BILL ANALYSIS Ó
SB 1130
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Date of Hearing: August 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1130 (de León) - As Amended: August 7, 2012
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes the Nonresidential Building Energy
Retrofit Financing Act of 2012 and requires the California
Energy Commission (CEC) to establish the Nonresidential Building
Energy Retrofit Financing Program by July 1, 2013 to provide
financial assistance through revenue bonds for owners of
eligible buildings to implement energy efficiency improvements
and renewable energy generation.
Specifically, this bill:
1)By July 1, 2013, requires CEC to develop a request for
proposal to develop the program by a third-party administrator
to administer the program and establish an automated,
asset-based underwriting system for all eligible buildings.
The administrator shall only be selected if the program is
self-supporting with costs to be covered by loan recipients,
administrator or bond purchasers.
2)Requires the administrator to establish underwriting
guidelines that consider an applicant's qualificationÝs] and
other appropriate factors, as specified. Requires any owner
who wishes to participate in the Program to submit an
application to the administrator.
3)Establishes requirements for the application and related
information and requires the administrator to recommend to the
CEC the approval or disapproval of the application.
4)Requires the administrator to establish an annualized schedule
for the repayment required by the agreement. Requires the
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Board of Equalization (BOE) to collect the repayment
installments.
5)Authorizes the California Alternative Energy and Advanced
Transportation Financing Authority (CAEATFA), on behalf of
CEC, to incur indebtedness and issue and renew specified forms
of debt. Specifies that all indebtedness shall be payable
solely from moneys received from the program and limits total
indebtedness to $2 billion. States that the Program shall not
include General Fund costs or liabilities, except start-up
costs as specified.
FISCAL EFFECT
1)Administrative expenses to CAEATFA, the CEC and BOE in the
millions of dollars.
2)Initial administrative expenses to be financed by a loan from
the General Fund of no more than $7 million. The program must
reimburse the General Fund by 2023 with interest paid to the
General Fund at the pooled money investment rate.
COMMENTS
1)Purpose . According to the author, studies have shown
investment in energy efficiency retrofits provide superior
financial, employment and environmental benefits compared to
equivalent investment in any other clean energy resource. The
author states the bill addresses the dearth of primary market
capital to fund commercial energy efficiency retrofits in
California. The author argues that financial institutions
have large pools of funds to invest in mortgage-related
securities, but there is little to no origination occurring,
in part, because the market lacks appropriate incentives to
drive private capital.
The author also notes the California economy continues to
suffer from long-term unemployment with the most hard-hit
sector being construction. The author argues driving private
capital to spur retrofit activity at no cost to taxpayers
would help alleviate this problem and achieve significant
carbon dioxide reductions.
2)Background . In 2009 the Legislature enacted AB 758 (Skinner),
Chapter 470, Statutes of 2009. The bill addressed the issue
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that about 60 % of California's residential and nonresidential
buildings were built prior to adoption of energy efficiency
building standards. AB 758 requires the CEC to develop a
comprehensive energy efficiency strategy for this old building
stock, both residential and nonresidential. To date, the CEC
has funded pilot programs to develop and advance the tools,
protocols and workforce to conduct best practice building
energy assessments and retrofits, which the CEC says will
generate information for developing the long-term strategy.
As required by AB 758, the CPUC has opened a rulemaking to
investigate the ability of IOUs to provide energy efficiency
financing options to customers to implement the CEC's strategy
for building retrofits, and is considering financing as part
of its proceedings governing the IOU energy efficiency
portfolios.
3)Financing. CAEATFA provides financing for facilities that use
alternative energy sources and technologies. CAEATFA can
issue revenue bonds, make loans, loan loss reserves, loan
guarantees, and other financial instruments to develop and
commercialize advanced transportation technologies that
conserve energy, reduce air emissions and promote economic
development and jobs. CAEATFA's board consists of the
Treasurer, Controller, Director of Finance, Chair of the CEC
and President of the PUC, which determines which projects
receive funding. Current law limits CAEATFA's total debt to
$1 billion.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081