b of the Civil Code, begin insert and, except as
provided in subdivision (e), end insert the legislative body shall cause to be
recorded in the office of the county recorder for the county in
which the real property is located, concurrently with the begin delete instrument
creating the voluntary contractual assessment, end delete begin insert notice required by
Section 5898.32, end insert a separate document that meets all of the
following requirements:

(1) The title of the document shall be “Payment of Contractual
Assessment Required” in at least 14-point boldface type.

(2) The document shall include all of the following information:

(A) The names of all current owners of the real property subject
to the contractual assessment and the legal description and
assessor’s parcel number for the affected property.

(B) The annual amount of the contractual assessment.

(C) The date or circumstances under which the contractual
assessment expires, or a statement that the assessment is perpetual.

(D) The purpose for which the funds from the contractual
assessment will be used.

(E) The entity to which funds from the contractual assessment
will be paid and specific contact information for that entity.

(F) The signature of the authorized representative of the
legislative body to which funds from the contractual assessment
will be paid.

begin delete

(e)

end delete

begin insert (d) end insert  The recorder shall only be responsible for examining the
document required by subdivision begin delete (d) end delete begin insert (c) end insert and determining that it
contains the information required by subparagraphs (A), (E), and
(F) of paragraph (2) of subdivision begin delete (d). end delete begin insert (c). end insert The recorder shall
index the document under the names of the persons and entities
identified in subparagraphs (A) and (E) of paragraph (2) of
subdivision begin delete (d). end delete begin insert (c). end insert The recorder shall not examine any other
information contained in the document required by subdivision

begin delete (d). end delete begin insert (c). end insert

begin delete

(f)

end delete

begin insert (e) end insert  In order to reduce the costs associated with contractual
assessments, a legislative body begin insert administering a voluntary
contractual assessment program end insert may authorize the document
described in subdivision begin delete (d) end delete begin insert (c) end insert to be combined with the notice
required by Section 5898.32, and recorded as a single document.

begin insert If the legislative body authorizes the single document described
in this subdivision and that document is presented for recordation
to a county recorder, the county recorder shall accept that
document for recordation and shall not require the public agency
to separately prepare and record the document described in
subdivision (c) and the document required by Section 5898.32. end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 5898.28 of the end insert begin insert Streets and Highways Code end insert begin insert is
amended to read: end insert

5898.28.  

(a)  begin insert (1) end insert begin insert   end insert A public agency may issue bonds pursuant
to this chapter, the principal and interest for which would be repaid
by voluntary contractual assessments. A public agency may
advance its own funds to finance work to be repaid through
voluntary contractual assessments, and may from time to time sell
bonds to reimburse itself for those advances. A public agency may
enter into a relationship with an underwriter or financial institution
that would allow the sequential issuance of a series of bonds, each
bond being issued as the need arose to finance work to be repaid
through voluntary contractual assessments. The interest rate of
each bond may be determined by an appropriate index, but shall
be fixed at the time each bond is issued unless the bond is begin delete issued
to finance improvements to end delete begin insert payable from one or more contractual
assessments levied on end insert nonresidential private property or residential
private property with four or more units. begin insert The interest rate on that
bond shall be considered fixed as long as the interest rate on each
unpaid contractual assessment that secures the bond is fixed at
the time the bond is issued. end insert Bond proceeds may be used to establish
a reserve fund for debt service or paying the costs of foreclosure
on properties participating in the program, to fund capitalized
interest for a period up to two years from the date of issuance of
the bonds, to fund the administrative fee required for participation
in the PACE Reserve Program established pursuant to Chapter 4
(commencing with Section 26050) of Division 16 of the Public
Resources Code, and to pay for expenses incidental to the issuance
and sale of the bonds. Division 10 (commencing with Section
8500) shall apply to any bonds issued pursuant to this section,
insofar as that division is not in conflict with this chapter.

begin insert

(2) An assessment contract may define the term of the voluntary
contractual assessment and the rate at which interest will accrue
on the voluntary contractual assessment, describe the terms under
which the assessment may be prepaid, identify a schedule of
installments that include principal, interest, and administrative
expense components, and provide for the use of the proceeds that
may be generated as a result of the voluntary contractual
assessment. During the term of a voluntary contractual assessment,
the public agency may levy the installments described in the
assessment contract. If bonds are issued after an assessment
contract is executed and delivered by a public agency and a
property owner, the installments payable under the assessment
contract shall thereafter be used only to pay debt service on the
bonds, a power purchase agreement or lease pursuant to Section
5899.2, or the public agency’s costs incidental to financing,
administration, and collection of the voluntary contractual
assessment.

end insert

(b) (1) Notwithstanding any provision of this division or the
Improvement Act of 1915 (Division 10 (commencing with Section
8500)), a public agency may transfer its right, title, and interest in
and to any voluntary contractual assessments, if bonds begin delete have not
been issued pursuant to subdivision (a). end delete begin insert are not payable for the
assessments. end insert The public agency and the transferee shall enter into
an agreement that, among other things, identifies begin insert the amount to
be paid by the transferee as consideration for the transfer and use
of that amount paid by the transferee to the public agency, the
commencement date for the accrual of interest on the voluntary
contractual assessment, the capitalizing of interest, if applicable,
the timing for payment of the voluntary contractual assessment
installments of the transferee if received by the public agency, and end insert
the specific period of time during which the transfer of voluntary
contractual assessments will be operative, not to exceed three
years. begin insert The agreement may provide that if at the end of the term of
the transfer of the voluntary contractual assessments the public
agency is unable to repay the transferee, the public agency may
transfer the voluntary contractual assessments for the length of
their term, so long as, notwithstanding any other limitations set
forth in this chapter, no installment of the voluntary contractual
assessments will increase as a result of the transfer without the
prior written consent of the affected property owner. The public
agency may enter into an agreement with a trustee, fiscal agent,
or payment agent to hold, invest, and distribute the amounts paid
by the transferee to the public agency as consideration for the
transfer and the voluntary contractual assessments if received by
the public agency. end insert Except as provided in paragraph (2), a transfer
of any voluntary contractual assessments under this subdivision
shall be treated as a true and absolute transfer of the asset so
transferred for the period of the transfer and not as a pledge or
grant of a security interest by the public agency for any borrowing.
The characterization of the transfer of any of those assets as an
absolute transfer by the public agency shall not be negated or
adversely affected by the fact that only a portion of any voluntary
contractual assessment is transferred, nor by any characterization
of the transferee for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever. As used in this
section, “transfer” means sale, assignment, or other transfer.

(2) Nothing in this subdivision shall be construed to authorize
the transferee to initiate and prosecute a foreclosure action resulting
from a delinquency in the payment of the voluntary contractual
assessment. Initiation and prosecution of a foreclosure action shall
remain the responsibility of the public agency, which shall retain
the sole right to enforce its senior lien begin delete status. end delete begin insert status for the benefit
of the public agency and any transferee. As a cumulative remedy,
if any assessment or installment thereof, or any interest thereon,
together with any penalties, costs, fees, and other charges accruing
under applicable taxation provisions are not paid when due, the
public agency may order that the same be collected by an action
brought in the superior court to foreclose the lien as provided in
this division, and this division shall be construed in a manner that
accomplishes the purposes of this paragraph. In connection with
the transfer of its right, title, and interest in and to any voluntary
contractual assessment, the public agency may covenant for the
benefit of the transferee to commence and diligently prosecute any
foreclosure action regarding delinquent installments of any
assessments. end insert

begin insert

(3) A public agency may issue bonds under this chapter to repay
a transferee of the right, title, and interest in and to any voluntary
contractual assessment under this subdivision. The public agency
may transfer or cause to be transferred, to the trustee, fiscal agent,
or payment agent for the bonds, as applicable, funds held with
respect to a transfer at the time the bonds are issued.

end insert

(c) Division 10 (commencing with Section 8500) shall apply to
any bonds issued pursuant to this section, insofar as that division
is not in conflict with this chapter. Notwithstanding Part 16
(commencing with Section 8880) of Division 10, if any reserve
fund is established in whole or in part with legally available
moneys of one or more public agencies other than bond proceeds,
the public agency or agencies may provide that a property owner
who prepays all or a portion of the assessment shall not be credited
with the public agency moneys in the reserve fund and there shall
be no reduction in the assessment pursuant to Sections 8884 or
8881, and the public agency moneys in the reserve account shall
not be used to redeem bonds pursuant to Section 8885 and any
public agency moneys remaining in the reserve fund at the maturity
of the bonds shall be disbursed to the public agency free and clear
of the lien of the issuing instrument. Any excess bond proceeds
may be used to pay principal of and interest on the bonds in
addition to any other use permitted by Division 10 (commencing
with Section 8500).

(d) Notwithstanding any other law, the public agency may
conclude that it is in the public interest for bonds issued by the
public agency pursuant to this chapter to not be subject to
redemption prior to their scheduled maturity date except as a result
of the prepayment in whole or in part of contractual assessments.
Notwithstanding any other limitations set forth in law, begin delete and end delete begin insert (1) end insert with
respect to bonds begin delete issued to finance improvements to nonresidential
property or end delete begin insert that are payable from one or more contractual
assessments levied on end insert residential property with begin delete four or more end delete begin insert three
or fewer end insert units, the redemption premium associated with a
redemption of bonds as a result of a contractual assessment
prepayment shall be determined by agreement of the public agency
issuing the begin delete bonds, the property owner, and the initial purchaser of
the bonds. end delete begin insert bonds and the initial purchaser of the bonds, but shall
not exceed 5 percent, and (2) with respect to bonds that are payable
from one or more contractual assessments levied on nonresidential
property or residential property with four or more units, (A) the
public agency and the property owner may agree that the
contractual assessment shall not be subject to prepayment for all
or a portion of the time it is unpaid or (B) if the contractual
assessment will be subject to prepayment, the redemption premium
associated with a redemption of bonds as a result of a contractual
assessment prepayment shall be determined by agreement of the
public agency issuing the bonds, the property owner, and the initial
purchaser of the bonds. Notwithstanding any other law, the public
agency issuing bonds pursuant to this chapter may provide for the
bonds to be subject to redemption on any date. The public agency
may provide for the redemption of bonds issued pursuant to this
chapter from unspent bond proceeds following the completion of
the installation of the improvements at a redemption price equal
to the principal amount of the bonds to be redeemed, plus accrued
interest to the redemption date, plus a redemption premium
specified in the assessment contract, if any, which premium may
exceed 5 percent of the principal amount of the bonds to be
redeemed only in the case of bonds that are payable from one or
more contractual assessments levied on residential property with
three or fewer units. end insert

(e) (1) Without the prior written approval of the property owner,
and notwithstanding any other law, a public agency may issue
bonds pursuant to this chapter to refinance outstanding bonds
payable from contractual assessments levied pursuant to this
chapter if all of the following are true:

(A) The total interest cost to maturity on the refunding bonds
is less than the total interest cost to maturity on the bonds to be
refunded.

(B) The final maturity date of the refunding bonds is not later
than the final maturity date of the refunded bonds, except that if
the bonds to be refunded are variable rate bonds, the final maturity
date of the refunding bonds may extend to, but not beyond, the
useful life of the financed improvements.

(C) The total interest component of the scheduled contractual
assessment installments to maturity, after issuance of the refunding
bonds, is less than the total interest component of the scheduled
contractual assessment installments to maturity prior to issuance
of the refunding bonds.

(2) For purposes of this section, in connection with the issuance
of fixed rate bonds to refinance variable rate bonds, the interest
rate on the refunded bonds for purpose of demonstrating
compliance with this section may be assumed to be the maximum
possible interest rate on the bonds to be refunded as long as the
legislative body concludes that the public interest will be served
by issuing fixed rate bonds to refinance the outstanding variable
rate bonds. In connection with an issuance of refunding bonds
under this chapter, the legislative body may direct that an
amendment to the document required by subdivision begin delete (d) end delete begin insert (c) end insert of
Section 5898.24 be recorded to reflect the revised contractual
assessment installment schedule.

(f) With the prior written approval of the owner of nonresidential
property or residential property with four or more units, and
notwithstanding any other law, a public agency may issue bonds
pursuant to this chapter to refinance outstanding bonds payable
from contractual assessments levied pursuant to this chapter
without complying with subdivision (e). The final maturity date
of the refunding bonds issued pursuant to this subdivision may be
later than the final maturity date of the bonds being refunded as
long as the final maturity date of the refunding bonds does not
extend beyond the useful life of the financed improvements.

begin insert

(g) The assessment contract between the public agency and a
property owner shall provide for the use of proceeds of any bonds
or other financing arrangement authorized by this chapter, and
may provide that the proceeds may be used to make progress
payments to a contractor as work is completed on portions of the
improvements in a manner that the public agency determines to
be reasonable.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 5899.2 of the end insert begin insert Streets and Highways Code end insert begin insert is
amended to read: end insert

5899.2.  

For the purpose of financing the installation of
distributed generation renewable energy sources pursuant to this
chapter, “permanently fixed” includes, but is not limited to, systems
attached to a residential, commercial, industrial, agricultural, or
other real property pursuant to a power purchase agreement or
lease between the owner of the system and the owner of the
assessed property, if the power purchase agreement or lease
contains all of the following provisions:

(a) The attached system is an eligible renewable energy resource
pursuant to the California Renewables Portfolio Standard Program
(Article 16 (commencing with Section 399.11) of Chapter 2.3 of
Part 1 of Division 1 of the Public Utilities Code).

(b) The term of the power purchase agreement or lease is at
least as long as the term of the related assessment contract.

(c) The owner of the attached system agrees to install, maintain,
and monitor the system for the entire term of the power purchase
agreement or lease.

(d) The owner of the attached system is not permitted to remove
the system prior to completion of the term of the contractual
assessment lien.

(e) After installation, the power purchase agreement or begin delete lease end delete
begin insert lease, including the costs of operating and maintaining the systems
and services incidental to the systems, end insert is paid, either partially or
in full, using the funds from the contractual assessment program.

begin insert For purposes of this subdivision, “funds from the contractual
assessment program” includes bond proceeds, contractual
assessment installments, grants, or other funding sources available
to the contractual assessment program, and savings and other
monetary benefits that are available as a result of the contractual
assessment financing. end insert

(f) The right to receive the electricity from the system, through
a power purchase agreement or lease or the right to the system
itself, is tied to the ownership of the assessed real property and is
required to be automatically transferred with the title to the real
property whether the title is transferred by voluntary sale, judicial
or nonjudicial foreclosure, or by any other means.

(g) The power purchase agreement or lease identifies the public
agency that is a party to the assessment contract on the real property
as a third-party beneficiary of the power purchase agreement or
lease until the assessment lien on the property has been fully paid
and, only until that time, prohibits amendments to the power
purchase agreement or lease without the consent of the public
agency.

(h) In order to ensure that the property owner is guaranteed the
electric power from the system for the length of the lien, the system
shall not be removed if the owner of the attached system is not
performing its obligations under the contract, and one of the
following is true:

(1) The owner of the attached system does both of the following:

(A) Covenants in its contract with the property owner that
neither the owner of the attached system nor any successor in
interest will remove or permanently decommission the attached
system during the term of the contract.

(B) Warrants in the contract with the property owner that no
assignee, creditor, partner, or owner of the attached system’s owner
has, as of the date of the contract or during the remaining term of
the contract, the right to remove or permanently decommission
the attached system.

(2) The owner of the attached system must be a bankruptcy
remote special purpose entity that is bankruptcy remote and meets
all of the following conditions:

(A) It does not engage in any business other than owning the
attached systems and entering into electricity contracts with the

begin delete homeowner. end delete begin insert property owner. end insert

(B) It has no material debt.

(C) Its contracts are either entered into with unrelated third
parties or have terms negotiated at arms length.

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 5899.4 is added to the end insert begin insert Streets and Highways
Code end insert begin insert , to read: end insert

begin insert

begin insert 5899.4. end insert   

The Legislature finds and declares that a public
purpose will be served by giving public agencies substantial
flexibility to establish arrangements that will address concerns of
participating bond owners, property owners, mortgage lenders,
or state and federal regulatory agencies about the financing
available under this chapter. These arrangements may include,
but are not limited to, the issuance by a public agency of bonds
pursuant to this chapter to redeem outstanding bonds issued by
the public agency pursuant to this chapter to accommodate an
arrangement authorized by this chapter so long as, notwithstanding
any other limitations set forth in this chapter, no installment of a
voluntary contractual assessment will increase without the prior
written consent of the affected property owner, and unspent
proceeds of the outstanding bonds to be redeemed may be applied
by the public agency in the manner that it determines will further
an arrangement authorized by this chapter.

end insert

begin delete

SECTION 1.  

Section 39712 of the Health and Safety Code is
amended to read:

39712.  

(a) (1) It is the intent of the Legislature that moneys
shall be appropriated from the fund only in a manner consistent
with the requirements of this chapter and Article 9.7 (commencing
with Section 16428.8) of Chapter 2 of Part 2 of Division 4 of Title
2 of the Government Code.

(2) The state shall not approve allocations for a measure or
program using moneys appropriated from the fund except after
determining, based on the available evidence, that the use of those
moneys furthers the regulatory purposes of Division 25.5
(commencing with Section 38500) and is consistent with law. If
any expenditure of moneys from the fund for any measure or
project is determined by a court to be inconsistent with law, the
allocations for the remaining measures or projects shall be
severable and shall not be affected.

(b) Moneys shall be used to facilitate the achievement of
reductions of greenhouse gas emissions in this state consistent
with Division 25.5 (commencing with Section 38500) and, where
applicable and to the extent feasible:

(1) Maximize economic, environmental, and public health
benefits to the state.

(2) Foster job creation by promoting in-state greenhouse gas
emissions reduction projects carried out by California workers and
businesses.

(3) Complement efforts to improve air quality.

(4) Direct investment toward the most disadvantaged
communities and households in the state.

(5) Provide opportunities for businesses, public agencies,
nonprofits, and other community institutions to participate in and
benefit from statewide efforts to reduce greenhouse gas emissions.

(6) Lessen the impacts and effects of climate change on the
state’s communities, economy, and environment.

(c) Moneys appropriated from the fund may be allocated,
consistent with subdivision (a), for the purpose of reducing
greenhouse gas emissions in this state through investments that
may include, but are not limited to, any of the following:

(1) Funding to reduce greenhouse gas emissions through energy
efficiency, clean and renewable energy generation, distributed
renewable energy generation, transmission and storage, and other
related actions, including, but not limited to, at public universities,
state and local public buildings, and industrial and manufacturing
facilities. Funding may also be used for the implementation of
Article 2 (commencing with Section 26060) of Chapter 4 of
Division 16 of the Public Resources Code.

(2) Funding to reduce greenhouse gas emissions through the
development of state-of-the-art systems to move goods and freight,
advanced technology vehicles and vehicle infrastructure, advanced
biofuels, and low-carbon and efficient public transportation.

(3) Funding to reduce greenhouse gas emissions associated with
water use and supply, land and natural resource conservation and
management, forestry, and sustainable agriculture.

(4) Funding to reduce greenhouse gas emissions through
strategic planning and development of sustainable infrastructure
projects, including, but not limited to, transportation and housing.

(5) Funding to reduce greenhouse gas emissions through
increased in-state diversion of municipal solid waste from disposal
through waste reduction, diversion, and reuse.

(6) Funding to reduce greenhouse gas emissions through
investments in programs implemented by local and regional
agencies, local and regional collaboratives, and nonprofit
organizations coordinating with local governments.

(7) Funding research, development, and deployment of
innovative technologies, measures, and practices related to
programs and projects funded pursuant to this chapter.

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