BILL ANALYSIS Ó SB 1233 Page 1 Date of Hearing: August 10, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1233 (McGuire) - As Amended August 2, 2016 ----------------------------------------------------------------- |Policy |Local Government |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill establishes the Water Bill Savings Act. Specifically, this bill: 1)Authorizes joint powers authorities (JPAs) to provide funding to customers of a local agency or its publicly owned utility for water efficiency improvements on the customer's private property. 2)Creates the process for establishing a financing program which would allow a JPA to provide the customer of a local agency or its publicly owned utility up front financing for a water efficiency improvement that the customer would then be required to repay by an efficiency charge on the customer's SB 1233 Page 2 water bill. 3)Authorizes JPAs to pool revenues generated by water efficiency charges paid by participating customers to issue bonds, pursuant to the Marks-Roos Act. 4)Requires the Department of Water Resources (DWR) to provide ongoing oversight of activities associated with the bill's provisions, including monitoring an authority's administration of an efficiency improvement financing program. FISCAL EFFECT: 1)One-time costs to DWR of up to $400,000 (GF) to analyze the existing CalConserve Program, create a list of acceptable efficiency projects, and establish reporting requirements. Actual costs will depend on the level of public input required (public meetings, stakeholder workshops) and whether regulations are required. 2)Ongoing annual costs to DWR in the range of $50,000 to $80,000 (GF) to review annual reports and maintain oversight. COMMENTS: 1)Purpose. According to the author, "This bill will create a broad scale regional response to California's water supply issues by extending existing Marks Roos Local Bond Pooling Act authority used by JPAs to fund utility projects to voluntary customer water efficiency projects installed on private property and paid for by participants." SB 1233 Page 3 Supporters contend that this bill will create another tool for local governments to respond to drought that is regionally efficient, financially sustainable, and available to all municipal utilities, large and small. Additionally, they assert this bill will help people save money on water, while reducing wasted water, and provide a voluntary tool to meet state conservation mandate. 2)Background. Modeled after a financing program in the City of Berkeley, in 2008, the Legislature granted the statutory authority to cities and counties to provide up-front financing to property owners to install renewable energy sources or energy efficiency improvements that are permanently fixed to their properties, which is repaid through the property tax bill. The Legislature has expanded PACE (Property Assessed Clean Energy) for residential and commercial property owners as an option to pay for renewable energy upgrades, energy and water efficiency retrofits, water efficiency improvements, and other specified improvements for their homes or buildings. Local agencies create PACE assessment districts or establish a Community Facilities District (CFD), allowing the local agency to issue bonds to finance the up-front costs of improvements. In turn, property owners enter into a voluntary contractual assessment agreement with the local agency or agree to annex their property into a CFD to re-pay the bonds via an assessment or special tax, secured by a priority lien, on their property tax bill. The intent of the program is that the assessment or parcel tax remains with the property, even if it is sold or transferred, and the improvements must be permanently fixed to the property. SB 1233 Page 4 In California, there are several models available to local governments in administering a PACE program. Only the counties of Sonoma and Placer administer their own PACE programs. The majority of local governments contract with a private third-party or join a JPA, which contracts with a private third-party to carry out their PACE programs. Additionally, AB 2636 (Gatto), Chapter 825, Statutes of 2014, created the CalConserve Water Use Efficiency Revolving Fund, administered by DWR, to be a sustainable funding source for water use efficiency projects. The Legislature allocated $10 million to provide loans to local agencies to provide water efficiency updates to eligible residents at no upfront costs, and for local agencies to implement water use efficiency loan programs through on-bill financing. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081 SB 1233 Page 5