HomeMy WebLinkAboutStaff Report 4.B 05/04/2015Agenda Item #4.B
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DATE: May 04, 2015
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Scott Duiven, Senior Planne L �=�
SUBJECT: Resolution Authorizing the City of Petaluma 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
Incorporated Territory of Petaluma; and Authorizing Related Actions
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution Authorizing the City of
Petaluma 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 Incorporated
Territory of Petaluma; and Authorizing Related Actions.
BACKGROUND
In 2005 the City of Petaluma joined the other 9 local governments within Sonoma County and
set a mutual greenhouse gas target to reduce emissions to 25 percent below 1990 levels by 2015,
one of the most aggressive targets in the country.
In 2009, the City of Petaluma entered into a cooperative agreement with the County of Sonoma
allowing property owners within Petaluma to participate in the Sonoma County Energy
Independence Program (SCEIP). SCEIP Financing is a form of the Property Assessed Clean
Energy (PACE) financing created in 2008 by California State Assembly Bill 811 (AB811).
SCEIP is financed through the issuance of bonds by the Sonoma County Public Finance
Authority to the County Treasury and the Sonoma County Water Agency. Use of PACE
financing by property owners is voluntary. AB811 allows for the acquisition and construction or
installation of distributed generation renewable energy sources and energy efficiency
improvements, which include water efficiency improvements, on or in properties through
contractual assessments paid back through property taxes pursuant to Chapter 29 of Division 7 of
the Streets & Highways Code. SCEIP financing is currently available to qualifying property
owners at a 7% fixed interest rate for terms of 10 or 20 years. There are over 90 eligible
improvements available through the SCEIP Financing product. To date, 290 improvement
projects have been completed in Petaluma, totaling nearly $4 million (see Attachment 3).
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Thirty states and the District of Columbia have passed PACE enabling legislation. Through a
variety of PACE financing providers and delivery mechanisms, over $500 million dollars' worth
of retrofits and renewables have been installed using PACE throughout the USA. This work is
estimated to have generated over 7,500 jobs.
Even though the Federal Housing Finance Agency has not reversed its position disapproving of
the priority lien position of PACE assessments as a part of real property taxes, no rulemaking has
occurred. To date, neither Fannie Mae nor Freddie Mac have taken foreclosure action on any
property due to the fact it had a PACE assessment.
In 2013, the State of California introduced the Statewide PACE Loss Reserve Program,
authorized by Senate Bill 96. The PACE Loss Reserve is designed to address FHFA's financial
concerns by malting first mortgage lenders whole for any losses in the event of a foreclosure or a
forced sale that are attributable to a PACE assessment. There are no fees for participation in the
fund. SCEIP participates in the fund.
DISCUSSION
The operator of the Energy Independence Office, the Energy and Sustainability Division of the
County of Sonoma General Services Department, has developed the Sonoma County PACE
Financing Marketplace to promote the effectiveness and sustainability of PACE financing in the
region by expanding the options available to property owners.
The Financing Marketplace integrates additional financing options from CaliforniaFIRST,
California HERO, and Figtree PACE into the region for water and energy efficiency upgrades
and the installation of renewable energy to complement the financing option of SCEIP currently
provided by the County Treasury (see Attachment 2). The collaboration of Marketplace PACE
members will leverage outreach efforts, expand opportunities for customer engagement, increase
local contractor engagement, increase access to project impact data, and maximize program
efficiency and effectiveness. Marketplace Members have entered into an Agreement for
Collaborative Services with the County to achieve the speed and scale needed to reach
community -wide goals for energy independence. The Marketplace will specifically:
a. Expand local funding capacity — The bonding capacity of the SCEIP financing product
from the County Treasury is limited to $60 million with $43 million currently extended.
Estimates of the funding needed to affect the current community climate action goals of
retrofitting 80% of the existing buildings with a 30% efficiency improvement exceed $2
billion dollars. The addition of Marketplace Members will augment the County
investment safeguarding property owner access to PACE financing for the long term.
b. Provide consumer choice — The Financing Marketplace will provide financing options in
a `lending -tree -like' model for the consumer. The different Marketplace members offer a
variety of financing terms, interest rates, eligible improvements and contractor services.
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c. Increase momentum and grow the contractor community — Engaging additional financing
partners throughout the region can expand and leverage outreach efforts, increase the
number of completed projects, and provide new tools and resources to local contractors.
Uniform addition of the available PACE providers by all local jurisdictions could
simplify local contractor service delivery throughout the region.
d. Maintain local coordination of regional PACE efforts — through Agreements for
Collaborative Services between each provider and the County of Sonoma, the Energy
Independence Office will continue in its role as a neutral third party operating for the
public benefit. The Energy Independence Office will offer ALL financing products in the
Marketplace (including SCEIP, along with the other information, tools, services, and
resources available with focus on the customer experience and consumer protections.
e. Consolidate and report data of community retrofit and renewable energy project results.
The PACE Financing Marketplace partnership has the collateral benefit of providing
additional technology and tools that will be utilized and assimilated with the Energy
Independence Office database structure to better record, monitor and assess program
activity and impacts; and
f. Accelerate progress toward meeting the climate action goals of each jurisdiction and
community -wide greenhouse gas reduction targets.
Sonoma PACE Financing Marketplace Members include:
Existing — SCEIP: The Sonoma County Energy Independence Program (SCEIP) financing
product is delivered through the Sonoma County Public Finance Authority Joint Powers
Authority. The Board of Supervisors of the County of Sonoma, California by its Resolution No.
09-0271, established the Sonoma County Energy Independence Program to finance the
acquisition and construction or installation of distributed generation renewable energy sources
and energy efficiency improvements, which include water efficiency improvements on or in
properties in the County through contractual assessments under AB 811.
Neiv - CaliforniaFirst: CaliforniaFIRST has accepted the terms of the Agreement for
Collaborative Services. The California Statewide Communities Development Authority
("California Communities") is a joint powers authority the members of which include numerous
cities and counties in the State of California, including the County of Sonoma and the City of
Petaluma. 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. California Communities established the
CaliforniaFIRST Property Assessed Clean Energy (PACE) program to allow the financing of
certain renewable energy, energy efficiency and water efficiency improvements (the
"Improvements") through the levy of contractual assessments under AB 811. As a member of the
California Statewide Communities Development Authority, Petaluma need only adopt the
attached resolution (Attachment 1) to make the CaliforniaFirst program available to its property
owners. Staff recommends making this option available to Petaluma's property owners.
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Neiv - California HERO and Figtree PACE: Both the California HERO and Figtree PACE
programs are similar to the CaliforniaFIRST program; however each requires the City to join
additional JPA's in order to participate. Typically, JPA's are formed in regions where the local
governments have a common interest. Here, both the Riverside JPA and the Figtree JPA have
been formed by agencies out of the area, and if the City were to join those JPA's, membership
would be limited and secondary to the founders of the JPA. Furthermore, liability is of concern
with both JPA's. The Riverside JPA requires mutual indemnification, and the Figree JPA is
silent on the issue of liability. In either event, by joining the JPA, the City is taking on potential
liability, without benefit, since neither the Riverside JPA nor the Figtree JPA offer any either
additional or more advantageous benefits than the existing SCEIP program and proposed
CaliforniFIRST program, in which the City is already a member of the relevant JPA. For this
reason, staff is recommending that the City Council not pursue these two programs at this time.
Future: Additional PACE Providers may join the Marketplace in the future. At that time, the
Council can also consider allowing property owner participation in these programs. Similar
resolution action by the Council would be required to allow Petaluma property owners to make
use of any new PACE products added to the Marketplace.
FINANCIAL IMPACTS
There is no negative fiscal impact to the City's general fund incurred by consenting to the
inclusion of properties within the City limits in the CaliforniaFIRST program. All
CaliforniaFIRST program administrative costs are included in the property owner's voluntary
contractual assessment which is collected on the property owner's tax bill. The only staffing
impacts related to this item include the time required to prepare the staff report.
ATTACHMENTS
1. Resolution
2. PACE Product Comparison Chart
3. Data on SCEIP Implementation to Date
L,
ATTACHMENT 1
RESOLUTION AUTHORIZING THE CITY OF PETALUMA 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
INCORPORATED TERRITORY OF PETALUMA; 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 Petaluma (the "City"); and
WHEREAS, California Communities has established the CaliforniaFIRST program (the
"CaliforniaFIRST Program") and will provide financing for certain improvements authorized by
Chapter 29 of Division 7 of the Streets & Highways Code ("Chapter 29"), including, but not
limited to, renewable energy, energy efficiency and water efficiency improvements and seismic
strengthening improvements (the "Improvements") through the levy of contractual assessments
pursuant to 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 ("Participating Property Owners")
within the incorporated territory of the City to participate in the CaliforniaFIRST Program and to
allow California Communities to conduct assessment proceedings under Chapter 29 within the
incorporated territory of the City.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, 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 CaliforniaFIRST Program.
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NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma as
follows:
Section 1. This City Council hereby finds and declares that properties in the City's
incorporated area will benefit from the availability of the CaliforniaFIRST Program within the
incorporated territory of the City and, pursuant thereto, the conduct of special assessment
proceedings by California Communities pursuant to Chapter 29 and the issuance of Bonds under
the 1915 Act.
Section 2. In connection with the CaliforniaFIRST Program, the City hereby consents to the
conduct of special assessment proceedings by California Communities pursuant to Chapter 29 on
any property within its jurisdiction and the issuance of Bonds under the 1915 Act; provided, that
(1) 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; and
(2) 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 CaliforniaFIRST Program.
(3) The issuance of Bonds will occur following receipt of a final judgment in a
validation action filed by California Communities pursuant to Code of Civil Procedure
Section 860 that the Bonds are legal obligations of California Communities.
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 CaliforniaFIRST 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.
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
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as are reasonably required by California Communities in accordance with the Program Report to
implement the CaliforniaFIRST Program for Participating Property Owners.
Section 6. The City Council hereby finds that adoption of this Resolution is not a "project"
under the California Environmental Quality Act, because the Resolution does not involve any
commitment to a specific project which may result in a potentially significant physical impact on
the environment, as contemplated by Title 14, California Code of Regulations, Section
15378(b)(4)).
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.
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ATTACHMENT 2
PACE Product Comparison Chart (rates and fees subject to change):
Property Types
Interest Rate
Fees
Minimum / ■
Maximum
Terms
Eligible
Improvements
Prepayment
Penalty
Residential
Commercial
Residential (as of
3/4/15)
■ 5 yr - 6.75%
■ 10 yr - 7.59%
■ 15 yr — 7.99%
■ 20 yr- 8.29%
■ 25 yr — 8.39%
Commercial
Varies
Vary
Residential $5,000
up to lesser of
$200,000 or 10% of
the value of the
property and
combined amount
financed under the
program plus
mortgage -related
debt cannot exceed
100% of the value of
the property
Commercial
minimum $50,000 to
$500,000
5 to 25 years
Energy, Water,
Renewable
No
Residential
Commercial
Residential
■ 5 yr - 5.95%
■ 10 yr - 7.95%
■ 15 yr - 8.75%
■ 20 yr - 8.95%
Commercial
■ 5 yr- 5.75%
■ 10 yr - 6.00%
■ 15 yr - 6.25%
■ 20 yr - 6.50%
Vary
$5,000 up to 10%
property value
5, 10, 15 or 20
year
Energy, Water,
Renewable
No
Residential
Commercial
Residential
(Projected)
■ 5 yr — 5.75%
■ 10 yr - 7.45%
■ 15 yr — 7.9%
■ 20 yr- 8.22%
■ 25 yr — 8.45%
Commercial
5 yr- 5.35%
■ 10 yr — 5.83%
■ 15 yr -6.11%
■ 20 yr — 6.35%
Vary
Commercial $5,000
up to 20% property
value
Residential $2,500
up to 10% property
value
5, 10, 15 or 20, 25
year
Energy, Water,
Renewable
No — residential
prepayment penalty
Residential
Commercial
Residential
7.0%
Commercial
7.0%
Market valuation
$12
Annual asmt.
admin $44
Title $125
Recordation $66
$2,500 up to
10% property
value
10 or 20 year
Energy, Water,
Renewable
No
8
0
ATTACHMENT 3
Reference
data on SCEIP participation
levels by City/Town
(minus unincorporated column)
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# of
Assess-
ments
36
26
170
643
50
34
144
29
127
2,123
Percent of
Total
Assess-
ments
1.7%
1.2%
8.0%
30.3%
2.4%
1.6%
6.8%
1.4%
6.0%
100.0%
Bonded
( $882, I
$692
$3,866
$18,398
$1,645
$986,
$2,997
$911,
$2,777
$66,815
Amount
609
439
1921
675
366 I
085
1871 I
3281
549
1568
Percent of
Total
1.3%
1.0%
5.8%
27.5%
2.5%
1.5%
4.5%
1.4%
4.2%
100.0%
Solar PV
24
15
97
328
32
21
64
19
78
1,352
Solar
Thermal
1
0
2I
21
6
0
3
0
4I
74
HVAC I
7I
6I
26
108
8I
11
23I
4
21
319
Cool Roof
1
3 I
15 I
75 I
9
5
35 I
0 I
24 I
216
Water
Heater
2
2 I
6 I
31 (
1 I
2
5 I
1 I
2 I
90
SeaInsulation
n I
I
I
oing
7
5(
51 (
154
12 I
9
29 I
6 I
8 I
398
Windows
& Doors I
13 I
13 I
71 I
231 I
13 I
16
72
10 I
32 I
646
Lighting I
1 I
1
5
29
5)
4
3
3I
1
87
Ventil-
ation I
2I
1 I
8)
22I
3
1
5I
2I
1 I
61
Water
Conserva-
tion
3
4
6
23
2
1
4
0
0
68
Other
Energy
Eff.
0
0
3
24
0
2
5
0
2
62
Total
Improve-
ments
61
50
290
1,046
91
72
248
45
173
3,373
0