BILL NUMBER: SB 77 CHAPTERED
BILL TEXT
CHAPTER 15
FILED WITH SECRETARY OF STATE APRIL 21, 2010
APPROVED BY GOVERNOR APRIL 21, 2010
PASSED THE SENATE APRIL 8, 2010
PASSED THE ASSEMBLY APRIL 8, 2010
AMENDED IN ASSEMBLY MARCH 22, 2010
INTRODUCED BY Senator Pavley
(Principal coauthor: Assembly Member Skinner)
(Coauthors: Senators Alquist, Cedillo, Hancock, Padilla,
Steinberg, and Wolk)
(Coauthor: Assembly Member Huffman)
JANUARY 20, 2009
An act to amend Section 26011 of, and to add Division 16.2
(commencing with Section 26100) to, and to repeal Section 26141 the
Public Resources Code, relating to energy, making an appropriation
therefor, and declaring the urgency thereof, to take effect
immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 77, Pavley. Energy: California Alternative Energy and Advanced
Transportation Financing Authority: Property Assessed Clean Energy
(PACE).
(1) The California Alternative Energy and Advanced Transportation
Financing Authority Act establishes the California Alternative Energy
and Advanced Transportation Financing Authority and authorizes the
authority to issue revenue bonds to provide industry with an
alternative method of financing in providing and promoting the
establishment of facilities utilizing alternative methods and sources
of energy and facilities needed for the development and
commercialization of advanced transportation technologies.
Existing law authorizes a public agency and a property owner to
enter into voluntary contractual assessments to finance the
installation of distributed generation renewable energy sources or
energy or water efficiency improvements that are permanently affixed
on real property.
This bill would require the authority to establish a Property
Assessed Clean Energy (PACE) Reserve program to assist local
jurisdictions in financing the installation of distributed generation
renewable energy sources or energy or water efficiency improvements
meeting specified requirements that are permanently affixed on real
property through the use of a voluntary contractual assessment. The
bill would, until January 1, 2015, appropriate up to $50,000,000 from
the Renewable Resource Trust Fund to the authority for the purposes
of the PACE Reserve program. The bill would require the authority, on
March 31, 2011, and annually thereafter until January 1, 2015, to
submit to the Legislature a report containing specified information
regarding the implementation of the above provisions.
(2) Existing law vests the authority with specified powers in the
implementation of the California Alternative Energy and Advanced
Transportation Financing Authority Act.
This bill would authorize the authority to purchase bonds issued
by a public agency meeting specified criteria. The bill would
authorize the authority to hold the purchased bonds or to sell the
purchased bonds, in whole or in part, to public or private
purchasers.
(3) This bill would declare that it is to take effect immediately
as an urgency statute.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 26011 of the Public Resources Code is amended
to read:
26011. The authority is authorized and empowered:
(a) To adopt an official seal.
(b) To sue and be sued in its own name.
(c) To issue bonds, notes, bond anticipation notes, and other
obligations of the authority, including, at the option of the
authority, obligations bearing interest that is taxable for purposes
of federal income taxation, for any of its purposes and to fund or
refund the same, all as provided in this division.
(d) To determine the location and character of a project to be
financed under the provisions of this division, to lend financial
assistance to a participating party, to enter into loan agreements
with a participating party for the financing of a project including
creating a lien or security interest in the property, to construct,
reconstruct, renovate, replace, lease, as lessor or lessee, and
regulate the same, and to enter into contracts for the sale of a
project, including installment sales or sales under conditional sales
contracts.
(e) To fix fees and charges for projects, and interest rates with
respect to loans for projects, and to revise from time to time the
fees and charges and interest rates, and to collect rates, rents,
fees, and charges for the use of, and for a facility or service
furnished, or to be furnished, by a project or part of the project
and to contract with a person, partnership, association, corporation,
or public agency with respect to the project, and to fix the terms
and conditions upon which a project may be sold or disposed of,
whether upon installment sales contracts or otherwise.
(f) To employ and fix the compensation of bond counsel, financial
consultants, and advisers as may be necessary in its judgment in
connection with the issuance and sale of any bonds, notes, bond
anticipation notes, or other obligations of the authority; to
contract for engineering, architectural, accounting, or other
services of appropriate state agencies as may be necessary in the
judgment of the authority for the successful development of a
project; and to pay the reasonable costs of consulting engineers,
architects, accountants, and construction experts employed by a
participating party if, in the judgment of the authority, the
services are necessary to the successful development of a project,
and the services are not obtainable from a state agency.
(g) To purchase alternative source energy or projects from a
person or entity for sale to a participating party, or to make a loan
to a participating party to purchase alternative source energy or
projects, or to purchase from a person or entity that has contracted
to sell alternative source energy to a participating party the right
to receive purchase payments and related rights under that contract
or any related contracts. Notwithstanding any other applicable law,
the authority and a public agency, for purposes of a program or
financing, shall have the power to enter into contractual
arrangements and related agreements or instruments, including,
without limitation, a prepayment purchase contract, lease, loan,
construction, security, operation and maintenance, or other agreement
or instrument, with the authority or with a participating party,
upon the terms and subject to the conditions that may be necessary or
convenient to accomplish the purposes of this subdivision. The
authority shall only enter into a prepayment contract with a
participating party for energy derived from an alternative source to
the extent the prepayment is for energy intended to primarily offset
part or all of the authority's or a participating party's own
electrical requirements.
(h) To purchase, with proceeds of its bonds or its revenue, bonds
issued by a public agency described in paragraph (2) of subdivision
(f) of Section 26003 at a public or negotiated sale. Bonds purchased
pursuant to this subdivision may be held by the authority or sold to
public or private purchasers at public or negotiated sales, in whole
or in part, separately or together with other bonds issued by the
authority.
(i) To do all things generally necessary or convenient to carry
out the purposes of this division.
SEC. 2. Division 16.2 (commencing with Section 26100) is added to
the Public Resources Code, to read:
DIVISION 16.2. Property Assessed Clean Energy (PACE) Financing
Assistance
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
26100. (a) The Legislature finds and declares all of the
following:
(1) Property Assessed Clean Energy (PACE) financing has been
pioneered by municipalities and counties in California as a way for
home and small business owners to finance voluntary energy and water
efficiency and clean energy improvements.
(2) PACE financing was pioneered in the City of Berkeley, while
the City and County of San Francisco, City of San Diego, City of Palm
Desert, Sonoma County, and the California Statewide Communities
Development Authority (CSCDA) have already initiated or are working
to launch additional programs.
(3) Seventeen other states, including Colorado and New York, have
also enacted enabling PACE legislation.
(4) The public subsidy provided by the PACE financing is justified
by the benefits received in job creation, lower energy demand, and
spurring new clean industries that will grow the economy.
(b) It is the intent of the Legislature to assist local
jurisdictions in financing the installation of distributed generation
renewable energy sources or energy or water efficiency improvements
that are permanently fixed to real property through the use of
voluntary contractual assessments.
(c) It is not the intent of the Legislature to create any debt,
liability, or obligation on the part of the state in assisting local
jurisdictions pursuant to this division.
26101. Unless the context otherwise requires, the definitions in
this chapter govern the construction of this division.
26102. "Applicant" means a public agency as defined in paragraph
(3) of subdivision (c) of Section 5898.20 of the Streets and Highways
Code.
26103. "Authority" means the California Alternative Energy and
Advanced Transportation Financing Authority established pursuant to
Section 26004.
26104. "Property Assessed Clean Energy bond" or "PACE bond" means
a bond that is secured by a voluntary contractual assessment on
property authorized pursuant to paragraph (2) of subdivision (a) of
Section 5898.20 of the Streets and Highways Code or by a voluntary
contractual assessment or a voluntary special tax on property to
finance the installation of distributed generation renewable energy
sources, or energy or water efficiency improvements that is levied
pursuant to a chartered city's constitutional authority under Section
5 of Article XI of the California Constitution.
26105. "PACE program" means a program established by an applicant
that is financed by the PACE bond.
26106. This division does not create any liability or obligation
upon the State of California and none shall be incurred by the
authority beyond the extent to which moneys shall have been provided
under this division. The authority shall not create any debt,
liability, or obligation on the part of the State of California
payable from any source whatsoever other than the moneys provided
under this division.
CHAPTER 2. PACE RESERVE PROGRAM
26120. The authority shall develop and administer a PACE Reserve
program to reduce overall costs to the property owners of PACE bonds
issued by an applicant by providing a reserve of no more than 10
percent of the initial principal amount of the PACE bond.
26121. To qualify for assistance pursuant to this division, the
PACE program shall require all of the following:
(a) The interest rate on the PACE bond does not exceed a
percentage as determined by the authority to be appropriate.
(b) Minimum legal loan structure and credit underwriting criteria
as determined by the authority are met.
(c) Proceeds of the PACE bonds are used to finance qualified
energy and water efficiency and clean energy improvements.
(d) The improvement financed is for a residential project of three
units or fewer, or a commercial project that costs less than
twenty-five thousand dollars ($25,000) in total.
26122. An applicant shall submit to the authority an application
providing a detailed description of the PACE program, a detailed
description of the transactional activities associated with the PACE
bond issuance, including all transactional costs, and other
information deemed necessary by the authority.
26123. (a) In evaluating eligibility, the authority shall
consider whether the applicant's PACE program includes the following
conditions:
(1) Loan recipients are legal owners of underlying property.
(2) Loan recipients are current on mortgage and property tax
payments.
(3) Loan recipients are not in default or in bankruptcy
proceedings.
(4) Loans are for less than 10 percent of the value of the
property.
(5) The property is within the geographical boundaries of the PACE
program.
(6) The program offers financing for energy efficiency
improvements.
(7) Improvements financed by the program follow applicable
standards of energy efficiency retrofit work, including any
guidelines adopted by the State Resources Conservation and
Development Commission.
(b) In evaluating an application, the authority shall consider all
of the following factors:
(1) The use by the PACE program of best practices, adopted by the
authority, to qualify eligible properties for participation in
underwriting the PACE program.
(2) The cost efficiency of the applicant's PACE program, including
bond issuance.
(3) The projected number of jobs created by the PACE program.
(4) The applicant's PACE program requirements for quality
assurance and consumer protection as related to achieving efficiency
and clean energy production.
(5) The mechanisms by which savings produced by this program are
passed on to the property owners.
(6) Any other factors deemed appropriate by the authority.
26124. The authority shall review the applicant's PACE bond
issuance, including, but not limited to, indenture, trust agreement,
and fiscal agent agreement ("the bond documents") and, when the
authority is satisfied that the bond documents are consistent with
the requirements of the PACE Reserve program established pursuant to
this chapter, the authority shall advance to the applicant or the
applicant's bond trustee, at the closing of the applicant's PACE
bonds, the amount made available from the Renewable Resource Trust
Fund and approved by the authority for use in the PACE bond's reserve
fund under the bond documents. Prior to the disbursement of moneys
pursuant to this section into a reserve fund, the authority shall
enter into an agreement with the applicant regarding the creation and
operation of the reserve fund, including the manner in which the
authority will be repaid for any moneys disbursed to the reserve
fund.
CHAPTER 3. APPROPRIATION AND REPORTING
26140. (a) Until January 1, 2015, an amount of up to fifty
million dollars ($50,000,000) from the Renewable Resource Trust Fund,
established pursuant to Section 25751, is hereby appropriated to the
authority for the purposes of this division. The moneys appropriated
shall remain in the Renewable Resource Trust Fund until the funds
are needed by the authority pursuant to this division.
(b) Of the moneys appropriated in subdivision (a), up to three
hundred thousand dollars ($300,000) may be expended by the authority
for the initial administrative costs in implementing this division.
(c) All repayments of moneys disbursed pursuant to this division
shall be deposited into the Renewable Resource Trust Fund.
26141. (a) On March 31, 2011, and annually thereafter, the
authority shall submit to the Legislature a report pursuant to
Section 9795 of the Government Code on all of the following:
(1) The status of the account.
(2) A summary of the PACE bonds that received assistance pursuant
to this division.
(3) A summary of the benefits provided by this division, including
reduced interest rates on the PACE bonds receiving assistance
pursuant to this division.
(4) The number of jobs created by the PACE programs that received
assistance pursuant to this division.
(5) Information on energy and water savings resulting from the
PACE programs that received assistance pursuant to this division.
(6) Other information deemed appropriate by the authority.
(b) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
To expedite the issuance of the Property Assessed Clean Energy
bonds by local entities that would facilitate the installation of
energy and water efficiency improvements and distributed generation
renewable energy sources on real property, creating jobs in the green
energy sector and protecting the environment, it is necessary for
this act to take effect immediately.