BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1873|
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THIRD READING
Bill No: AB 1873
Author: Huffman (D)
Amended: 6/23/10 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 8-0, 6/29/10
AYES: Wright, Harman, Calderon, Florez, Negrete McLeod,
Padilla, Price, Yee
NO VOTE RECORDED: Denham, Oropeza, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 52-24, 6/2/10 - See last page for vote
SUBJECT : Property Assessed Clean Energy bonds
SOURCE : Environmental Defense Fund
Sonoma County
DIGEST : This bill authorizes the State Treasurer, the
California Public Employees Retirement System, and the
State Compensation Insurance Fund to invest in Property
Assessed Clean Energy bonds.
ANALYSIS : Existing law authorizes cities, counties and
other public agencies 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.
CONTINUED
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Existing law declares 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. Existing law
prohibits the authorization from being used to finance the
purchase of appliances or installations not fixed to real
property.
Existing law requires the Treasurer to invest or make
deposits in banks and savings and loan associations of
revenues in the Pooled Money Investment Account in
accordance with designations specified by the Pooled Money
Investment Board.
The Board of Administration of California Public Employees'
Retirement System (CalPERS) is authorized to make any
investment authorized by law, including, among others, an
investment in real property.
The State Compensation Insurance Fund (SCIF) is authorized
to purchase general obligation bonds or other evidence of
indebtedness issued by the state.
The Joint Exercise of Powers Act authorizes any separate
entity created pursuant to that act to invest any money in
the treasury that is not required for the immediate
necessities of the agency or entity, as the agency or
entity determines is advisable.
This bill:
1. Authorizes the State Treasurer, CalPERS, and SCIF to
purchase Property Assessed Clean Energy (PACE) bonds.
2. Adds a new provision to the Joint Exercise of Powers Act
authorizing a joint powers authority (JPA) to purchase,
and a local agency to sell, the right, title, and
interest in an assessment contract pursuant to an
agreement between the JPA and the local agency.
PACE Program: This program permits local public agencies
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and utility districts to provide up-front financing to
property owners to install solar or other renewable
energy-generating devices or make specified water or energy
efficiency improvements to their properties. This
financing mechanism was first used by the City of Berkeley
through its Charter Cities authority, and then authorizes
statewide by AB 811 (Levine), Chapter 159, Statutes of 2008
and AB 474 (Blumenfield), Chapter 444, Statutes of 2009.
Under the program, a city, county, or other public agency
issues bonds and uses the proceeds to make loans to
property owners to finance energy retrofits. These loans
are repaid by the property owner over 20-30 years via an
annual assessment on the owner's property tax bill. The
assessment remains on the property even if it is sold or
transferred. From the property owner's perspective, the
added property tax assessments are partly or fully offset
by energy savings resulting from the retrofit. The loan
repayments from the property owners are dedicated by the
municipalities to the repayment of the revenue bonds.
Comments
According to the author's office, this bill intends to
expand the AB 811 (Levine) program throughout the state by
authorizing the State Treasurer, CalPERS and the SCIF to
purchase local PACE bonds, thereby lowering the interest
rates that local governments must charge homeowners, while
simultaneously creating a new, secure income stream for the
state of California. In addition this bill allows a JPA to
act as a conduit for the loans, allowing local governments
to sell the loans to the private market. The author's
office points out that Prop. 13 prohibits a local
government from selling loans directly to a private
investor (e.g., bank) so this would set up a process
whereby they can be transferred to an existing JPA and then
sold to private investors.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/3/10)
Environmental Defense Fund (co-source)
Sonoma County (co-source)
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Breathe California
CIO
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California State Council of Laborers
City of Palm Desert
Planning and Conservation League
Renewable Funding
Sierra Club
Sonoma County Water Agency
State Building & Construction Trades Council
Vote Solar
ARGUMENTS IN SUPPORT : Proponents contend that this bill
will make contractual assessments more attractive to local
governments and homeowners by reducing the cost of the
loans made to homeowners to finance energy and water
efficiency improvements. Proponents also emphasize that
making these loan programs more attractive and encouraging
local governments to use them will expand job growth at a
time we most need it and also help the state meet its
energy efficiency and renewable energy goals.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Coto, Davis, De La
Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes,
Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill,
Huber, Huffman, Jones, Bonnie Lowenthal, Ma, Mendoza,
Monning, Nava, Nestande, V. Manuel Perez, Portantino,
Ruskin, Salas, Saldana, Skinner, Smyth, Solorio, Swanson,
Torlakson, Torres, Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Conway, Cook,
DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick,
Gilmore, Hagman, Harkey, Jeffries, Knight, Logue, Miller,
Niello, Nielsen, Norby, Silva, Tran, Villines
NO VOTE RECORDED: Tom Berryhill, Lieu, Audra Strickland,
Vacancy
TSM:do 8/4/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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