Bill Text: CA AB122 | 2013-2014 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Energy improvements: financing.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB122 Detail]
Download: California-2013-AB122-Amended.html
Bill Title: Energy improvements: financing.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB122 Detail]
Download: California-2013-AB122-Amended.html
BILL NUMBER: AB 122 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 1, 2013
AMENDED IN ASSEMBLY MARCH 19, 2013
INTRODUCED BY Assembly Member Rendon
JANUARY 14, 2013
An act to add Chapter 13 (commencing with Section 25987.1) to
Division 15 of the Public Resources Code, relating to energy, and
making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 122, as amended, Rendon. Energy: energy assessment:
nonresidential buildings: financing.
Existing law requires the State Energy Resources Conservation and
Development Commission to implement a program to provide financial
assistance for energy efficiency projects.
This bill would enact the Nonresidential Building Energy Retrofit
Financing Act of 2013 and would require the commission to establish
the Nonresidential Building Energy Retrofit Financing Program and to
develop a request for proposal for a third-party administrator by
July 1, 2014, to develop and operate the program to provide financial
assistance, through authorizing the issuance of, among other things,
revenue bonds, to owners of eligible nonresidential buildings for
implementing energy improvements for their properties. The bill would
require that the bonds be secured by the recording of an energy
remittance repayment agreement lien , as defined, on the
deed of the property for which the improvements are performed. The
bill would require the State Board of Equalization to collect
installment payments from owners of eligible properties whose
applications have been approved by the commission.
The bill would require the commission to meet for the purpose of
approving applicants to participate in the program. The bill would
authorize the California Alternative Energy and Advanced
Transportation Financing Authority, on behalf of the commission, to
issue and renew the negotiable revenue bonds to generate moneys to
finance energy improvements for approved applicants.
The bill would establish the Nonresidential Building Energy
Retrofit Debt Servicing Fund in the State Treasury and the Loan Loss
Reserve Account and 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 certain fees collected 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, the
commission, and the State Board of Equalization, thereby making an
appropriation.
The bill would require the Director of Finance to transfer, as a
loan, up to $1,000,000, to the authority, and up to $7,000,000, to
the commission, from the General Fund for the purposes of
implementing the program. The bill would require the loans to be
repaid on or before January 1, 2024.
Existing law establishes incentives in the form of grants and
loans to low-income residents, small businesses, and residential
property owners for constructing and retrofitting buildings to be
more energy efficient.
The bill would require the State Energy Resources Conservation and
Development Commission, to the extent it determines necessary to
effectively complete it duties under the act, to analyze and evaluate
specified standards developed for nonresidential energy building
retrofits.
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. Chapter 13 (commencing with Section 25987.1) is added
to Division 15 of the Public Resources Code, to read:
CHAPTER 13. NONRESIDENTIAL BUILDING ASSESSMENT FINANCING
Article 1. General Provisions and Definitions
25987.1. This act shall be known, and may be cited, as the
Nonresidential Building Energy Retrofit Financing Act of 2013.
25987.2. The purpose of this chapter is to facilitate private
financing to enable private nonresidential building owners and
eligible public entities to invest in clean energy improvements,
renewable energy, and conservation; to incentivize private equity
managers to invest in clean energy improvements, integrate the smart
energy economy, and 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.
25987.3. The Legislature finds and declares all of the following:
(a) Nonresidential buildings represent a huge opportunity to
significantly increase energy efficiency and reduce greenhouse gas
emissions. To do this, California needs to address the design,
construction, and operation of these buildings.
(b) The lack of accessible and affordable financing for energy
efficiency retrofits 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 nonresidential
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 nonresidential property
to invest in new energy improvements, including building energy
efficiency improvements that qualify for investor-owned utility or
publicly owned utility programs, water 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 building 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 building energy efficiency
improvements and renewable energy improvements, can provide positive
cashflow when the costs of the improvements are spread out over a
long enough time that a building's cumulative utility bill cost
savings exceed the amount of the liens recorded on the eligible
building to ensure payment for the improvements.
(2) Many owners of eligible nonresidential 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 nonresidential building owners who participate in the
program established pursuant to this division to assist them in
completing new energy improvements, including building energy
efficiency improvements and renewable energy improvements, to the
building shall do so voluntarily.
25987.4. Unless the context otherwise requires, for the purposes
of this chapter, the following terms have the following meanings:
(a) (1) "Alternative sources of energy" or "alternative energy
sources" means energy from renewable cogeneration or gas-fired
cogeneration technology that meets the greenhouse gas emissions and
efficiency standards applicable to the Self-Generation Incentive
Program in effect at the time of the application, energy storage
technologies, or energy from solar, biomass, wind, or geothermal
systems, or fuel cells, the efficient use of which will reduce the
use of conventional energy fuels.
(2) The system shall be sized appropriately to offset part or all
of the applicant's own electricity demand and shall be located on the
same premises of the application property
where the applicant's own electrical demand is located.
(b) "Applicant" 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 owns a nonresidential building and
applies for financial assistance from the commission for the purpose
of implementing a project in a manner prescribed by the commission.
(c) "Authority" means the California Alternative Energy and
Advanced Transportation Financing Authority established pursuant to
Section 26004.
(d) "Board" means the State Board of Equalization.
(e) "Building energy efficiency improvement" means one or more
installations or modifications, for which a building permit is issued
after January 1, 2014, to an eligible building that either qualifies
for an investor-owned utility or publicly owned utility energy
efficiency program or is designed to reduce the energy consumption of
the building, and that may include, but is not limited to, all of
the following to the extent they qualify:
(1) High-efficiency mechanical equipment.
(2) High-efficiency electrical equipment.
(3) Capturing or reducing heat gain or solar shading, including
the roof and south and west walls, and not just glazing.
(4) High-efficiency water heating.
(5) Insulation in walls, roofs, floors, and foundations and in
heating and cooling distribution systems.
(6) Fenestration and door replacements, and door modifications
that reduce energy consumption.
(7) Automatic energy control systems.
(8) Heating, ventilating, or air conditioning and distribution
system modifications or replacements.
(9) Caulking and weather stripping.
(10) Replacement or modification of luminaries to increase the
energy efficiency of the system, or additional lighting controls to
reduce electric lighting during periods of vacancy.
(11) Energy recovery systems.
(12) Daylighting systems and associated lighting controls for
daylight harvesting.
(13) A modification, installation, or remodeling approved as a
utility cost-savings measure by the commission or the Public
Utilities Commission and utilized by investor-owned utilities and
energy efficiency specialists participating in their Energy
Efficiency programs.
(14) Plug load solutions.
(15) Building commissioning or retrocommissioning.
(f) "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 liquefied natural gas.
(3) Nuclear fissionable materials.
(4) Coal.
(g) "Demand response" means reductions or shifts in electricity
consumption by customers in response to either economic or
reliability signals.
(h) "Eligible building" means a nonresidential building that
completed construction on or before January 1, 2014, and is located
within the boundaries of the state.
(i) "Energy remittance repayment agreement" means a contractual
agreement between an eligible building owner and the commission,
secured by a lien, as described in Section 25987.21, recorded in the
county where the property is situated and on an eligible building
specially benefited by a new energy improvement for which the
commission 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 building 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 in an amount to be established by the third-party
administrator in consultation with the commission and the warehouse
financier under contract entered into pursuant to paragraph (8) of
subdivision (a) of Section 25987.25 to insure against nonperformance
of the loan and other losses of the program, and a program
administrative cost fee.
(j) "Energy efficiency specialist" means an individual or business
authorized or certified by rules of the commission to analyze,
evaluate, or install a renewable energy source, building energy
efficiency improvement, or water efficiency improvement for eligible
property.
(k) "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 and
approved by the commission.
(2) Other types of assistance the commission determines are
appropriate.
(l) "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.
(m) "Loan loss reserve fee" means a fee that serves as collateral
in the event of a loan default.
(n) "Nonresidential Building Energy Retrofit Bond" means a bond
issued pursuant to Section 25987.31 that is secured by an energy
remittance repayment agreement on property entered into voluntarily
to finance the installation of renewable energy sources, building
energy efficiency improvement or retrofits, or water efficiency
improvements.
(o) "Participant" 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, as a qualified
applicant is approved for financial assistance pursuant to Article 2
(commencing with Section 25987.5) and has entered into an energy
remittance repayment agreement with the commission for the purpose of
implementing a project in a manner prescribed by the commission.
(p) "Portfolio" means an aggregation of approved applications.
(q) "Program" means the Nonresidential Building Energy Retrofit
Financing Program established by the commission in accordance with
Section 25987.7.
(r) "Program administration cost fee" means a fee imposed for the
costs incurred by the commission, the authority, and the State Board
of Equalization to administer the program.
(s) "Project" means an improvement to an eligible building that
constitutes a water efficiency improvement, alternative source of
energy, or building energy efficiency improvement.
(t) "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 appraised value not to exceed 85 percent and subject to
adjustment by the program administrator 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 commission a complete application, which
notes the existence of any 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 chapter.
(3) Meets standard of credit worthiness that the commission may
establish.
(u) "Renewable energy" means heat, processed heat, space heating,
water heating, steam, space cooling, refrigeration, mechanical
energy, electricity, fuel cells, or energy in any form convertible to
these uses, and including energy storage technologies, 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.
(v) "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
building or that are installed on the customer side of a meter of an
eligible building and that produce renewable energy from renewable
resources, including, but not limited to, photovoltaic, solar
thermal, small wind, biomass, fuel cells, or geothermal systems such
as ground source heat pumps, as may be approved by the commission.
(w) "Third-party administrator" means an entity selected by the
commission through a request for proposal to manage project
applications and make recommendations to the commission as to
individual project's compliance with this chapter.
(x) "Warehouse financier" means a financial entity, bank, or
pension fund, chosen by the commission through a request for proposal
to provide an ongoing and revolving source of financing for projects
approved pursuant to Section 25987.20.
Article 2. Nonresidential Building Energy Retrofit Financing
Program
25987.5. The purpose of the Nonresidential Building Energy
Retrofit Financing Program is to help provide the special benefits of
water efficiency improvements, alternative energy, and building
energy efficiency improvements to owners of eligible buildings who
voluntarily participate in the program by establishing, developing,
financing, and administering a program to assist those owners in
completing improvements.
25987.6. The commission shall have and exercise all rights and
powers necessary or incidental to or implied from the specific powers
granted to the commission by this chapter. 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 chapter.
25987.7. (a) The commission shall establish, develop, finance,
and administer, pursuant to Section 25987.9, the Nonresidential
Building Energy Retrofit Financing Program. The commission shall
provide general direction and oversight to the authority and board as
they complete duties specified in this chapter. 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, building energy efficiency
improvements, or water efficiency improvements, by applying to the
commission for inclusion of the owner's project in a portfolio that
will be financed through the use of the revenue bonds issued pursuant
to this chapter. These bonds shall be secured by revenues generated
through energy remittance repayment agreements recorded on the
buildings benefited by the projects in the portfolio.
(b) (1) The program shall provide financial assistance for
improvements when 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 25987.13
are expected to equal or exceed the total costs incurred by the owner
pursuant to the program.
(2) The commission may waive the requirements of paragraph (1) by
adopting a specific finding that additional improvements may be
undertaken that significantly increase energy efficiency and improve
public health.
(c) In developing rules to certify an energy efficiency
specialist, the commission shall consult with the Public Utilities
Commission, the investor-owned utilities, the contractor community,
and other entities the commission deems appropriate and consider
existing trade certifications or licensing requirements applicable to
occupations that perform work contemplated pursuant to this chapter.
25987.8. To receive financial assistance pursuant to this
chapter, a qualified applicant shall contractually agree to the
recording of an energy remittance repayment agreement on the eligible
building that is being retrofitted.
25987.9. By July 1, 2014, the commission shall develop a request
for proposal to develop the program by a third-party administrator.
The third-party administrator shall administer the program and
establish an automated, asset-based underwriting system for all
eligible buildings in the state. The third-party administrator shall
provide consultation to the commission in developing guidelines for
the program. The party selected as the third-party administrator
shall only be selected if the program proposal submitted by the party
requires all costs, including startup costs of the program, to be
covered by the loan recipients, the administrator, the bond
purchasers, or some combination thereof. The program selected shall
not include General Fund costs or liabilities, with the exception of
loans from the General Fund pursuant to Section 25987.41 utilized for
startup costs.
25987.10. The third-party administrator shall establish
underwriting guidelines that consider an applicant's qualifications,
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 Article 3 (commencing with
Section 25987.29) for a successful bond sale.
25987.11. The third-party administrator shall disclose to an
owner of a nonresidential building all fees imposed pursuant to this
chapter, including the loan loss reserve fee, the program
administration cost fee, and the interest rate charged, prior to the
submission of an application by the building owner.
25987.12. (a) An owner of an eligible building who wishes to
undertake an improvement shall submit to the third-party
administrator 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 commission 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 third-party
administrator 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 PROPERTY. UPON THE
APPROVAL BY THE COMMISSION 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 PROPERTY.
25987.13. The owner of an eligible building shall include all of
the following information in the application:
(a) The name, business address, and email 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 that has
been conducted within the past six months or during an appropriate
timeframe consistent with industry practices for underwriting of
nonresidential buildings.
(e) A detailed description of the building energy efficiency
improvements being funded.
(f) The name of the financial institution providing interim
financing for the improvements or the warehouse line of credit
developed pursuant to Section 25987.26.
(g) The structure of the loan financing the building energy
efficiency improvements.
(h) Any information that the commission or third-party
administrator requires to verify that the owner will complete the
project.
(i) An analysis performed by an energy efficiency specialist to
quantify the costs of the energy and water efficiency improvements,
and total energy and water cost savings realized by the owner, or his
or her successor during the effective useful life of, and estimated
carbon impacts of, the improvements, including an annual cashflow
analysis.
(j) Copies of an application that have been made for energy
efficiency incentives identified pursuant to subdivision (d) of
Section 25987.19 for any applicable retrofits.
(k) Other information deemed necessary by the commission or the
third-party administrator.
25987.14. (a) In addition to the information required under
Section 25987.13, an applicant shall provide in the application a
detailed description of all of the following:
(1) The eligible building.
(2) The transactional activities associated with the eligible
improvements, including the transactional costs.
(3) Other information deemed necessary by the commission or the
third-party administrator.
(b) An applicant shall agree in the application to remit repayment
installments due by an electronic funds transfer under procedures
prescribed by the board.
25987.15. (a) The third-party administrator shall make
recommendations to the commission regarding the approval or
disapproval of an application.
(b) The commission may approve and accept an applicant into the
program if both of the following conditions are met:
(1) The applicant is a qualified applicant.
(2) Prior to receiving funding for renewable energy improvement or
alternative energy sources, the applicant shall show both of the
following:
(A) Evidence of intent to make feasible energy efficiency upgrades
recommended by the analysis required pursuant to subdivision (i) of
Section 25987.13.
(B) Evidence of intent to enroll in eligible demand response
programs, if appropriate.
(c) The commission shall determine appropriate guarantees
necessary to ensure cost neutrality of the improvements that may
include the requirement that the owner of the eligible building
obtain insurance issued by an A.M. Best "A" or better rated insurance
carrier or a similar product as approved by the commission.
25987.16. (a) Upon the mutual agreement of the participant and
the third-party administrator, the third-party administrator shall
establish an annualized schedule for the repayment required by the
energy remittance repayment agreement, including the interest
charged, administrative cost fee, and loan loss fee.
(b) The board shall collect the repayment installments that become
due and payable.
(c) (1) The period for repayment of the energy remittance
repayment agreement shall not exceed the effective useful life of the
improvements or 20 years, whichever is shorter.
(2) The calculated effective useful life of the building energy
efficiency improvements shall be calculated using methodologies
adopted by the commission, in consultation with the Public Utilities
Commission.
(d) Upon the failure of the participant 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 board shall assess a penalty on the delinquent
payment of 10 percent of the unpaid installment.
(e) Within 60 days of a failure to pay the scheduled energy
remittance payment, the board shall issue a demand letter to the
participant with notice provided to the commission and provide the
participant with 30 days to cure the default.
(f) (1) If the participant fails to cure the default within the
time allotted, the board may 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
by either judicial or nonjudicial foreclosure.
(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) Upon the full repayment of the balance of the energy
remittance repayment agreement, and interest and penalties that had
accrued, the board shall notify the commission of that repayment.
Within 30 days of the receipt of the notice, the board shall record
with the county in which the eligible building is located a release
of the energy remittance repayment agreement.
25987.17. (a) A participant shall remit repayment installments
due by an electronic funds transfer to the board under procedures
prescribed by the board.
(b) Any participant remitting amounts due pursuant to subdivision
(a) shall perform electronic funds transfers in compliance with the
due dates prescribed in the schedule for repayment. Payment is deemed
complete on the date the electronic funds transfer is initiated if
settlement to the state's demand account occurs on or before the
banking day following the date the transfer is initiated. If
settlement to the state's demand account does not occur on or before
the banking day following the date the transfer is initiated, payment
is deemed to occur on the date settlement occurs.
(c) Any participant who remits a repayment installment by means
other than appropriate electronic funds transfer shall pay a penalty
of 10 percent of the repayment installment incorrectly remitted.
(d) The board may prescribe, adopt, and enforce guidelines
relating to the collection of the energy remittance repayment
installments. The guidelines adopted pursuant to this section shall
be exempt from the requirements of the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code).
25987.18. (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 commission shall conduct
a public meeting on the proposed application or modification.
(b) The commission shall post a notice of the hearing on the
commission'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 public meeting.
(c) The notice shall specify all of the following:
(1) The name of the qualified applicant.
(2) The address of the eligible meeting.
(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 meeting.
(5) The schedule for repayment of the contractual energy
remittance and associated costs as agreed upon between the qualified
applicant and the commission.
(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 commission not less than 10
days prior to the public meeting.
25987.19. In evaluating the eligibility of an applicant, the
commission shall consider the creditworthiness of the applicant and
the effectiveness of the improvements applying the following
criteria, which may include, but not be limited to, all of the
following:
(a) Whether applicants are legal owners of the underlying
property.
(b) Whether applicants are current on any outstanding mortgage and
property tax payments.
(c) Whether applicants are in default or in bankruptcy
proceedings.
(d) Whether applicants have applied for incentives available
through the energy efficiency programs offered by an electrical or
gas corporation.
(e) Whether improvements financed by the program follow applicable
standards including any guidelines adopted by the commission.
25987.20. (a) The commission shall approve an application at a
business meeting. Upon approval of an application, the commission
shall authorize a recording of the energy remittance repayment
agreement on the deed of the eligible building.
(b) The commission shall specify the amount required to be paid to
the board pursuant to the energy remittance repayment agreement, the
schedule of repayment, and the interest rate charged.
(c) The commission shall approve a modification of an approved
application at a business meeting.
25987.21. (a) The energy remittance repayment agreement lien
that is secured by a lien recorded pursuant to this section,
shall have the force, effect, and priority of a judgment
lien, and shall be subordinate to any and all secured mortgage liens
recorded against the deed of the eligible building at the time of
recording of the energy remittance repayment agreement.
a prominent header on the document that reads "Energy Remittance
Repayment Agreement Lien" in 14- point type
and contains all of the following information related to the affected
real property:
(1) The assessor's parcel number.
(2) The owners of record.
(3) The legal description.
(4) The street address.
(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 except where the
first mortgage is refinanced, in which case the energy remittance
repayment agreement shall remain secondary to the primary mortgage.
(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) In the event of foreclosure, the energy remittance repayment
agreement installments shall not be due and owing during such time
when the building is owned by a financial institution taking title by
way of foreclosure. The installments owing pursuant to the energy
remittance repayment agreement shall, however, continue to accrue and
shall become due 60 days after a new, nonfinancial owner takes
title.
(e) Notwithstanding any other law, in the event of a foreclosure
of the property, 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.
25987.22. (a) No later than 30 days after the approval of an
application, the commission shall forward the agreement and any other
information necessary to collect the installment repayments to the
board which shall record with the county in which the eligible
building is located the energy remittance repayment agreement on the
deed of the eligible building. The board shall notify the commission
upon the recordation of the energy remittance repayment agreement.
(b) Within 60 days of the notice of recording of the energy
remittance repayment agreement, the commission shall include the
approved application in a portfolio posted on the commission's
Internet Web site.
25987.23. (a) The board shall deposit into the Nonresidential
Building Energy Retrofit Debt Servicing Fund established pursuant to
Section 25987.38 any moneys collected pursuant to this chapter.
(b) The board may charge a program administration cost fee on the
owner of an eligible building to cover its costs as well as the
authority's and the commission's costs in implementing this chapter.
(c) Nothing in this chapter shall be construed to require
investor-owned utilities or municipal utilities to serve in the role
as a third-party private guarantor or loan servicer or otherwise
provide credit support for the loan program.
25987.24. (a) A local government that has issued revenue bonds
pursuant to a program providing financial assistance to owners of
nonresidential buildings undertaking a renewable energy, water
efficiency, or energy efficiency retrofit improvement on the
buildings may apply to the commission for participation in the
program.
(b) Upon the approval of an application submitted by the local
government, the authority may 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 board.
25987.25. (a) To the extent that the commission determines
necessary to effectively complete the duties specified by this
chapter, the commission shall do all of the following:
(1) (A) Analyze and evaluate standards for nonresidential energy
building retrofits previously developed by various national and
international organizations to provide uniformity and transparency
for financial institutions evaluating loan proposals for energy
improvements to nonresidential buildings. To the extent that the
commission determines necessary, this evaluation shall be completed
not later than January 1, 2015.
(B) The evaluation shall review existing protocols or a
combination of elements of existing measurement protocols and shall
be made available in an electronic format to financial institutions
and local governments initiating loans pursuant to this chapter.
(2) Establish those standards, guidelines, and procedures, through
regulation, 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.
(3) Establish those measurement and verification standards
necessary to ensure that the building energy efficiency improvements
financed pursuant to this chapter are realized at a level specified
by the commission.
(4) Consider reliance on existing trade certifications or
licensing requirements applicable to occupations that perform the
work contemplated under this chapter.
(5) Establish qualifications for the certification of contractors
to construct or install building energy efficiency improvements.
(6) Contract with a party, public or private, to do any of the
following:
(A) Ensure that appropriate and reasonable steps are taken to
monitor and verify the quality and longevity of building energy
efficiency improvements financed pursuant to this division and
measure the total energy savings achieved by the program.
(B) Monitor the total number of program participants.
(C) Determine the average amount, in aggregate, paid to
contractors and financial institutions pursuant to the program.
Notwithstanding the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), upon a finding pursuant to Section 6255 of the
Government Code that the public interest is served by not disclosing
information clearly outweighs the public interest served by
disclosing information, the commission shall not disclose payments
made by an applicant or a program participant to individual
contractors or financial institutions.
(D) 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.
(7) 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 renewable energy, water efficiency, or energy
efficiency retrofit improvements that result in operational savings
based on the useful life of the retrofit while protecting tenants
from underperformance of the building energy efficiency improvements.
(8) 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
25987.29. The warehouse line of credit shall be drawn by the
third-party administrator for origination of direct loans to
qualified applicants.
(9) Adopt a standard notice and disclosure form for the purposes
of Section 25987.27.
(b) In implementing this chapter, the commission shall do all of
the following:
(1) Consult with the Public Utilities Commission, representatives
from the investor-owned and publicly owned utilities, local
governments, real estate licensees, commercial builders, commercial
property owners, small businesses, financial institutions, commercial
property appraisers, energy rating organizations, and other entities
the commission deems appropriate.
(2) Hold at least one public hearing.
(3) Adopt guidelines and standards for the purposes of
implementing this chapter at a publicly noticed meeting offering all
interested parties an opportunity to comment. For the initial
adoption of the guidelines and standards, the commission shall
provide a written public notice at least 30 days prior to the
meeting. For the adoption of any substantive change to the guidelines
and standards, the commission shall provide a written public notice
at least 10 days prior to the meeting. Notwithstanding any other law,
guidelines or standards adopted pursuant to this section shall be
exempt from the requirements of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
25987.26. Credit issued under the warehouse line of credit shall
not be deemed to constitute a debt or liability of the state or of
any political subdivision thereof, or a pledge of the full faith and
credit of the state or of any political subdivision, but shall be
payable solely from the funds provided therefor. All credit
instruments shall contain 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 principal and interest on
this credit instrument."
25987.27. (a) From the date upon which financial assistance is
approved by the commission pursuant to Section 25987.20 and for all
subsequent transactions entered into pursuant to this chapter, a
seller of real property subject to an energy remittance repayment
agreement shall deliver to the buyer an energy remittance repayment
agreement notice and disclosure as adopted by the commission pursuant
to paragraph (9) of subdivision (a) of Section 25987.25.
(b) (1) Upon the delivery of the completed notice and disclosure
form to the buyer of real property, the seller and his or her agent
is not required to provide additional information relative to the
energy remittance repayment agreement.
(2) The information in the notice and disclosure form is deemed
sufficient to provide notice to the buyer of the existence of the
energy improvements, the energy remittance repayment agreement, and
the repayment obligation that will be assigned to, and assumed by,
the buyer upon taking title.
25987.28. No later than June 30, 2015, 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.
Article 3. Nonresidential Building Energy Retrofit Bond
25987.29. The authority, on behalf of the commission, 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 chapter and the proceeds of its negotiable bonds, notes,
debentures, or other securities and shall not exceed the sum of two
billion dollars ($2,000,000,000).
25987.30. The Legislature may, by statute, authorize the
authority to issue bonds, as defined in Section 25987.31 in excess of
the amount provided in Section 25987.29.
25987.31. (a) On a semiannual basis, the authority shall conduct
a meeting for the purpose of authorizing the issuance of, by the
adoption of a resolution, negotiable bonds, notes, debentures, 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 the participant on whose behalf the commission has
provided funds through the warehouse line of credit. In anticipation
of the sale of bonds as authorized by Section 25987.29, or as may be
authorized pursuant to Section 25987.30, the authority, on behalf of
the commission, 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) 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 chapter. 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 25987.29 and 25987.30,
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 30
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 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 authority
may issue interim receipts, certificates, or temporary bonds that
shall be exchanged for the definitive bonds. The authority 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 chapter 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 the commission or
their 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 or commission.
(8) Defining the acts or omissions to act that constitute a
default in the duties of the authority or commission to holders of
its obligations and providing the rights and remedies of the holders
in the event of a default.
(e) The authority, the commission, and any person executing the
bonds or notes shall not 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.
(g) The commission, the authority, and the board may enter into a
memorandum of understanding providing for the transfer of energy
remittance payments between the three agencies in furtherance of this
chapter.
(h) Should there be insufficient project valuation or insufficient
demand for the revenue bonds authorized by this chapter, the board
shall continue to collect the energy remittance payments and service
the loans. Failure to sell the revenue bonds shall not create any
liability for the state.
25987.32. In the discretion of the authority, any bonds issued
under the provisions of this article may be secured by a trust
agreement by and between the authority and a corporate trustee or
trustees, which may be the authority 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 chapter, 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 commission
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 authority shall not be deemed to have a conflict of interest by
reason of acting as trustee pursuant to this chapter.
25987.33. Bonds issued under the provisions of this article 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, 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 article 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
chapter.
25987.34. (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 authority 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 chapter.
25987.35. 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.
25987.36. The state hereby pledges and agrees with the holders of
the bonds and with a participant with an approved application that
the state will not limit, alter, restrict, or impair the rights
vested in the authority or the commission or the rights or
obligations of a person or entity with which the commission
contracts to fulfill the
terms of an agreement made pursuant to this chapter. 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.
25987.37. (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, 2014, the commission shall apply to
the United States Department of the Treasury under the Energy Tax
Incentives 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.
Article 4. Nonresidential Building Energy Retrofit Debt
Servicing Fund
25987.38. (a) The Nonresidential Building Energy Retrofit Debt
Servicing Fund is hereby established in the State Treasury.
Notwithstanding Section 13340 of the Government Code, the moneys in
the fund are hereby continuously appropriated to the authority
without regard to fiscal year for the purposes of paying the
principal and interest on bonds issued by the authority pursuant to
Section 25987.29, servicing the warehouse line of credit, and
defraying any direct and indirect costs incurred by the Treasurer in
executing duties required by this chapter.
(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.
25987.39. The Loan Loss Reserve Account is hereby established in
the Nonresidential Building Energy Retrofit Debt Servicing Fund. The
board 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 authority 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. 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.
25987.40. The Administration Account is hereby established in the
Nonresidential Building Energy Retrofit Debt Servicing Fund. The
authority shall deposit into the account the program administration
fee collected pursuant to subdivision (b) of Section 25987.23 and
penalties collected pursuant to Section 25987.16. Notwithstanding
Section 13340 of the Government Code, moneys in the account shall be
continuously appropriated to the authority, the commission, and the
board for the costs of implementing this chapter.
25987.41. (a) The Director of Finance shall transfer, as a loan,
up to one million dollars ($1,000,000) from the General Fund to the
board to implement this chapter.
(b) The Director of Finance shall transfer, as a loan, up to seven
million dollars ($7,000,000) from the General Fund to the commission
to implement this chapter.
(c) Any loan made pursuant to this section shall be repaid on or
before January 1, 2024, with interest at the pooled money investment
rate, from energy remittance repayment collected pursuant to this
chapter.
(d) If the fees authorized for collection pursuant to subdivision
(b) of Section 25987.23 are not sufficient to support the loans made
pursuant to this section, the Director of Finance shall discuss
alternative repayment terms with the borrowing agencies.
25987.42. (a) The commission, the board, and the authority shall
be authorized to promulgate necessary regulations to implement and
administer this chapter.
(b) Guidelines for the purposes of implementing this chapter shall
be adopted by the commission, board, or authority at a publicly
noticed meeting offering all interested parties an opportunity to
comment. For the initial adoption of the guidelines and standards,
the commission, board, or authority shall provide a written public
notice at least 30 days prior to the meeting. For the adoption of any
substantive change to the guidelines and standards, the commission,
board, or authority shall provide a written public notice at least 10
days prior to the meeting. Notwithstanding any other law, guidelines
or standards adopted pursuant to this section shall be exempt from
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
