BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 77
Author: Pavely (D), et al
Amended: 3/22/10
Vote: 27 - Urgency
PRIOR SENATE VOTE NOT RELEVANT
ASSEMBLY FLOOR : Not available
SUBJECT : California alternative energy and advanced
transportation
financing authority
SOURCE : Environmental Entrepreneurs
DIGEST : Assembly Amendments delete the Senate version
which expressed the intent of the Legislature to enact
necessary statutory changes relating to the Budget Act of
2009.
This bill now establishes a state-financed reserve for the
Property Assessed Clean Energy (PACE) program by
transferring funds from the Renewable Resource Trust Fund,
and makes other changes related to the PACE program. This
bill is similar to SB 26 X8 which passed the Senate 32-0
but died on the Assembly Third Reading File. This bill
does not contain the prevailing wage language which was
placed in SB 26 X8 in the Assembly which became
controversial.
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ANALYSIS :
Existing law:
1. Authorizes cities, counties, and other local public
agencies 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 through a system of voluntary contractual
assessments which is repaid, with interest, through
property tax assessments.
2. Creates the California Alternative Energy and Advanced
Transportation Financing Authority (CAEATFA) for the
purpose of promoting the development and utilization of
alternative energy sources and the development and
commercialization of advanced transportation
technologies. CAEATFA is authorized to issue up to $1
billion in revenue or prepayment bonds to fund projects.
3. Authorizes the California Energy Commission (CEC) to use
federal funds received from the American Recovery and
Reinvestment Act of 2009 (ARRA), or subsequent federal
acts related to ARRA, to award contracts, grants, and
loans for energy efficiency, energy conservation,
renewable energy, and other energy-related projects and
activities.
This bill:
1. Authorizes CAEATFA within the State Treasurer's Office
to provide reserves for bonds issued through the
Property Assessed Clean Energy (PACE) program.
2. Specifies that the reserves may be up to 10 percent of
PACE bonds issued by local governments. The reserves
would lower the cost to local governments of raising
money to make loans to homeowners and businesses for
energy efficiency and generation projects.
3. Sets forth various criteria that CAEATA must consider
when providing the debt reserves to localities,
including whether the PACE program offers loans for
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energy efficiency projects.
4. Appropriates $50 million through January 1, 2015 from
the Renewable Resource Trust Fund (a fund used by the
California Energy Commission to support renewable energy
projects) to fund the program. States that up to
$300,000 may be expended by the authority for the
initial administrative costs.
5. Authorizes CAEATFA to pool local PACE bonds (for the
purpose of reducing borrowing costs), by purchasing them
from individual municipalities, combining them with
other PACE bonds, and selling the pooled bonds through
public or negotiated sales.
Background
CAEATFA . CAEATFA was created in 1980 with an authorization
of $200 million in revenue bonds to finance projects
utilizing alternative sources of energy, such as
cogeneration, wind and geothermal power. In 1994, it was
renamed the California Alternative Energy and Advanced
Transportation Financing Authority and its charge expanded
to include the financing of "advanced transportation"
technologies.
During the energy crisis of 2001, its authority was again
expanded, this time to provide financial assistance to
public power entities, independent generators, and others
for new and renewable energy sources, and to develop clean
distributed generation.
CAEATFA consists of five members: the Director of the
Department of Finance, the Chairman of the CEC, the
President of the Public Utilities Commission, the State
Controller, and the State Treasurer. Its current mission
is to provide financing for facilities that use alternative
energy sources and technologies. CAEATFA also provides
financing for facilities needed to develop and
commercialize advanced transportation technologies that
that conserve energy, reduce air pollution, and promote
economic development and jobs.
Property Assessed Clean Energy Bonds/Program . First
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launched in California, these programs are being pursued
across the nation by municipalities to accelerate the
retrofitting of residential and commercial buildings with
renewable energy and energy efficiency improvements. Bonds
are issued and the proceeds are loaned to property owners
to finance energy retrofits who then repay their loans over
20 years via an annual assessment on their property tax
bill. PACE bonds can be issued by municipal financing
districts and the proceeds can be typically used to
retrofit both commercial and residential properties.
Although the costs of energy efficiency and renewable
energy generation can be offset by lower energy payments,
property owners are challenged to finance those
improvements as a result of declining property values. The
PACE program addresses that issue by permitting
improvements to be paid for through property tax
assessments which will run with the property and pass on to
the next owner along with the promise of lower energy
bills. Property tax liens are senior to mortgage debt
reducing the default risk for local governments.
Comment
California Programs . Charter cities have broad authority
to create special assessment districts. Berkeley was the
first city in the nation to launch a PACE program and used
a special assessment district to establish a financing
mechanism in which individual property owners can
voluntarily participate and repay improvements through a
special property tax assessment.
The Legislature specifically addressed this issue by
permitting the use of voluntary contractual assessments for
energy and water efficiency and renewable energy generation
as a result of AB 811 (Levine), Chapter 159, Statutes of
2008, which was expanded by AB 474 (Blumenfield), Chapter
444, Statutes of 2009.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Transfer to new account $50,000
Special*
($50,000)
Special**
Program administration $300
$300Special**
* Renewable Resource Trust Fund
** California Alternative Energy Authority Fund, PACE
Account
SUPPORT : (Verified 3/23/10 )
Environmental Entrepreneurs (source)
State Treasurer, Bill Lockyer
Adura Technologies
California Building Performance Contractors Association
California Energy Efficiency Industry Council
Center for Sustainable Energy California
Cleantech Group LLC
County of Santa Clara
Eco Motion
Efficiency First
Energy Industries
Environmental Defense Fund
Johnson Controls
KW Engineering
Lime Energy
McCalmont Engineering
National Parks Conservation Association
Natural Resources Defense Council
New Resource Bank
RBC Capital Markets
Recurve
Renewable Funding
Sempra Energy
State Building and Construction Traces Council of
California
Stone & Youngberg
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Southern California Edison
Suntech
The Vote Solar Initiative
Union of Concerned Scientists
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is intended to create a state program in the
State Treasurer's Office through which local PACE programs
can be aggregated into larger groupings to make the loans
both much more attractive to financial markets and lower
the costs of financing.
DLW:do 8/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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