BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 10, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1233  
          (McGuire) - As Amended August 2, 2016


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          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  








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            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."









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            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.  











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            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


















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