BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           653 (Nunez)
          
          Hearing Date:  8/28/03          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  
          Bond authority                        --                 Unknown,  
          potentially $6,300   Bond
                                                                         in  
          2004-05, and $12,600 
                                                                          
          annually in subsequent years
          DGS administration            --                 Up to $2,000  
          annually,            Special*
                                                        should be offset by  
          energy 
                                                        cost savings
          *Service Revolving Fund (SRF)   
          
          STAFF COMMENTS: 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 (avg. $12.6  
          million annually) 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. These changes 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 about $2 million annually.  This bill would continue  
          those costs, beg. 2005-06. The projects financed by these  
          revenue bonds must demonstrate the ability to generate  
          suffcient annual cost energy savings to pay the debt  
          service and related program costs.  Thus, DGS's  
          administrative costs should be recovered from bond  
          proceeds.