City Council
MEETING DATE: 6/29/2016
TITLE:
Title
Resolution Consenting to the Inclusion of Properties within the City’s Jurisdiction in the CaliforniaFIRST Program
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FROM:
Tracey R. Martinez, CMC
Deputy City Clerk
RECOMMENDATION:
Recommendation
Staff recommends the City Council adopt a Resolution Consenting to the Inclusion of Properties within the City’s Jurisdiction in the CaliforniaFIRST Program to Finance Distributed Generation Renewable Energy Sources, Energy and Water Efficiency Improvements and Electric Vehicle Charging Infrastructure.
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BACKGROUND:
Assembly Bill (AB) 811 was signed into law on July 21, 2008, and AB 474, effective January 1, 2010, amended Chapter 29 of Part 3 of Division 7 of the Streets & Highways Code of the State of California (“Chapter 29”) and authorizes a legislative body to designate an area within which authorized public officials and free and willing property owners may enter into voluntary contractual assessments to finance the installation of distributed generation renewable energy sources, energy efficiency, and/or water conservation improvements that are permanently fixed to real property, as specified. The financing for these improvements has come to be known as PACE, which stands for Property Assessed Clean Energy.
On January 25, the CVAG Executive Committee approved implementation of new PACE programs regionally, with CVAG oversight and similar policies and procedures that have been incorporated into the HERO and Ygrene programs. CVAG staff has developed a consistent process for vetting potential PACE programs, described below. CaliforniaFIRST has approached CVAG about implementing their program on a regional scale.
CaliforniaFIRST is a public/private financing PACE program administered by Renew Financial, an Oakland-based clean energy finance company that specializes in affordable financing for renewable energy and energy efficiency projects in almost 300 cities and counties. CaliforniaFIRST operates under AB 811 and is enrolled in the Open PACE program, which has oversight from the California Statewide Communities Development Authority (CSCDA). The CSCDA was created in 1988, under California’s Joint Exercise of Powers Act, to provide California’s local governments with an effective tool for the timely financing of community-based public benefit projects, such as the Open PACE program. CSCDA was created by and for local governments in California, and is sponsored by the California State Association of Counties and the League of California Cities. Currently, more than 500 cities, counties and special districts have become members of CSCDA. Many CVAG member agencies are currently members of CSCDA. The Open PACE program provides CSCDA members a turn-key PACE solution that provides property owners a choice among multiple pre-qualified PACE financing providers based on their rates, experience and capital commitment to the California PACE market. There are currently three approved PACE providers authorized by CSCDA under the Open PACE program; CaliforniaFIRST is one of these approved providers. The consumer protection policies and procedures adopted by the CVAG Executive Committee on January 25 are used by CSCDA for the Open PACE program and therefore are adopted by CaliforniaFIRST. These are the same policies used by the HERO program.
The CSCDA provides oversight of CaliforniaFIRST, including review of each application and underwriting criteria. Their function is similar to that provided by CVAG for the CV Upgrade/Ygrene program and by Western Riverside Council of Governments for the HERO program. As part of the process to make CaliforniaFIRST available to property owners, each CVAG member agency will need to adopt a resolution and join the CSCDA. Rancho Mirage is already a member of the CSCDA so will not need to join.
The agreement with Renew Financial to be a PACE provider in the Coachella Valley provides for CVAG oversight of the CaliforniaFIRST program and consistency with the policies, procedures and oversight that are currently in place with both HERO and Ygrene programs. The Renew Financial agreement is similar to the one developed with Renovate America and the Western Riverside Council of Governments for HERO. This agreement allows CVAG to provide oversight on behalf of our member agencies, to: 1) minimize issues that may arise from the operation of multiple programs simultaneously in the Coachella Valley; 2) assist with marketing and outreach; 3) coordinate with and assist CVAG member agencies; and 4) handle any property owner or contractor complaints. This agreement will also provide for cost recovery associated with CVAG’s role in CaliforniaFIRST as a regional PACE program.
As part of the development of this agreement, CVAG staff has been working with Renew Financial and CSCDA to review their procedures to ensure they meet the same standards established for our existing regional programs. Given the growth in the PACE market, it is important to maintain oversight and properly vet new programs. Under this agreement:
1. Renew Financial would provide all administration and financing of the program at no cost to member agencies. At this time, the program is anticipated to be available only for residential property owners.
2. CVAG would provide program oversight including:
a. Review and approve projects submitted by property owners participating in the CaliforniaFIRST program within the CVAG region.
b. Adopt resolutions and approve documents authorizing the CaliforniaFIRST program;
c. Assist member agencies with the process of adoption of resolutions and/or other actions necessary to participate in the CaliforniaFIRST program.
d. Coordinate with Renew Financial on program marketing and outreach, to ensure that such marketing and outreach is compatible with the existing CV Upgrade program and property owners in the CVAG region are aware of the options for PACE programs, including the Ygrene Energy Fund CV Upgrade program and the HERO program.
e. Provide Renew Financial with a “local presence” at the CVAG offices.
3. Renew Financial is the program administrator for the CaliforniaFIRST program. Renew Financial will participate in the CaliforniaFIRST program for the Coachella Valley as conduit issuer of bonds and will coordinate with CVAG as needed.
DISCUSSION:
Similar to other PACE programs, the CaliforniaFIRST Program is being offered to allow property owners in participating cities and counties to finance renewable energy, energy and water efficiency improvements, and electric vehicle charging infrastructure on their property. If a property owner chooses to participate, the installed improvements will be financed by the issuance of bonds. The bonds are secured by a voluntary contractual assessment levied on such owner’s property, with no recourse to the local government or other participating jurisdictions. Participation in the program is 100% voluntary. Property owners who wish to participate in the program agree to repay the amount borrowed through the voluntary contractual assessment collected together with their property taxes. This financing is available for eligible improvements on both residential and non-residential properties.
The benefits to the property owner include:
• Eligibility: In today’s economic environment, alternatives for property owners to finance renewable energy/energy efficiency/water efficiency improvements or electric vehicle charging infrastructure may not be available. As such many property owners do not have financing options available that would provide funding for improvements that lower their utility bills.
• Savings: Energy prices continue to rise and selecting in energy efficient, water efficient and renewable energy improvements reduces utility bills.
• 100% voluntary. Property owners can choose to participate in the program at their discretion. Improvements and properties must meet eligibility criteria in order to qualify for financing.
• Payment obligation stays with the property. Under Chapter 29, a voluntary contractual assessment stays with the property upon transfer of ownership. Certain residential conforming mortgage providers will, however, require the assessment be paid off at the time the property is refinanced or sold.
• Prepayment option. The property owner can choose to pay off the assessments at any time, subject to applicable prepayment penalties.
• Customer oriented program. Part of the success of the program is the prompt customer service. Committed funding partners provide funding promptly upon project completion resulting in both property owner and contactor satisfaction.
The benefits to the City include:
• Increase local jobs.
• An increase in property values (energy efficient homes and buildings are worth more money).
• An increase in sales, payroll and property tax revenue
• As in conventional assessment financing, the City is not obligated to repay the bonds or to pay any delinquent assessments levied on the participating properties.
The standard procedure for all cities and counties to participate in the CaliforniaFIRST program is to adopt the form of a resolution accompanying this staff report. The attached Resolution enables the CaliforniaFIRST Program to be available to owners of property within Cathedral City to finance renewable energy, energy efficiency and water efficiency improvements and electric vehicle charging infrastructure. The resolution also identifies that the City is a member of CVAG and CVAG has contracted with Renew Financial to provide the CaliforniaFIRST program to its member agencies, whereby portions of the administration of the CaliforniaFIRST Program in Eastern Riverside County shall be delegated to CVAG.
FISCAL IMPACT:
No negative fiscal impact to the City’s general fund will be incurred by consenting to the inclusion of properties within the City limits in the CaliforniaFIRST Program. All CaliforniaFIRST Program administrative costs are covered through an initial administrative fee included in the property owner’s voluntary contractual assessment and an annual administrative fee which is also collected on the property owner’s tax bill.
ATTACHMENTS:
Resolution for CaliforniaFIRST Program