Santa Rosa Watches AB 811 promise to finance a greener future

North Bay BUSINESS JOURNAL EDITORIAL
Monday, September 1, 2008
Link to article

In 2006, the California Legislature mandated substantial reductions in greenhouse gas emissions for the entire state.

By 2020, cities and counties through California must do their part to cut emissions to the level of 1990, a 25 percent decrease. By 2050, the law mandates an 80 percent cut. Most immediately, a goal of reducing emissions by 11 percent from current levels is fast approaching in 2010.

Now, a newly enacted state law gives counties and municipalities a financing tool to help meet that goal.

Assembly Bill 811, pushed primarily by Palm Desert, Berkeley and San Francisco, allows California counties and cities to sell bonds to fund “permanently fixed improvements” to private property the way they can for public works. The government would be allowed to pay off the bonds via special districts in which residents or businesses can opt for loans paid back over a period of time or via property taxes.

Beginning with an ambitious plan for green energy and water systems for the 450-acre Airport Business Center north of Santa Rosa, “the county is in full gear to figure out how financing is going to occur,” said a spokeswoman for the Sonoma County Water Agency, which is a key force in pushing emissions-reducing efforts.

The water agency itself has set a goal to have a net-zero carbon footprint in the coming years.

The Airport Green Business Group was organized earlier this summer by the agency and businesses in the park such as Jackson Family Wines, which has its headquarters and production facilities there.

The group is exploring how to reduce water and energy costs through facility upgrades as well as by pumping treated wastewater from nearby county treatment facilities throughout the park to heat and cool buildings via a geo-exchange system. Recycled water could also be used for irrigation.

At the same time, the county’s auditor’s office is carefully watching developments in Palm Desert financing plans. The California Public Utilities Commission sees Palm Desert’s evolving plan as a potential statewide model.

All these efforts are worthy of support because, instead of just being handed a goal, communities now have a tool to reach it.

Galt to seek greener housing

Sacramento Bee
By Loretta Kalb - lkalb@sacbee.com

Published 12:00 am PDT Saturday, September 6, 2008
Story appeared in OUR REGION section, Page B4

Link to story

The mayor of Galt says the Berkeley City Council doesn't know squat about the role of Marine recruiters.

But he says the city is right on target when it comes to solar energy financing.

Accordingly, Galt Mayor Andrew Meredith has proposed a solar energy financing plan patterned after one in Berkeley.

The Berkeley plan, facing a vote Sept. 16, creates bond financing for property owners who "opt-in" to an assessment district. Those who do would pay for solar improvements with their property taxes.

Not long ago, Meredith was fed up with Berkeley's City Council, which voted in January to tell Marine recruiters they were "uninvited and unwelcome guests."

Meredith, an Iraq war veteran, wrote to the commandant of the Marine Corps a few months later. On city letterhead, he called the Berkeley action repulsive, offensive and insulting.

The letter "goes back to the fact that I was a soldier, and I kind of have a soft spot" for those in the military, Meredith said Friday. "As a veteran, I found that (Berkeley) was disrespectful."

On the other hand, he said, "I think in the last decade Berkeley has taken a lot of steps that have resonated throughout the state in regards to clean energy."

Steps like the solar financing plan.

Galt's proposed plan not only would provide money for electricity-generating solar panels, but also would help finance energy efficiency upgrades such as new windows and low-flush toilets.

In both cities, residents would "opt in." Galt residents would be allowed to do so during an open enrollment period every other year.

In Galt, bonds sold as part of a financing district would fund improvements of up to $20,000, which would be repaid through property tax payments of up to 20 years.

Galt also would require subdivision home builders to construct at least 20 percent of their inventory in accordance with the Sacramento Municipal Utility District's Solar-Smart program.

In contrast to Berkeley, which is a charter city, Galt is a general law city and its ability to launch the financing side of the program will require a change in state law. Such legislation is now on the governor's desk, said Galt Assistant City Manager Jason Behrmann.

If Galt gets the green light, look for the City Council to pull together. At a meeting Tuesday night when Meredith put the idea to them, council members were generally receptive, said Behrmann.

Meredith said he'll return a final draft to the council in October. Council approval would create the program, he said. Then the city would await financing authority and implementation, possibly by 2010.

Galt is not the only city to find the Berkeley program desirable.

"This is the favorite phone call of the day," said Nils Moe, assistant to Berkeley Mayor Tom Bates, when asked to talk about the pilot program.

The council approved the concept in late 2007. Now the city is working with the University of California, Berkeley, to evaluate the program and create a "replication guide" for other cities.

The calls are coming in "from Cambridge, Mass., to Seattle, Portland, Austin and countless cities within the state of California," he said.

Galt Councilman Darryl Clare said Friday he is "very in favor of the general concept, the voluntary aspects."

But he expressed concern about "telling private people" such as home builders how they must build subdivisions.

"Before we start mandating too much," he said, "let's hear from all those involved."

About the writer:

• Call The Bee's Loretta Kalb, (916) 478-2641.

Chula Vista and Saratoga Latest California Cities to Adopt Green Building Rules

Downtown Chula Vista (Photo: Flickr)

Two more California cities, Chula Vista and Saratoga, have joined the nearly three dozen cities statewide that have adopted green building rules. The Chula Vista City Council recently pledged to become the first municipality in San Diego County with green building standards for all new construction and major renovations. City Council members voted unanimously to require energy- and water-efficient construction standards as part of a proposal from the city’s Climate Change Working Group, a commission led by resident Richard Chavez. City staff will spend the next 90 days working out details. The proposal adopted by the city council includes requiring businesses to have regular energy audits, developing a solar energy program to help residents and businesses install photovoltaic systems, coordinating with local water authorities to convert grass lawns to water-saving rock and shrub landscapes, facilitating smart growth and converting the city’s fleet to high-efficiency vehicles.

The City of Saratoga’s new green building policy will require all newly constructed or renovated city-owned facilities over 5,000 square feet to meet the U.S. Green Building Council’s requirements for LEED (Leadership in Energy and Environmental Design) Silver certification. The policy is modeled on recommendations in the Santa Clara County Cities Association’s “Near-term Policy on Green Building Strategy,” and will help to streamline the green building process. Building permit applicants will need to complete a green building checklist, which will help the City Council track the growth of sustainable building practices in Saratoga, while also helping building permit applicants identify opportunities to incorporate green building elements into their projects.

Read background on the Chula Vista and Saratoga (PDF, 31 KB) green building policies

Greentechmedia: Berkeley to Launch Solar Financing Program

Wed, 09/24/2008 - 20:33 — admin

By Ucilia Wan, GreenTechMedia

Link to article

The city of Berkeley has chosen Renewable Funding to finance a $1.5 million pilot program that will allow residents and businesses to pay for solar power systems through property taxes.

The city council on Tuesday night authorized the city manager to sign contracts with Oakland, Calif.,-based Renewable Funding. The decision was made after its staff spent about 10 months trying to line up backers for the city's unusual solar loan program.

The complexity of running the program caused several banks and private investment firms to back out of discussions, according to a staff report.

As a result, the city decided to start with a trial program to gauge how it might want to finance and operate the program over the long term. The City Council also approved an ordinance Tuesday night that would allow the city to borrow up to $80 million for the program.

Berkeley first approved the idea of the program in November, then approved more details – subject to a second and final vote Tuesday – last week (see Berkeley to Finance Solar Installations and Berkeley Set to Vote on Solar Financing).

The city said it was the first in the country to approve this kind of program, which finances the upfront costs of installing solar-panel systems on residential and business properties. Home and business owners pay the city back through property taxes over 20 years, including interest. The interest rate would be determined and locked in at the time that a property owner signs on by joining a special tax district created for the program.

Only property owners who opt to take advantage of the program will see the extra charges on their tax bills.

Other cities and counties in the country, including Santa Cruz County in California and the city of Boulder in Colorado, have expressed interest in creating programs using Berkeley's model.

Cities, such as San Francisco, have set up rebate programs for solar-power installations. San Francisco has set aside between $2 million and $5 million annually for 10 years for its solar program, which provides $3,000 to $6,000 for a solar power system at home and up to $10,000 for one on a commercial property (see San Francisco Solar Incentives Become Official).

Renewable Funding, started by Stephen Compagni Portis, plans to buy up to $1.5 million worth of bonds to finance the solar-power equipment and installation and to manage the application process.

Portis, a visiting researcher at the University of California at Berkeley's Renewable and Appropriate Energy Laboratory, has ample experience in investment banking, according to city staff. He was previously a partner at VX Capital Partners, president of Leveraged Equity Management and chairman and CEO of Kettle Restaurants.

The $1.5 million is expected to be enough to finance installations on at least 40 properties, according to the staff report. Each property owner will be eligible to request funding for up to $37,500.

An average solar-power system costs roughly $28,000, not counting an average $6,108 rebate available though the state-run California Solar Initiative. After adding other fees and charges, a property owner could expect to pay about $2,100 per year on his or her tax bill, the city said.

The program is scheduled to begin in a month. The city hasn't announced when it will begin accepting applications, but the goal is to do so in the fall. The first workshop for the program could take place as early as next month.

http://www.greentechmedia.com/articles/berkeley-to-launch-solar-financing-program-1465.html

Burlington (VT) Electric Dept to study energy assessment district financing

Feasibility study grant awarded to BED by American Public Power Association to study Berkeley/AB 811 model

October 17, 2008

By Candace Page
Free Press Staff Writer

Contact Candace Page at 660-1865 or cpage@bfp.burlingtonfreepress.com.

Link to Article

Burlington Electric Department is considering an innovative way to jump-start a fresh round of energy efficiency and renewable energy projects among city homeowners.

The concept goes like this: The city would issue bonds to raise a pool of money that could be lent to homeowners to install solar power or other energy measures.

Homeowners would repay the money over 20 years, through an additional payment on their property tax bills.

The idea is attractive because many home alternative energy projects have a high initial cost and require big, unaffordable monthly payments if they must be paid off in five years through a standard home-improvement loan. With 20 years to pay off the loan, homeowners might save more money on their energy bills than the cost of their city loan payments.

And, if the property were sold, the new owner would gain the benefits of the energy projects, as well as taking over payment for them.

"What makes this really exciting is the ability to finance over a longer period of time," Mayor Bob Kiss said Thursday.

Burlington Electric announced earlier in the day that it won a $34,000 grant from the American Public Power Association for a feasibility study. The study will be subcontracted to the Vermont Energy Investment Corp.

BED spokeswoman Mary Sullivan said if analysis shows the idea is viable, BED and the city would proceed cautiously.

"We'd like to start a pilot project in a year or so," she said.

BED has set a goal of obtaining all its electricity from renewable sources by 2012. Reducing electric demand from its customers could help meet that goal. The city's efforts to reduce Burlington's carbon footprint would also benefit.

The utility's proposal is based on a new program in Berkeley, Calif. City government in September created a special, citywide tax district, the Sustainable Energy Financing District.

The district allows property owners to borrow money to install solar electric panels and to pay for the improvements over 20 years through a special tax levy on their property bills. The tax is paid only by property owners who choose to participate.

Financing the Green: AB 811 & AB 1790 : Recent developments in financing solar and energy efficiency projects

By Tim Seufert, NBS, Managing Director
[NBS is a consulting, admin and software service company to local governments, others with offices in Temecula, CA and San Francisco]
August, 2008
link to article

The “green revolution” has come to public finance. This article reviews a number of options for
your City, District, or local agency to pursue to foster investment in renewable energy (solar)
and energy efficiency projects. Some of the tools are familiar, but there have been recent
changes and new developments. This evolution will surely continue.
The primary tools in this discussion, in no particular order, are as follows:
• Assessment Districts
• Community Facilities Districts
• Rebate programs (local, plus State and Federal incentives)
• Voluntary donation programs
• Grants and other sources

Assessment Districts and Community Facilities Districts:
Assembly Bill 811, effective July 21, 2008 as an urgency bill, amended the 1911 Act, Chapter
29, to allow for contractual assessments that will finance renewable energy source and energy
efficiency improvements for already-developed residential, commercial, industrial, or other real
property. Contractual assessments are basically special assessments levied by contract
between a local agency and a property owner. Under this model, a local agency forms an
assessment district (which may be limited or jurisdiction-wide in scope) and, with a property
owner’s consent, levies assessments on a property to finance improvements made to that
property.

To get started, the local agency shall pass a Resolution of Intention that states that
this assessment program is for the public good and benefit. This Resolution shall specify,
among other things, the boundaries of the area in question, the types of improvements allowed,
and the financing program. The financing program may include the issuance of 1911 or 1915
Act bonds, or use of some other financing tools.

Public finance professionals in California are promoting an alternative legal approach through
Assembly Bill 1709, which is still working its way through the California Legislature. AB 1709
would amend the Mello-Roos Community Facilities Act of 1982 to allow Community Facilities
Districts (“CFDs”) to levy special taxes to finance renewable energy and energy efficiency
improvements to private property. This will add additional capability to the existing and already flexible
CFD law. Note that the City of Berkeley pioneered the CFD solar model by using its
status as a charter city to adopt a special tax ordinance based on the CFD law. AB 1709 is
modeled on Berkeley’s special tax ordinance.

There are a few significant differences between AB 811 (contractual assessments) and AB
1709 (CFD special taxes). First, AB 811 is limited to developed property, while AB 1709 would
also allow financing of renewable energy and energy efficiency improvements for new
development. Second, AB 811 is only available to cities and counties, while AB 1709 would be
available to all local agencies. Third, the CFD law (AB 1709) has proven to be a more flexible
financing tool than the 1911 Act (AB 811), which may be important as local agencies, public
finance professionals and the lending community begin to explore the rapidly-changing area of
renewable energy financing. Finally, AB 1709 (which would allow the annual levy of a special
tax to pay bonded indebtedness issued to finance renewable energy and energy efficiency
improvements) may be less problematic with respect to existing home mortgages than AB 811
(which levies the entire principal amount of the assessment at the time the contractual
assessment is established).

Both the CFD (AB 1709) and Assessment (AB 811) routes offer two primary benefits because:
• The obligation to repay the cost of the renewable energy and energy efficiency
improvements will be on the property tax bill. It will not be “due on sale” of the
benefited property (which is the case with traditional equity lines of credit) and the
lender will have a “super lien” on the benefited property that is equal to the lien of
general ad valorem property taxes; and
• Renewable energy and energy efficiency improvements may be financed without a
significant down-payment.

Chris Lynch, of the bond counsel firm Jones Hall, who authored Berkeley’s special tax
ordinance and helped Assemblyperson Loni Hancock write AB 1709, believes the biggest
hurdle to public financing of renewable energy and energy efficiency improvements to private
property is not legal but financial: “Because bonds issued for this purpose will not be tax exempt,
it remains to be seen whether local government will be able to offer a financing
program that is economically superior to financial products available from the private sector.”

Rebates and Incentives:
As part of the Governor’s $3.3 billion Million Solar Roofs Program, the State of California has a
rebate program, known as the California Solar Initiative (“CSI”). A typical residential solar
installation can currently receive a rebate of up to $4,750 for the installation of 2.5 kW system.
For more information, please see http://www.gosolarcalifornia.ca.gov. Note that the Federal
government also has a tax credit program to incent such incentives. This federal tax credit is set
to expire at the end of 2008, but it may be extended. A number of bills have been brought forth
to extend the credit, and the political maneuvering continues.
To leverage private investment, the City and County of San Francisco implemented an incentive
program on July 1, 2008 for residential, non-profit, and commercial solar installations. A
homeowner can apply and receive between $3000 and $6000 for a 1.5kW or larger system. The
initial funding in the amount of $3 million is being provided by the San Francisco Public Utilities
Commission’s Sustainable Energy Account.

For further information, go to
http://sfwater.org/home.cfm and click on the GoSolarSF links.

Grants and Voluntary Programs:
Some cities are providing for voluntary contributions, via their utility bills for example. Residents
may donate any amount to fund solar and energy efficiency programs within their communities,
particularly for schools, low-income applications, and non-profit organizations.
Grant funding can come from a plethora of sources. PG&E, for example, has given significant
grants to fund solar installations at schools and non-profit housing facilities.
Further information
is available at http://www.pge.com/giving/.

These avenues and others will surely evolve over time. The good news is that you can start now
and foster investment that will save money, reduce pollution and our environmental footprint,
and help diversify our sources of energy. Those three goals are certainly worthy of our time and
efforts.

We will post updates to this article at www.nbsgov.com on our Publications page as this
evolves.

AB 1709 - Mello-Roos Act for Renewable Energy & Energy Efficiency - Legislative Analysis

[ AB 1709 is an alternative to AB 811 put forth by some municipal
financing professionals to add flexibility and expand energy
options under AB 811.
A primary expansion is to create Mello-Roos type CFD
Community Facilities District) bonds vs "contractual assessment"
financing with funds available for new construction.
AB 811 is for retrofits only. Vetoed by the Governor on 9/27/2008 per below - JFinlay ]


BILL NUMBER:  AB 1709
  VETOED DATE: 09/27/2008

To the Members of the California State Assembly:

I am returning Assembly Bill 1709 without my signature.

While I support the use and inclusion of energy efficiency products
for the homes in our state as demonstrated by my Million Solar Roofs
Initiative, this bill would allow Mello-Roos taxes to be imposed on
homeowners in order to finance energy efficiency improvements.  This
provision represents a fundamental shift in the purpose of Mello-Roos
taxes and is one that I cannot support.

Sincerely,
Arnold Schwarzenegger

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SENATE LOCAL GOVERNMENT COMMITTEE
[ analysis, discussion of AB 1709 ]
              Senator Gloria Negrete McLeod, Chair

  BILL NO:  AB 1709                    HEARING:  6/25/08
  AUTHOR:  Hancock                     FISCAL:  No
  VERSION:  5/19/08                    CONSULTANT:
  Weinberger

   MELLO-ROOS ACT FOR RENEWABLE ENERGY AND ENERGY EFFICIENCY

                            Background 

  The Mello-Roos Community Facilities Act allows counties,
  cities, special districts, and school districts to levy
  special taxes (parcel taxes) to finance a wide variety of
  public works, including parks, recreation centers, schools,
  libraries, child care facilities, and utility
  infrastructure.  A Mello-Roos Community Facilities District
  (CFD) issues bonds against these special taxes to finance
  the public works projects.  Like all special taxes,
  Mello-Roos Act special taxes require 2/3-voter approval.
  If there are fewer than 12 registered voters, the affected
  landowners vote.

  In addition to financing public or governmental capital
  facilities, Mello-Roos Act special taxes can fund a limited
  list of public services: police services, fire protection,
  recreation programs, library services, museum operations,
  park maintenance, flood protection, hazardous waste
  cleanup, street and road maintenance, lighting of parks,
  parkways, streets, roads, and open space, plowing and
  removal of snow, and graffiti management and removal.

  The Mello-Roos Act is an important feature of the local
  fiscal landscape, providing local officials with a key tool
  for accumulating the public capital needed to pay for the
  public works projects that make new residential development
  possible.  Since 1985, CFDs have issued over $18 billion in
  long-term bonds, mostly for capital improvements.  Without
  access to Mello-Roos bond funding, many builders would have
  to pay higher development impact fees and raise housing
  prices.

  Local officials want to be able to use Mello-Roos taxes to
  help finance renewable energy and energy efficiency
  improvements on private property.  To simplify the process
  by which property owners can voluntarily use Mello-Roos

  financing, local officials want to be able to create CFDs
  that initially contain no parcels of land, but consist only
  of territory from which parcels may subsequently be annexed
  to the CFD with the unanimous approval of parcel owners.


                           Proposed Law 

  I.   Facilities  .  In addition to financing public works such
  as park, school, and library facilities, CFDs can pay for
  improvements on privately owned buildings or real property.
   For example, CFDs may pay for work deemed necessary to
  bring buildings or real property, whether privately or
  publicly owned, into compliance with seismic safety
  standard and regulations.

  Assembly Bill 1709 adds the acquisition, installation, and
  improvement of energy efficiency and renewable energy
  improvements to the types of facilities that a CFD may
  finance, or refinance, regardless of whether the buildings
  or property are privately or public owned.

  AB 1709 provides that work on privately owned buildings and
  real property may be financed by a special tax levy only:
         If all of the votes cast on the question of levying
       the special tax are in favor of levying the special
       tax;   or  ,
         With the prior written consent to the special tax
       of all of the owners of each property that may be
       subject to the special tax.

  AB 1709 specifies that the prior written consent
  constitutes a unanimous vote in favor of the special tax
  and any associated bond indebtedness.


  II.   CFD formation and annexation  .  To initiate the
  formation of a CFD, a local agency's legislative body must
  adopt a resolution of intention to establish the district,
  which must:
         Describe the district's boundaries.
         Describe the facilities and services proposed to be
       financed.
         State that a special tax, secured by a lien against
       real property, will be annually levied.


         Specify, in detail, the rate, method of
       apportionment, and manner of collection of the special
       tax.
         Fix a time and place for a public hearing.
  After holding the hearing and considering protests, if the
  legislative body determines to establish the CFD, it must
  adopt a resolution of formation containing all of the
  information provided in the resolution of intention and, if
  a special tax is to be levied, some additional information
  about the tax levy.

  Assembly Bill 1709 authorizes an alternate procedure for
  forming a CFD that initially consists solely of territory
  proposed for annexation to the CFD in the future, with the
  condition that a parcel or parcels within that territory
  may be annexed to the CFD and subjected to the special tax
  only with the unanimous approval of the parcel owner or
  owners at the time of annexation.

  Under the alternate CFD formation procedure authorized by
  AB 1709, the resolution of intention or the resolution of
  formation do not need to specify the rate or rates of
  special tax, provided that the rate of special tax
  applicable to a parcel or parcels will be specified in the
  unanimous approval provided by parcel owners at the time
  they annex to the CFD.

  A majority protest to a proposed CFD halts formation
  proceedings for one year from the date of the protest
  decision.  A majority protest occurs if 50% or more of the
  registered voters, or six registered voters, whichever is
  more, residing within the territory proposed to be included
  in the district, or if the owners of one-half or more of
  the area of the land in the territory proposed to be
  included in the district and not exempt from the special
  tax, file written protests against the establishment of the
  district.  AB 1709 provides that this definition of
  majority protest does not apply to the alternative CFD
  formation process.  Instead, under the alternative CFD
  formation process authorized by AB 1709, a majority protest
  occurs if 50% or more of the registered voters, or six
  registered voters, whichever is more, residing within the
  territory proposed to be annexed to the CFD in the future,
  or the owners of one-half or more of the area of the land
  proposed to be annexed in the future and not exempt from

  the special tax, file written protests against the
  establishment of the district.

  After the adoption of the resolution of formation, voters
  must approve the special tax levy, authorize indebtedness,
  and establish the CFD's appropriations limit.  Under the
  alternate procedure established by AB 1709, the
  appropriations limit for the CFD, the applicable rate of
  the special tax and the method of apportionment and manner
  of collection of that tax, and the authorization to incur
  bonded indebtedness must be specified and be approved by
  the unanimous approval of the owner or owners of each
  parcel or parcels at the time that the parcel or parcels
  are annexed to the CFD.  The bill states that no additional
  hearings or procedures are required, and the unanimous
  approval shall be deemed to constitute a unanimous vote in
  favor of the appropriations limit for the CFD, the
  authorization to levy the special tax on the parcel or
  parcels, and the authorization to incur bonded
  indebtedness.

  AB 1709 prohibits a local legislative body from recording a
  notice of tax lien against any parcel or parcels within a
  CFD formed using the alternative process until the parcel
  owner or owners have given unanimous approval of the parcel
  or parcels' annexation to the CFD, at which time the
  special tax lien shall be recorded.


  III.   Special taxes  .  A resolution of intention to form a
  CFD must specify the rate, method of apportionment, and
  manner of collection of the special tax that is to be
  levied in sufficient detail to allow each landowner or
  resident within the proposed district to estimate the
  maximum amount that he or she will have to pay.  After a
  CFD has been created and authorized to levy special taxes,
  the legislative body may approve an ordinance to levy the
  special taxes at the rate, and in the manner, described in
  the resolution of intention.

  Under the alternative CFD formation process authorized by
  Assembly Bill 1709, a legislative body adopts an ordinance
  providing for the levy of the special taxes on parcels that
  will annex to the CFD at the rate or rates to be approved
  unanimously by the parcel owner or owners.  The ordinance

  providing for the levy of special taxes must also provide
  for the apportionment and collection of special taxes in
  the manner specified in the resolution of formation.  AB
  1709 specifies that no further ordinance shall be required
  even though no parcels may have annexed to the CFD.

  An action to determine the validity of special taxes levied
  by a CFD must be brought by an interested person, pursuant
  to specified statutes, within 30 days after voters approve
  the special tax.  AB 1709 requires an action to determine
  the validity of special taxes levied by a CFD formed under
  the alternative process to be brought by an interested
  person, pursuant to specified statutes, within 30 days
  after voters approve the adoption of the resolution of
  formation for the CFD.


  III.   Bonds  .  For a CFD to issue bonds, the local
  legislative body must adopt a resolution proposing to incur
  bonded indebtedness, hold a hearing on the proposed debt
  authorization, and submit the proposition to voters.  A 2/3
  vote is required to approve the issuance of bonds by a CFD.


  Under the alternative CFD formation process authorized by
  Assembly Bill 1709, the proposition to authorize bonded
  indebtedness is approved by parcel owners at the time a
  parcel or parcels is annexed to the CFD pursuant to the
  unanimous approval requirements for annexing into the CFD.
  AB 1709 provides that no additional hearings or procedures
  shall be required, and unanimous approval shall be deemed
  to constitute a unanimous vote in favor of the proposition
  to authorize bonded indebtedness.

  An action to determine the validity of bonds issued by a
  CFD must be brought by an interested person, pursuant to
  specified statutes, within 30 days after voters approve the
  issuance of the bonds.  AB 1709 requires an action to
  determine the validity of bonds issued by a CFD formed
  under the alternative process to be brought by an
  interested person, pursuant to specified statutes, within
  30 days after the effective date of a resolution to approve
  bonded indebtedness that has been adopted by the local
  legislative body.


                             Comments 

  1.   Local assistance for energy improvements  .  In response
  to rising energy costs and concerns about climate change,
  local governments want to promote energy efficiency and
  renewable energy generation.  Up-front installation costs
  can deter property owners from installing solar panels, or
  making energy efficiency improvements.  Using Mello-Roos
  taxes, counties and cities can help to finance these
  investments at low interest rates.  Property owners who
  voluntarily agree to pay Mello-Ross taxes to finance energy
  improvements will realize immediate savings on their
  utility bills while paying off their costs over time on
  their property tax bills.  By lowering energy costs,
  reducing energy demand, and expanding generation from
  renewable energy sources, the voluntary Mello-Roos taxes
  authorized by AB 1709 will benefit residents throughout
  California.

  2.   Narrow purpose, broad powers .  The alternative CFD
  formation process in AB 1709 is intended to simplify the
  process by which individual private parcel owners can
  voluntarily use Mello-Roos special taxes to finance energy
  efficiency and renewable energy improvements.  However, a
  CFD formed using this alternative process could finance any
  of the facilities and services authorized by the Mello-Roos
  Act.  It is unclear why the alternative CFD formation
  process should be used for CFDs that finance anything other
  than energy efficiency and renewable energy facilities on
  individual parcels.  The Committee may wish to consider
  amending AB 1709 to authorize the use of the alternative
  CFD formation procedure only for a CFD that will
  exclusively finance energy efficiency and renewable energy
  improvements that are permanently fixed to or on real
  property and in buildings.

  3.   Permanent fixtures  .  AB 1709 does not define the term
  "energy efficiency improvements," potentially allowing
  property owners to use Mello-Roos special taxes to finance
  the purchase of energy efficient appliances, like
  flat-screen TVs or microwave ovens.  Because Mello-Roos
  taxes are levied on real property and may be enforced
  through recordation of a lien against real property, the
  Committee may wish to consider whether they should be used

  to finance the purchase of appliances and other facilities
  that may be unplugged and easily removed from the property.
   The Committee may wish to consider amending AB 1709 to
  require that energy efficiency and renewable energy
  improvements must be permanently fixed to or on real
  property and in buildings.

  4.   Public purpose  .  The California Constitution prohibits
  the use or pledge of public credit to aid - or pay the
  liabilities of - any individual, association, or
  corporation.  However, the courts have found this
  prohibition does not preclude the use of public credit or
  funds for public purposes, even if a private entity also
  benefits.  For example, to finance seismic safety work on
  private property (AB 1700, Farr, 1992) and fire safety
  improvements on private property (AB 2594, Bates, 1992),
  benefit assessments can be levied only with a property
  owner's consent.  The Committee may wish to consider
  amending AB 1709 to include a legislative declaration that
  a public purpose will be served by providing the
  legislative body of a local agency with the authority to
  use Mello-Roos special taxes to finance the installation of
  energy efficiency and renewable energy improvements that
  are permanently fixed to or on real property and in
  buildings.

  5.   Technical amendment  .  The committee may wish to
  consider deleting the cross-reference to  53321.1 on page
  10, line 3, and replacing it with a reference to  53328.1.

  6.   Related bill  .  At its June 4 hearing, the Senate Local
  Government Committee passed AB 811 (Levine) which
  authorizes cities and counties to finance distributed
  generation renewable energy sources and energy efficiency
  improvements using contractual assessments.

  7.   Legislative history  .  As introduced, AB 1709 was a bill
  authored by the Assembly Committee on Labor and Employment
  that would have required the Labor and Workforce
  Development Agency to report specified information to the
  Legislature.  The July 20, 2007 amendments removed that
  material, changed the author, and inserted language
  relating to the declaration of a temporary local public
  health emergency.  The May 19, 2008 amendments, in turn,
  removed that material and inserted the current language
  relating to Mello-Roos Community Facilities Districts.


                         Assembly Actions 

  Not relevant to current the May 19, 2008 version of the
  bill.


                 Support and Opposition  (6/19/08)

   Support  :  Cities of Berkeley, Morgan Hill, Saratoga, and
  Solana Beach, County of San Mateo, Pacific Gas and Electric
  Company.

   Opposition  :  Howard Jarvis Taxpayers Association.