BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Carole Migden, Chair
1383 (Pavley)
Hearing Date: August 15, 2005 Amended: July 13, 2005
Consultant: John Decker Policy Vote: EU&C (7-3)
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BILL SUMMARY: AB 1383 creates a grant and loan program to
facilitate the installation of solar energy systems in
low-income housing.
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Fiscal Impact (in thousands)
Major Provisions 2005-06 2006-07 2007-08 Fund
Transfers $5,000 $10,000 $10,000
Special*
*The bill transfers funds from the Emergency Renewable Resources
Account and the fund identified (and unnamed) in subdivision (a)
of Chapter 329 (Statutes of 2000), or from the funds
appropriated in SB 1 (Murray and Campbell), the Million Solar
Roofs Initiative.
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STAFF COMMENTS: The bill meets the criteria for referral to
Suspense File.
According to the sponsor, the bill is intended to provide up to
100 percent financing for solar units installed in low-income
housing, and loan up to $100 million over ten years.
The bill creates a revolving fund, to be administered by the
energy commission. The revolving fund is capitalized with
transfers from special funds which derive their revenues from
rate payers. The commission may make annual allocations from
the fund to providers of low-income housing. The commission may
make loans or grants. The revolving fund sunsets on January
1, 2016.
Section 1 of the bill contains findings and declarations. Among
other things, the section says that California needs a steady
supply of affordable electricity and expanding the number of
solar energy units will help the state's manufacturing base.
Section 1 also declares that by establishing the loan program,
the state will (a) make a cost-effective investment, (b) modify
solar energy incentives and (c) provide more reliability to its
electricity supplies.
The bill could result in transfers of up to $10 million
annually, with offsetting revenue in the future deposited in the
revolving fund as the loans are repaid.
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AB 1383 (Pavely)
Page 2
STAFF NOTES:
1) Neither the sponsors nor the commission are able to
identify the size of the potential demand for the bill's
loans. Nor does the bill identify how the bill will
ensure cost-effectiveness or reliability. Though the
bill's findings and declarations provide general
information, they do not provide a basis for measuring
program effectiveness. For example. on what basis will
the commission measure whether the loans merely crowd out
other subsidies? On what basis should the Legislature
consider whether ill the new solar units are a
cost-effective allocation of state funds? When should the
Legislature expand the program? The author should
clarify .
2) In the Senate Energy, Utilities and Communications
Committee, the bill's continuous appropriation was deleted
and replaced with a provision requiring the Legislature to
make annual appropriations. It is not clear what is being
appropriated. Is it the amount of the transfer from the
special funds to the revolving fund, or is it the amount
from the revolving fund which the commission may allocate
for the loans?
Moreover, because the sponsors are unable to identify the
on-going need for these loans, the Legislature should
require the commission to report on the loan portfolio and
the health of the revolving fund. Staff recommend that the
bill be amended to (a) clarify that the Legislature
annually appropriate funds from the revolving fund for
allocation by the commission, and (b) require the
commission to report on the program's loan portfolio and
the condition of the revolving fund .
3) To the extent the commission makes loans which are due
after January 1, 2016, who manages the repayments? Where
do the payments go? Presumably, the funds are still paid
to the commission, who re-deposits the money into the
accounts from which the funds were originally transferred.
In addition, the bill authorizes the commission to charge
an application fee. The bill should specify that the fee
cover the costs of the entire application process, and the
fee revenue be deposited in the revolving fund. The author
should clarify .
4) The bill authorizes the commission to make grants, in
addition to loans, to the housing developers. Because the
amount of the grants are likely to be offset
dollar-for-dollar for any low income housing tax credit
allocated by the Treasurer, the grants may not be the best
way to encourage solar units. The sponsors did not intend
for the commission to make any grants. The author should
clarify .
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AB 1383 (Pavely)
Page 3
5) According to the sponsor, the bill is directed at
non-profit development corporations. However, the bill is
not limited to them. Other non-profits, local governments,
for-profit corporations, and individuals all could qualify
for the loans. Given the limits of the likely funding
streams, the author should clarify .
6) The state and federal government currently has various
tax, loan and grant programs for subsidizing the
installation of solar panels. It is possible that the
bill would authorize subsidizing an installation by more
than 100 percent of the developer's costs. The author
should clarify that the loans provided in this bill-when
combined with the other state and federal incentives--will
not provide financing in excess of 100 percent of cost.