HomeMy WebLinkAbout12/01/2009, PH 5 - PARTICIPATION IN ENERGY EFFICIENCY FINANCING PILOT PROGRAM council M.W*D"` 12.1-09
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CITY OF SAN LUIS OBISPO
FROM: Bill Statler, Director of Finance& Information Technology 's
Debbie Malicoat. Finance Manager
SUBJECT: PARTICIPATION IN ENERGY EFFICIENCY FINANCING PILOT PROGRAM
RECOMMENDATION
Adopt a resolution joining the CalifomiaFIRST energy efficiency improvements financing pilot
program.
REPORT-IN-BRIEF
CalifbmiaFIRST is a statewide energy efficiency program, sponsored by the League of California
Cities and the California State Association of Counties that is being developed pursuant to
Assembly Bill (AB) 811. The proposed program allows property owners to voluntarily join a
financing district that would allow energy efficiency improvement to be financed through the
issuance of bonds. The bonds would be secured through assessments on the property and repaid
through existing property tax procedures, similar to other special assessments.
CalifomiaFIRST is seeking counties and cities to join the pilot stage of this program and help in
developing program criteria, marketing and implementation of the program. The County of San
Luis Obispo Board of Supervisors has indicated interest in participating in the pilot phase;
however, the program requires at least one incorporated city to participate as well.
This effort will require staffing resources, primarily from the Community Development
Department, to assist with operational details such as eligible improvements, home energy audit
requirements, energy use documentation and permit processing, which will be developed in
collaboration with the participating parties. Marketing and outreach will also be the City's
responsibility. In addition, there is a direct cost of $12,500 to join the program, which staff
recommends funding with the proceeds from the $20,000 grant awarded to the City from the
Energy Efficiency and Conservation Block Grant (EECBG) to explore financing options.
While there are several details and unanswered questions remaining about the program, there are
significant benefits to joining a statewide program like CalifomiaFIRST rather than developing a
City-only program; and by participating in the pilot program, we will be in the best position to
influence program details.
DISCUSSION
Background
CaliforniaFIRST is being developed by the California Statewide Communities Development
Authority (California Communities) to establish a statewide program that allows private property
owners in participating cities and counties to finance renewable energy and energy efficiency
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Participation in Energy Efficiency Financing Pilot Program Page 2
improvements on their property. As described in greater detail below, these improvements would
be funded via a government-sponsored program using a financing district formed pursuant to AB
811.
California Communities is a joint powers authority sponsored by the League of California Cities
and the California State Association of Counties. There are more than 500 member local agencies
of California Communities throughout California, including the City and the County of San Luis
Obispo. To manage this program, California Communities has contracted with Renewable
Funding LLC (RenewFund), which worked with the City of Berkeley in developing its energy
efficiency financing program.
Participating in a statewide program like this is consistent with Council direction from the October
3, 2009 meeting, where the Council comprehensively reviewed financing options for energy
efficiency improvements, and the advantages and disadvantages of forming an AB 811 financing
district.
Program Summary
As further described in Attachment 1, under the proposed program, if a property owner chooses to
voluntarily participate, the energy efficiency improvements would be financed by bonds issued by
California Communities. California Communities will levy "contractual assessments" on the
owner's property to repay the portion of the bonds issued to finance the improvements on that
property. California Communities has selected RenewFund and RBC Capital Markets to provide
administration and financing for the program.
Proposed Resolution
The proposed resolution authorizes California Communities to:
1. Accept applications from owners of property within their jurisdiction for municipal financing
of renewable energy, energy efficiency and water efficiency improvements through the
CaliforniaFIRST program.
2. Conduct assessment proceedings and levy assessments against the property of participating
. owners within their boundaries.
It also authorizes miscellaneous related actions and makes certain findings and determinations as
required by law. California Communities will undertake a judicial validation proceeding as part of
its initiation of the CaliforniaFIRST Program. The resolution also authorizes payment of a set-up
fee of $12,500 to cover legal, procedural, and technology costs associated with the
CaliforniaFIRST Program.
The resolution identifies water as well as electricity efficiencies. At this time, the program does
not include water conservation improvements. However, CalifomiaFIRST foresees the possibility
of expanding the program to include water efficiency projects at some point in the future.
Adopting the resolution to include these provisions provides maximum flexibility in the future
development of the program.
Participation in Energy Efficiency Financing Pilot Program Page 3
Any jurisdiction can withdraw from the CaliforniaFIRST Program at any time by passing a
resolution rescinding the authorization.
Attached to the resolution as Exhibit A is a "Form of Resolution of Intention to be Adopted by
California Communities." This is for informational purposes and does not require action by the
Council.
Legal Basis for Financing Program
The "contractual assessment" proceedings will be undertaken by the California Communities
pursuant to Chapter 29 of Division 7 of the Streets & Highways Code, which was amended in
2008 by Assembly Bill 811 to allow the financing of renewable energy and energy efficiency
improvements on private property. Pursuant to Chapter 29, assessments may be levied to finance
renewable energy and energy efficiency improvements only with the free and willing consent of
the owner of each lot or parcel on which an assessment is levied. Property owners evidence their
consent to the assessments by executing a contract with the California Communities.
Program Benefits
The benefits to the property owner include:
1. Only property owners who choose to participate in the program will have assessments imposed
on their property.
2. In today's economic environment, there may not be attractive private enterprise alternatives for
property owners to finance renewable energy/energy efficiency improvements.
3. Even if there were private enterprise alternatives, most private loans are due on sale of the
benefited property, which makes it difficult for some property owners to match the life of the
repayment obligation with the useful life of the financed improvements. Under the
CalifomiaFIRST program, the assessment obligation will transfer with the property upon sale.
4. The property owner can choose to pay off the special assessments at any time.
5. By virtue of regional aggregation provided by CaliforniaFIRST, small projects, both residential
and commercial, can have access to the municipal bond market, which may produce a lower
borrowing cost as opposed to individual financing.
The benefits to the City in participating in the statewide program include:
1. As in a conventional assessment financing, the City is not obligated to repay the bonds issued
by California Communities or to pay the assessments levied on the participating properties.
2. California Communities will handle all the assessment administration, bond issuance and bond
administration functions. A participating city can provide financing of renewable energy and
energy efficiency improvements to property owners through CaliforniaFIRST — thereby
meeting its environment goals—while committing limited staff time to administer the program
(once established).
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Participation in Energy Efficiency Financing Pilot Program Page 4
Possible Downsides in Participating in a Statewide Program
A potential downside is that program demand could exceed available funding. However, this
potential exists in any type of energy financing program, whether administered locally or on a
larger basis. Additionally, local program preferences may need to be sacrificed in order to support
the broader statewide program.
However, these possible downsides are far outweighed by the significant benefits of participating
in a statewide program, which include:
1. Significantly lower program administration costs and City staff resource commitments..
2. Elimination of any front-end, start-up costs and the risk of non-recovery.
3. Assurance of enough participation to make the program feasible for City residents and
businesses, even if relatively few choose to do so.
Pilot Program
California Communities is finalizing the documentation necessary to implement the
CaliforniaFIRST program. Preliminary program structure and information including proposed
property types, financing structure and terms are provided in Attachment 1. The first phase of the
program is a pilot phase. Cities and counties interested in partnering to develop the pilot must be
willing to provide sufficient staff support to assist in the developing, marketing and implementing
the program. Cities and counties will be asked to help generate demand for this new program and
provide assistance at a somewhat greater level than what will be required in later program phases.
Downsides to participating in the pilot phase, as opposed to waiting for the full program, include
the staff time that will be required to assist in development of the program; and the risk that the
program will not be fully vetted and as such, rather than benefitting from lessons learned during
the pilot phase, we will experience some of the bumps along the road. On the other hand, by
participating in the pilot program the City may be able to have greater influence on the program
design and the program would be available sooner than if the City waited to join future phases of
the program.
At this point, both the City and County of San Luis Obispo have indicated their interest in
participating in the pilot stage of the program. The pilot program requires participation by the
County and at least one city within the County. The County Board of Supervisors discussed this at
its October 27, 2009 meeting and directed County staff to pursue the pilot program. Included in
Attachment 2 is the County's staff report related to this topic. At this time, it is not known if any
other cities in the County will participate in the pilot program.
Program Specific: What It Is and What It Isn't The program includes one web portal per
county, customer support, standard package of informational materials, deployment of the
application system, regular reporting, financing and a program manager to serve as a liaison to the
City. The Community Development Department is currently charged with leading the City's
efforts in developing a Climate Action Plan to reduce green house gas emissions and encourage
energy conservation. The CaliforniaFIRST program provides a framework for identifying eligible
private projects and assisting the community with accessing a mechanism to finance those energy
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Participation in Energy Efficiency Financing Pilot Program J Page 5
projects. However, the participating jurisdictions will be responsible for the marketing and
community outreach efforts that would be required to implement a successful renewable
energy/energy efficiency program.
Additional services are available through the program to further customize the program, such as
additional marketing or local stakeholder engagement, customized web portals for each city (in
addition to the countywide portal), integration of existing programs into the financing and
providing a physical "storefront" in the community. Additional fees would be required for these
additional services, which could be recovered from the program assessments. Staff will return to
the Council for further direction on the desirability of these added services and funding options
after program details have been further developed by CaliforniaFIRST.
In addition, an application for State Energy Program (SEP) funds is under consideration to help
offset some of the costs of the CaliforniaFIRST program. SEP funds are available to eligible local
governments through the California Energy Commission for energy efficiency, energy
conservation, renewable energy and other energy related projects and activities authorized by the
American Recovery and Reinvestment Act of 2009. Sacramento County is taking the lead in
applying for SEP grant funding for the CaliforniaFIRST program and each participating city or
county will need to collaborate with Sacramento County for purposes of receiving these grant
funds. Participation will require Council adoption of a resolution; however at this time, the final
details and documents are still in development. Staff will return to Council when this is available.
Tentative Timeline
Cities and counties selected to participate in the pilot program must pass resolutions to join the
program by January 18, 2009. After that, California Communities has several steps in the process
including passing resolutions and holding public hearings. The goal is to have the pilot program
launched in June 2010; and then to allow additional cities and counties to join the program by fall
2010.
Program Concerns and Questions
1. Given the effective interest rate that is projected for this program (between 7% and 9%,
depending on the bond market), what are the benefits to property owners that have good credit,
available equity and an adequate income, when there may be private sector options that may be
simpler and more cost effective that would achieve the same end-goal of improved energy
efficiency? There are three possible advantages:
a. Creating Interest Simply by having an energy efficiency financing program in place, we
may generate significant interest from residents and businesses that might not otherwise be
the case in considering all of the financing options available and the net savings available
to them in reducing energy costs. In some (perhaps many) cases, there may be more
economically viable options available, in which case property owners will not choose to
participate in this type of financing program. However, they will still achieve energy
efficiencies but may not have evaluated other options at all without first having become
interested via consideration of the AB 811 financing program. In short, by providing a
financing venue for educating the community about the benefits of making energy
efficiency improvements, and providing a ready program for financing them, property
Participation in Energy Efficiency Financing Pilot Program Page 6
owners may be more likely to research all available funding options, and then choose the
one that is best for their circumstances.
b. Better Matching the Life of Improvements with Property Ownership. Additionally, this
type of financing allows the repayment terms to match the expected useful life of the
improvements (which is generally a longer time period than other financing repayment
options) even if the property changes hands. On the other hand, this may be more of a
perceived benefit than a real one, since the continued debt obligation— if fully disclosed—
should affect the sales price of the property. In short, regardless of how it is carried—as a
higher mortgage by the new buyer or an assessment on the property—the debt remains and
must be repaid until no principal remains.
a Addressing Recent Property Value Decline& Lastly, while property owners may have
good credit and adequate income to repay the loan, due to the unprecedented drop in
property values in the last eighteen months, they may no longer have adequate equity in
their home or business to qualify for conventional private financing at a reasonable rate. In
this case, the proposed program would make economic sense for property owners,
At the end of the day, participation in this program is voluntary and simply offers one more
option to property owners in financing energy efficiency improvements. And for this reason,
participating in a statewide program is the best option for our community: if property owners
can find a better financing deal, they should take it; on the other hand, if this makes sense for
some property owners, it is available to them and not dependent on whether enough other
property owners in the City also want to participate. In summary, with a broad, state-wide
base, this becomes a viable option to however many (or few) property owners find this
approach to be advantageous to them.
2. Should we wait to see if pending legislation is passed (HR 3525) to make interest income on
this type of financing exempt from federal taxes?
Currently, bondholders would pay income taxes on the interest from these bonds because they
are used to finance private improvements. There is pending legislation that would change this,
which could reduce the interest rates for property owners by about 30%, At this time, it is
unclear when, or if, Congress will pass such a bill. It is also unclear how this change in
legislation would impact any bonds that are already on the market. Preliminary thoughts are
that existing bonds could be called and refinanced at lower rates if this occurs. Given the
uncertainty of federal action, and the voluntary nature of property owner participation in this
financing, staff recommends moving forward with the CalifomiaFIRST pilot program.
3. Since these bonds are for private improvements and this is a voluntary action by the property
owner, will existing mortgage holders block letting this assessment have superior position for
repayment?
Sonoma County initially received some resistance from mortgage holders regarding this
concern. It was the view of some mortgage holders that the property owner violated the terms
of their mortgage by voluntarily entering into an agreement that placed a lien on the property
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Participation in Energy Efficiency Financing Pilot Program Page 7
that was superior to the mortgage. Since then, Fannie Mae has issued guidance that indicates
that these assessments should be treated like any other type of special assessment by mortgage
holders (Attachment 3). While Fannie Mae's opinion is not binding on all mortgages (and it
appears subject to subsequent revision), it does support the concept of treating this type of
assessment like all others. That said, Sonoma County has still had some mortgage holders
refuse to give lender approval, so this issue has not been fully resolved.
4. When new property owners have questions about the assessment, who do they call?
At this point, staff believes it is clear that California Communities will have this responsibility as
the issuer of the bonds. However, based on the experience of other communities where
assessments are transferrable; this is likely to become an issue as the program matures and loans
are transferred onto new buyers. While this lien will undoubtedly be disclosed to purchasers
during the sale and escrow process, for many the first time that they will become aware of the
added assessment is when they receive their first property tax bill. This will potentially become
awkward for the City if this becomes a broad-based problem: while the City was not the issuer of
the bonds nor responsible for the collection of assessments, the City was the sponsor of the
program.
Other questions and concerns include what credit standards participants will need to meet, if any;
whether the proposed default remedy procedures will be similar to those for regular assessment
districts and if so, who will be responsible for initiating foreclosure proceedings; and assuring
clear assignment of responsibility for administering the annual assessment process.
Overall Risk Assessment
There are risks associated with launching any new program; and in this case, several details remain
to be finalized as discussed above. On the other hand, there is the potential for significant benefits
to property owners in making an AB 811 financing program available to them; and to the
community at-large in reducing green house gases. Moreover, the best way for the City to
minimize the potential risks associated with an AB 811 financing district is by joining a statewide
program like CaliforniaFIRST rather than developing a City-only program or less broadly based
regional one. And by participating in the pilot program, the City will be in the best position to
influence program details.
CONCURRENCES
The Community Development Department concurs with this recommendation and is anticipating
adjusting staff resources and priorities to be available to work on the program once authorized.
FISCAL IMPACT
Direct Cost Impacts
All participating cities and counties must pay a set-up fee based on population size. The set-up fee
for the City would be $12,500. These fees are due within 30 days of adoption of the resolution.
Staff recommends funding this fee with the proceeds from the $20,000 EECBG grant awarded to
the City to explore financing options. /
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Participation in Energy Efficiency Financing Pilot Program Page 8
Participating property owners will pay all on-going program costs associated with the state-level
administration of the program. The one-time set up fee for the City is intended to cover fees
associated with initial legal costs primarily to cover validation proceedings and technological costs
primarily to cover data acquisition, configuration, and portal customization. The set-up fee covers
the costs for the launch of a CaliforniaFIRST program, exclusive of City staff time.
Staffmg Impacts
While the direct costs should be limited to the $12,500 start-up fee, there will be staffing impacts
in participating in the pilot program in Community Development and the Finance Division as
follows:
Community Development
Staff time will be required to work with the California Communities and the County to define the
local criteria for the program. RenewFund estimates that development and launch of the program
will take approximately 0.25 to 0.50 full-time equivalent (FTE) staffing by the City. This will
include participation in weekly or biweekly meetings, which will last approximately 2 hours and
take place via WebEx.
Operational details such as qualifying improvements, home energy audit requirements, energy use
documentation and permit processing will need to be developed in collaboration with the
participating parties. In addition, marketing and outreach will be the City's responsibility. There
is a logical connection between the on-going efforts for the Climate Action Plan and outreach
associated with an energy improvement financing district. Private solar companies, PG&E, and
other contract businesses will be the City's partners in getting the word out to the community..
Staff will need to spend time with these business partners to ensure a consistent and accurate
message is delivered about the program.
If the program is successful in obtaining funds through Sacramento County's SEP grant
application, there may be staff time associated with grant management and reporting for the life of
the grant. At this time, the amount of staff time anticipated for this activity is unknown.
Finance Division
Limited staff time is anticipated, assuming that all financing-related activities will be performed as
proposed by California Communities and RenewFund, and its contracted administrator.. Finance
staff will participate in the program conference calls and will continue to support the development
of the pilot program as appropriate. However, once the program is launched, the proposed
program assumes that California Communities will be responsible for:
1. Issuing the bonds.
2. Coordinating and executing loan agreements with participating property owners.
3. Administering all assessments, including providing the County with annual amounts to be
collected from each participating property owner.
4. Pursuing any delinquency/foreclosure proceedings.
5. And responding to property owner questions about the assessment.
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Participation in Energy Efficiency Financing Pilot Program Page 9
However, if the City becomes responsible for these activities; substantial staff involvement from
the Finance Division will be required.
ALTERNATIVES
1. Develop our own program. This is not recommended. Some cities and counties in the state
have developed their own energy financing programs in accordance with AB 811. Staff has
researched these programs and concludes that there are significant advantages in joining a
larger group program, such as reduced administrative costs for both program participants as
well as the City. In short, if the Council is interested in having energy financing program for
private improvements, staff believes that the CalifomiaFIRST program is the best vehicle
currently available for accomplishing this.
2. Do not participate in pilot program. This is not recommended. Participating in the pilot stage
of this program will allow greater input in the development of the program and will make this
program available to citizens sooner than waiting for future phases of the program.
ATTACHMENTS
1. CaliforniaFIRST AB811 Financing Program for Renewable Energy and Energy Efficiency
Program Update, October 5, 2009
2. County of San Luis Obispo Staff Report, October 27, 2009
3. Fannie Mae Lending Letter, September 18, 2009
4. Resolution joining the CaliforniaFIRST energy efficiency improvements financing pilot
program.
T:\Co=d Agenda Reports\Finance&rr CAR\2009\CelifumiaFIRST AB81 I\CalifomiaFIRST pilot participation,CAR 11-17-09.doc
Attachment 1
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AB 811 Financing Program for Renewable Energy and Energy Efficiency
Program Update
October 5, 2009
Attachment 1
CaliforniaFIRST
Statewide AB811 Property Assessed Clean Energy Financing Program
Program Description and Participation Information
Executive Summary
The California Statewide Communities Development Authority("California Communities")is
pleased to provide this information and update on the new CaliforniaFIRST AB 811 solar and
energy efficiency financing program.
The program is designed to allow property owners in your jurisdiction to install solar and energy
efficiency projects and repay those costs as a line item on their property tax bill. The
CaliforniaFIRST team will take care of most of the work—establishing and designing the
program,providing the capital, and administering the program to property owners. We work
with you to deploy a customized marketing campaign and web portal tailored to your area and to
ensure CaliforniaFIRST integrates with your existing programs and services.
The California Communities board gave approval to move forward with a pilot program on
September 23,2009. In this first phase pilot program,we will be selecting a limited number of
cities and counties to participate in the development and implementation of the program. These
selected cities and counties must be willing to work with the program team to help develop the
full extent of program terms,process and marketing.
In response to your request for further information regarding partnering with CaliforniaFIRST to
develop a statewide pilot program,we are providing this program summary and an optional
"Resolution of Declared Interest"that can be brought before your Board of Supervisors or City
Council to help them understand the program. A final"Resolution to Join CalifomiaFIRST,"
which is the legal step necessary for your city or county to participate in the program will be
provided by late October. Cities and counties will need to have passed the resolution by early
December.
This packet includes:
• CaliforniaFIRST Program Overview
• Process for Selected Cities and Counties to Join CalifomiaFIRST
• Final Set-up Fees for Cities and Counties
• Resolution of Declared Interest to Join the CalifomiaFIRST Program
• Attachment of the program report provided to California Communities Board
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Attachment 1
CaliforniaFIRST: Program Overview
The California Statewide Communities Development Authority("California Communities") is a
statewide joint powers authority sponsored by the California State Association of Counties and
the League of California Cities. Its mission is to provide local governments access to low-cost
financing for projects that provide a tangible public benefit, contribute to social and economic
growth,and improve the overall quality of life in.local communities.The California
Communities currently has 500 local government members and has issued more than $40 billion
in municipal'debt since 1988.
Following a competitive process, California Communities selected Renewable Funding and
Royal Bank of Canada Capital Markets asprojectpartners to offer a complete AB 811 program
to cities and counties throughout the tate, including both administration and finance. The
founders of Renewable Funding helped create the property assessed clean energy(PACE)
program model and are assisting cities,counties, and states across the country to launch these
financing programs. RBC Capital Markets is a leading underwriter of municipal bonds, with
issuance volume of more than $100 billion since 2004.
The California Center for Sustainable Energy(CCSE)and EcoMotion are program partners.
They are participating in program design and will be involved in providing services to some
communities. Other program partners or affiliates may be added. The program's legal counsel
includes Jones Hall(bond counsel) and Orrick, Herrington& Sutcliffe LLP (issuers and
disclosure counsel).
Program services include:
• Program Formation and Adoption. Under CaliforniaFIRST, California Communities
will be responsible for implementing the AB 811 program, completing the validation
process,providing tax administration, and issuing the bonds.
• Program Administration. Renewable Funding serves as the administrator of the
CaliforniaFIRST program. The company enrolls municipalities,provides financing and.
program design, qualifies projects,and processes property owner applications.
Renewable Funding also provides marketing and customer service through its custom
websites, email, and toll-free phone number.
• Program Finance. The CaliforniaFIRST program also provides a dedicated program
finance team. The Royal Bank of Canada Capital Markets serves as the bond underwriter
for the program. This program will facilitate a statewide bond pool allowing for access to
the bond markets at the best interest rates.
Preliminary Program Structure
The pilot program will include residential, multifamily,commercial and industrial properties.
The categories of buildings and how they are addressed in the program is outlined below. Itis
Attachment 1
possible that the financing structure associated with the building categories may change
dependent on market demand, bond rates, and other factors.
Property Types
- Residential and Small Commercial consists of single family, small multifamily, and small
commercial properties. These properties include detached single family homes,
duplexes,triplexes, quadplexes, townhouses,twin homes,and multifamily and tenancy in
common properties with up to four units. Small commercial properties are defined by the
amount of financing requested from the program. If a commercial property requests
financing below the Residential and Small Commercial property type maximum limit, it
will apply under this process. All commercially owned properties,regardless of size or
financed amount,will require lender consent for approval in the CalifomiaFIRST
program-
- Non-Residential consists of commercial, industrial, large multifamily, community
facilities,and non-profit-owned properties. Commercial properties requesting financing
over the Residential and Small Commercial property type maximum limit will apply
under the Non-Residential process. Large multifamily properties are defined as those
that contain five or more units.
Financing Structure and Terms By Property Type
- Residential and Small Commercial: These properties are eligible for financing up to
$75,000 or 10% of the assessed and/or market value of the property whichever is less.
These properties will utilize a pooled bond financing structure at the outset of the pilot
program. In this approach,bonds are sold to the market after a set period for application
submittal. Individual liens are placed prior to the installation of the authorized
improvements. The first three to eight months of interest is typically capitalized in the
lien amount. If a property owner withdraws from the program after the lien is placed, the
property owner will be required to pay administration and finance costs associated with
satisfying the lien. A not-to-exceed interest rate is stated,but the final interest rate is not
known until the pooled bonds are sold. This approach will allow for significant volume
in a short period of time, resulting in the potential fora rated bond and lower interest rate.
The Program Team may change the approach to a micro-bond structure overtime,in
order to deliver the best financing at the lowest cost.
- Non-Residential: These properties are eligible for financing up to 10%of the assessed
and/or market value of the property. There are multiple options for Non-Residential
properties, such as a selective proposal process or broad pooled bond approach;however,
it is likely we will launch the program using the pooled bond approach. The Non-
Residential projects will be aggregated into a bond for a separate sale,which will not
include residential and small commercial projects.
Property Owner Experience
The process for participating property owners is designed to be straightforward.
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Attachment 1
• Education. Property owners visit the dedicated website to learn about the program,the
financing terms and other details; read the terms and conditions; and find approved
contractors and improvements.
• Application. Property owners apply to the program online through a dedicated website,
paying an application fee. The CalifomiaFIRST Program Team reviews the property title
to confirm ownership, screens for unpaid taxes or other delinquent property-based debt,
applies loan-to-value metrics, and evaluates the proposed project using established
underwriting criteria.
• Reservation. If approved, applicants then receive a reservation for funding and have a
lien placed on the property. Property owners have six to nine months, dependent on
property type, to install their solar system or energy efficiency project and return to the
website to request payment.
• Funding. After signing forms and providing documentation as directed,the check is
issued to the property owner or contractor.
Tentative Timeline
Date Time Event
October 20,2009 —2 weeks Soft commitment to pilot program
Renewable Funding distributes documents
Late October 2009 for Resolution to Join
November 19,2009 State Energy Program applications due
December 4,2009 "4-6 weeks from receipt of Cities and Counties pass Resolution to
Resolution documents Join
December 16,2009 Next Board meeting after all California Communities passes Resolution
City/County Resolutions passed of Intention
December 17 2009 30-day notice California Communities publishes notice,
through January 20,2010 Board meeting on January 20 holds public hearing,and confirms report
January 21,2010 through _60— 120 days Validation period for cities and counties
May 20,2010
March 20,2010 through Potential pilot program launch(Goal:
May 20,2010 April 20,20 10)
June 20,2010 Additional cities/counties join program
Attachment 1
Contract Information
Please contact Renewable Funding with questions about the Pilot program.
Annie Henderson,Program Director
Phone: (510)451-7911
Email: anlue cyrenewfund.com
Address: 1746 Broadway, 3Td Flr
Oakland, CA 94612
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Attachment 1
CaliforniaFIRST: How Does a City and County Participate?
To participate in the pilot program,cities and counties must meet the following requirements:
• Cities and counties interested in partnering to develop the pilot must be willing to provide
sufficient staff support to assist in the development, marketing and implementation of the
program. Cities and counties will be asked to help generate demand for this new program
and provide assistance at a level somewhat greater than what will be required in later
program phases.
• Cities and counties must be members of the California Communities. All California
counties, and most cities, are already members of California Communities. You can
confirm your membership at www.cacommunities.ora/docs/members.asox. If you are
not yet a member, it is free to join. The resolution to join the California Communities is
available on the same website. It must be adopted in advance of or concurrently with the
final"Resolution to Join CaliforniaFIRST."
• Adopt the"Resolution to Join CaliforniaFIRST"program. A"Resolution of Declared
Interest to Join CaliforniaFIRST is included in this packet as an optional first step to
familiarize your City Council or Board of Supervisors. The final"Resolution to Join
CaliforniaFIRST"will be provided by late October and must be adopted by early
December.
• Payment of Set-Up Fees. All participating cities and counties must pay a set-up fee of
between$10,000 and $25,000,depending on population. Set-up fees are due within 30
days of passing the Resolution to Join.. See the chart below for more information on the
fees.
Once the resolution is adopted and fees paid,the California Communities team will conduct all
the legal and procedural work to set up the CaliforniaFIRST program, including judicial
validation of the program. The team will work with city or county staff on the timing and
marketing of the program, as well as requested customizations to the standard program,
including local branding at the county level.
During the program pilot phase, cities and counties will be required to provide staff support for
the launch of the program. Cities and counties are encouraged to integrate the program with
existing climate change and energy efficiency marketing or other efforts. The program team will
provide city and county staff information on program applications and other metrics through
regular program reports. In addition, every city or county will be assigned a dedicated program
manager from the CaliforniaFIRST team.
The vast majority of start up and operational costs will be paid by program participants(i.e.
property owners who elect to participate)through administration and financing fees. However, a
modest set-up fee for cities and counties is charged to cover baseline legal,marketing,and
technology costs. The fee schedule is attached. Fees range from$10,000 for cities under 20,000
in population to$25,000 for the largest jurisdictions.
�P/ s ��
r
Attachment 1
CaliforniaFIRST: Fees
Explanation of Costs
The CaliforniaFIRST program has been designed such that participating property owners will
pay all on-going program costs associated with the state-level administration of the program.
Cities and counties participating in the CaliforniaFIRST program will be required to pay a one-
time set-up fee associated with initial legal and technology costs. The legal costs are primarily to
cover validation proceedings;technology costs are primarily to cover data acquisition,
configuration, and portal customization.
Cost Allocation
Costs are allocated based on population. Below is the fee table.
Per City or County Level 1 Level 2 Level 3 Level 4 Level 5
Population under 20K 21 K-75 K 75K-200K 201 K to 500 K over 500K
Legal&Validation
Process $7,500 $7,500 $7,500 $7,500 $7,50-0-
Technology
7 500Technolo Set-Up $2,500 $5,000 $7,500 $12,500 $17,50-0-
Total
17500Total $10,000 $12,500 $15,000 $20,000 $25 000
*For the purposes of this calculation, it is the population of a county's unincorporated area that
determines the CaliforniaFIRST set-up fee for the county.
CaliforniaFIRST operates by forming assessment districts at the countywide level. To allow for
a complete judicial validation,we require the county and at least one incorporated city within
that county to have passed the resolution and paid the fees. For counties with no incorporated
cities,the fee is a flat$40,000. There will be discounts in fees for counties in which numerous
incorporated cities will be participating in the pilot program.
This set-up fee covers the city or county's costs for the launch of a CaliforniaFIRST program,
exclusive of local staff time. The full program includes one web portal per county, complete
customer service, a standard package of collateral materials, deployment of the application
system, regular reporting, financing, and a dedicated program manager to serve as liaison to the
city or county. All on-going state-level program costs are paid by program participants. The tax
assessor's fee has been built into the interest rate spread and will therefore be covered by the
program participants.
Additional services are available to further customize the program; such as to provide additional
marketing or local stakeholder engagement,deploy customized web portals for each city (in
addition to the countywide portal),integrate existing programs into the financing,or provide a
physical"storefront"in the community. There will be an additional fee for each of these
additional services. All additional services provided by Renewable Funding or our program
partners will be arranged on a case-by-case basis.
State Energy Program Application
A city or county may apply for State Energy Program(SEP) funds,which can be used for the
following,as outlined in the current SEP Guidelines:
Attachment 1
Cover program start-up costs, including but not limited to legal services and financial
advisor costs;
Cover some ongoing program costs (such as staffing,market surveys,marketing and
tracking, and reporting energy savings);
Home energy ratings, energy audits and the investigation phase of building
commissioning projects;
Interim financing(warehouse line of credit);
- Interest rate buy-down; and
Homeowner grants (for low income homeowners or energy efficiency retrofits).
The CaliforniaFIRST team is working on options for a joint application with participating cities
and counties to the California Energy Commission for SEP funds to obtain financial assistance to
reduce financing and/or other costs for the pilot program. Participating city or county
involvement in the application creation will be key to determining the application's final
structure.
The structure of this application is still under development. The CalifomiaFIRST application
will narrowly focus on the financing aspect of this program and likely include an interest rate
buy-down or coverage of costs that result in a reduced effective rate for program participants.
City and county administrative costs will not be included within this application,though could be
included in a separate application or submitted as a package with the CaliforniaFIRST
application.
The CaliforniaFIRST team will provide the relevant information needed to complete a SEPI
application to all interested cities and counties prior to the submittal deadline.
Attachment 2
COUNTY OF SAN LUIS OBISPO BOARD OF SUPERVISORS
AGENDA ITEM TRANSMITTAL
(1)DEPARTMENT (2)MEETING DATE (3)CONTACT/PHONE
Administrative Office October 27, 2009 Dan Buckshi, (805) 781-5011
(4)SUBJECT
Outline of the AB 811 energy efficiency improvements legislation and options and considerations for a
County program.
(5)SUMMARY OF REQUEST
Outline of the AB 811 energy efficiency improvements legislation and options and considerations for a
County program.
(6)RECOMMENDED ACTION
1. Provide staff direction about whether or not an AB 811 program should be pursued for San Luis
Obispo County.
If the answer to the above question is no,.then no further action is required. If the answer is yes, the
recommendations are:
2. Coordinate activities with the cities of the county.
3. Pursue the statewide California FIRST AB 811 program. Provide direction to staff regarding
whether or not the County should pursue the pilot CA FIRST program or wait for the full-scale
program.
(7)FUNDING SOURCE(S) (8)CURRENT YEAR FINANCIAL IMPACT (9)ANNUAL COST (10)BUDGETED?
TBD TBD TBD ® No ❑Yes ❑N/A
(11)OTHER AGENCY INVOLVEMENT/IMPACT(LIST):
The internal County AB 811 team includes members from the Auditor-Controller, Treasurer-Tax Collector-Public
Administrator, Planning&Building, Supervisorial District Five,and the Administrative Office. In addition,program options
have been discussed with individuals from the California FIRST program, Santa Barbara County,Ventura County, Sonoma
County, and the cities within San Luis Obispo County.
(12)WILL REQUEST REQUIRE ADDITIONAL STAFF? ❑ No ❑Yes,How Many? Possibly,it depends upon the option pursued
❑Permanent_ ❑Limited Tenn_ ❑Contract— ❑Temporary Help_
(13)SUPERVISOR DISTRICT(S) (�1''4'I,LOCATION MAP (15)Maddy Act Appointments
❑1st,❑2nd.03rd.[-]4th,❑5th,®AII u Attached ®N/A Signed-off by Clerk of the Board
®WA
(16)AGENDA PLACEMENT (17)EXECUTED DOCUMENTS
❑Consent ❑Hearing(Time Est ) ❑Resolutions(Ong) ❑Contracts(Ong+3 Copies)
❑Presentation ®Board Business(Time Est.one hour) ❑Ordinances(Orig) ®N/A
❑Email Resolution and Ordinance.to CR_Board_Clerk(in Word)
(18)NEED EXTRA EXECUTED COPIES? (19)BUDGET ADJUSTMENT REQUIRED?
❑Number. ❑Attached ®WA ❑Submitted ❑4/5th's Vote Required ®WA
(20)OUTLINE AGREEMENT REQUISITION NUMBER(OAR) (21)W-9 (22)Agenda Item History
N/A ® No Oyes ®WA Date
(23)ADMINISTRATIVE OFFICE REVI
Rev.6-09 ��S--1� D-1
1
October 27,2009
Attachment 2
County of San Luis Obispo
M
COUNTY GOVERNMENT CENTER,RM.D430•SAN LUIS OBISPO,CALIFORNIA 93408-(805)781-5011
JIM GRANT
COUNTY ADMINISTRATOR
TO: County Board of Supervisors
FROM: Dan Buckshi,Principal Administrative Analyst
DATE: October 27, 2009
SUBJECT: Outline of the AB 811 energy efficiency improvements legislation and options and
considerations for a County program.
RECOMMENDATIONS:
1. Provide staff direction about whether or not an AB 811 program should be pursued for San Luis Obispo
County.
If the answer to the above question is no,then no further action is required. If the answer is yes,the
recommendations are:
2. Coordinate activities with the cities of the county.
3. Pursue the statewide California FIRST AB 811 program. Provide direction to staff regarding whether
or not the County should pursue the pilot CA FIRST program or wait for the full-scale program.
DISCUSSION:
Background-Legislation:
In an effort to promote energy conservation and to make energy improvements more affordable,the
California legislature enacted AB 811 on July 21,2008. Under this new law, local governments have the
ability to designate a contractual assessment area and a corresponding loan pool enhancing property
owner's financial options for installing energy efficient improvements,including solar photovoltaic cells.
Participants borrow money from a loan pool and repay it.through contractual assessments on their secured.
property tax bills. In doing so,property owners minimize their upfront costs and may have longer
repayment periods than with conventional financing. Loans are entered into voluntarily and transfer to the
subsequent owner upon sale.
S o�D D-1
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October 27,2009
I
Attachment 2
Background- Current programs:
At this point in time,one of California's 58 counties has implemented an AB 811 program and two of
California's 480 cities have implemented a program. As such,many questions regarding such programs
remain unanswered(some of which are outlined later in this report). The pioneer of these programs was
the City of Berkeley,which established its program as part of its climate action plan in 2007,before
enactment of AB 811. As a charter city,the City of Berkeley had the authority and ability to establish a
special tax financing district, allowing residents to opt into the program. Focusing only on solar
installations,the Berkeley pilot program had a loan pool of$1,5 million and provided loan reservations to
38 residences(loans averaged$40,000 under this program). The pilot program, administered under a third
party contract with Renewable Funding,is now closed. Due to its popularity,the initial pilot program sold
out quickly and individuals are now on waiting lists while the city seeks additional funding. Consequently,
the program is experiencing some frustrations by members of the public and amongst the solar industry as
the latter experiences a dramatic slow-down in work following the suspension of the program.
The City of Palm Desert, a leading proponent of AB 811 legislation,implemented its pilot program in
2008. Borrowing from its general fund and redevelopment agency,Palm Desert made$7.5 million
available for its program,which financed both solar installations and energy efficiency improvements. The
city provided$160,000 in general funds upon program start-up for its advertising and promotion program.
The loan pool provided a total of 208 loans including 88 solar installations and 120 energy efficiency
projects. The program is administered collaboratively by staff from the Energy Coalition including
representatives for Southern California Edison, Southern California Gas, and three Palm Desert employees.
The city's portion of the operating budget for this program is about$650,000.
Sonoma County designed its program after Palm Desert, also financing solar installations and energy
efficiency improvements for both residential and commercial properties. A significantly larger program,
Sonoma has access to a$100 million line of credit through 4 combination of funding through its water
authority and county treasury. Sonoma County's program also includes all nine of its incorporated cities.
The County borrowed$1 million to pay for the upfront costs associated with program operations(i.e. start-
up costs).
Options for a San Luis Obispo County AB 811 program:
Several months ago a cross-functional team of County staff was created in order to analyze options for
creating an AB 811 program. At this point in time,the options are as follows.
1. A County Only program (i.e. unincorporated area only)-The County could create a program for
only the unincorporated areas of the county. The cities could choose to create their own programs
(or not) and design as they see fit. The upside to this option is that the County could design the
program as it so chooses. The downside is there would be minimal economies of scale from a
program design and administration standpoint. Additionally,there may not be enough of a market
in only the unincorporated area of the County in order to make a viable program.
2. Countywide program(i.e. unincorporated and incorporated areas)-The County could create a
program for the entire county. The upsides are that the pool of interested customers would be larger
and the program would be more viable. Additionally,there would be less confusion for area
residents as the program design could be unified(as opposed to being unique for each city in the
county). The downsides are that a larger program may require more start-up funds and ongoing
operational costs and specific jurisdictional program preferences may need to be sacrificed in order
to create a more regional program.
For-0,71
D_3
October 27,2009
Attachment 2
At the September,2009 City Managers meeting, some of the cities expressed interest in a joint
program-pending the details. The City of Atascadero issued a request for proposal (RFP) in order
to outsource the creation, financing, and administration of a city-only AB 811 program. Atascadero
has not yet determined if it will go it alone or join a regional program.
3. Tri-County program- Staff from Santa Barbara,Ventura, and San Luis Obispo counties has been in
contact regarding a joint,regional program. The upsides are that program participation would be
enhanced, economies of scale could be realized, and additional grant funding may become available
(some grants favor regional approaches). The downsides are that such a program could take longer
to design and implement and local program preferences may need to be sacrificed.
At this point in time, Santa Barbara County is committed to implementing an AB 811 program and
its target for starting up such a program is April 2010. Santa Barbara is interested in a tri-county
program but is prepared to go it alone if a tri-county program were not to materialize. While many,
many details are not yet known,it is anticipated that Santa Barbara's program would include its
cities,would require$1 million of start-up costs, and would allow for up to$40 million of loans to
Santa Barbara County program participants(funding yet to be determined). San Luis Obispo and/or
Ventura could join Santa Barbara's effort soon and be involved in program design or later after it is
up and running.
Ventura County is interested in an AB 811 program but is not committed at this point in time. If it
were to do one,it might be interested in a tri-county approach. Ventura expressed concerns about
start-up costs,potential impacts to its General Fund,and how to fund a program given current
budget and bond market challenges. Additionally,Ventura is uncertain about interest levels in an
AB 811 program as a market study has not been conducted. Lastly,tax breaks and other"green"
incentives may reduce the need for an AB 811 program.
4. California FIRST, statewide grogram-The California State Communities Development Association
(CSCDA),of which San Luis Obispo County is a member, is a Joint Powers Authority sponsored
by the California State Association of Counties(CSAC)and the California League of Cities that
exists to provide municipal financing to local governments throughout the State. In November
2008, CSCDA announced the formation of a statewide AB 811 program called California FIRST
and solicited requests for proposals for a program administrator. Renewable Funding(the
contractor for the City of Berkeley program)was selected to be the program administrator. The
intent of the program is that Renewable Funding would work directly with each participating
municipality to tailor and brand a turnkey program for the local community. The program team
would provide program education,application processing, financing, and customer service for
property owners who choose to participate. Renewable Funding would conduct all necessary steps
to develop an AB 811 program and provide program funding. There would be no financial risk to
counties or cities. Once the program is established,interested jurisdictions would simply sign on to
the California FIRST program and pay an administrative fee and operating costs,both of which
could be incorporated into participants' loans resulting in no net cost to the participating
jurisdiction.
The upsides to the program are the low administrative and resource burden to counties and cities
and a large number of program participants. Additionally,the CA FIRST program,not counties or
cities,would bear all financial risk related to the bond financing of an AB 811 program. The
downsides are minimal as compared to the other options. A potential downside is that program
demand could exceed available financing;however,this potential issue exists for all of the options.
D-4
October 27,.2009
Attachment 2
Additionally, local program preferences may need to be sacrificed in order to support this broad of a
program.
During the month of September,Renewable Funding met with the CSCDA Board of Directors
regarding the implementation of the California FIRST program. The program was given a green
light and the plans are as follows.
A pilot program will be made available to some counties and cities,which is targeted to be up and
running in April 2010. Counties and cities that would like to participate in the pilot need to express
an interest to do so by the end of October. Counties and cities selected to participate in the pilot
program would need to approve a resolution committing to the pilot program by December 2009
(the documents from CA FIRST will be available by the end of October). Additionally,if selected
for the pilot program,there is a one-time cost to participate. The cost varies based upon the size of
a county or city. The cost for San Luis Obispo County would be$20,000. If the County were
selected to participate in the pilot, staff time would be required to help design the program. The
details regarding how much staff time would be required are not yet available. It is important to
note that in order for a county to participate in the pilot program, at least one of the cities within the
county must also participate.
If the program is successful as planned, a full-scale, state-wide program is targeted to be up and
running by June 2010. As noted in the recommendations section of this report,the County could
request to participate in the pilot program or wait for the full program to become available. The
upsides to participating in the pilot program are that we may be able to influence the program
design and the program would be available two months sooner. The downsides to participating in
the pilot(as opposed to waiting for the full program) are that staff time will be required(which is
currently not allocated) and there is additional risk in that the program will not be fully vetted(i.e.
lessons learned from the pilot program would be applied to the full, state-wide program).
Attachment A contains information about the California FIRST program.
Pending Financial Issues and Future Considerations:
• Ongoing Program Funding-How to fund and how much to fund? An initial market study
conducted by California FIRST indicates that demand for such a program would require a minimum
of$36 million in program funding for San Luis Obispo County. The high end estimate is$245
million. Counties and cities that have created their own programs have utilized a mixture of county
treasury funds,other agency funds(e.g. Sonoma water district), and general funds. The intent of
these programs is that bonds would be issued in order to pay back these funding sources (loans).
Other funding options include local,private investors(e.g. local banks)or a third party consultant
(similar to the approach the City of Atascadero is considering). The CA FIRST program would
provide all program funding for the state-wide approach.
• Start-up Costs-Based upon the Sonoma County experience and Santa Barbara County's estimates,
start-up costs for a locally designed program could approximate$1 million. The concept is that
these costs would be charged to loan participants and the money would be paid back over time. The
County allocated$150,000 of the Energy Efficiency and Conservation Block Grant(EECBG)
toward the design of an AB 811 program. How to fund the difference? By comparison,the start-up
cost associated with the CA First program is a one-time payment of$20,000.
D'S
October 27,2009
Attachment 2.
• Cost Neutrality-Further analysis and program design are required in order to ensure that at worst, a
locally designed program is cost neutral to the County. One of the tenets of the California FIRST
program is that there is no financial risk to counties and cities(i.e. cost neutral).
• Unintended Consequences-During the tri-county discussions with Ventura and Santa Barbara and
additional discussions with the City of San Luis Obispo,the concern of unintended consequences
arose. It is possible that individuals and/or commercial operations with lower credit ratings and/or
less equity would be more likely to participate in an AB 811 program as opposed to those with
stronger credit ratings,equity,and/or lines of credit(because an AB 811 program may be the only
type of financing available). If this were to be the case,the additional lien and corresponding
payments could place additional financial strain upon program participants. Credit checks and other
types of financial verification could help to avoid these unintended consequences.
Other Program Issues and Future Considerations:
• Interest in the Program? Is there enough interest in the program to sustain a successful AB 811
program? At this point,the initial market study conducted by California FIRST suggests there is.
Additional study may be warranted to better understand the potential market.
• Breadth of the Program-Limit to solar or expand to include other improvements such as window
replacement and insulation(i.e. energy efficiency)?
• Breadth of Customers-Residential only,commercial only,or residential and commercial?
Energy Audits-Would energy audits be required to verify improvements and to measure results? If
so,who would conduct these audits and how would they be funded?
• Contractor Involvement-Would the County"pre-certify"certain contractors as qualified to perform
the proposed work?
• Prop-ram Promotion-How would the plan and the program benefits be communicated to prospective
applicants?
• Who to Administer the Program_? For a locally designed program, would the program be created,
implemented,and administered by County staff or by an outside contractor(or a blend of both)? As
an example,the City of Atascadero is contemplating outsourcing the entire program(design,
funding, and ongoing administration)to an outside firm.
Next Steos:
• Board of Supervisors to provide direction for whether or not the County should implement an AB
811 program. If the answer to this question is yes,the next steps include the following.
• Coordinate activities with the cities.
• Depending upon the direction of the Board,approach California FIRST about joining either the
pilot and/or full time program.
D-6
October 27.2009
Attachment 2
• Identify program costs and explore options for funding. This analysis would include start-up costs,
ongoing program administration costs, and program loan requirements.
• Report back to your Board after answers to the pending questions are available.
OTHER AGENCY INVOLVEMENT:
The internal County AB 811 team includes members from the Auditor-Controller,Treasurer-Tax Collector-
Public Administrator,Planning&Building, Supervisorial District Five, and the Administrative Office. In
addition,program options have been discussed with individuals from the California FIRST program, Santa
Barbara County, Ventura County, Sonoma County, and the cities within San Luis Obispo County.
FINANCIAL CONSIDERATIONS:
At this point in time, a detailed financial analysis has not been conducted given the many programmatic
unknowns. However,information gathered.from other jurisdictions indicates that for a locally designed
program start-up costs would be approximately$1 million, annual program administration costs
approximately$500K-$750K, and a minimum loan pool of$36 million would be required. Based upon
the initial market study conducted by California FIRST;the size of the loan pool may need to be
significantly higher-i.e. $245 million. Funding sources for a locally designed program are not identified at
this point in time. Options for funding include an outside consulting firm,the County Treasury,private
investment(local banks),bond issuance, and the County's reserves. Given the County's current budget
challenges, it is unlikely that staff would recommend the use of County reserves for this program.
The costs associated with the California FIRST program are a one-time, start-up cost of$20,000.
Additionally, a yet-to-be specified amount of staff time would be required to participate in the pilot
program. Note that for both a locally designed and the CA.FIRST programs,the County has allocated
$150,000 of the EECBG grant for program start-up. The County was notified that this funding should be
received in November.
RESULTS:
To provide the Board of Supervisors an update on the status of a County AB 811 program so that future
direction can be provided. If implemented,the intended results of an AB 811 program would be to reduce
energy consumption and to provide an economic stimulus to the solar and building industries.
Footnote: Thanks to Ventura County staff for providing much of the background information contained in this report.
October 27,2009
I � �
Attachment 2
ATTACHMENTA
Additional California FIRST
program information
October 27,2009
Attachment 2
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CaliforniaFIRST
AB 811 Financing Program for Renewable Energy and Energy Efficiency
Program Update
October 5, 2009
:P9
October 27,2009
Attachment 2
CaliforniaFIRST
Statewide AE811 Property Assessed Clean Energy Financing Program
Program Description and Participation Information
Executive Summary
The California Statewide Communities Development Authority("California Communities")is
pleased to provide this information and update on the new CaliforniaFIRST AB 811 solar and
energy efficiency financing program.
The program is designed to allow property owners in your jurisdiction to install solar and energy
efficiency projects and repay those costs as a line item on their property tax bill. The
CaliforniaFIRST team will take care of most of the work-establishing and designing the
program,providing the capital,and administering the program to property owners. We work
with you to deploy a customized marketing campaign and web portal tailored to your area and to
ensure CaliforniaFIRST integrates with your existing programs and services.
The California Communities board gave approval to move forward with a pilot program on
September 23,2009. In this first phase pilot program,we will be selecting a limited number of
cities and counties to participate in the development and implementation of the program. These
selected cities and counties must be willing to work with the program team to help develop the
full extent of program terms,process and marketing. .
In response to your request for further information regarding partnering with CaliforniaFIRST to
develop a statewide pilot program,we are providing this program summary and an optional
"Resolution of Declared Interest"that can be brought before your Board of Supervisors or City
Council to help them understand the program. A final"Resolution to Join CaliforniaFIRST,"
which is the legal step necessary for your city or county to participate in the program will be
provided by late October. Cities and counties will need to have passed the resolution by early
December.
This packet includes:
• CaliforniaFIRST Program Overview
• Process for Selected Cities and Counties to Join CaliforniaFIRST
• Final Set-up Fees for Cities and Counties
• Resolution of Declared Interest to Join the CaliforniaFIRST Program
• Attachment of the program report provided to California Communities Board
* Not included in the County's staff report
1
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October 27,2009
I �s
Attachment 2
CaliforniaFEKST: Program Overview
The California Statewide Communities Development Authority("California Communities")is a
statewide joint powers authority sponsored by the California State Association of Counties and
the League of California Cities. Its mission is to provide local governments access to low-cost
financing for projects that provide a tangible public benefit,contribute to social and economic
growth,and improve the overall quality of life in local communities.The California
Communities currently has 500 local government members and has issued more than$40 billion
in municipal debt since 1988.
Following a competitive process,California Communities selected Renewable Funding and
Royal Bank of Canada Capital Markets as project partners to offer a complete AB 811 program
to cities and counties throughout the State;including both administration and finance. The
founders of Renewable Funding helped create the property assessed clean energy(PACE)
program model and are assisting cities,counties,and states across the country to launch these
financing programs. RBC Capital Markets is a leading underwriter of municipal bonds,with
issuance volume of more than$100 billion since 2004.
The California Center for Sustainable Energy(CCSE)and EcoMotion are program partners.
They are participating in program design and will be involved in providing services to some
communities. Other program partners or affiliates may be added. The program's legal counsel
includes Jones Hall(bond counsel)and Orrick,Herrington&Sutcliffe LLP(issuers and
disclosure counsel).
Program services include:
Program Formation and Adoption. Under CalifomiaFIRST;California Communities
will be responsible for implementing the AB 811 program,completing the validation
process,providing tax administration,and issuing the bonds.
• Program Administration. Renewable Funding serves as the administrator of the
CalifomiaFIRST program. The company enrolls municipalities,provides financing and
program design;qualifies projects,and processes property owner applications.
Renewable Funding also provides marketing and customer service through its custom
websites,email,and toll-free phone number.
• Program Finance. The CalifomiaFIRST program also provides a dedicated program
finance team. The Royal Bank of Canada Capital Markets serves as the bond underwriter
for the program. This program will facilitate a statewide bond pool allowing for access to
the bond markets at the best interest rates.
Preliminary Program Structure
The pilot program will include residential,multifamily,commercial and industrial properties.
The categories of buildings and how they are addressed in the program is outlined below. It is .
D-1
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October 27,2009
i
Attachment 2
possible that the financing structure associated with the building categories may change
dependent on market demand,bond rates,and other factors.
Property Types
- Residential and Small Commercial consists of single family,small multifamily,and small
commercial properties. These properties include detached single family homes,
duplexes,triplexes,quadplexes,townhouses,twin homes,and multifamily and tenancy in
common properties with up to four units. Small commercial properties are defined by the
amount of financing requested from the program. If a commercial property requests
financing below the Residential and Small Commercial property type maximum limit,it
will apply under this process. All commercially owned properties,regardless of size or
financed amount,will require lender consent for approval in the CalifomiaFIRST
program.
Non-Residential consists of commercial,industrial,large multifamily,community
facilities,and non-profit-owned properties. Commercial properties requesting financing
over the Residential and Small Commercial property type maximum limit will apply
under the Non-Residential process. Large multifamily properties are defined as those.
that contain five or more units.
Financing Structure and Terms By Property Type
Residential and Small Commercial: These properties are eligible for financing up to
$75,000 or 10%of the assessed and/or market value of the property whichever is less.
These properties will utilize a pooled bond financing structure at.the outset of the pilot
program. In this approach,bonds are sold to the market after a set period for application
submittal. Individual liens are placed prior to the installation of the authorized
improvements.The first three to eight months of interest is typically capitalized in the
lien amount. If a property owner withdraws from the program after the lien is placed,the
property owner will be required to pay administration and finance costs associated with
satisfying the lien. A not-to-exceed interest rate is stated,but the final interest rate is not
known until the pooled bonds are sold. This approach will allow for significant volume
in a short period of time,resulting in the potential for a rated bond and lower interest rate.
The Program Team may change the approach to a micro-bond structure over time,in
order to deliver the best financing at the lowest cost.
Non-Residential:These properties are eligible for financing up to 10%of the assessed
and/or market value of the property. There are multiple options for Non-Residential
properties,such as a selective proposal process or broad pooled bond approach;however,
it is likely we will launch the program using the pooled bond approach. The Non-
Residential projects will be aggregated into a bond for a separate sale,which will not
include residential and small commercial projects.
Property Owner Experience
The process for participating property owners is designed to be straightforward.
Oil� D-1
12
October 27,2009
Attachment 2
• Education. Property owners visit the dedicated website to learn about the program,the
financing terms and other details;read the terms and conditions;and find approved
contractors and improvements.
• Application. Property owners apply to the program online through a dedicated website,
paying an application fee.The CaliforniaFIRST Program Team reviews the property title
to confirm ownership,screens for unpaid taxes or other delinquent property-based debt,
applies loan-to-value metrics,and evaluates the proposed project using established
underwriting criteria.
• Reservation. If approved, applicants then receive a reservation for funding and have a
lien placed on the property.Property owners have six to nine months,dependent on
property type,to install their solar system or energy efficiency project and return to the
website to request payment.
• Funding. After signing forms and providing documentation as directed,the check is
issued to the property owner or contractor.
Tentative Timeline
Date Time Event
October 20,2009 -•2 weeks Soft commitment to pilot program
Y,i 1 S s ptt { sp (.S. p„1,II W4' r .'ti f ii ;## # i i' ' 211 I r! ” '+'' i t' - 'i 17 ! fiJ
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November 19E,2009 State Energy Program applications due
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December 16,2009 Next Board meeting after all California Communities passes Resolution
City/County Resolutions passed of Intention
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January 21,2010 through _60— 120 days Validation period for cities and counties
May 20,2010
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June 20,2010 Additional cities/counties join program
D-1
13
October 27,2009
Attachment 2
Contract Information
Please contact Renewable Funding with questions about the Pilot program.
Annie Henderson,Program Director
Phone: (510)451-7911
Email:annieexenewfund.com
Address: 1746 Broadway, 3rd Flr
Oakland,CA 94612
HJ�-�3;-D-1
14
October 27,2009
Attachment 2
CaliforniaFIRST: Flow Does a City and County Participate?
To participate in the pilot program,cities and counties must meet the following requirements:
• Cities and counties interested in partnering to develop the pilot must be willing to provide
sufficient staff support to assist in the development,marketing and implementation of the
program. Cities and counties will be asked to help generate demand for this new program
and provide assistance at a level somewhat greater than what will be required in later
program phases.
• Cities and counties must be members of the California Communities. All California
counties,and most cities,are already members of California Communities. You can
confirm your membership at www.cacouununities.ore/docs/members.aspx. If you are
not yet a member,it is free to join. The resolution to join the California Communities is
available on the same website: It must be adopted in advance of or concurrently with the
final"Resolution to Join CalifomiaFIRST."
• Adopt the"Resolution to Join CaliforniaFIRST"program. A"Resolution of Declared
Interest to Join CaliforniaFIRST"is included in this packet as an optional first step to
familiarize your City Council or Board of Supervisors. The final"Resolution to Join
CaliforniaFIRST'will be provided by late October and must be adopted by early
December.
• Payment of Set-Up Fees. All participating cities and counties must pay a set-up fee of
between$10,000 and$25,000,depending on population. Set-up fees are due within 30
days of passing the Resolution to Join. See the chart below for more information on the
fees.
Once the resolution is adopted and fees paid,the California Communities team will conduct all
the legal and procedural work to set up the CaliforniaFIRST program,including judicial
validation of the program. The team will work with city or county staff on the timing and
marketing of the program,as well as requested customizations to the standard program,
including local branding at the county level.
During the program pilot phase,cities and counties will be required to provide staff support for
the launch of the program. Cities and counties are encouraged to integrate the program with
existing climate change and energy efficiency marketing or other efforts. The program team will
provide city and county staff information on program applications and other metrics through
regular program reports. In addition,every city or county will be assigned a dedicated program
manager from the CalifomiaFIRST team.
The vast majority of start up and operational costs will be paid by program participants(i.e.
property owners who elect to participate)through administration and financing fees. However,a
modest set-up fee for cities and counties is charged to cover baseline legal,marketing,and
technology costs. The fee schedule is attached. Fees range from$10,000 for cities under 20,000
in population to$25,000 for the largest jurisdictions.
S 33D-1
3 Di s
October 27,2009
I
Attachment 2
CaliforniaFIRST:Fees
Explanation of Costs
The CaliforniaFIRST program has been designed such that participating property owners will
pay all on-going program costs associatedmith the state-level administration of the program.
Cities and counties participating in the CaliforniaFIRST program will be required to pay a one-
time set-up fee associated with initial legal and technology costs. The legal costs are primarily to
cover validation proceedings;technology costs are primarily to cover data acquisition,
configuration,and portal customization.
Cost Allocation
Costs are allocated based on population. Below is the fee table.
Per City or County Level l Level 2 Level 3 Level 4 Level 5
Population under 20K 21 K-75 K 75 K-200 K 201 K to 500 K over 500K
Legal&Validation
Process $7,500 $7,500 $7,500 $7,500 $7,500
Technology Set-Up S2,500 $5,000 $7,500 S12,500 $17,500
Total SIM21000 $12 00 $15,000 $20,000 $25,000
*For the purposes of this calculation, it is the population of a county's.unincorporated area that
determines the CaliforniaFIRST set-up fee for the county.
CaliforniaFIRST operates by forming assessment districts at the countywide level. To allow for
a complete judicial validation,we require the county and at least one incorporated city within
that county to have passed the resolution and paid the fees. For counties with no incorporated
cities,the fee is a flat$40,000. There will be discounts in fees for counties in which numerous
incorporated cities will be participating in the pilot program.
This set-up fee covers the city or county's costs for the launch of a CaliforniaFIRST program,
exclusive of local staff time. The full program includes one web portal per county,complete
customer service,a standard package of collateral materials,deployment of the application
system, regular reporting,financing, and a dedicated program manager to serve as liaison to the
city or county. All on-going state-level program costs are paid by program participants. The tax
assessor's fee has been built into the interest rate spread and will therefore be covered by the
program participants.
Additional services are available to further customize the program;such as to provide additional
marketing or local stakeholder engagement,deploy customized web portals for each city(in
addition to the countywide portal),integrate existing programs into the financing,or provide a
physical"storefront"in the community.There will be an additional fee for each of these
additional services. All additional services provided by Renewable Funding or our program
partners will be arranged on a case-by-case basis.
State Energy Program Application
A city or county may apply for State Energy Program(SEP)funds,which can be used for the
following,as outlined in the current SEP Guidelines:
D16
October 27,2009
Attachment
Cover program start-up costs, including but not limited to legal services and financial
advisor costs;
Cover some ongoing program costs(such as staffing,market surveys,marketing and
tracking,and reporting energy savings);
Home energy ratings,energy audits and the investigation phase of building
commissioning projects;
Interim financing(warehouse line of credit);
Interest rate buy-down;and
Homeowner grants(for low income homeowners or energy efficiency retrofits).
The CalifomiaFIRST team is working on options for a joint application with participating cities
and counties to the California Energy Commission for SEP funds to obtain financial assistance to
reduce financing and/or other costs for the pilot program. Participating city or county
involvement in the application creation will be key to determining the application's final
structure.
The structure of this application is still under development. The CalifbmiaFI ST application
will narrowly focus on the financing aspect of this program and likely include an interest rate
buy-down or coverage of costs that result in a reduced effective rate for program participants.
City and county administrative costs will not be included within this application,though could be
included in a separate application or submitted as a package with the CalifomiaFIRST
application.
The CalifomiaFIRST team will provide the relevant information needed to complete a SEP 1
application to all.interested cities and counties prior to the submittal deadline.
T145' D-1
17
October 27,2009
Attachment
r..
Lender Letter 07-2009 September 18, 2009
To: All Fannie Mae Single-Family Sellers and Servicers
Energy Loan Tax Assessment Programs
Introduction
Fannie Mae has recently received questions from lenders regarding certain state and county-
sponsored programs that make loans available to residential homeowners for energy efficiency
improvements tied to tax assessments. Approximately ten states have enacted laws allowing
localities to establish programs to finance energy efficient home improvements, and other states
may be considering similar legislation. Under these laws, localities or private lenders loan farads
to participating homeowners. These loans are generally treated as special assessments and are
levied and collected in the same manner as real property tax assessments. The resulting energy
loan has priority over all existing liens, other than liens related to real property taxes.
These energy efficiency loan programs are sometimes referred to as Property Assessed Clean
Energy (PACE)programs, or Energy Loan Tax Assessment Programs (ELTAPs). Depending on
the jurisdiction, ELTAPs may be used to fund energy efficiency improvements such as new
windows, insulation, and solar panels. The specific implementation (e.g., maximum loan
amount, permitted purpose, etc.) differs from county to county. Typically, homeowners repay
ELTAP loans via their property tax bill, and in the event of non-payment, the ELTAPs have
priority over Fannie Mae's mortgage lien.
ELTAPs bear similarity to special assessments, which may be imposed by local governments or
homeowner's associations, generally to make improvements to a community's infrastructure
such as roads, water, or sewer. However, ELTAPs differ in that they are a loan made by a
government or private entity to fund improvements to the borrower's private residence, and the
total obligation is generally considerably higher.
Note: ELTAPs are not eligible for sale to Fannie Mae. Rather, this Lender Letter is intended to
alert lenders to issues concerning ELTAPs in the underwriting and servicing of Fannie Mae
mortgages.
Underwriting and Servicing Mortgage Loans with an ELTAP
As ELTAPs have the potential to become a first lien if unpaid, and increase the borrowers total
debt obligations, Fannie Mae is reviewing its underwriting guidelines to determine appropriate
requirements in jurisdictions that have enacted legislation establishing ELTAPs. Until such
Lender Letter 07-2009 Page 1
R6R -3 (
Attachment=
guidelines are issued, lenders should treat ELTAP payments as a special assessment in
underwriting a borrower where the security property is subject to an existing ELTAP loan. A
letter from the Federal Housing Finance Administration, Fannie Mae's regulator, with more
information on ELTAPs, can be found on eFannieMae.com.
Servicers should treat ELTAPs as any tax or assessment that may take priority over Fannie
Mae's lien. Therefore, if a servicer maintains an escrow account for a borrower that has an
ELTAP, the servicer should also escrow amounts necessary to make the ELTAP payment when
due. ELTAP payments should be considered during the borrower's annual escrow analysis.
Servicers are reminded that Part III of the Servicing Guide requires that servicers advance
payments necessary to keep current all real estate taxes, special assessments and other
obligations that may take priority over Fannie Mae's lien. Therefore, if the borrower fails to
make ELTAP payments when due, or in the event that escrow funds are insufficient to cover the
ELTAP payments, servicers must advance its own funds to bring the ELTAP current.
Note: If the ELTAP structure is such that the energy loan cannot take priority over Fannie
Mae's mortgage lien, the servicer need not take additional steps to escrow for ELTAP payments.
* s * * s
Lenders who have questions about this Lender Letter should contact their Customer Account
Team, and Servicers should contact their Servicing Consultant, Portfolio Manager, or Fannie
Mae's National Servicing Organization's Servicing Solutions Center at 1-888-FANNIE5 (888-
326-6435).
Marianne E. Sullivan
Senior Vice President
Single-Family Chief Risk Officer
Lender Letter 07-2009 Page 2
Attachment 4
RESOLUTION NO. (2009 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING THE CITY TO JOIN THE CALIFORNIAFIRST PROGRAM; AUTHORIZING
THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO
ACCEPT APPLICATIONS FROM PROPERTY OWNERS,CONDUCT CONTRACTUAL
ASSESSMENT PROCEEDINGS AND LEVY CONTRACTUAL ASSESSMENTS WITHIN THE
TERRITORY OF THE CITY; AND AUTHORIZING RELATED ACTIONS
WHEREAS, the California Statewide Communities Development Authority ("California
Communities") is a joint exercise of powers authority the members of which include numerous cities and
counties in the State of California,including the City of San Luis Obispo(the"City");and
WHEREAS, California Communities has established the CalifomiaFIRST program (the
"CalifomiaFIRST Program") to allow the financing of certain renewable energy, energy efficiency and
water efficiency improvements (the "Improvements") through the levy of contractual assessments
pursuant to Chapter 29 of Division 7 of the Streets &Highways Code ("Chapter 29") and the issuance of
improvement bonds (the "Bonds") under the Improvement Bond Act of 1915 (Streets and Highways
Code Sections 8500 and following) (the "1915 Act") upon the security of the unpaid contractual
assessments; and
WHEREAS, Chapter 29 provides that assessments may be levied under its provisions only with
the free and willing consent of the owner of each lot or parcel on which an assessment is levied at the
time the assessment is levied;and
WHEREAS, the City desires to allow the owners of property within its jurisdiction
("Participating Property Owners") to participate in the CalifomiaFIRST Program and to allow California
Communities to conduct assessment proceedings under Chapter 29 and to issue Bonds under the 1915 Act
to finance the Improvements; and
WHEREAS, California Communities will conduct assessment proceedings under Chapter 29 and
issue Bonds under the 1915 Act to finance Improvements;
WHEREAS, there has been presented to this meeting a proposed form of Resolution of Intention
to be adopted by California Communities in connection with such assessment proceedings (the "ROI"), a
copy of which is attached hereto as Exhibit A, and the territory within which assessments may be levied
for the CaliforniaFIRST Program shall include all of the territory within the City's official boundaries of
record(the"Proposed Boundaries");and
WHEREAS, the City will not be responsible for the conduct of any assessment proceedings; the
levy or collection of assessments or any required remedial action in the case of delinquencies in such
assessment payments; or the issuance, sale or administration of the Bonds or any other bonds issued in
connection with the CalifomiaFIRST Program;and
WHEREAS,pursuant to Government Code Section 6586.5, a notice of public hearing has been
published once at least five days prior to the date hereof in a newspaper of general circulation in the City
and a public hearing has been duly conducted by the Council concerning the significant public benefits of
the CaliforniaFIRST Program and the financing of the Improvements;
R
TtI5 r�
Attachment 4
Resolution No. (2009 Series)
Page 2
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as
follows:
Section 1. On the date hereof, the City Council held a public hearing and the City Council
hereby finds and declares that the issuance of bonds by California Communities in connection with the
CalifomiaFIRST Program will provide significant public benefits;including without limitation,savings in
effective interest rate, bond preparation, bond underwriting and bond issuance costs and reductions in
effective user charges levied by water and electricity providers within the boundaries of the City.
Section 2. In connection with the CalifomiaFIRST Program, the City hereby consents to the
conduct of special assessment proceedings by California Communities pursuant to Chapter 29 on any
property within the Proposed Boundaries and the issuance of Bonds under the 1915 Act;provided, that
(1) Such proceedings are conducted pursuant to one or more Resolutions of Intention
in substantially the form of the ROI; and
(2) The Participating Property Owners, who shall be the legal owners of such
property, execute a contract pursuant to Chapter 29 and comply with other applicable provisions
of California law in order to accomplish the valid levy of assessments.
Section 3. Pursuant to the requirements of Chapter 29, California Communities has
prepared and will update from time to time the "Program Report" for the CaliforniaFIRST Program(the
"Program Report'),and California Communities will undertake assessment proceedings and the financing
of Improvements as set forth in the Program Report.
Section 4. The appropriate officials and staff of the City are hereby authorized and directed
to make applications for the CalifomiaFIRST program available to all property owners who wish to
finance Improvements; provided, that California Communities shall be responsible for providing such
applications and related materials at its own expense. The following staff persons,together with any other
staff persons chosen by the City Manager from time to time, are hereby designated as the contact persons
for California Communities in connection with the CalifomiaFIRST Program: Deputy Director of
Community Development.
Section 5. The appropriate officials and staff of the City are hereby authorized and directed
to execute and deliver such closing certificates, requisitions, agreements and related documents as are
reasonably required by California Communities in accordance with the Program Report to implement the
CalifomiaFIRST Program for Participating Property Owners and to evidence compliance with the
requirements of federal and state law in connection with the issuance by California Communities of the
Bonds and any other bonds for the CalifomiaFIRST Program. To that end, and pursuant to Treasury
Regulations Section 1.150-2, the staff persons listed in Section 4 above,or other staff person acting in the
same capacity for the City with respect to the CaliforniaFIRST Program, are hereby authorized and
designated to declare the official intent of the City with respect to the Improvements to be paid or
reimbursed through participation in the CalifomiaFIRST Program.
Section 6. The appropriate officials and staff of the City are hereby authorized and directed
to pay California Communities a fee in an amount not to exceed $12,500, which California Communities
will use to pay for the costs of implementing the CalifomiaFIRST Program in the City, including the
payment of legal costs incurred in connection with judicial validation of the CalifomiaFIRST Program.
Attachment 4
Resolution No. (2009 Series)
Page 3
Section 7. This Resolution shall take effect immediately upon its adoption. The City Clerk
is hereby authorized and directed to transmit a certified copy of this resolution to the Secretary of
California Communities.
Upon motion of seconded by
and on the following vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted on December 1,2009.
Mayor David F. Romero
ATTEST:
Elaina Cano,City Clerk
j
PROVE O FORM:1athan P. Lowell,City Attorney
l
EXHIBIT A
FORM OF RESOLUTION OF INTENTION Attachment 4
RESOLUTION NO.
RESOLUTION DECLARING INTENTION TO FINANCE INSTALLATION OF
DISTRIBUTED GENERATION RENEWABLE ENERGY SOURCES,ENERGY
EFFICIENCY AND WATER EFFICIENCY IMPROVEMENTS
COUNTY OF
WHEREAS, the California Statewide Communities Development Authority ("California
Communities") is authorized under the authority granted California Communities pursuant to
Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California in
accordance with Chapter 29 of Part 3 of Division 7 of the Streets & Highways Code of the State
of California ("Chapter 29") to authorize assessments to finance the installation of distributed
generation renewable energy sources, energy efficiency and water efficiency improvements that
are permanently fixed to real property("Authorized Improvements"); and
WHEREAS, Chapter 29 authorizes California Communities to enter into contractual
assessments to finance the installation of Authorized Improvements in the County of_ (the
"County"); and
WHEREAS, California Communities wishes to declare its intention to establish a
CaliforniaFIRST program (the "CaliforniaFIRST Program") in the County, pursuant to which
California Communities, subject to certain conditions set forth below, would enter into
contractual assessments to finance the installation of Authorized Improvements in the County;
NOW, THEREFORE, BE IT RESOLVED by the California Statewide Communities
Development Authority, as follows:
Section 1. Findings. California Communities hereby finds and declares the following:
(a) The above recitals are true and correct.
(b) Energy conservation efforts, including the promotion of energy-related Authorized
Improvements to residential, commercial, industrial, or other real property, are necessary to
address the issue of global climate change and the reduction of greenhouse gas emissions in
the County.
(c) Water conservation efforts, including the promotion of water-related Authorized
Improvements to residential, commercial, industrial, or other real property, are necessary to
address the issue of chronic water shortages in California.
(d) The upfront cost of making residential, commercial, industrial, or other real
property more energy and water efficient, along with the fact that most commercial loans for that
purpose are due on the sale of the property, prevents many property owners from installing
Authorized Improvements.
(e) A public purpose will be served by establishing a contractual assessment
program, to be known as the CaliforniaFIRST Program, pursuant to which California
Communities will finance the installation of Authorized Improvements to residential, commercial,
industrial, or other real property in the County.
Jones Hall,A Professional Law Corporation 11-6-00
1
T�5 �qqr
Attachment 4
Section 2. Determination of Public Interest. California Communities hereby
determines that(a) it would be convenient, advantageous, and in the public interest to designate
an area, which shall encompass the entire geographic territory within the boundaries of the
County, within which California Communities and property owners within the County may enter
into contractual assessments to finance the installation of Authorized Improvements pursuant to
Chapter 29 and (b) it is in the public interest for California Communities to finance the
installation of Authorized Improvements in the County pursuant to Chapter 29.
Section 3. Identification of Authorized Improvements. California Communities
hereby declares that it proposes to make contractual assessment financing available to property
owners to finance installation of Authorized Improvements, including but not limited to those
improvements detailed in the Report described in Section 8 below, as that Report may be
amended from time to time.
Section 4. Identification of Boundaries. Contractual assessments may be entered into
by property owners located within the entire geographic territory of the County; provided,
however, that California Communities shall not enter into contractual assessments to finance the
installation of Authorized Improvements with the owner of any property in the County unless
requested to do so first by the County if the property is located in unincorporated territory or a city
if the property is located in incorporated territory and after such city or the County, as applicable,
has held a public hearing pursuant to Section 6586.5 of the Government Code of the State of
California. The form of resolution pursuant to which cities may request California Communities
to enter into contractual assessments to finance the installation of Authorized Improvements is
attached as Exhibit A.
Section 5. Proposed Financing Arrangements. Under Chapter 29, California
Communities may issue bonds pursuant to Chapter 29 that are payable by contractual
assessments and California Communities may advance its own funds to finance work to be
repaid through contractual assessments, and may from time to time sell bonds to reimburse
itself for such advances. Division 10 (commencing with Section 8500) of the Streets &
Highways Code of the State (the 'Improvement Bond Act of 1915") shall apply to any bonds
issued pursuant to Chapter 29, insofar as the Improvement Bond Act of 1915 is not in conflict
with Chapter 29.
California Communities shall determine the creditworthiness of a property owner to
participate in the financing of Authorized Improvements based on the criteria developed by the
Program Manager in consultation with the CaliforniaFIRST Program financing team and on file
with the Secretary.
In connection with bonds issued under the Improvement Bond Act of 1915 that are
payable from contractual assessments, serial and/or term improvement bonds shall be issued
in such series and shall mature in such principal amounts and at such times (not to exceed 20
years from the second day of September next following their date) and at such rate or rates of
interest (not to exceed the maximum rate permitted by applicable law) as shall be determined
by California Communities at the time of the issuance and sale of the bonds. The provisions
of Part 11.1 of the Improvement Bond Act of 1915 shall apply to the calling of the bonds. It is
the intention of California Communities to create a special reserve fund for the bonds under
Part 16 of the Improvement Bond Act of 1915.. California Communities will not advance
available surplus funds from its treasury to cure any deficiency in the redemption fund to be
created with respect to the bonds; provided, however, that this determination shall not prevent
California Communities from, in its sole discretion, so advancing funds. The bonds may be
2 L
Attachment 4
refunded under Division 11.5 of the California Streets and Highways Code or other applicable
laws permitting refunding of the bonds, upon the conditions specified by and at, the
determination of California Communities.
California Communities hereby authorizes the Program Manager, upon consultation
with bond counsel and the CaliforniaFIRST Program underwriter, to provide for the issuance
of bonds payable from contractual assessments.
In connection with the issuance of bonds payable from contractual assessments,
California Communities expects to obligate itself, through a covenant with the owners of the
bonds, to exercise its foreclosure rights with respect to delinquent contractual assessment
installments under specified circumstances.
Section 6. Public Hearing. Pursuant to the Act, California Communities hereby orders that
a public hearing be held before this Commission, at on 2009 at
a.m., for the purposes of allowing interested persons to object to or inquire about the
proposed program or any of its particulars. The public hearing may be continued from time to time
as determined by the Commission for a time not exceeding a total of 180 days.
At the time of the hearing, the Report described in Section 8 below shall be summarized
and the Commission shall afford all persons who are present an opportunity to comment upon,
object to, or present evidence with regard to the proposed contractual assessment program, the
extent of the area proposed to be included within the program, the terms and conditions of the
draft Contract described in Section 8 below, or the proposed financing provisions. Following the
public hearing, California Communities may adopt a resolution confirming the Report (the
"Resolution Confirming Report") or may direct the Report's modification in any respect, or may
abandon the proceedings.
The Commission hereby orders the Secretary to publish a notice of public hearing once a
week for two successive weeks. Two publications in a newspaper published once a week or
more often, with at least five days intervening between the respective publication dates not
counting such publication dates, are sufficient. The period of notice will commence upon the first
day of publication and terminate at the end of the fourteenth day. The first publication shall occur
not later than 20 days before the date of the public hearing.
Section 7. Notice to Water and Electric Providers. Pursuant to Section 5898.24 of the
Streets & Highways Code, the Commission hereby orders the Secretary to provide written notice
of the proposed contractual assessment program within the County to all water and electric
providers within the boundaries of the County not less than 60 days prior to adoption of the
Resolution Confirming Report.
Section 8. Report. The Commission hereby directs the Program Manager for the
CalifomiaFIRST Program to prepare and file with the Commission a report (the "Report") at or
before the time of the public hearing described in Section 6 above containing all of the following:
(a) A map showing the boundaries of the territory within which contractual
assessments are proposed to be offered, asset forth in Section 4 above.
(b) A draft contract(the "Contract') specifying the terms and conditions that would be
agreed to by California Communities and a property owner within the County. The Contract may
allow property owners to purchase directly the related equipment and materials for the
3
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Attachment 4
installation of the.Authorized Improvements and to contract directly for the installation of such
Authorized Improvements.
(c) A statement of California Communities' policies concerning contractual
assessments including all of the following:
(1) Identification of types of Authorized Improvements that may be financed
through the use of contractual assessments.
(2) Identification of California Communities official authorized to enter into
contractual assessments on behalf of California Communities.
(3) A maximum aggregate dollar amount of contractual assessments in the
County.
(4) A method for setting requests from property owners for financing through
contractual assessments in priority order in the event that requests appear likely to
exceed the authorization amount.
(d) A plan for raising a capital amount required to pay for work performed pursuant
to contractual assessments. The plan may include amounts to be advanced by California
Communities through funds available to it from any source. The plan may include the sale of a
bond or bonds or other financing relationship pursuant to Section 5898.28 of Chapter 29. The
plan shall include a statement of or method for determining the interest rate and time period
during which contracting property owners would pay any assessment. The plan shall provide for
any reserve fund or funds. The plan shall provide for the apportionment of all or any portion of
the costs incidental to financing, administration, and collection of the contractual assessment
program among the consenting property owners and California Communities.
(e) A report on the results of the consultations with the County Auditor-Controller
described in Section 10 below concerning the additional fees, if any, that will be charged to
California Communities for incorporating the proposed contractual assessments into the
assessments of the general taxes of the County on real property, and a plan for financing the
payment of those fees.
Section 9. Nature of Assessments. Assessments levied pursuant to Chapter 29, and
the interest and any penalties thereon, will constitute a lien against the lots and parcels of land
on which they are made, until they are paid. Unless otherwise directed by California
Communities, the assessments shall be collected in the same manner and at the same time
as the general taxes of the County on real property are payable, and subject to the same
penalties and remedies and lien priorities in the event of delinquency and default.
Section 10. Consultations with County Auditor-Controller. California Communities
hereby directs the Program Manager to enter into consultations with the County Auditor-
Controller in order to reach agreement on what additional fees, if any, will be charged to
California Communities for incorporating the proposed contractual assessments into the
assessments of the general taxes of the County on real property.
Section 11. Preparation of Current Roll of Assessment. Pursuant to Section
5898.24(c), California Communities hereby designates the Program Manager (or his/her
designee) as the responsible official for annually preparing the current roll of assessment
4 V
V60''4�
Attachment4
obligations by assessor's parcel number on property subject to a voluntary contractual
assessment.
Section 12. Procedures for Responding to Inguiries. The Program Manager shall
establish procedures to promptly respond to inquiries concerning current and future estimated
liability for a voluntary contractual assessment.
Section 13. Professionals Appointed. California Communities hereby appoints Jones
Hall, A Professional Law Corporation, San Francisco, California, as bond counsel to California
Communities in connection with the CaliforniaFIRST Program. The Program Manager is hereby
authorized and directed to enter into appropriate agreements with such firm for its services to
California Communities in connection with the matters addressed in this Resolution.
Section 14. Effective Date. This resolution shall take effect immediately upon its
adoption.
PASSED AND ADOPTED by the California Statewide Communities Development
Authority this , 2010.
I, the undersigned, the duly appointed, and qualified member of the Commission of the
California Statewide Communities Development Authority, DO HEREBY CERTIFY that the
foregoing resolution was duly adopted by the Commission of said Authority at a duly called
meeting of the Commission of said Authority held in accordance with law on 2010.
By:
Member
5 11 l
Page 1 of 1
Council, SloCity
From: Christine Mulholland[cdev@thegrid.net] Sent: Mon 11/30/2009 10:58 AM
To: Council,sloCity RECEIVED
Cc:
Subject: Fwd: Energy Efficiency Financing District "v n � 7-Ip
Attachments:
Dear Mayor and City Council, SLO CITY CLERK
I have reviewed the staff report for this Item. I am very supportive of the resolution to participate in the California First program.
I urge you all to vote to proceed.
thank you,
Christine Mulholland
544-6618
The City Council will be considering a resolution to participate in the California FIRST
municipal energy efficiency financing district at the December 1, 2009 City Council
meeting. You are receiving this email because you have expressed an interest in being
notified of efforts the City is undertaking to further energy efficiency and sustainable
programs. The link below will take you directly to the staff report for the December
1st meeting. Please feel free to contact me or Debbie Malicoat (dmalicoat(aslocity.org)
with any questions. Thank you for your interest!
--ZZ) 00ay Ciyi.a r
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https://mail.slocity.org/exchange/slocitycouncil/Inbox/Fwd`:%2OEnergy%2OEff iciency%2... 11/30/2009