BILL ANALYSIS
AB 44
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 44 (Blakeslee)
As Amended August 19, 2010
Majority vote
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|ASSEMBLY: | |(June 2, 2009) |SENATE: |27-4 |(August 26, |
| | | | | |2010) |
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(vote not relevant)
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|COMMITTEE VOTE: |8-0 |(August 30, 2010) |RECOMMENDATION: |Concur |
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Original Committee Reference: U. & C.
SUMMARY : Expands the use of voluntary contractual assessments to
include financing electricity purchase agreements.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Expand 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.
2)Require the electricity purchase agreement to contain all of the
following provisions:
a) The attached system is an eligible renewable energy
resource pursuant to the California Renewables Portfolio
Standard Program;
b) The term of the electricity purchase agreement 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
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electricity purchase agreement;
d) The owner of the attached system cannot remove the system
before the end of the term of the contractual assessment lien;
e) After installation, the electricity is purchased by a
single payment using the funds from the contractual assessment
program;
f) 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 or
judicial or non-judicial foreclosure or by any other means;
g) The system must provide electricity to the assessed
property and to no other property or location. The property
owner must not use the electricity generated from the system
for any location other than the assessed property;
h) 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; and,
i) The property owner is guaranteed the electric power from
the system, under the public agency criteria.
3)Require a public agency's legislative body to establish criteria
to ensure that a real property owner is guaranteed the
electricity from a distributed generation renewable energy source
if the owner of the system files for bankruptcy, to the extent
permitted by federal law, prior to authorizing public agency
officials and property owners to enter into voluntary contractual
assessments for financing the installation of distributed
generation renewable energy sources attached to a residential,
commercial, industrial, agricultural, or other real property
pursuant to an electricity purchase agreement.
4)Require a public agency's legislative body to find that any
electricity purchase agreement funded with a contractual
assessment is structured, to the extent permitted by federal law,
to provide protections to the property owner in the event of a
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bankruptcy of the system's owner; the protections may include the
use of a special purpose entity or other adequate security.
EXISTING LAW :
1)Authorizes public agencies, as defined, in California to
designate areas within which legislative bodies and willing
property owners may enter into contractual assessments to finance
the installation of distributed generation renewable energy
sources or energy or water efficiency improvements.
2)States legislative intent that the authorization listed above
should be used to finance the installation of distributed
generation renewable energy sources and energy or water
efficiency improvements that are fixed to residential,
commercial, industrial, agricultural, and other real property.
3)States that for the purpose of financing the installation of
water efficiency improvements, "public agency" means a city,
county, city and county, municipal utility district, community
services district, sanitary district, sanitation district, or
water district.
4)Prohibits the authorization from being used to finance the
purchase or appliances or installations not fixed to real
property.
5)Makes findings and declarations concerning the need for energy
and water efficiency improvements in order to address global
climate change, the deterrent effect of high up-front costs on
making those improvements, and the need to authorize an
alternative procedure for authorizing assessments to finance the
cost of energy efficiency improvements in order to make them more
affordable and promote their installation.
6)Declares that a public purpose will be served by a contractual
assessment program that provides the legislative body of
specified public agencies with the authority to finance the
installation of distributed generation renewable energy sources
or energy or water efficiency improvements to residential,
commercial, industrial, agricultural and other real property.
7)Authorizes the legislative body to determine that it would be
convenient, advantageous, and in the public interest to designate
an area within the public agencies' jurisdiction, which may
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encompass the entire jurisdiction or a lesser portion, within
which authorized legislative body officials and property owners
may enter into contractual assessments to finance the
installation of distributed generation renewable energy sources
or energy or water efficiency improvements that are fixed to the
property.
8)States that the term "energy efficient improvements" includes,
but is not limited to, the installation of distributed generation
renewable energy resources; and, that any energy efficiency
improvement must be fixed to the real property.
9)Requires that the resolution adopted by the governing body direct
the appropriate city official to prepare a report including
specified provisions.
10)Provides that, upon the written consent of an authorized city
official, the proposed arrangements for financing the program
pertaining to the installation of distributed generation
renewable energy resources, energy or water efficiency
improvements fixed to real property may authorize the property
owner to purchase directly the related equipment and materials
and to contract directly for the work on the property owner's
residential, commercial, industrial, and other real property.
11)Specifies that assessments may be levied 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.
12)States that assessments levied pursuant to this chapter, and the
interest and any penalties thereon shall constitute a lien
against the lots and parcels of land on which they are made until
they are paid.
13)Requires that a specified city official enter into consultations
with the office of the county auditor or controller in order to
reach agreement on what additional fees, if any, will be charged
to the city or county for incorporating the proposed contractual
assessments into the assessments of the general taxes of the city
or county on real property, and to include a report on the
results of these consultations in the report to be submitted to
the legislative body of the city.
14)Requires a legislative body to publish notice of a hearing
regarding contractual assessments.
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15)Defines "city" for purposes of these sections as a city, county,
or city and county.
16)Defines "water district" as any district or other political
subdivision, other than a city or county, a primary function of
which is the irrigation, reclamation, or drainage of land or the
diversion, storage, management, or distribution of water
primarily for domestic, municipal, agricultural, industrial,
recreation, fish and wildlife enhancement, flood control, or
power production purposes.
17)Specifies for the purpose of financing the installation of
distributed generation renewable energy sources or energy
efficiency improvements, "public agency" means a county, city,
city and county, or a municipal utility district, an irrigation
district, or public utility district that owns and operates an
electric distribution system.
18)Authorizes, under the Mello-Roos Community Facilities Act of
1982, a community facilities district to pay for work deemed
necessary to bring buildings or real property, including
privately owned buildings or real property, into compliance with
seismic safety standards or regulations. Only work certified as
necessary to comply with seismic safety standards or regulations
by local building officials may be financed.
AS PASSED BY THE ASSEMBLY , this bill created incentives for
investor owned utilities and non-utility companies to build energy
storage devices that store energy produced from renewable
facilities.
FISCAL EFFECT : Unknown
COMMENTS : AB 811 (Levine), Chapter 159, Statutes of 2008, proposed
to further the public interest of addressing climate change through
energy conservation efforts by authorizing cities to provide
up-front financing to property owners to install solar or other
renewable energy-generating devices or make specified energy
efficiency improvements to their properties through a system of
contractual assessments. Prior to AB 811, contractual assessments
were only authorized for certain types of public works projects.
Under contractual assessments, the property owner or owners within
a designated area choose to assess themselves for the cost of
energy efficiency improvements or public works projects (i.e.,
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under grounding of power lines or installation of streetlights).
The local government then provides the up-front funds for the
project, and the property owners pay an annual assessment until
those funds, plus interest, are repaid. The underlying purpose is
to create a means by which a project that provides both a public
benefit and an incidental benefit to particular property owners can
be financed without imposing the cost on property owners in other
parts of the city who derive no benefit.
AB 474 (Blumenfield), Chapter 444, Statutes of 2009, added water
efficiency improvements to the list of improvements that can be
paid for through a contractual assessment between a willing
property owner and a public agency. 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.
Support arguments: Supporters state that the cost associated with
purchasing renewable energy improvements can be very cost
prohibitive for many property owners. Even with the use of
contractual assessments many property owners still cannot make the
costs and the projected savings pencil out. Supporters believe
that by allowing the third-party provider to own the actual system,
where they are able to receive the bulk tax credits and discounts,
more property owners will be able to participate in renewable
energy programs. Supporters argue that providing additional
options for the financing of these important projects is vital to
reducing the use of electricity from the grid.
Opposition arguments: Opposition could argue that this measure
adds yet another improvement to the laundry list of improvements
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that a local government can finance through contractual
assessments; the Legislature may wish to consider whether it is
prudent to continue to authorize local governments to become a
glorified bank to help pay for on-site property improvements. The
Legislature may also wish to consider if it would be wise to place
some type of cap on the amount of contractual assessments a local
government may enter into at any one time in order to reduce the
financial risk for the local agency.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958
FN: 0006840