BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB x1 14 (Skinner)
Hearing Date: 07/06/2011 Amended: 07/01/2011
Consultant: Brendan McCarthy Policy Vote: EU&C 10-0
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BILL SUMMARY: AB x1 14 authorizes the California Alternative
Energy and Advanced Transportation Financing Authority to
provide financial support to lenders to facilitate projects for
energy and water conservation and renewable energy. The fund
source is $50 million originally appropriated in SB 77 (Pavley,
2010).
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Providing financial support $50,000 General
*
* Renewable Resource Trust Fund.
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STAFF COMMENTS: SUSPENSE FILE.
Under current law, local governments are authorized to create
Property Assessed Clean Energy (PACE) programs. In a PACE
program, commercial or residential property owners borrow money
from a local government entity to pay for energy efficiency
improvements or renewable energy projects (such as rooftop solar
systems). The debt service associated with the loan is attached
to the property tax bill. Typically, local governments that
operate PACE projects sell municipal bonds to finance the loans
made to property owners and the bonds are paid off with the debt
service payments made by property owners via their property tax
bills.
SB 77 (Pavley, 2010) established a PACE reserve program, to be
implemented by the California Alternative Energy and Advanced
Transportation Financing Authority (Authority). The Authority is
authorized to provide a reserve up to ten percent of any PACE
AB x1 14 (Skinner)
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bond issued by the local government. The reserve provided by the
Authority would be held in an escrow account against any
possible default by a property owner that might interrupt debt
service payments by the local government agency. SB 77 also
appropriated $50 million from the Renewable Resource Trust Fund
(a fund used by the Energy Commission to support the use of
renewable energy) to the new account.
In July 2010, the federal Housing Finance Authority issued a
directive to the federal residential lending agencies (such as
Fannie May) prohibiting them from lending on properties
encumbered by PACE loans. The concern of federal regulators is
that PACE loans, because they are attached to property tax
bills, have priority over loans secured against the property.
The directive effectively halted all PACE financing activity in
the state.
AB x1 14 creates a new Clean Energy Upgrade Program under the
oversight of the Authority. Under the new program, the Authority
would provide reserves or other financial assistance to
financial institutions that provide loans for energy or water
conservation, electric vehicle charging infrastructure, or
renewable energy generation. By providing financial assistance
to lenders, the bill intends to lower borrowing costs for
borrowers and make credit more available.
The bill specifies that financial support shall only be provided
for loans made to owners of residential properties with three
units or less or for commercial projects that cost less than
$25,000. The bill specifies other eligibility criteria for the
program.
The bill requires the Authority to adopt regulations to
implement the bill's requirements.
The bill authorizes up to $500,000 of the original appropriation
to be used for administrative costs.
By expanding the possible uses of funds appropriated by SB 77,
this bill makes an appropriation.
SB 679 (Pavley) reappropriates $25 million of the $50 million
initially appropriated in SB 77 (Pavley, 2010) for inclusion in
AB x1 14 (Skinner)
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an existing energy conservation loan program administered by the
California Energy Commission. That bill is in the Assembly
Utilities and Communications Committee.
The recent amendments authorize regulations required under the
bill to be adopted as emergency regulations.