BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 44|
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THIRD READING
Bill No: AB 44
Author: Blakeslee (R)
Amended: 8/2/10 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 3-2, 6/30/10
AYES: Cox, Kehoe, DeSaulnier
NOES: Aanestad, Price
ASSEMBLY FLOOR : Not relevant
SUBJECT : Improvement Act of 1911: contractual
assessments
SOURCE : SunRun
DIGEST : This bill expands the use of voluntary
contractual assessments to include financing electricity
purchase agreements by expanding the definition of
"permanently fixed to real property" to include systems
attached to a residential, commercial, industrial,
agricultural, or other real property pursuant to an
electricity purchase agreement between the owner of the
system and the owner of the assessed property. The
electricity purchase agreement must contain specified
provisions. This bill also limits the total annual
property tax and assessments from exceeding five percent of
the market value of the property.
ANALYSIS : Existing law authorizes only with the free and
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willing consent of affected property owners, public
agencies to use "voluntary contractual assessments" to
finance:
1. Public improvements to developed parcels (SB 837
[McQuorquodale], Chapter 1385, Statutes of 1987).
2. Renewable energy sources or energy efficiency
improvements that are permanently fixed to real property
(AB 811 [Levine], Chapter 159, Statutes of 2008).
3. Water efficiency improvements that are permanently fixed
to real property (AB 474 [Blumenfield], Chapter 444,
Statutes of 2009).
To use voluntary contractual assessments, a public agency's
legislative body must adopt a resolution, which:
1. Determines that it would be convenient, advantageous,
and in the public interest to designate an area within
which officials and property owners may enter into
contractual assessments and make related financing
arrangements.
2. Identifies the kinds of public works which may be
financed.
3. Describes the area where contractual assessments may be
used.
4. Describes the proposed financing arrangements, including
criteria for determining the creditworthiness of a
property owner.
5. States the time and place for a public hearing.
6. Directs an official to prepare a detailed report about
the contractual assessment program and consult with the
county auditor and county controller regarding fees.
This bill expands the use of voluntary contractual
assessments to include financing electricity purchase
agreements by expanding the definition of "permanently
fixed to real property" to include systems attached to a
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residential, commercial, industrial, agricultural, or other
real property pursuant to an electricity purchase agreement
between the owner of the system and the owner of the
assessed property. The electricity purchase agreement must
contain these provisions:
1. The attached system is an eligible renewable energy
resource pursuant to the California Renewables Portfolio
Standard Program/
2. The term of the electricity purchase agreement is at
least as long as the term of the related assessment
contract.
3. The owner of the attached system agrees to install,
maintain, and monitor the system for the entire term of
the electricity purchase agreement.
4. The owner of the attached system cannot remove the
system before the end of the term of the contractual
assessment lien.
5. After installation, the electricity is purchased by a
single payment using the funds from the contractual
assessment program.
6. The right to receive the electricity from the system is
tied to the ownership of the assessed real property and
must 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.
7 The electricity purchase agreement identifies the public
agency that is a party to the assessment contract on the
real property as a third-party beneficiary of the
electricity purchase agreement until the assessment lien
is fully paid and, only until then, prohibits amendments
to the electricity purchase agreement without the public
agency's consent.
This bill also requires the prescribed report to include
criteria for determining the creditworthiness of a property
owner, and limits the total annual property tax and
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assessments on the property to not exceed five percent of
the market value of the property.
Comments
Since the 2008 Levine bill took effect, communities
throughout California have developed financing programs to
help property owners pay for renewable energy improvements.
Financing solar power through electricity purchase
agreements offers significant advantages over financing
individually-owned solar systems. Electricity purchase
agreements alleviate the property owner's responsibility
for maintaining the system and provide incentives for the
third-party service-provider to operate systems at maximum
efficiency. Third-party providers can also take full
advantage of federal tax credits and accelerated
depreciation schedules, significantly reducing the costs of
solar systems. Economies of scale also allow third-party
providers to deliver solar power at lower costs. This bill
improves on the Levine bill's success and benefits property
owners by combining voluntary contractual assessment
programs' low-cost financing with electricity purchase
agreements' advantages over individually-owned solar
systems.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/3/10)
SunRun (source)
AGB:do 8/4/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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