BILL ANALYSIS
AB 653
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ASSEMBLY THIRD READING
AB 653 (Nunez)
As Amended March 24, 2003
Majority vote
BUSINESS AND PROFESSIONS 13-0 NATURAL RESOURCES 12-0
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|Ayes:|Correa, Shirley Horton, |Ayes:|Jackson, La Malfa, |
| |Aghazarian, Bermudez, | |Hancock Harman, Haynes, |
| |Corbett, Koretz, Leno, | |Keene, Koretz, Laird, |
| |Maldonado, Maze, Nation, | |Lieber, Lowenthal, |
| |Vargas, Wyland, Yee | |Montanez, Wolk |
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APPROPRIATIONS 24-0
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SUMMARY : Extends the sunset date and eligibility requirements
for bonding authority related to a State Public Works Board
(PWB) "Energy Conservation in Public Buildings" program
(Program). Specifically, this bill :
1)Expands the Program's eligibility to include projects that
combine conservation and alternative energy equipment.
2)Requires PWB, in determining whether to issue funding, to
evaluate each proposed project in its entirety and analyze the
costs and financial and energy savings over the life of the
project.
3)Extends the sunset date of the Program's bonding authority by
five years to January 1, 2010.
4)Makes related definitional clarifications.
FISCAL EFFECT : Extends annual program administration costs of
about $2 million within the Department of General Services for
five years. (All program and project costs are financed with
revenue bonds issued by the PWB that are retired with energy
cost savings resulting from the projects.)
AB 653
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COMMENTS : This bill is intended to extend the life of the
Program by expanding its eligibility requirements and adding
another five years to its sunset date.
The original Program was created in 1982 and provided bonding
authority to PWB for up to $500 million to finance the cost of
conservation or alternative energy projects in state buildings.
According to the sponsor, the Planning and Conservation League,
the Program still has approximately $235 million available for
projects. This bill would expand Program eligibility and extend
the sunset date so that it is easier to use the remaining
bonding authority for environmentally friendly projects on state
property.
Without extension of the sunset date, the Department of General
Services (DGS) will stop approving future projects under the
Program this year because of "the significant lead time for
development and bond sales" required.
This bill attempts to make a larger number of projects viable
under this Program by making two eligibility changes: "bundling"
of projects and expanding the scope of evaluation to the "life
of the project." Under current law, any project must pay for
the service of its bond costs and interest, meaning that all
projects must be revenue positive in order to be approved.
However, a second administrative requirement held that projects
must pay for themselves within 10 years, regardless of the life
span or usefulness of the project. By extending the evaluation
period to the full span of the project, longer-term investments
that pay off more slowly but are still revenue positive can be
approved. Furthermore, by "bundling" generation and
conservation projects together, some projects like solar
generation (which, according to DGS, can be more difficult to
make cost-effective) are more likely to be approved as well.
Analysis Prepared by : Hank Dempsey / B. & P. / (916) 319-3301
FN: 0001372