BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           653 (Nunez)
          
          Hearing Date:  8/18/03          Amended: 8/18/03       
          Consultant:  Lisa Matocq            Policy Vote: E, U & C  
          7-1                      
          ____________________________________________________________ 
          ___
          BILL SUMMARY:  AB 653 repeals the January 1, 2005 sunset  
          date on the program that authorizes the State Public Works  
          Board (SPWB) to issue revenue bonds, notes, and bond  
          anticipation notes to finance cogeneration and alternative  
          energy equipment , and conservation projects in public  
          buildings, and broadens the spectrum of projects that can  
          be financed.  
                              Fiscal Impact (in thousands)
           Major Provisions            2003-04             2004-05              
           2005-06            Fund  
          DGS administration            --                 Unknown,  
          potentially $2,000    Special*
                                                        annually
          *Service Revolving Fund (SRF)   
          
          STAFF COMMENTS: This bill meets the criteria for referral  
          to the Suspense File. The Energy Conservation in Public  
          Buildings program was established in 1982, and authorized  
          the SPWB to issue bonds to finance energy and water  
          conservation projects in state buildings that would  
          ultimately save the state money.  It is administered by the  
          Department of General Services (DGS).  AB 1551 (Pescetti,  
          Ch. 981, St. of 1999) extended the program until January 1,  
          2005 and limited the SPWB's bonding authority to $500  
          million. To date, an estimated $265 million in revenue  
          bonds have been issued.  

          The bill expands the scope of program by (1) authorizing  
          the financing of projects that combine energy efficiency  
          measures and alternative energy equipment, and (2)  
          requiring the SWPB, in determining whether to finance a  
          project, to evaluate the project in its entirety and  
          analyze the costs and financial and energy cost savings  
          over the full life of the project (rather than the  
          administrative requirement that a project pay for itself  
          within 10 years).  It also allows the board to consider the  
          value added by a product warranty in this evaluation.   










          These changes in the evaluation of projects could result in  
          additional types of projects, such as photovoltaics being  
          financed, and longer repayment periods.

          DGS's annual program administration costs vary depending on  
          the number and scope of projects evaluated each year, but  
          are in the $2 million range.  This bill would continue  
          those costs, beginning in 2005-06.  Program and project  
          costs are financed with revenue bond proceeds that are  
          retired with energy cost savings resulting from the  
          projects. Energy efficiency and conservation projects must  
          save enough money in operational costs to cover the expense  
          of financing the project.