BILL NUMBER: SB 1130 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 7, 2012
AMENDED IN SENATE APRIL 19, 2012
INTRODUCED BY Senator De León
(Principal coauthor: Assembly Member Skinner)
FEBRUARY 21, 2012
An act to add Chapter 5.10 13
(commencing with Section 25499) 25987.1)
to of Division 15 of the Public Resources
Code, relating to energy , and making an appropriation therefor
.
LEGISLATIVE COUNSEL'S DIGEST
SB 1130, as amended, De León. Energy: energy assessment:
commercial buildings: retrofitting.
financing.
Existing law requires the State Energy Resources Conservation and
Development Commission to implement a program to provide financial
assistance for energy efficiency projects.
This bill would enact the Commercial Building Energy Retrofit
Financing Act of 2012 and would require the commission to establish
the Commercial Building Energy Retrofit Financing Program and to hire
a third-party administrator by July 1, 2013, to develop and operate
the program to provide financial assistance, through authorizing the
issuance of, among other things, revenue bonds, to owners of eligible
commercial properties for implementing energy improvements for their
properties. The bill would provide that the bonds are secured by the
recording of an energy remittance repayment agreement, as defined,
on the deed of the property for which the improvements are performed.
The bill would require the State Board of Equalization to collect
installment payments from owners of eligible properties whose
applications have been approved by the commission.
This bill would require the commission to meet, for the purpose of
approving applicants to participate in the program and authorizing
the issuance of, among other things, negotiable bonds to generate
moneys sufficient to finance energy efficiency retrofit measures
specified on applications that have been approved prior to the
meeting. The bill would authorize the Treasurer to issue and renew
the negotiable bonds.
This bill would establish the Commercial Building Energy Retrofit
Debt Servicing Fund, the Loan Loss Reserve Account, and the
Administration Account within the fund. The bill would require the
State Board of Equalization to deposit the installment payment
received from the owners of eligible properties into the fund and the
fees collected into the specified accounts. The bill would
continuously appropriate the moneys in the fund and the accounts to
repay the principal and interest on the bonds, and to cover the
administrative costs incurred by the Treasurer, the commission, and
the State Board of Equalization, thereby making an appropriation.
Existing law establishes incentives in the form of grants and
loans to low-income residents, small businesses, and residential
property owners for constructing and retrofitting buildings to be
more energy efficient.
The bill would also require the State Energy Resources
Conservation and Development Commission to analyze and evaluate
standards for commercial energy building.
Vote: majority. Appropriation: no yes
. Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 13 (commencing with
Section 25987.1) is added to Division 15 of the Public
Resources Code , to read:
CHAPTER 13. COMMERCIAL BUILDING ASSESSMENT FINANCING
Article 1. General Provisions and Definitions
25987.1. This act shall be known, and may be cited, as the
Commercial Building Energy Retrofit Financing Act of 2012.
25987.2. The purpose of this chapter is to facilitate private
financing to enable private commercial building owners to invest in
clean energy improvements, to incentivize private equity managers to
invest in clean energy improvements, to stimulate the state economy
by directly creating jobs for contractors and other persons who
complete new energy improvements, and to reinforce the leadership
role of the state in the new energy economy, thereby attracting
energy manufacturing facilities and related jobs to the state.
25987.3. The Legislature finds and declares all of the following:
(a) Commercial buildings represent a huge opportunity to
significantly increase energy efficiency and reduce greenhouse gas
emissions. To do this, we need to address the design, construction,
and operation of these buildings.
(b) The lack of accessible and affordable financing for energy
efficiency retrofits results in energy-inefficient buildings that are
estimated to consume up to 50 percent more energy than required to
achieve the same level of comfort. Energy use in the building sector
accounts for approximately 20 percent of global emissions of carbon
dioxide, or 10 billion tons, annually.
(c) It is possible to retrofit the California commercial building
stock to use, on average, at least 50 percent less energy by 2050
through the wide adoption of deep energy retrofits that save more
energy and increase profits for building owners.
(d) Investment in building performance upgrades is an intelligent
business decision. Building performance upgrades lower operating
costs, improve occupant comfort, hedge against utility price
increases, demonstrate commitment to tenant well-being, reduce
exposure to regulation, help the environment, and ultimately boost
property values.
(e) It is in the best interest of the state and its citizens to
enable and encourage the owners of eligible commercial property to
invest in new energy improvements, including energy efficiency
improvements, water efficiency improvements, and renewable energy
improvements, by enacting this division to establish, develop,
finance, implement, and administer a new energy improvement program
that provides for both energy efficiency improvements and renewable
energy improvements and to assist those owners who choose to
participate in the program to complete new energy improvements to
their properties because of the following:
(1) New energy improvements, including energy efficiency
improvements and renewable energy improvements, can provide positive
cashflow when the costs of the improvements are spread out over a
long enough time that building's cumulative utility bill cost savings
exceed the amount of the liens recorded on the eligible buildings to
assure payment for the improvements.
(2) Many owners of eligible commercial buildings are unable to
fund a new energy improvement because the owners do not have
sufficient liquid assets to directly fund the improvement or are
unable or unwilling to incur the negative net cashflow likely to
result if the owner uses a typical existing loan program to fund the
improvement.
(f) Reduction in the amount of emissions of greenhouse gases and
environmental pollutants resulting from increased efficiencies and
the resulting decreased use of traditional nonrenewable fuels will
improve air quality and may help to mitigate climate change.
(g) The commercial building owners who participate in the program
established pursuant to this division to assist them in completing
new energy improvements, including energy efficiency improvements and
renewable energy improvements, to the property shall do so
voluntarily.
25987.4. Unless the context otherwise requires, for the purposes
of this division, the following terms have the following meanings:
(a) "Applicant" means a person, or an entity or group of entities,
engaged in business or operations in the state, whether organized
for profit or not for profit that applies for financial assistance
from the commission for the purpose of implementing a project in a
manner prescribed by the commission.
(b) "Alternative sources of energy" or "alternative energy sources"
means energy from cogeneration technology, the conservation of
energy, or energy from solar, biomass, wind, geothermal, or any other
source of energy, the efficient use of which will reduce the use of
conventional energy fuels.
(c) "Board" means the State Board of Equalization.
(d) "Commercial Building Energy Retrofit Bond" means a bond issued
pursuant to Section 26987.28 that is secured by an energy remittance
repayment agreement on property entered into voluntarily to finance
the installation of renewable energy sources, energy efficiency
improvement or retrofits, or water efficiency improvements.
(e) "Conventional energy fuel" means any of the following:
(1) A fuel derived from petroleum deposits, including, but not
limited to, oil, heating oil, gasoline, and fuel oil.
(2) Natural gas, including liquified natural gas.
(3) Nuclear fissionable materials.
(f) "Demand response" means energy storage, controls, and
associate equipment that permits altering the timing of energy demand
in return for economic reward based on time of use pricing or demand
response incentive.
(g) "Eligible building" means a commercial or industrial building
located within the boundaries of the state.
(h) "Energy efficiency improvement or retrofit" means one or more
installations or modifications to eligible property that are designed
to reduce the energy consumption of the building and includes, but
is not limited to, all of the following:
(1) High-efficiency mechanical equipment.
(2) High-efficiency electrical equipment.
(3) Capturing or reducing heat gain or solar shading, including
the roof and south and west walls, and not just glazing.
(4) High-efficiency water heating.
(5) Insulation in walls, roofs, floors, and foundations and in
heating and cooling distribution systems.
(6) Storm windows and doors, multiglazed windows and doors,
heat-absorbing or heat-reflective glazed and coated window and door
systems, additional glazing, reductions in glass area, and other
window and door system modifications that reduce energy consumption.
(7) Automatic energy control systems.
(8) Heating, ventilating, or air conditioning and distribution
system modifications or replacements.
(9) Caulking and weather stripping.
(10) Replacement or modification of lighting fixtures to increase
the energy efficiency of the system.
(11) Energy recovery and energy storage systems.
(12) Daylighting systems.
(13) A modification, installation, or remodeling approved as a
utility cost-savings measure by the State Energy Resources
Conservation and Development Commission, and which may include
measures described in the Database for Energy Efficiency Resources
(DEER) overseen by the California Public Utilities Commission (CPUC)
and utilized by investor-owned utilities and energy efficiency
specialists participating in their Energy Efficiency (EE) programs.
(i) "Energy remittance repayment agreement" means a contractual
agreement between an eligible building owner and the commission,
secured by a lien recorded on an eligible building specially
benefited by a new energy improvement for which the commission will
make reimbursement or a direct payment to the party financing the
energy improvements, and "contractual energy remittance" means that
reimbursement or direct payment. The amount to be repaid pursuant to
the energy remittance repayment agreement shall include the costs
necessary to finance the energy efficiency improvements less any
rebates, grants, and other direct financial assistance received by
the owner pursuant to other law and a loan loss reserve fee that is
not less than 1.5 percent to be established by the program
administrator of the financing costs to insure against nonperformance
of the loan and other losses of the program, and a program
administrative cost fee.
(j) "Energy efficiency specialist" means an individual or business
certified by rules or requirements of the State Energy Resources
Conservation and Development Commission, the Public Utilities
Commission, an investor-owned utility, or a publicly owned utility to
analyze, evaluate, or install a renewable energy source, energy
efficiency improvement, or water efficiency improvement for eligible
property.
(k) "Financial assistance" means either of the following:
(1) Loans, loan loss reserves, interest rate reductions, secondary
loan purchase, insurance, guarantees or other credit enhancements or
liquidity facilities, contributions of money, property, labor, or
other items of value, or any combination thereof, as determined by,
and approved by a resolution of, the commission.
(2) Other types of assistance the commission determines is
appropriate.
(l) "Loan balance" means the outstanding principal balance of
loans secured by a mortgage or deed of trust with a first or second
lien on eligible property.
(m) "Loan loss reserve fee" means a fee paid by a combination of
banks, loan recipients, and government agencies, that serves as
collateral in the event of a loan default.
(n) "Participant" means a person, or an entity or group of
entities, engaged in business or operations in the state, whether
organized for profit or not for profit, that, as a qualified
applicant is approved for financial assistance pursuant to Article 2
of this chapter and has entered into an energy remittance repayment
agreement with the commission for the purpose of implementing a
project in a manner prescribed by the commission.
(o) "Portfolio" means an aggregation of approved applications.
(p) "Program" means the Commercial Building Energy Retrofit
Financing Program established by the commission in accordance with
Section 26987.7.
(q) "Program administration cost fee" mean costs incurred by the
commission, the Treasurer, and the State Board of Equalization to
administer the program.
(r) "Project" means a building, improvement to the land or
building, rehabilitation, work, property, or structure, real or
personal, stationary or mobile, including, but not limited to,
machinery and equipment, that utilizes water efficiency improvements,
alternative sources of energy, or energy efficiency improvements.
(s) "Qualified applicant" means a person or business entity who
does all of the following:
(1) Owns an eligible building that has a ratio of loan balance to
its appraised value not to exceed 85 percent and subject to
adjustment by the program administrator at the time the person's
program application is approved, as shown in the records of the
county assessor, unless the holder of the deed of trust or mortgage
recorded against the eligible property that has priority over all
other deeds of trust or mortgages recorded against the eligible
property has consented in writing to the recording of an energy
remittance repayment agreement pursuant to this division against the
eligible property.
(2) Timely submits to the commission a complete application, which
notes the existence of any first priority mortgage or deed of trust
on the eligible property and the identity of the holder of the
mortgage or deed of trust, to join the program and consents to the
levying of a special assessment on the property pursuant to this
chapter.
(3) Meets standard of credit worthiness that the commission may
establish.
(t) "Renewable energy" means heat, processed heat, space heating,
water heating, steam, space cooling, refrigeration, mechanical
energy, electricity, or energy in any form convertible to these uses,
whether produced or conserved, that does not expend or use
conventional energy fuels, and that uses any of the following
electrical generation technologies:
(1) Biomass.
(2) Solar thermal.
(3) Photovoltaic.
(4) Wind.
(5) Geothermal.
(u) "Renewable energy improvement" means one or more fixtures,
products, systems, or devices, or an interacting group of fixtures,
products, systems, or devices, that directly benefit an eligible
property or that are installed on the user side of an electric meter
of an eligible property and that produce energy from renewable
resources, including, but not limited to, photovoltaic, solar
thermal, small wind, low-impact hydroelectric, biomass, or geothermal
systems such as ground source heat pumps, as may be approved by the
commission.
Article 2. Commercial Building Energy Retrofit Financing
Program
25987.5. The purpose of the Commercial Building Energy Retrofit
Financing Program is to help provide the special benefits of water
efficiency improvements, alternative energy, and energy efficiency
improvements to owners of eligible property who voluntarily
participate in the program by establishing, developing, financing,
and administering a program to assist those owners in completing
improvements.
25987.6. The commission shall have and exercise all rights and
powers necessary or incidental to or implied from the specific powers
granted to the commission by this division. Those specific powers
shall not be considered as a limitation upon any power necessary or
appropriate to carry out the purposes and intent of this chapter.
25987.7. The commission shall establish, develop, finance, and
administer pursuant to Section 25987.9 the Commercial Building Energy
Retrofit Financing Program. The program shall be designed to provide
financial assistance for an owner of an eligible building to use one
or more energy efficiency specialists to retrofit the property with
one or more alternative energy sources or renewable energy
improvements, energy efficiency improvements, or water efficiency
improvements, by applying to the commission for inclusion of the
owner's project in a portfolio that will be financed through the use
of the revenue bonds issued pursuant to this chapter. These bonds
shall be secured by revenues generated through energy remittance
repayment agreements recorded on the buildings benefited by the
projects in the portfolio. The program shall provide financial
assistance for energy efficiency improvements when the total energy
and water cost savings realized by the property owner, and any
successor or successors to the property owner, during the useful life
of the improvements, as determined by an analysis required pursuant
to subdivision (i) of Section 26987.13 are expected to exceed the
total costs incurred by the owner pursuant to the program.
25987.8. To receive financial assistance pursuant to this
chapter, a qualified applicant shall contractually agree to the
recording of an energy remittance repayment agreement on the eligible
building that is being retrofitted.
25987.9. By July 1, 2013, the commission shall develop a request
for proposal to develop the program by a third-party administrator
and for the third-party administrator to administer the program and
establish an automated, asset-based underwriting system for all
eligible properties in the state. The party selected as the
third-party administrator shall only be selected if the program by
the party submitted requires all costs, including start-up costs of
the program, to be covered by the loan recipients, the administrator,
the bond purchasers, or some combination thereof. The program
selected shall not include General Fund costs or liabilities, with
the exception of loans from the General Fund utilized for start-up
costs, that shall be repaid within two years.
25987.10. The third-party administrator shall establish
underwriting guidelines that consider an applicant's qualification,
and other appropriate factors, including, but not limited to, credit
reports and loan-to-value ratios, consistent with good and customary
lending practices, necessary for the Treasurer to obtain a bond
rating for bonds issued pursuant to Article 3 (commencing with
Section 25987.28) for a successful bond sale.
25987.11. The third-party administrator shall disclose to an
owner of a commercial building all fees imposed pursuant to this
chapter, including the loan loss reserve fee, the program
administration cost fee, and the interest rate charged, prior to the
submission of an application by the building owner.
25987.12. (a) An owner of an eligible building who wishes to
undertake an energy efficiency project shall submit to the
third-party administrator an application to participate in the
program.
(b) The submission of an application is deemed to be a voluntary
agreement by the owner for the commission to record the energy
remittance repayment agreement on the deed of the eligible building
upon the approval of the application.
(c) The application form developed by the third-party
administrator shall include a statement in no less than 12-point type
stating the following:
SUBMISSION OF THIS APPLICATION CONSTITUTES THE VOLUNTARY CONSENT
OF THE APPLICANT FOR THE RECORDATION OF THE ENERGY REMITTANCE
REPAYMENT AGREEMENT ON THE DEED OF THE ELIGIBLE PROPERTY. UPON THE
APPROVAL BY THE COMMISSION OF THE APPLICATION AND THE RECORDATION OF
THE ENERGY REMITTANCE REPAYMENT AGREEMENT, A LIEN IN THE AMOUNT
SPECIFIED IN THE ENERGY REMITTANCE REPAYMENT AGREEMENT SHALL BE
SECURED BY THE PROPERTY.
25987.13. The owner of an eligible building shall include all of
the following information in the application:
(a) The name, business address, and e-mail address of the owners
of the eligible building.
(b) The names of all entities that hold a secured lien on the
eligible building and their contact information.
(c) The total dollar amount of liens that have been recorded on
the eligible building.
(d) An appraisal of the value of the eligible building.
(e) A detailed description of the energy efficiency improvements
being funded.
(f) The name of the financial institution providing interim
financing for the improvements or the warehouse facility developed
pursuant to Section 25987.26.
(g) The structure of the loan financing the energy efficiency
improvements.
(h) Any information that the commission or third-party
administrator requires to verify that the owner will complete the
project.
(i) An analysis performed by an energy efficiency specialist to
quantify the costs of the energy and water efficiency improvements,
and total energy and water cost savings realized by the owner, or his
or her successor during the useful life of, and estimated carbon
impacts of, the improvements, including an annual cash flow analysis.
(j) Other information deemed necessary by the commission or the
third-party administrator.
25987.14. (a) In addition to the information required under
Section 26987.13, an applicant shall provide in the application a
detailed description of the property and a detailed description of
the transactional activities associated with the improvements,
including all transactional costs and other information deemed
necessary by the commission or the third-party administrator.
(b) An applicant shall agree in the application to remit repayment
installments due by an electronic funds transfer under procedures
prescribed by the board.
25987.15. (a) The third-party administrator shall recommend to
the commission on the approval or disapproval of an application.
(b) The commission may approve and accept into the program only
those applicants that meet both of the following conditions:
(1) The applicant is a qualified applicant.
(2) For improvements that exceed five hundred thousand dollars
($500,000), the property owner shall obtain a guarantee on the energy
and water cost savings as quantified by the analysis required
pursuant to subdivision (i) of Section 26987.13 by obtaining energy
savings insurance issued by an A.M. Best "A" or better rated carrier
or a similar product adopted by regulation by the commission.
25987.16. (a) Upon the mutual agreement of the participant and
the third-party administrator, the third-party administrator shall
establish an annualized schedule for the repayment required by the
energy remittance repayment agreement, including the interest
charged, administrative cost fee, and loan loss fee.
(b) The board shall collect the repayment installments that become
due and payable.
(c) (1) The period for repayment of the energy remittance
repayment agreement shall not exceed the expected useful life of the
improvements or 20 years, whichever is shorter.
(2) The calculated expected useful life of the energy efficiency
improvements shall be calculated using methodologies approved by the
commission for performing those calculations.
(d) Upon the failure of the participant to pay any installment
toward the repayment of the energy remittance repayment agreement
when the installment becomes due and owing pursuant to the schedule
for repayment, the board shall assess a penalty on the delinquent
payment of 10 percent of the unpaid installment.
(e) Within 60 days of a failure to pay the scheduled energy
remittance, the board shall issue a demand letter to the participant
with notice provided to the commission and provide the participant
with 30 days to cure the default.
(f) (1) If the participant fails to cure the default within the
time allotted, the board shall declare the entire outstanding energy
remittance repayment agreement balance, including any interest due,
penalties assessed, and costs of collection incurred, immediately due
and owing and foreclose on the energy remittance repayment
agreement.
(2) Revenue generated from the sale of the eligible building shall
be distributed to satisfy liens on the eligible building in
accordance with the priority of the liens as provided by law.
(g) A participant who is not in default may pay the entire unpaid
balance of the energy remittance repayment agreement plus any
interest accruing to the maturity of the next installment payment
without prepayment penalty.
(h) Upon the full repayment of the balance of the energy
remittance repayment agreement, and interest and penalties that had
accrued, the State Board of Equalization shall notify the commission
of that repayment. Within 30 days of the receipt of the notice, the
board shall record with the county in which the eligible building is
located a release of the energy remittance repayment agreement.
25987.17. (a) A participant shall remit repayment installments
due by an electronic funds transfer to the board under procedures
prescribed by the board.
(b) Any participant remitting amounts due pursuant to subdivision
(a) shall perform electronic funds transfers in compliance with the
due dates prescribed in the schedule for repayment. Payment is deemed
complete on the date the electronic funds transfer is initiated if
settlement to the state's demand account occurs on or before the
banking day following the date the transfer is initiated. If
settlement to the state's demand account does not occur on or before
the banking day following
the date the transfer is initiated, payment is deemed to occur on the
date settlement occurs.
(c) Any participant who remits a repayment installment by means
other than appropriate electronic funds transfer shall pay a penalty
of 10 percent of the repayment installment incorrectly remitted.
(d) The board may prescribe, adopt, and enforce regulations
relating to the collection of the installment repayment pursuant to
the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code) for purposes of collecting energy remittance repayment
installments.
25987.18. (a) Prior to approving an application for inclusion
into a loan portfolio and the recordation of the energy remittance
repayment agreement, or a modification of an approved application,
the commission shall conduct a public hearing on the application or
modification.
(b) The commission shall post a notice of the hearing on the
commission's Internet Web site and provide the notice, in writing, to
all lienholders of the eligible building no later than 30 days prior
to the hearing.
(c) The notice shall specify all of the following:
(1) The name of the qualified applicant.
(2) The address of the eligible building.
(3) The amount required to be repaid by the energy remittance
repayment agreement proposed to be recorded on the eligible building.
(4) The date and place of the public hearing.
(5) The schedule for repayment of the contractual energy
remittance and associated costs as agreed upon between the qualified
applicant and the commission.
(6) The interest rate assessed pursuant to the energy remittance
repayment agreement.
(7) A detailed description of the proposed modification, if
applicable.
(d) The notice shall inform the lienholder that any complaints or
objections to either the approval of the application and the
recordation of the energy remittance repayment agreement on the
eligible building or the modification of an approved application
shall be submitted, in writing, to the commission prior to the
hearing.
25987.19. At the public hearing, the commission shall consider
and resolve all complaints and objections made.
25987.20. In evaluating the eligibility of an applicant, the
commission shall consider the creditworthiness of the applicant and
the effectiveness of the improvements applying the following
criteria, including, but not limited to, all of the following:
(a) Whether applicants are legal owners of the underlying
property.
(b) Whether applicants are current on any outstanding mortgage and
property tax payments.
(c) Whether applicants are in default or in bankruptcy
proceedings.
(d) Whether improvements financed by the program follow applicable
standards including any guidelines adopted by the commission.
25987.21. (a) The commission shall approve an application through
the adoption of a resolution approving the application and
authorizing the recording of the energy remittance repayment
agreement on the deed of the eligible property.
(b) The resolution shall specify the amount required to be paid to
the board pursuant to the energy remittance repayment agreement, the
schedule of repayment, and the interest rate charged.
(c) The commission shall approve the modification of an approved
application through the adoption of a resolution.
25987.22. (a) The energy remittance repayment agreement shall be
subordinate to any and all secured mortgage liens recorded against
the deed of the eligible property at the time of recording of the
energy remittance repayment agreement.
(b) Except as otherwise required by law, the energy remittance
repayment agreement shall be superior in priority to all subsequent
liens recorded on the deed of the eligible property.
(c) The sale of the eligible property to enforce the payment of
general ad valorem taxes shall not extinguish the energy remittance
repayment agreement recorded on the eligible property.
(d) In the event of foreclosure, the energy remittance repayment
agreement shall not be due and owing during such time when the
property is owned by a financial institution taking title by way of
foreclosure. The amounts owing pursuant to the energy remittance
repayment agreement shall, however, continue to accrue and shall
become due 60 days after a new, nonfinancial owner shall take title.
(e) Notwithstanding any other law, in the event of a foreclosure
of the property, the energy remittance repayment agreement shall not
be extinguished, unless the outstanding balance of the energy
remittance repayment agreement, including the interest accrued and
all penalties and fees assessed prior to the foreclosure, is fully
paid through the foreclosure proceeding.
25987.23. (a) Thirty days after the adoption of the resolution,
the commission shall forward the resolution, the agreement, and any
other information necessary to collect the installment repayments to
the board which shall record with the county in which the eligible
building is located the energy remittance repayment agreement on the
deed of the eligible property. The board shall notify the commission
upon the recordation of the energy remitance agreement.
(b) Upon 60 days of the notice of recording of the energy
remittance repayment agreement, the commission shall include the
approved application in a portfolio posted on the commission's
Internet Web site.
25987.24. (a) The board shall deposit into the Commercial
Building Energy Retrofit Debt Servicing Fund established pursuant to
Section 25987.38 any moneys collected pursuant to this chapter.
(b) The board may charge a program administration cost fee on the
owner of an eligible building to cover its costs as well as the
Treasurer's and the commission's costs in implementing this chapter.
(c) Nothing in this chapter shall be construed to require investor
owned utilities or municipal utilities to serve in the role as a
third-party private guarantor or loan servicer.
25987.25. (a) A local government that has issued revenue bonds
pursuant to a program providing financial assistance to commercial
and residential buildings owners undertaking a renewable energy,
water efficiency, or energy efficiency retrofit improvement on the
buildings may apply to the commission for participation in the
program.
(b) Upon the approval of an application submitted by the local
government for the building or buildings in which that jurisdiction
is located, the commission may purchase all those outstanding revenue
bonds issued by the local government.
(c) Upon the purchase of the revenue bonds issued by the local
government by the commission, the commission succeeds to all rights
conferred upon the bondholder by those revenue bonds and the local
government shall remit revenue that is used to secure those revenue
bonds to the board.
25987.26. The commission shall do all of the following:
(a) (1) On or before July 1, 2013, analyze and evaluate standards
for commercial energy building retrofits previously developed by
various national and international organizations to provide
uniformity and transparency for financial institutions evaluating
loan proposals for energy improvements to commercial properties.
(2) The evaluation shall evaluate existing protocols or
combination of elements of existing measurement protocols and shall
be made available in an electronic format to financial institutions
and local governments initiating loans pursuant to this chapter.
(b) Establish those standards, guidelines, and procedures, through
regulation, including, but not limited to, standards of credit
worthiness for qualification of program applicants, that are
necessary to ensure the financial stability of the program and
otherwise prevent fraud and abuse.
(c) Establish qualifications for the certification of contractors
to construct or install energy efficiency improvements.
(d) Contract with a party, public or private, to do any of the
following:
(1) Ensure that appropriate steps are taken to monitor the quality
of energy efficiency improvements financed pursuant to this division
and measure the total energy savings achieved by the program.
(2) Monitor the total number of program participants.
(3) Determine the total amount paid to contractors and financial
institutions pursuant to the program.
(4) Calculate the number of jobs created by the program, the
number of defaults by program participants, and the total losses from
the defaults, and calculate the total dollar amount of bonds issued
by the commission to reimburse program participants.
(e) Develop a model energy aligned lease provision that modifies,
upon the agreement between the owner and tenants of an eligible
building, a commercial lease agreement allowing the owners to recover
the costs of the renewable energy, water efficiency, or energy
efficiency retrofit improvements that result in operational savings
based on the useful life of the retrofit while protecting tenants
from underperformance of the energy efficiency improvements.
(f) Develop a request for proposal to contract with one or more
financial institutions to secure a short-term, revolving credit
facility (warehouse line of credit) for the purpose of creating an
interim financing mechanism for the loans that would be aggregated
for the purposes of issuance of a revenue bond pursuant to Section
26987.30. Credit issued under the warehouse line of credit shall not
be deemed to constitute a debt or liability of the state or of any
political subdivision thereof, or a pledge of the full faith and
credit of the state or of any political subdivision, but shall be
payable solely from the funds provided therefor. All credit
instruments shall contain a statement to the following effect:
"Neither the faith and credit nor the taxing power of the State of
California is pledged to the payment of principal and interest on
this credit instrument."
The warehouse line of credit shall be drawn by the third-party
administrator for origination of direct loans to qualified
applicants.
25987.27. No later than June 30, 2014, and no later than June 30
of every fifth year thereafter, the State Auditor shall conduct, or
cause to be conducted, a performance audit of the program. The State
Auditor shall prepare a report and recommendations on each audit
conducted and present the report and recommendations to the President
pro Tempore of the Senate and the Speaker of the Assembly.
Article 3. Commercial Building Energy Retrofit Bond
25987.28. The Treasurer, on behalf of the commission, may incur
indebtedness and issue and renew negotiable bonds, notes, debentures,
or other securities of any kind or class. All indebtedness, however
evidenced, shall be payable solely from moneys received pursuant to
this chapter and the proceeds of its negotiable bonds, notes,
debentures, or other securities and shall not exceed the sum of two
billion dollars ($2,000,000,000).
25987.29. The Legislature may, by statute, authorize the
Treasurer to issue bonds, as defined in Section 26987.30 in excess of
the amount provided in Section 26987.28.
25987.30. (a) On a semiannual basis, the commission shall conduct
a meeting for the purpose of authorizing the issuance of, by the
adoption of a resolution, negotiable bonds, notes, debenture, or
other securities (collectively called "bonds") for the purposes of
generating sufficient moneys to fund the approved applications in the
portfolio at the time of the meeting or to repay an outstanding
balance of participant on whose behalf the commission has provided
funds through the warehouse line of credit. In anticipation of the
sale of bonds as authorized by Section 26987.28, or as may be
authorized pursuant to Section 26987.29, the Treasurer, on behalf of
the commission, may issue negotiable bond anticipation notes and may
renew the notes from time to time. The bond anticipation notes may be
paid from the proceeds of sale of the bonds of the Treasurer in
anticipation of which they were issued. Notes and agreements relating
to the notes and bond anticipation notes (collectively called "notes"
) and the resolution or resolutions authorizing the notes may contain
any provisions, conditions, or limitations that a bond, agreement
relating to the bond, and bond resolution of the commission may
contain. However, a note or renewal of the note shall mature at a
time not exceeding two years from the date of issue of the original
note.
(b) Every issue of its bonds, notes, or other obligations shall be
general obligations of the Treasurer or commission payable from
revenues or moneys received pursuant to this chapter. Notwithstanding
that the bonds, notes, or other obligations may be payable from a
special fund, they are for all purposes negotiable instruments,
subject only to the provisions of the bonds, notes, or other
obligations for registration.
(c) Subject to the limitations in Sections 26987.28 and 26987.29,
the bonds may be issued as serial bonds or as term bonds, or the
Treasurer in its discretion, may issue bonds of both types. The bonds
shall be authorized by resolution of the Treasurer commission and
shall bear the date or dates, mature at the time or times, not
exceeding__years from their respective dates, bear interest at the
rate or rates, be payable at the time or times, be in the
denominations, be in the form, either coupon or registered, carry the
registration privileges, be executed in a manner, be payable in
lawful money of the United States of America at a place or places,
and be subject to terms of redemption, as the resolution or
resolutions may provide. The sales may be a public or private sale,
and for the price or prices and on the terms and conditions, as the
Treasurer shall determine after giving due consideration to the
recommendations of any participating party to be assisted from the
proceeds of the bonds or notes. Pending preparation of the definitive
bonds, the Treasurer may issue interim receipts, certificates, or
temporary bonds that shall be exchanged for the definitive bonds. The
Treasurer may sell bonds, notes, or other evidence of indebtedness
at a price below their par value. However, the discount on a security
sold pursuant to this section shall not exceed 6 percent of the par
value.
(d) A resolution or resolutions authorizing bonds or an issue of
bonds may contain provisions that shall be a part of the contract
with the holders of the bonds to be authorized, as to all of the
following:
(1) Pledging the moneys collected pursuant to this chapter from
the portfolio of approved applications that are funded by the bonds,
to secure the payment of the bonds or of any particular issue of
bonds, subject to the agreements with bondholders as may then exist.
(2) The setting aside of reserves or sinking funds, and the
regulation and disposition of the reserves or sinking funds.
(3) Limitations on the right of the Treasurer or the commission or
their agent to restrict and regulate the use of the project or
projects to be financed out of the proceeds of the bonds or any
particular issue of bonds.
(4) Limitations on the purpose to which the proceeds of sale of an
issue of bonds then or thereafter to be issued may be applied and
pledging those proceeds to secure the payment of the bonds or the
issue of the bonds.
(5) Limitations on the issuance of additional bonds, the terms
upon which additional bonds may be issued and secured, and the
refunding of outstanding bonds.
(6) The procedure, if any, by which the terms of a contract with
bondholders may be amended or abrogated, the amount of bonds the
holders of which must consent to the amendment or abrogation, and the
manner in which that consent may be given.
(7) Limitations on expenditures for operating, administrative, or
other expenses of the Treasurer or commission.
(8) Defining the acts or omissions to act that constitute a
default in the duties of the Treasurer or commission to holders of
its obligations and providing the rights and remedies of the holders
in the event of a default.
(e) Neither the Treasurer, the commission, or a person executing
the bonds or notes shall be liable personally on the bonds or notes
or be subject to personal liability or accountability by reason of
the issuance of the bond or note.
(f) The Treasurer shall have power out of any funds available for
these purposes to purchase its bonds or notes. The Treasurer may
hold, pledge, cancel, or resell those bonds, subject to and in
accordance with agreements with bondholders.
(g) The commission, the Treasurer, and the board shall enter into
a memorandum of understanding providing for the transfer of energy
remittance payments between the three agencies in furtherance of this
chapter.
(h) Should there be insufficient project valuation or insufficient
demand for the revenue bonds authorized by this chapter, the board
shall continue to collect the energy remittance payments and service
the loans. Failure to sell the revenue bonds shall not create any
liability for the state.
25987.31. In the discretion of the Treasurer, any bonds issued
under the provisions of this article may be secured by a trust
agreement by and between the Treasurer and a corporate trustee or
trustees, which may be the Treasurer or any trust company or bank
having the powers of a trust company within or without the state.
Such trust agreement or the resolution providing for the issuance of
such bonds may pledge or assign the revenues to be received pursuant
to this chapter, to be financed out of the proceeds of such bonds.
Such trust agreement or resolution providing for the issuance of such
bonds may contain such provisions for protecting and enforcing the
rights and remedies of the bondholders as may be reasonable and
proper and not in violation of law, including particularly such
provisions as have herein above been specifically authorized to be
included in any resolution or resolutions of the commission
authorizing bonds thereof. Any bank or trust company doing business
under the laws of this state which may act as depositary of the
proceeds of bonds or of revenues or other moneys may furnish such
indemnifying bonds or pledge such securities as may be required by
the Treasurer. Any such trust agreement may set forth the rights and
remedies of the bondholders and of the trustee or trustees, and may
restrict the individual right of action by bondholders. In addition
to the foregoing, any such trust agreement or resolution may contain
such other provisions as the Treasurer may deem reasonable and proper
for the security of the bondholders. Notwithstanding any other law,
the Treasurer shall not be deemed to have a conflict of interest by
reason of acting as trustee pursuant to this chapter.
25987.32. Bonds issued under the provisions of this article shall
not be deemed to constitute a debt or liability of the state or of
any political subdivision thereof, other than the authority, or a
pledge of the faith and credit of the state or of any such political
subdivision, but shall be payable solely from the funds herein
provided therefor. All such bonds shall contain on the face thereof a
statement to the following effect: "Neither the faith and credit nor
the taxing power of the State of California is pledged to the
payment of the principal of or interest on this bond." The issuance
of bonds under the provisions of this article shall not directly or
indirectly or contingently obligate the state or any political
subdivision thereof to levy or to pledge any form of taxation
whatever therefor or to make any appropriation for their payment.
Nothing contained in this section shall prevent or be construed to
prevent the Treasurer from pledging its full faith and credit to the
payment of bonds or issue of bonds authorized pursuant to this
chapter.
25987.33. (a) The Treasurer is hereby authorized to provide for
the issuance of bonds of the Treasurer for the purpose of refunding
any bonds, notes, or other securities of the Treasurer then
outstanding, including the payment of any redemption premium thereon
and any interest accrued or to accrue to the earliest or subsequent
date of redemption, purchase, or maturity of such bonds.
(b) The proceeds of any such bonds issued for the purpose of
refunding outstanding bonds, notes, or other securities may, in the
discretion of the Treasurer, be applied to the purchase or retirement
at maturity or redemption of such outstanding bonds either on their
earliest or any subsequent redemption date or upon the purchase or
retirement at the maturity thereof and may, pending such application,
be placed in escrow to be applied to such purchase or retirement at
maturity or redemption on such date as may be determined by the
Treasurer.
(c) Pending such use, any such escrowed proceeds may be invested
and reinvested by the Treasurer in obligations of, or guaranteed by,
the United States of America, or in certificates of deposit or time
deposits secured by obligations of, or guaranteed by, the United
States of America, maturing at such time or times as shall be
appropriate to ensure the prompt payment, as to principal, interest,
and redemption premium, if any, of the outstanding bonds to be so
refunded. The interest, income, and profits, if any, earned or
realized on any such investment may also be applied to the payment of
the outstanding bonds to be so refunded. After the terms of the
escrow have been fully satisfied and carried out, any balance of such
proceeds and interest, income, and profits, if any, earned or
realized on the investments thereof may be returned to the authority
for use by it in any lawful manner.
(d) All such bonds shall be subject to the provisions of this
division in the same manner and to the same extent as other bonds
issued pursuant to this chapter.
25987.34. Bonds issued by the Treasurer are legal investments for
all trust funds, the funds of all insurance companies, banks, both
commercial and savings, trust companies, savings and loan
associations, and investment companies, for executors,
administrators, trustees, and other fiduciaries, for state school
funds, and for any funds which may be invested in county, municipal,
or school district bonds, and such bonds are securities which may
properly and legally be deposited with, and received by, any state or
municipal officer or agency or political subdivision of the state
for any purpose for which the deposit of bonds or obligations of the
state, is now, or may hereafter be, authorized by law, including
deposits to secure public funds if, and only to the extent that,
evidence of indebtedness or debt securities of the participating
party receiving financing through the issuance of such bonds qualify
or are eligible for such purposes and uses.
25987.35. The state hereby pledges and agrees with the holders of
the bonds and with a participant with an approved application that
the state will not limit, alter, restrict, or impair the rights
vested in the Treasurer or the commission or the rights or
obligations of a person or
entity with which the commission contracts to fulfill the terms of an
agreement made pursuant to this chapter. The state further agrees
that it will not in any way impair the rights or remedies of the
holder of the bonds until the bonds have been paid or until adequate
provision for payment has been made. The Treasurer may include this
provision and undertaking for the Treasurer in its bonds.
25987.36. No liability shall be incurred by the Treasurer or the
commission beyond the extent to which moneys have been provided under
this chapter; except that for the purposes of meeting the necessary
expenses of initial organization and operation until such date as the
Treasurer derives revenues or proceeds from bonds or notes as
provided under this chapter, the Treasurer may borrow money as needed
for such expenses from the State Energy Resources Conservation and
Development Special Account in the General Fund in the State
Treasury. Such borrowed moneys shall be repaid with interest within a
reasonable time after the Treasurer receives revenues or proceeds
from bonds or notes as provided under this chapter.
25987.37. (a) Bonds issued pursuant to this division shall be
exempt from all taxation and assessment imposed pursuant to state
law.
(b) No later than February 1, 2013, the commission shall apply to
the United States Department of the Treasury under the Energy Tax
Incentive Act of 2005 (Title XIII of Public Law 109-58) for the
Treasurer to issue tax advantage bonds under the federal Clean
Renewable Energy Bonds program or any other applicable programs.
Article 4. Commercial Building Energy Retrofit Debt Servicing
Fund
25987.38. (a) The Commercial Building Energy Retrofit Debt
Servicing Fund is hereby established in the State Treasury.
Notwithstanding Section 13340 of the Government Code, the moneys in
the fund are hereby continuously appropriated to the Treasurer
without regard to fiscal year for the purposes of paying the
principal and interest on bonds issued by the Treasurer pursuant to
Section 26987.28, servicing the warehouse line of credit, and
defraying any direct and indirect costs incurred by the Treasurer in
executing duties required by this chapter.
(b) All interest and income derived from the deposit and
investment of moneys in the fund shall be credited to the fund, and
all unexpended and unencumbered moneys in the fund at the end of any
fiscal year shall remain in the fund.
25987.39. The Loan Loss Reserve Account is hereby established in
the Commercial Building Energy Retrofit Debt Servicing Fund. The
board shall deposit the portion of the contractual energy remittance
that is the loan loss reserve fee into the account. Notwithstanding
Section 13340 of the Government Code, the moneys in the account are
hereby continuously appropriated to the Treasurer without regard to
fiscal year for the purposes of paying outstanding balances due under
an energy remittance repayment agreement on a building that has been
foreclosed upon if the proceeds generated from the foreclosure
proceedings are insufficient to pay any past due payments past due
under the energy remittance repayment agreement, including accrued
interest, penalties, and fees. All interest and income derived from
the deposit and investment of moneys in the account shall be credited
to the account, and all unexpended and unencumbered moneys in the
account at the end of any fiscal year shall remain in the account.
25987.40. The Administration Account is hereby established in the
Commercial Building Energy Retrofit Debt Servicing Fund. The
Treasurer shall deposit into the account the program administration
fee collected pursuant to subdivision (b) of Section 25987.24 and
penalties collected pursuant to Section 25987.16. Notwithstanding
Section 13340 of the Government Code, moneys in the account shall be
continuously appropriated to the Treasurer, the commission, and the
board for the costs of implementing this chapter.
25987.41. (a) The Director of Finance shall transfer, as a loan,
up to __dollars ($___) from the General Fund to the board to
implement the collection of the energy remittance repayment.
(b) Any loan made pursuant to this section shall be repaid on or
before ____, with interest at the pooled money investment rate, from
energy remittance repayment collected pursuant to this chapter.
25987.42. The commission, the board, and the Treasurer shall be
authorized to promulgate necessary regulations to implement and
administer this chapter.
SECTION 1. The Legislature finds and declares
all of the following:
(a) Commercial buildings represent a substantial opportunity to
significantly increase energy efficiency and reduce greenhouse gas
emissions. To accomplish these objectives, we need to address the
design, construction, and operation of these buildings.
(b) Energy use in the building sector accounts for approximately
20 percent of global emissions of carbon dioxide, or 10 billion tons,
annually.
(c) The lack of accessible and affordable financing for energy
efficiency results in energy-inefficient buildings, estimated to
consume up to 50 percent more energy than required to achieve the
same level of comfort.
(d) It is possible to retrofit the California commercial building
stock to use, on average, at least 50 percent less energy by 2050
through the wide adoption of deep energy retrofits that save more
energy and increase profits for building owners.
(e) Investment in building performance upgrades is an intelligent
business decision. Building performance upgrades lower operating
costs, improve occupant comfort, hedge against utility price
increases, demonstrate commitment to tenant well-being, reduce
exposure to regulation, help the environment, and ultimately boost
property values.
(f) It is in the best interest of the state and its citizens to
enable and encourage the owners of eligible commercial property to
invest in new energy improvements, including energy improvements and
renewable energy improvements, by enacting this act.
(g) New improvements, including energy efficiency improvements and
renewable energy improvements, can provide positive cashflow as the
costs of the improvements are spread out over a long enough time and
the owners' utility bill cost savings exceed the amount of the liens
recorded on the eligible buildings to pay for the improvements.
(h) Reduction in the amount of emissions of greenhouse gases and
environmental pollutants, resulting from increased efficiencies and
the resulting decreased use of traditional nonrenewable fuels, will
improve air quality and may help to mitigate climate change.
SEC. 2. Chapter 5.10 (commencing with Section
25499) is added to Division 15 of the Public Resources Code, to read:
CHAPTER 5.10. COMMERCIAL BUILDING RETROFIT
25499. This act shall be known, and may be cited, as the
Commercial Building Energy Retrofit Act of 2012.
25499.1. The purpose of this chapter is to enable private
commercial building owners to invest in clean energy improvements, to
incentivize private equity managers to invest in clean energy
improvements, to stimulate the state economy by directly creating
jobs for contractors and other persons who complete new energy
improvements, and to reinforce the leadership role of the state in
the new energy economy, thereby attracting energy manufacturing
facilities and related jobs to the state.
25499.2. (a) On or before January 1, 2016, the commission shall
analyze and evaluate standards for commercial energy building
retrofits previously developed by various national and international
organizations to provide uniformity and transparency for financial
institutions evaluating loan proposals for energy improvements to
commercial properties.
(b) The evaluation shall evaluate existing protocols or
combination of elements of existing measurement protocols and shall
be made available in an electronic format to financial institutions
and local governments initiating PACE bonds as defined in Section
26104.