BILL NUMBER: SB 1130 INTRODUCED
BILL TEXT
INTRODUCED BY Senator De León
FEBRUARY 21, 2012
An act to add Division 16.3 (commencing with Section 26200) to the
Public Resources Code, relating to energy, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 1130, as introduced, De León. Energy: energy assessment:
commercial buildings: financing.
Existing law requires the California Alternative Energy and
Advanced Transportation Financing Authority to establish programs to
provide financial assistance to participating parties to purchase
alternative source energy and to develop renewable energy projects.
Existing law authorizes the authority to issue revenue bonds secured
by revenues generated by a project to provide financing for those
purposes.
This bill would enact the Commercial Building Energy Retrofit
Financing Act of 2012 and would require the authority to establish
the Commercial Building Energy Retrofit Financing Program to provide
financial assistance, through the issuance of revenue bonds, to
owners of eligible buildings for implementing energy efficiency
retrofit measures for the buildings. The bill would provide that the
bonds are secured by the recording of an energy remittance repayment
agreement, as defined, on the deed of the building for which the
energy efficiency retrofits are performed. The bill would require the
State Board of Equalization to collect installment payments from
owners of eligible buildings whose applications have been approved by
the authority. This bill would authorize the authority and the State
Board of Equalization to assess a fee to reimburse them for the
administrative costs incurred in implementing the program.
This bill would require the authority to meet, on a semiannual
basis, for the purpose of issuing the revenue bonds to generate
moneys sufficient to finance energy efficiency retrofit measures
specified on applications that have been approved prior to the
meeting.
This bill would establish the Commercial Building Energy Retrofit
Debt Servicing Fund, the Loan Loss Reserve Account, the
Administration Account, and the Collection Administration Account
within the fund. The bill would require the State Board of
Equalization to deposit the installment payment received from the
owners of eligible buildings into the fund and the fees collected by
the authority and the State Board of Equalization into the specified
accounts. The bill would continuously appropriate the moneys in the
fund and the accounts to repay the principal and interest on the
bonds, and to cover the administrative costs incurred by the
authority and the State Board of Equalization, thereby making an
appropriation.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 16.3 (commencing with Section 26200) is added
to the Public Resources Code, to read:
DIVISION 16.3. Commercial Building Assessment Financing
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
26200. This act shall be known, and may be cited, as the
Commercial Building Energy Retrofit Financing Act of 2012.
26201. The purpose of this division is to establish sustainable
financing to enable private commercial building owners to invest in
clean energy improvements, to incentivize private equity managers to
invest in clean energy improvements, to stimulate the state economy
by directly creating jobs for contractors and other persons who
complete new energy improvements, and to reinforce the leadership
role of the state in the new energy economy, thereby attracting
energy manufacturing facilities and related jobs to the state.
26202. The Legislature finds and declares all of the following:
(a) Commercial buildings represent a huge opportunity to
significantly increase energy efficiency and reduce greenhouse gas
emissions. To do this, we need to address the design, construction,
and operation of these buildings.
(b) The lack of accessible and affordable financing for energy
efficiencies results in energy-inefficient buildings that are
estimated to consume up to 50 percent more energy than required to
achieve the same level of comfort. Energy use in the building sector
accounts for approximately 20 percent of global emissions of carbon
dioxide, or 10 billion tons, annually.
(c) It is possible to retrofit the California commercial building
stock to use, on average, at least 50 percent less energy by 2050
through the wide adoption of deep energy retrofits that save more
energy and increase profits for building owners.
(d) Investment in building performance upgrades is an intelligent
business decision. Building performance upgrades lower operating
costs, improve occupant comfort, hedge against utility price
increases, demonstrate commitment to tenant well-being, reduce
exposure to regulation, help the environment, and ultimately boost
property values.
(e) It is in the best interest of the state and its citizens to
enable and encourage the owners of eligible commercial property to
invest in new energy improvements, including energy efficiency
improvements and renewable energy improvements, by enacting this
division to establish, develop, finance, implement, and administer a
new energy improvement program that provides for both energy
efficiency improvements and renewable energy improvements and to
assist those owners who choose to participate in the program to
complete new energy improvements to their properties because of the
following:
(1) New energy improvements, including energy efficiency
improvements and renewable energy improvements, can provide positive
cashflow as the costs of the improvements are spread out over a long
enough time that the owners' utility bill cost savings exceed amount
of the liens recorded on the eligible buildings to pay for the
improvements.
(2) Many owners of eligible commercial buildings are unable to
fund a new energy improvement because the owners do not have
sufficient liquid assets to directly fund the improvement or are
unable or unwilling to incur the negative net cashflow likely to
result if the owner uses a typical existing loan program to fund the
improvement.
(f) Reduction in the amount of emissions of greenhouse gases and
environmental pollutants resulting from increased efficiencies and
the resulting decreased use of traditional nonrenewable fuels will
improve air quality and may help to mitigate climate change.
(g) The commercial building owners who participate in the program
established pursuant to this division to assist them in completing
new energy improvements, including energy efficiency improvements and
renewable energy improvements, to the property shall do so
voluntarily, and liens recorded on the commercial buildings in the
program shall not constitute a tax within the meaning of Article XIII
C of the California Constitution.
26203. Unless the context otherwise requires, for the purposes of
this division, the following terms have the following meanings:
(a) "Alternative sources of energy" or "alternative energy sources"
means energy from cogeneration technology, the conservation of
energy, or energy from solar, biomass, wind, geothermal, or any other
source of energy, the efficient use of which will reduce the use of
conventional energy fuels.
(b) "Authority" means the California Alternative Energy and
Advanced Transportation Financing Authority established pursuant to
Section 26004, and any board, commission, department, or officer
succeeding to the functions of the authority, or to which the powers
conferred upon the authority by this division shall be given.
(c) "Commercial Building Energy Retrofit Bond" means a bond issued
pursuant to Section 26242 that is secured by an energy remittance
repayment agreement on property entered into voluntarily to finance
the installation of renewable energy sources, or energy or water
efficiency improvements.
(d) "Conventional energy fuel" means any of the following:
(1) A fuel derived from petroleum deposits, including, but not
limited to, oil, heating oil, gasoline, and fuel oil.
(2) Natural gas, including liquified natural gas.
(3) Nuclear fissionable materials.
(e) "Eligible building" means a commercial or industrial building
located within the boundaries of the state.
(f) "Energy efficiency improvement" means one or more
installations or modifications to eligible property that are designed
to reduce the energy consumption of the building and includes, but
is not limited to, the following:
(1) Insulation in walls, roofs, floors, and foundations and in
heating and cooling distribution systems.
(2) Storm windows and doors, multiglazed windows and doors,
heat-absorbing or heat-reflective glazed and coated window and door
systems, additional glazing, reductions in glass area, and other
window and door system modifications that reduce energy consumption.
(3) Automatic energy control systems.
(4) Heating, ventilating, or air conditioning and distribution
system modifications or replacements.
(5) Caulking and weatherstripping.
(6) Replacement or modification of lighting fixtures to increase
the energy efficiency of the system.
(7) Energy recovery systems.
(8) Daylighting systems.
(9) A modification, installation, or remodeling approved as a
utility cost-savings measure by the State Energy Resources
Conservation and Development Commission.
(g) "Energy remittance repayment agreement" means a contractual
agreement between an eligible building owner and the authority,
secured by a lien recorded on an eligible building specially
benefited by a new energy improvement for which the authority will
make reimbursement or a direct payment to the party financing the
energy improvements, and "contractual energy remittance" means that
reimbursement or direct payment. The amount to be repaid pursuant to
the energy remittance repayment agreement shall include the costs
necessary to finance the energy efficiency improvements less any
rebates, grants, and other direct financial assistance received by
the owner pursuant to other law and a loan loss reserve fee that is
____ percent of the financing costs to insure against nonperformance
of the loan and other losses of the program.
(h) "Energy efficiency specialist" means an individual or business
certified by the State Energy Resources Conservation and Development
Commission, the Public Utilities Commission, an investor-owned
utility, or a municipally owned utility to analyze, evaluate, or
install clean energy improvements for eligible property.
(i) "Financial assistance" means either of the following:
(1) Loans, loan loss reserves, interest rate reductions, secondary
loan purchase, insurance, guarantees or other credit enhancements or
liquidity facilities, contributions of money, property, labor, or
other items of value, or any combination thereof, as determined by,
and approved by a resolution of, the authority.
(2) Other types of assistance the authority determines is
appropriate.
(j) "Loan balance" means the outstanding principal balance of
loans secured by a mortgage or deed of trust with a first or second
lien on eligible property.
(k) "Participating party" means a person, or an entity or group of
entities, engaged in business or operations in the state, whether
organized for profit or not for profit, that applies for financial
assistance from the authority for the purpose of implementing a
project in a manner prescribed by the authority.
(l) "Portfolio" means an aggregation of approved applications.
(m) "Program" means the Commercial Building Energy Retrofit
Financing Program established by the authority in accordance with
Section 26212.
(n) "Project" means a building, improvement to the land or
building, rehabilitation, work, property, or structure, real or
personal, stationary or mobile, including, but not limited to,
machinery and equipment, that utilizes alternative sources of energy.
(o) "Qualified applicant" means a person or business entity who
does all of the following:
(1) Owns an eligible building that has a ratio of loan balance to
its actual value of _____ or less at the time the person's program
application is approved, as shown in the records of the county
assessor, unless the holder of the deed of trust or mortgage recorded
against the eligible property that has priority over all other deeds
of trust or mortgages recorded against the eligible property has
consented in writing to the recording of an energy remittance
repayment agreement pursuant to this division against the eligible
property.
(2) Timely submits to the authority a complete application, which
notes the existence of any first priority mortgage or deed of trust
on the eligible property and the identity of the holder of the
mortgage or deed of trust, to join the program and consents to the
levying of a special assessment on the property pursuant to this
division.
(3) Meets any standard of credit worthiness that the authority may
establish.
(p) "Renewable energy" means heat, processed heat, space heating,
water heating, steam, space cooling, refrigeration, mechanical
energy, electricity, or energy in any form convertible to these uses,
whether produced or conserved, that does not expend or use
conventional energy fuels, and that uses any of the following
electrical generation technologies:
(1) Biomass.
(2) Solar thermal.
(3) Photovoltaic.
(4) Wind.
(5) Geothermal.
(q) "Renewable energy improvement" means one or more fixtures,
products, systems, or devices, or an interacting group of fixtures,
products, systems, or devices, that directly benefit an eligible
property or that are installed on the user side of an electric meter
of an eligible property and that produce energy from renewable
resources, including, but not limited to, photovoltaic, solar
thermal, small wind, low-impact hydroelectric, biomass, or geothermal
systems such as ground source heat pumps, as may be approved by the
State Energy Resources Conservation and Development Commission.
CHAPTER 2. COMMERCIAL BUILDING ENERGY RETROFIT FINANCING
PROGRAM
26210. The purpose of the Commercial Building Energy Retrofit
Financing Program is to help provide the special benefits of
alternative energy and energy efficiency improvements to owners of
eligible property who voluntarily participate in the program by
establishing, developing, financing, and administering a program to
assist those owners in completing new energy improvements.
26211. The authority shall have and exercise all rights and
powers necessary or incidental to or implied from the specific powers
granted to the authority by this division and Division 16. Those
specific powers shall not be considered as a limitation upon any
power necessary or appropriate to carry out the purposes and intent
of this division.
26212. The authority shall establish, develop, finance, and
administer the Commercial Building Energy Retrofit Financing Program.
The program shall be designed to provide financial assistance for an
owner of an eligible building to use one or more energy efficiency
specialists to retrofit the property with one or more alternative
energy sources or renewable energy improvements by applying to the
authority for inclusion of the owner's energy project in a portfolio
that will be financed through the use of the revenue bonds issued
pursuant to this division. These bonds shall be secured by revenues
generated through energy remittance repayment agreements recorded on
the buildings benefited by the projects in the portfolio. The program
shall provide financial assistance for energy efficiency
improvements on terms such that the total energy and water cost
savings realized by the property owner, and any successor or
successors to the property owner, during the useful life of the
improvements, as determined by an analysis required pursuant to
subdivision (i) of Section 26218, are expected to exceed the total
costs incurred by the owner pursuant to the program.
26213. To receive financial assistance pursuant to this division,
a qualified applicant shall contractually agree to the recording of
an energy remittance repayment agreement on the eligible building
that is being retrofitted.
26214. The authority shall establish an application process for
the program that allows an owner of an eligible building to become a
qualified applicant by submitting an application to the authority and
that may include one or more deadlines for filing the application.
The authority may charge an application fee to reimburse the
authority for the costs incurred in reviewing the application.
26215. The authority shall establish underwriting guidelines that
consider an applicant's qualification, and other appropriate
factors, including, but not limited to, credit reports and
loan-to-value ratios, consistent with good and customary lending
practices, necessary for the authority to obtain a bond rating for
bonds issued pursuant to Chapter 3 (commencing with Section 26240)
for a successful bond sale.
26216. The authority shall disclose to an owner of a commercial
building all fees imposed pursuant to this division, including the
loan loss reserve fee and the interest rate charged, prior to the
submitting of an application.
26217. (a) An owner of an eligible building who wishes to
undertake an energy efficiency project may submit to the authority an
application to participate in the program.
(b) The submission of an application is deemed to be a voluntary
agreement by the owner for the authority to record the energy
remittance repayment agreement on the deed of the eligible building
upon the approval of the application.
(c) The application form developed by the authority shall include
a statement in no less than 12-point type stating the following:
SUBMISSION OF THIS APPLICATION CONSTITUTES THE VOLUNTARY CONSENT
OF THE APPLICANT FOR THE RECORDATION OF THE ENERGY REMITTANCE
REPAYMENT AGREEMENT ON THE DEED OF THE ELIGIBLE BUILDING. UPON THE
APPROVAL BY THE AUTHORITY OF THE APPLICATION AND THE RECORDATION OF
THE ENERGY REMITTANCE REPAYMENT AGREEMENT, A LIEN IN THE AMOUNT
SPECIFIED IN THE ENERGY REMITTANCE REPAYMENT AGREEMENT SHALL BE
SECURED BY THE BUILDING.
26218. The owner of an eligible building shall include all of the
following information in the application:
(a) The name, business address, and e-mail address of the owners
of the eligible building.
(b) The names of all entities that hold a secured lien on the
eligible building and their contact information.
(c) The total dollar amount of liens that have been recorded on
the eligible building.
(d) An appraisal of the value of the eligible building.
(e) A detailed description of the energy efficiency improvements
being funded.
(f) The name of the financial institution providing financing for
the energy efficiency improvements.
(g) The structure of the loan financing the energy efficiency
improvements.
(h) Information that the authority requires to verify that the
owner will complete the energy efficiency improvement.
(i) An analysis performed by an energy efficiency specialist to
quantify the costs of the energy efficiency improvements, and total
energy and water cost savings realized by the owner, or his or her
successor, during the useful life of, and estimated carbon impacts
of, the energy efficiency improvements, including an annual cashflow
analysis.
(j) Other information deemed necessary by the authority.
26219. In addition to the information required under Section
26218, an applicant shall provide in the application a detailed
description of the property and a detailed description of the
transactional activities associated with the retrofits, including all
transactional costs and other information deemed necessary by the
authority.
26219.5. (a) The costs of the energy efficiency improvements
shall not exceed 10 percent of the estimated value of the commercial
building.
(b) At the time of submission of the application, the total amount
of liens recorded on the building shall not exceed 85 percent of the
estimated value of the building.
(c) For energy efficiency improvements that exceed five hundred
thousand dollars ($500,000), the contractor installing the
improvements or the property owner shall obtain a guarantee on the
energy and water cost savings as quantified by the analysis required
pursuant to subdivision (i) of Section 26218 by obtaining a security
in the full amount of the cost savings. The security shall be in any
of the following forms, which shall be further specified in
regulation:
(1) Energy savings insurance issued by an A.M. Best "A" or better
rated carrier.
(2) Investment grade guarantee.
(3) Energy efficiency bond.
(4) Letter of credit or cash collateral.
26220. (a) Upon the mutual agreement of the applicant and the
authority, the authority shall establish a schedule for the repayment
required by the energy remittance repayment agreement, including the
interest charged.
(b) Each repayment installment shall become due and owing 30 days
after the prior installment, with the first installment due and owing
within 30 days of the recording of the energy remittance repayment
agreement. The State Board of Equalization shall collect the
repayment installments that become due and owing.
(c) (1) The period for repayment of the energy remittance
repayment agreement shall not exceed the expected useful life of the
energy efficiency improvements or 20 years, whichever is shorter.
(2) The calculated expected useful life of the energy efficiency
improvements shall be consistent with methodologies approved by the
State Energy Resources Conservation and Development Commission for
performing those calculations.
(d) Upon the failure of the applicant to pay any installment
toward the repayment of the energy remittance repayment agreement
when the installment becomes due and owing pursuant to the schedule
for repayment, the authority or the State Board of Equalization may
do either of the following:
(1) Assess a penalty on the delinquent payment that is a
percentage of the delinquent payment.
(2) Declare the entire outstanding energy remittance repayment
agreement balance, including any interest due, penalties assessed,
and costs of collection incurred, immediately due and owing and
foreclose on the energy remittance repayment agreement.
(e) Within __ days of a default, the State Board of Equalization
shall provide to the authority and applicant a notice of default and
provide the applicant with __ days to cure the default.
(f) (1) If the applicant fails to cure the default, the authority
shall notify the tax collector of the county in which the eligible
building is located and the eligible building shall be sold in
accordance with Part 6 (commencing with Section 3351) of Division 1
of the Revenue and Taxation Code.
(2) Revenue generated from the sale of the eligible building shall
be distributed to satisfy liens on the eligible building in
accordance with the priority of the liens as provided by law.
(g) An applicant that is not in default may pay the entire unpaid
balance of the energy remittance repayment agreement plus any
interest accruing to the maturity of the next installment payment
without prepayment penalty.
(h) Upon the full repayment of the balance of the energy
remittance repayment agreement, and interest and penalties that had
accrued, the State Board of Equalization shall notify the authority
of that repayment. Within ____ days of the receipt of the notice, the
authority shall record with the county in which the eligible
building is located a release of the energy remittance repayment
agreement.
26221. (a) Prior to approving an application for inclusion into a
loan portfolio and the recordation of the energy remittance
repayment agreement, or a modification of an approved application,
the authority shall conduct a public hearing on the application or
modification.
(b) The authority shall post a notice of the hearing on the
authority's Internet Web site and provide the notice, in writing, to
all lienholders of the eligible building no later than 30 days prior
to the hearing.
(c) The notice shall specify all of the following:
(1) The name of the applicant.
(2) The address of the eligible building.
(3) The amount required to be repaid by the energy remittance
repayment agreement proposed to be recorded on the eligible building.
(4) The date and place of the public hearing.
(5) The schedule for repayment of the contractual energy
remittance and associated costs as agreed upon between the applicant
and the authority.
(6) The interest rate assessed pursuant to the energy remittance
repayment agreement.
(7) A detailed description of the proposed modification, if
applicable.
(d) The notice shall inform the lienholder that any complaints or
objections to either the approval of the application and the
recordation of the energy remittance repayment agreement on the
eligible building or the modification of an approved application
shall be submitted, in writing, to the authority prior to the
hearing.
26222. At the public hearing, the authority shall consider and
resolve all complaints and objections made.
26223. In evaluating the eligibility of an applicant, the
authority shall consider all of the following:
(a) Whether loan recipients are legal owners of the underlying
property.
(b) Whether loan recipients are current on any outstanding
mortgage and property tax payments.
(c) Whether loan recipients are in default or in bankruptcy
proceedings.
(d) Whether retrofits financed by the program follow applicable
standards of energy efficiency retrofit work, including any
guidelines adopted by the State Energy Resources Conservation and
Development Commission.
26224. (a) The authority shall approve an application through the
adoption of a resolution approving the application and authorizing
the recording of the energy remittance repayment agreement on the
deed of the eligible building.
(b) The resolution shall specify the amount required to be paid to
the authority pursuant to the energy remittance repayment agreement,
the schedule of repayment, and the interest rate charged.
(c) The authority shall approve the modification of an approved
application through the adoption of a resolution.
26225. (a) The energy remittance repayment agreement shall be
subordinate to any and all secured liens recorded against the deed of
the eligible building at the time of recording of the energy
remittance repayment agreement.
(b) Except as otherwise required by law, the energy remittance
repayment agreement shall be superior in priority to all subsequent
liens recorded on the deed of the eligible building.
(c) The sale of the eligible building to enforce the payment of
general ad valorem taxes shall not extinguish the energy remittance
repayment agreement recorded on the eligible building.
(d) Notwithstanding any other law, in the event of a foreclosure
of the building, the energy remittance repayment agreement shall not
be extinguished, unless the outstanding balance of the energy
remittance repayment agreement, including the interest accrued and
all penalties and fees assessed prior to the foreclosure, is fully
paid through the foreclosure proceeding.
26226. (a) Within 30 days of the adoption of a resolution
approving the application and authorizing the recordation of the
energy remittance repayment agreement or the approval of the
modification to an approved application, a lienholder that has
submitted a complaint or objection may file an action or proceeding
challenging the adoption of the resolution with the superior court
with jurisdiction over the eligible building.
(b) The owner of the eligible building shall be named as the real
party in interest in an action or proceeding filed pursuant to
subdivision (a).
26227. (a) Thirty days after the adoption of the resolution or
the date of a final, nonappealable judgment if an action or
proceeding is filed pursuant to Section 26226, the authority shall
forward the resolution to the State Board of Equalization and shall
record with the county in which the eligible building is located the
energy remittance repayment agreement on the deed of the eligible
building.
(b) Upon the recording of the energy remittance repayment
agreement, the authority shall include the approved application in a
portfolio.
26228. (a) The State Board of Equalization shall deposit into the
Commercial Building Energy Retrofit Debt Servicing Fund established
pursuant to Section 26250 any moneys, including repayment
installments and penalties, received pursuant to this division.
(b) The State Board of Equalization may charge a fee on the owner
of eligible buildings to cover its costs in implementing this
division.
26229. (a) A local government that has issued revenue bonds
pursuant to a program providing financial assistance to commercial
and residential buildings owners undertaking an energy efficiency
retrofit on the buildings may apply to the authority for
participation in the program.
(b) Upon the approval of an application submitted by the local
government and the issuance of the Commercial Building Energy
Retrofit Bond for the portfolio in which that application is located,
the authority shall purchase all those outstanding revenue bonds
issued by the local government.
(c) Upon the purchase of
the revenue bonds issued by the local government by the authority,
the authority succeeds to all rights conferred upon the bondholder by
those revenue bonds and the local government shall remit revenue
that is used to secure those revenue bonds to the State Board of
Equalization.
26230. To administer the program, the authority shall do all of
the following:
(a) Market the program to owners of eligible property, encourage
those owners to obtain the special benefits of completing new energy
improvements to their property by providing more attractive and
accessible means of funding the completion of new energy
improvements, and accept and process program applications from any
such owners who are qualified applicants.
(b) Establish those standards, guidelines, and procedures,
including, but not limited to, standards of credit worthiness for
qualification of program applicants, that are necessary to ensure the
financial stability of the program and otherwise prevent fraud and
abuse.
(c) Collaborate with the State Energy Resources Conservation and
Development Commission to establish qualifications for the
certification of contractors to construct or install energy
efficiency improvements.
(d) Contract with a party, public or private, to do any of the
following:
(1) Ensure that appropriate steps are taken to monitor the quality
of energy efficiency improvements financed pursuant to this division
and measure the total energy savings achieved by the program.
(2) Monitor the total number of program participants.
(3) Determine the total amount paid to contractors and financial
institutions pursuant to the program.
(4) Calculate the number of jobs created by the program, the
number of defaults by program participants, and the total losses from
the defaults, and calculate the total dollar amount of bonds issued
by the authority to reimburse program participants.
(e) Develop a model energy aligned lease provision that modifies,
upon the agreement between the owner and tenants of an eligible
building, a commercial lease agreement allowing the owners to recover
the costs of the energy efficiency improvements that result in
operational savings based on the useful life of the retrofit while
protecting tenants from underperformance of the energy efficiency
improvements.
(f) Develop a request for proposal to contract with one or more
financial institutions to secure a short-term, revolving credit
facility (warehouse line of credit) for the purpose of creating an
interim financing mechanism for the loans that would be aggregated
for the purposes of issuance of a revenue bond pursuant to Section
26242. The warehouse line of credit shall be drawn by the authority,
based on adherence to predetermined underwriting criteria and
standards of credit-worthiness established by the authority, to fund
either of the following:
(1) Origination of direct loans to qualified applicants.
(2) Purchase or acquisition of secondary market loans from
financial institutions.
(g) To facilitate the management of the program and the use of the
warehouse line of credit, the authority shall develop a request for
proposal to contract with an outside program administrator that will
work with the authority and private financial institutions in
identifying the appropriate underwriting criteria, loan processing
procedures, loan servicing and monitoring guidelines, and bond
financing parameters.
26231. No later than June 30, 2014, and no later than June 30 of
every fifth year thereafter, the State Auditor shall conduct, or
cause to be conducted, a performance audit of the program. The State
Auditor shall prepare a report and recommendations on each audit
conducted and present the report and recommendations to the President
pro Tempore of the Senate and the Speaker of the Assembly.
CHAPTER 3. COMMERCIAL BUILDING ENERGY RETROFIT BOND
26240. The authority may incur indebtedness and issue and renew
negotiable bonds, notes, debentures, or other securities of any kind
or class. All indebtedness, however evidenced, shall be payable
solely from moneys received pursuant to this division and the
proceeds of its negotiable bonds, notes, debentures, or other
securities and shall not exceed the sum of ____ dollars ($____).
26241. The Legislature may, by statute, authorize the authority
to issue bonds, as defined in Section 26242, in excess of the amount
provided in Section 26240.
26242. (a) On a semiannual basis, the authority shall conduct a
meeting for the purposes of issuing, by the adoption of a resolution,
negotiable bonds, notes, debenture, or other securities
(collectively called "bonds") for the purposes of generating
sufficient moneys to fund the approved applications in the portfolio
at the time of the meeting or to repay an outstanding balance of a
qualified applicant on whose behalf the authority has provided funds
through the warehouse line of credit pursuant to subdivision (f) of
Section 26230. In anticipation of the sale of bonds as authorized by
Section 26240, or as may be authorized pursuant to Section 26241, the
authority may issue negotiable bond anticipation notes and may renew
the notes from time to time. The bond anticipation notes may be paid
from the proceeds of sale of the bonds of the authority in
anticipation of which they were issued. Notes and agreements relating
to the notes and bond anticipation notes (collectively called "notes"
) and the resolution or resolutions authorizing the notes may contain
any provisions, conditions, or limitations that a bond, agreement
relating to the bond, and bond resolution of the authority may
contain. However, a note or renewal of the note shall mature at a
time not exceeding two years from the date of issue of the original
note.
(b) Except as may otherwise be expressly provided by the
authority, every issue of its bonds, notes, or other obligations
shall be general obligations of the authority payable from revenues
or moneys received pursuant to this division, subject only to any
agreements with the holders of particular bonds, notes, or other
obligations pledging any particular revenues or moneys and subject to
any agreements with any participating party. Notwithstanding that
the bonds, notes, or other obligations may be payable from a special
fund, they are for all purposes negotiable instruments, subject only
to the provisions of the bonds, notes, or other obligations for
registration.
(c) Subject to the limitations in Sections 26240 and 26241, the
bonds may be issued as serial bonds or as term bonds, or the
authority, in its discretion, may issue bonds of both types. The
bonds shall be authorized by resolution of the authority and shall
bear the date or dates, mature at the time or times, not exceeding __
years from their respective dates, bear interest at the rate or
rates, be payable at the time or times, be in the denominations, be
in the form, either coupon or registered, carry the registration
privileges, be executed in a manner, be payable in lawful money of
the United States of America at a place or places, and be subject to
terms of redemption, as the resolution or resolutions may provide.
The bonds or notes shall be sold by the Treasurer within 60 days of
receipt of a certified copy of the authority's resolution authorizing
the sale of the bonds. However, the authority, at its discretion,
may adopt a resolution extending the 60-day period. The sales may be
a public or private sale, and for the price or prices and on the
terms and conditions, as the authority shall determine after giving
due consideration to the recommendations of any participating party
to be assisted from the proceeds of the bonds or notes. Pending
preparation of the definitive bonds, the Treasurer may issue interim
receipts, certificates, or temporary bonds that shall be exchanged
for the definitive bonds. The Treasurer may sell bonds, notes, or
other evidence of indebtedness at a price below their par value.
However, the discount on a security sold pursuant to this section
shall not exceed 6 percent of the par value.
(d) A resolution or resolutions authorizing bonds or an issue of
bonds may contain provisions that shall be a part of the contract
with the holders of the bonds to be authorized, as to all of the
following:
(1) Pledging the moneys collected pursuant to this division from
the portfolio of approved applications that are funded by the bonds,
to secure the payment of the bonds or of any particular issue of
bonds, subject to the agreements with bondholders as may then exist.
(2) The setting aside of reserves or sinking funds, and the
regulation and disposition of the reserves or sinking funds.
(3) Limitations on the right of the authority or its agent to
restrict and regulate the use of the project or projects to be
financed out of the proceeds of the bonds or any particular issue of
bonds.
(4) Limitations on the purpose to which the proceeds of sale of an
issue of bonds then or thereafter to be issued may be applied and
pledging those proceeds to secure the payment of the bonds or the
issue of the bonds.
(5) Limitations on the issuance of additional bonds, the terms
upon which additional bonds may be issued and secured, and the
refunding of outstanding bonds.
(6) The procedure, if any, by which the terms of a contract with
bondholders may be amended or abrogated, the amount of bonds the
holders of which must consent to the amendment or abrogation, and the
manner in which that consent may be given.
(7) Limitations on expenditures for operating, administrative, or
other expenses of the authority.
(8) Defining the acts or omissions to act that constitute a
default in the duties of the authority to holders of its obligations
and providing the rights and remedies of the holders in the event of
a default.
(e) Neither the members of the authority nor a person executing
the bonds or notes shall be liable personally on the bonds or notes
or be subject to personal liability or accountability by reason of
the issuance of the bond or note.
(f) The authority shall have power out of any funds available for
these purposes to purchase its bonds or notes. The authority may
hold, pledge, cancel, or resell those bonds, subject to and in
accordance with agreements with bondholders.
26243. In the discretion of the authority, any bonds issued under
the provisions of this division may be secured by a trust agreement
by and between the authority and a corporate trustee or trustees,
which may be the Treasurer or any trust company or bank having the
powers of a trust company within or without the state. Such trust
agreement or the resolution providing for the issuance of such bonds
may pledge or assign the revenues to be received pursuant to this
division, to be financed out of the proceeds of such bonds. Such
trust agreement or resolution providing for the issuance of such
bonds may contain such provisions for protecting and enforcing the
rights and remedies of the bondholders as may be reasonable and
proper and not in violation of law, including particularly such
provisions as have herein above been specifically authorized to be
included in any resolution or resolutions of the authority
authorizing bonds thereof. Any bank or trust company doing business
under the laws of this state which may act as depositary of the
proceeds of bonds or of revenues or other moneys may furnish such
indemnifying bonds or pledge such securities as may be required by
the authority. Any such trust agreement may set forth the rights and
remedies of the bondholders and of the trustee or trustees, and may
restrict the individual right of action by bondholders. In addition
to the foregoing, any such trust agreement or resolution may contain
such other provisions as the authority may deem reasonable and proper
for the security of the bondholders. Notwithstanding any other law,
the Treasurer shall not be deemed to have a conflict of interest by
reason of acting as trustee pursuant to this division.
26244. Bonds issued under the provisions of this division shall
not be deemed to constitute a debt or liability of the state or of
any political subdivision thereof, other than the authority, or a
pledge of the faith and credit of the state or of any such political
subdivision, other than the authority, but shall be payable solely
from the funds herein provided therefor. All such bonds shall contain
on the face thereof a statement to the following effect:
"Neither the faith and credit nor the taxing power of the State of
California is pledged to the payment of the principal of or interest
on this bond."
The issuance of bonds under the provisions of this division shall
not directly or indirectly or contingently obligate the state or any
political subdivision thereof to levy or to pledge any form of
taxation whatever therefor or to make any appropriation for their
payment. Nothing contained in this section shall prevent or be
construed to prevent the authority from pledging its full faith and
credit to the payment of bonds or issue of bonds authorized pursuant
to this division.
26245. (a) The authority is hereby authorized to provide for the
issuance of bonds of the authority for the purpose of refunding any
bonds, notes, or other securities of the authority then outstanding,
including the payment of any redemption premium thereon and any
interest accrued or to accrue to the earliest or subsequent date of
redemption, purchase, or maturity of such bonds.
(b) The proceeds of any such bonds issued for the purpose of
refunding outstanding bonds, notes, or other securities may, in the
discretion of the authority, be applied to the purchase or retirement
at maturity or redemption of such outstanding bonds either on their
earliest or any subsequent redemption date or upon the purchase or
retirement at the maturity thereof and may, pending such application,
be placed in escrow to be applied to such purchase or retirement at
maturity or redemption on such date as may be determined by the
authority.
(c) Pending such use, any such escrowed proceeds may be invested
and reinvested by the Treasurer in obligations of, or guaranteed by,
the United States of America, or in certificates of deposit or time
deposits secured by obligations of, or guaranteed by, the United
States of America, maturing at such time or times as shall be
appropriate to ensure the prompt payment, as to principal, interest,
and redemption premium, if any, of the outstanding bonds to be so
refunded. The interest, income, and profits, if any, earned or
realized on any such investment may also be applied to the payment of
the outstanding bonds to be so refunded. After the terms of the
escrow have been fully satisfied and carried out, any balance of such
proceeds and interest, income, and profits, if any, earned or
realized on the investments thereof may be returned to the authority
for use by it in any lawful manner.
(d) All such bonds shall be subject to the provisions of this
division in the same manner and to the same extent as other bonds
issued pursuant to this division.
26246. Bonds issued by the authority are legal investments for
all trust funds, the funds of all insurance companies, banks, both
commercial and savings, trust companies, savings and loan
associations, and investment companies, for executors,
administrators, trustees, and other fiduciaries, for state school
funds, and for any funds which may be invested in county, municipal,
or school district bonds, and such bonds are securities which may
properly and legally be deposited with, and received by, any state or
municipal officer or agency or political subdivision of the state
for any purpose for which the deposit of bonds or obligations of the
state, is now, or may hereafter be, authorized by law, including
deposits to secure public funds if, and only to the extent that,
evidence of indebtedness or debt securities of the participating
party receiving financing through the issuance of such bonds qualify
or are eligible for such purposes and uses.
26247. The state hereby pledges and agrees with the holders of
the bonds and with an applicant of an approved application that the
state will not limit, alter, restrict, or impair the rights vested in
the authority or the rights or obligations of a person or entity
with which the authority contracts to fulfill the terms of an
agreement made pursuant to this division. The state further agrees
that it will not in any way impair the rights or remedies of the
holder of the bonds until the bonds have been paid or until adequate
provision for payment has been made. The authority may include this
provision and undertaking for the authority in its bonds.
26248. No liability shall be incurred by the authority beyond the
extent to which moneys have been provided under this division;
except that for the purposes of meeting the necessary expenses of
initial organization and operation until such date as the authority
derives revenues or proceeds from bonds or notes as provided under
this division, the authority may borrow money as needed for such
expenses from the State Energy Resources Conservation and Development
Special Account in the General Fund in the State Treasury. Such
borrowed moneys shall be repaid with interest within a reasonable
time after the authority receives revenues or proceeds from bonds or
notes as provided under this division.
26249. (a) Bonds issued pursuant to this division shall be exempt
from all taxation and assessment imposed pursuant to state law.
(b) No later than February 1, 2013, the authority shall apply to
the United States Department of the Treasury under the Energy Tax
Incentive Act of 2005 (Title XIII of Public Law 109-58) for the
authority to issue tax advantage bonds under the federal Clean
Renewable Energy Bonds program or any other applicable programs.
CHAPTER 4. COMMERCIAL BUILDING ENERGY RETROFIT DEBT SERVICING
FUND
26250. (a) The Commercial Building Energy Retrofit Debt Servicing
Fund is hereby established in the Treasury. Notwithstanding Section
13340 of the Government Code, the moneys in the fund are hereby
continuously appropriated to the Treasurer without regard to fiscal
year for the purposes of paying the principal and interest on bonds
issued by the authority pursuant to Section 26242 and defraying any
direct and indirect costs incurred by the Treasurer in executing
duties required by this division.
(b) All interest and income derived from the deposit and
investment of moneys in the fund shall be credited to the fund, and
all unexpended and unencumbered moneys in the fund at the end of any
fiscal year shall remain in the fund.
26250.5. (a) The Loan Loss Reserve Account is hereby established
in the Commercial Building Energy Retrofit Debt Servicing Fund. The
State Board of Equalization shall deposit the portion of the
contractual energy remittance that is the loan loss reserve fee into
the account. Notwithstanding Section 13340 of the Government Code,
the moneys in the account are hereby continuously appropriated to the
Treasurer without regard to fiscal year for the purposes of paying
outstanding balances due under an energy remittance repayment
agreement on a building that has been foreclosed upon if the proceeds
generated from the foreclosure proceedings are insufficient to pay
any past due payments past due under the energy remittance repayment
agreement, including accrued interest, penalties, and fees.
(b) All interest and income derived from the deposit and
investment of moneys in the account shall be credited to the account,
and all unexpended and unencumbered moneys in the account at the end
of any fiscal year shall remain in the account.
26251. The Administration Account is hereby established in the
Commercial Building Energy Retrofit Debt Servicing Fund. The
authority shall deposit into the account any fees collected pursuant
to Section 26214. Notwithstanding Section 13340 of the Government
Code, moneys in the account shall be continuously appropriated to the
authority for the costs of implementing this division.
26252. The Collection Administration Account is hereby
established in the Commercial Building Energy Retrofit Debt Servicing
Fund. The State Board of Equalization shall deposit into the account
fees collected pursuant to subdivision (b) of Section 26228.
Notwithstanding Section 13340 of the Government Code, moneys in the
account shall be continuously appropriated to the State Board of
Equalization for the costs of implementing this division.