BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 14X1|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 14X1
Author: Skinner (D), et al.
Amended: 7/1/11 in Senate
Vote: 27
SENATE ENERGY, UTIL. & COMM. COMMITTEE : 10-0, 5/3/11
AYES: Padilla, Fuller, Berryhill, Corbett, DeSaulnier,
Pavley, Rubio, Simitian, Strickland, Wright
NO VOTE RECORDED: De Le�n
SENATE APPROPRIATIONS COMMITTEE : 8-1, 07/06/11
AYES: Kehoe, Alquist, Emmerson, Lieu, Pavley, Price,
Runner, Steinberg
NOES: Walters
ASSEMBLY FLOOR : 58-12, 3/25/11 - See last page for vote
SUBJECT : Energy: energy upgrade financing
SOURCE : Author
DIGEST : This bill 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), Chapter 15, Statutes of 2010.
ANALYSIS : Existing law:
CONTINUED
AB 14X1
Page
2
1.Establishes the California Alternative Energy and
Advanced Transportation Financing Authority (CAEATFA)
within the State Treasurer's Office and authorizes it to
issue revenue or prepayment bonds to industry for the
purpose of promoting the development and utilization of
alternative energy sources and the development and
commercialization of advanced transportation
technologies.
2.Establishes the Renewable Resources Trust Fund (RRTF)
with up to $65.5 million per year collected from a
customer surcharge to support renewable energy programs
administered by the State Energy Resources Conservation
and Development Commission (CEC).
3.Appropriates $50 million from the RRTF to the CAEATFA to
implement the Property Assessed Clean Energy (PACE)
Reserve program to help lower the cost to local
governments for issuing bonds secured by voluntary
contractual assessments on property to finance the
installation of distributed generation renewable energy
sources, electric vehicle charging infrastructure, or
energy or water efficiency improvements.
4.Authorizes CAEATFA to expend up to $300,000 of the $50
million for initial administrative costs in implementing
the PACE reserve program.
This bill:
1.Expands the authority of the CAEATFA to spend the $50
million appropriated from the RRTF for PACE to administer
a new Clean Energy Upgrade Program that would be
developed by the CEC and the CAEATFA to provide a reserve
or other financial assistance to lenders for loan
programs to help finance energy efficiency and water
efficiency improvements and the installation of renewable
energy generation technologies and electric vehicle
charging equipment on residential and commercial
properties.
2.Authorizes financing for loan programs that finance a
residential project of three units or fewer or a
commercial project that costs less than $25,000 and
CONTINUED
AB 14X1
Page
3
require CAEATFA to adopt guidelines to administer the
program.
3.Authorizes financing for loan programs that offer
financing for electrical vehicle charging infrastructure
if the electric vehicle charging infrastructure is part
of a project to install energy efficiency improvements
and distributed generation renewable energy resources and
is designed so that the project does not increase peak
energy demand.
4.Authorizes CAEATFA to expend up to $550,000 for initial
administrative costs in implementing the Clean Energy
Upgrade Program.
5.Requires the CAEATFA to report annually to the
Legislature a summary of loans that received assistance
under the program.
6.Declares that its provisions address the fiscal emergency
proclaimed by the Governor.
7.Authorizes regulations required under this bill to be
adopted as emergency regulations.
Background
PACE Programs Halted
PACE programs provide up-front financing for renewable and
energy efficiency-related upgrades to properties. Property
owners can borrow funds from participating local
governments, which are then repaid over 20 years through an
annual assessment on the owner's property tax bill. The
assessment remains on the property when sold or
transferred. This repayment feature makes PACE loans
acquire a priority lien over existing mortgages, which may
pose unusual and difficult risk management challenges for
lenders and mortgage security investors. As a result, in
July 2010, the Federal Housing Financing Agency (FHFA)
issued a directive to the federal residential lending
agencies that has effectively halted the operation of
residential PACE programs across the country.
CONTINUED
AB 14X1
Page
4
Energy Upgrade California
This year, using about $33 million in American Recovery and
Reinvestment Act funds that were intended for PACE, the CEC
launched "Energy Upgrade California," a web portal
resulting from a collaborative effort among CEC, the Public
Utilities Commission, utilities, local governments,
non-governmental organizations and the private sector to
establish a "one-stop clearinghouse" for energy efficiency
information, incentives and rebates and training for
contractors and building professionals. Each county has
its own page that highlights the services and energy
efficiency opportunities available for local residents.
Property owners can enter their zip code or county name to
learn about local incentives, financing options and
participating contractors. A substantial portion of the $33
million is dedicated to outreach and promotion to entice
property owners to adopt energy efficiency measures.
Another $4.3 million is intended for CAEATFA to develop
financing products for lenders that would make loans
available through Energy Upgrade California.
Federal Programs for Energy Efficiency Financing
According to CAEATFA staff, federal programs offer
residential financing options for residential energy
efficiency measures that may meet some of the same need
addressed by this bill. On April 21, the U.S. Department
of Energy and Housing and Urban Development announced a new
program of "PowerSaver" loans to offer homeowners up to
$25,000 to make energy efficiency improvements of their
choice, including installation of insulation, duct sealing,
replacement doors and windows, HHVAC systems, water
heaters, solar panels, and geothermal systems.
Related Legislation
SB 679 (Pavley), appropriates the unencumbered balance of
the $50 million that was appropriated to the CAEATFA for
the PACE Reserve program to the Energy Conservation
Assistance Account program administered by CEC for
providing low-interest energy efficiency revolving loans to
local governments, public schools, and hospitals.
CONTINUED
AB 14X1
Page
5
SB 1 X1 (Steinberg), Chapter 2, Statutes of 2011-12 First
Extraordinary Session, appropriates $40 million over five
years from the RRTF for Clean Technology Partnership
Academies.
SB 343 (de Leon), authorizes an unspecified amount from the
Emerging Renewable Resources Account of the RRTF for a
program for energy efficiency retrofits for commercial
buildings.
Prior Legislation
SB 77 (Pavley), Chapter 15, Statutes of 2010, appropriated
$50 million from the RRTF to the CAEATFA for local PACE
programs, and was chaptered prior to the FHFA directive
that froze PACE programs. Although that directive is being
challenged in court, the legal uncertainty about the
program has brought the residential PACE program to a
virtual halt. The demand for commercial PACE financing is
minimal because of project cap of $25,000.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/6/11)
California State Treasurer
California Association of Realtors
California Municipal Utilities Association
Ecology Action
Matadors Community Credit Union
Rabobank International
Renewable Funding
Stop Waste.Org
Sierra Club California
The Solar Alliance
The Vote Solar Initiative
Union of Concerned Scientists
ARGUMENTS IN SUPPORT : According to the author's office,
the Clean Energy Upgrade program established by this bill
is designed to achieve the same goals as the PACE program:
increase demand for energy efficiency and distributed
small-scale renewable energy technologies, create green
CONTINUED
AB 14X1
Page
6
jobs, reduce interest rates on loans to property owners,
increase capital availability by reducing risk to lenders,
and leverage available funds. According to the author,
"Clean Energy Upgrade program will provide a backstop for
lenders against the risk of occasional loan loss, allowing
the lender to lower its rates and thereby lowering the
borrowing cost to property owners."
ASSEMBLY FLOOR : 58-12, 3/25/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Cook, Davis, Dickinson, Eng,
Feuer, Fletcher, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Jeffries, Bonnie Lowenthal, Ma, Mendoza,
Miller, Mitchell, Monning, Nestande, Olsen, Pan, Perea,
V. Manuel P�rez, Portantino, Skinner, Smyth, Solorio,
Torres, Wieckowski, Williams, Yamada, John A. P�rez
NOES: Donnelly, Garrick, Grove, Halderman, Harkey, Knight,
Logue, Mansoor, Morrell, Silva, Valadao, Wagner
NO VOTE RECORDED: Conway, Gorell, Hagman, Hall, Jones,
Lara, Nielsen, Norby, Swanson, Vacancy
RM:rm:nl 7/6/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED