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AB-2045 Energy improvements: financing. (2013-2014)

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AB2045:v97#DOCUMENT

Amended  IN  Assembly  April 23, 2014
Amended  IN  Assembly  April 10, 2014

CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION

Assembly Bill
No. 2045


Introduced by Assembly Member Rendon

February 20, 2014


An act to add Chapter 12.5 (commencing with Section 25987.1) to Division 15 of the Public Resources Code, relating to energy, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 2045, as amended, Rendon. Energy improvements: financing.
Existing law requires the State Energy Resources Conservation and Development Commission to implement a program to provide financial assistance for energy efficiency projects.
This bill would enact the Nonresidential Real Property Energy Retrofit Financing Act of 2014 and would require the commission to establish the Nonresidential Real Property Energy Retrofit Financing Program. The program would provide financial assistance, through authorizing the issuance of, among other things, revenue bonds, to owners of eligible real properties, as defined, for implementing energy improvements for their properties. The bill would require that the bonds be secured by the recording of an energy remittance repayment agreement lien, as defined, on the eligible real property for which the improvements are performed. The bill would require the commission to collect installment payments from owners of eligible real properties whose applications it has approved. The bill would require the commission to collect repayment installments that are delinquent.
The bill would authorize the California Alternative Energy and Advanced Transportation Financing Authority, on behalf of the commission, to issue and renew the negotiable revenue bonds to generate moneys to finance energy improvements for approved applicants.
The bill would establish the Nonresidential Real Property Energy Retrofit Debt Servicing Fund in the State Treasury and the Loan Loss Reserve Account and Administration Account within the fund. The bill would require the commission to deposit the installment payment received from the owners of eligible real properties into the fund and certain fees collected into the specified accounts. The bill would continuously appropriate the moneys in the fund and the accounts to repay the principal and interest on the bonds, and to cover the administrative costs incurred by the authority and the commission, thereby making an appropriation.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Chapter 12.5 (commencing with Section 25987.1) is added to Division 15 of the Public Resources Code, to read:
CHAPTER  12.5. Nonresidential Real Property Energy Retrofit Financing
Article  1. General Provisions and Definitions

25987.1.
 This act shall be known, and may be cited, as the Nonresidential Real Property Energy Retrofit Financing Act of 2014.

25987.2.
 The purpose of this chapter is to facilitate private financing to enable nonresidential real property owners to invest in clean energy improvements, renewable energy, and conservation; to provide incentives for private equity managers to invest in clean energy improvements, integrate the smart energy economy, and stimulate the state economy by directly creating jobs for contractors and other persons who complete new energy improvements; and to reinforce the leadership role of the state in the new energy economy, thereby attracting energy manufacturing facilities and related jobs to the state.

25987.3.
 The Legislature finds and declares all of the following:
(a) Nonresidential real properties represent a huge opportunity to significantly increase energy efficiency and reduce greenhouse gas emissions. To do this, California needs to address the design, construction, and operation of these buildings.
(b) Investment in building performance upgrades is an intelligent business decision. Building performance upgrades lower operating costs, improve occupant comfort, hedge against utility price increases, demonstrate commitment to tenant well-being, reduce exposure to regulation, help the environment, and ultimately boost property values.
(c) It is in the best interest of the state and its citizens to enable and encourage the owners of eligible nonresidential real property to invest in new energy improvements, including building energy efficiency improvements that qualify for investor-owned utility or publicly owned utility programs, water efficiency improvements, and renewable energy improvements, by enacting this division chapter to establish, develop, finance, implement, and administer a new energy improvement program that provides for both building energy efficiency improvements and renewable energy improvements and to assist those owners who choose to participate in the program to complete new energy improvements to their properties because of the following:
(1) New energy improvements, including building energy efficiency improvements and renewable energy improvements, can provide positive cashflow when the costs of the improvements are spread out over a long enough time that a building’s cumulative utility bill cost savings exceed the amount of the liens recorded on the eligible building to ensure payment for the improvements.
(2) Many owners of eligible nonresidential real properties are unable to fund a new energy improvement because the owners do not have sufficient liquid assets to directly fund the improvement or are unable or unwilling to incur the negative net cashflow likely to result if the owner uses a typical existing loan program to fund the improvement.
(d) Reduction in the amount of emissions of greenhouse gases and environmental pollutants, resulting from increased efficiencies and the resulting decreased use of traditional nonrenewable fuels, will improve air quality and may help to mitigate climate change.
(e) The owners of nonresidential real properties who participate in the program established pursuant to this division chapter shall do so voluntarily.

25987.4.
 Unless the context otherwise requires, for the purposes of this chapter, the following terms have the following meanings:

(a)(1)“Alternative energy sources” means energy from renewable cogeneration or gas-fired cogeneration technology that meets the greenhouse gas emissions and efficiency standards applicable to the Self-Generation Incentive Program in effect at the time of the application, energy storage technologies, or energy from solar, biomass, wind, or geothermal systems, or fuel cells, the efficient use of which will reduce the use of conventional energy fuels.

(2)The system shall be sized appropriately to offset part or all of the applicant’s own energy demand for the permanent fixtures that consume energy, as if all cost-effective energy efficiency measures have been installed, and shall be located on the same property where the eligible real property is located.

(b)

(a) “Applicant” means a person, or an entity or group of entities, engaged in business or operations in the state, whether organized for profit or not for profit that owns a nonresidential real property and applies for financial assistance from the commission for the purpose of implementing a project in a manner prescribed by the commission.

(c)

(b) “Authority” means the California Alternative Energy and Advanced Transportation Financing Authority established pursuant to Section 26004.

(d)

(c) “Building energy efficiency improvement” means one or more installations or modifications that are permanently affixed to the building or located on the premises of the building site, for which a building permit is issued after January 1, 2015, to an eligible building that either qualifies for an investor-owned utility or publicly owned utility energy efficiency program or is designed to reduce the energy consumption of the building, and that may include, but is not limited to, all of the following to the extent they qualify:
(1) High-efficiency mechanical equipment.
(2) High-efficiency electrical equipment.
(3) Capturing or reducing heat gain or solar shading, including the roof and south and west walls, and not just glazing.
(4) High-efficiency water heating.
(5) Insulation in walls, roofs, floors, and foundations and in heating and cooling distribution systems.
(6) Fenestration and door replacements, and door modifications that reduce energy consumption.
(7) Automatic energy control systems.
(8) Heating, ventilating, or air conditioning and distribution system modifications or replacements.
(9) Caulking and weather stripping.
(10) Replacement or modification of luminaries to increase the energy efficiency of the system, or additional lighting controls to reduce electric lighting during periods of vacancy.
(11) Energy recovery systems.
(12) Daylighting systems and associated lighting controls for daylight harvesting.
(13) Building commissioning or retrocommissioning.

(e)

(d) “Conventional energy fuel” means any of the following:
(1) A fuel derived from petroleum deposits, including, but not limited to, oil, heating oil, gasoline, and fuel oil.
(2) Natural gas, including liquefied natural gas, other than that used in cogeneration gas-fired technology.
(3) Nuclear fissionable materials.
(4) Coal.

(f)

(e) “Delinquent repayment installment” means a due and payable repayment installation that was not paid within the time specified in the schedule for repayment.

(g)

(f) “Demand response” means reductions or shifts in electricity consumption by customers in response to either economic or reliability signals.

(h)

(g) “Due and payable” means the date as specified in the schedule for repayment for each repayment installment.

(i)

(h) “Eligible real property” means a nonresidential building that completed construction on or before January 1, 2015, and is located within the boundaries of the state.

(j)

(i) “Energy remittance repayment agreement” means a contractual agreement between an owner of an eligible real property and the commission, secured by a lien, as described in Section 25987.21, recorded in the county where the property is situated and on an eligible real property specially benefited by the project for which the commission will make reimbursement or a direct payment to the party financing the project, and “contractual energy remittance” means that reimbursement or direct payment. The amount to be repaid pursuant to the energy remittance repayment agreement shall include the costs necessary to finance the project less any rebates, grants, and other direct financial assistance received by the owner pursuant to other law, a loan loss reserve fee, in an amount to be established by the third-party administrator in consultation with the commission and any warehouse financier under contract entered into pursuant to paragraph (3) of subdivision (a) of Section 25987.25, to insure against nonperformance of the loan and other losses of the program, and a program administrative cost fee.

(k)

(j) “Energy efficiency specialist” means an individual or business authorized or certified by rules of the commission to analyze, evaluate, or install a project.
(k) “Energy service provider” means an electrical corporation as defined in Section 218 of the Public Utilities Code, an electric service provider as defined in Section 218.3 of the Public Utilities Code, a gas corporation as defined in Section 222 of the Public Utilities Code, or a local publicly owned electric utility as defined in Section 224.3 of the Public Utilities Code.
(l) “Energy storage” means a thermal or electrochemical device capable of storing energy produced by a renewable energy improvement that is designed to release the stored energy to reduce the use of electricity or natural gas that would otherwise be delivered from an energy service provider.

(l)

(m) “Financial assistance” means either of the following:
(1) Loans, loan loss reserves, interest rate reductions, secondary loan purchase, insurance, guarantees or other credit enhancements or liquidity facilities, contributions of money, property, labor, or other items of value, or any combination thereof, as determined and approved by the commission.
(2) Other types of assistance the commission determines are appropriate.

(m)

(n) “Loan balance” means the outstanding principal balance of loans secured by a mortgage or deed of trust with a first or second lien on eligible real property.

(n)

(o) “Loan loss reserve fee” means a fee that serves as collateral in the event of a loan default.

(o)

(p) “Nonresidential Real Property Energy Retrofit Bond” means a bond issued pursuant to Section 25987.31 that is secured by an energy remittance repayment agreement lien on real property and is entered into voluntarily to finance the project.

(p)

(q) “Participant” means a person, or an entity or group of entities, engaged in business or operations in the state, whether organized for profit or not for profit, that, as a qualified applicant, is approved for financial assistance pursuant to Article 2 (commencing with Section 25987.5) and has entered into an energy remittance repayment agreement with the commission for the purpose of implementing a project in a manner prescribed by the commission. “Participant” includes a subsequent owner taking title to real property subject to an energy remittance repayment agreement lien.

(q)

(r) “Portfolio” means an aggregation of approved applications.

(r)

(s) “Program” means the Nonresidential Real Property Energy Retrofit Financing Program established by the commission in accordance with Section 25987.7.

(s)

(t) “Program administration cost fee” means a fee imposed for the costs incurred by the commission and the authority to administer the program.

(t)

(u) “Project” means an improvement to an eligible real property that constitutes a water efficiency improvement, renewable energy improvement, or building energy efficiency improvement.

(u)

(v) “Qualified applicant” means a person or business entity who does all of the following:
(1) Owns an eligible real property that has a ratio of loan balance to its appraised value not to exceed exceeding 85 percent, which is subject to adjustment by the program administrator at the time the person’s program application is approved, as shown in the records of the county assessor, unless the holder of the deed of trust or mortgage recorded against the eligible real property that has priority over all other deeds of trust or mortgages recorded against the eligible real property has consented in writing to the recording of an energy remittance repayment agreement lien pursuant to this division chapter against the eligible real property.
(2) Timely submits to the commission a complete application, which notes the existence of any priority mortgage or deed of trust on the eligible property and the identity of the holder of the mortgage or deed of trust, to join the program and consents to the levying of a lien in the amount of the energy remittance repayment agreement on the real property pursuant to this chapter.
(3) Meets standard of credit worthiness that the commission may establish.

(v)

(w) “Renewable energy” means heat, processed heat, space heating, water heating, steam, space cooling, refrigeration, mechanical energy, electricity, fuel cells, or energy in any form convertible to these uses, and including energy storage technologies, that does not expend or use conventional energy fuels, and that uses any of the following electrical generation technologies:
(1) Biomass.
(2) Solar thermal.
(3) Photovoltaic.
(4) Wind.
(5) Geothermal.

(w)

(x) “Renewable energy improvement” means one or more fixtures, products, systems, or devices, or an interacting group of fixtures, products, systems, or devices, that use an alternative energy source, are permanently affixed to, or located on, the real property, and directly benefit an eligible real property or that are installed on the customer side of a meter of an eligible real property and that produce renewable energy from renewable resources, including, but not limited to, photovoltaic, solar thermal, small wind, biomass, fuel cells, or geothermal systems, such as ground source heat pumps, as may be approved by the commission. meet all of the following requirements:
(1) Use renewable energy or energy storage.
(2) Are all of the following:
(A) Affixed permanently to, or located on, an eligible real property on the customer side of the meter of the property.
(B) Interconnected and operated in parallel with the energy service provider’s electric system.
(C) Sized to a total capacity of not more than one megawatt.
(D) Designed and intended primarily to offset all or part of the applicant’s own annual energy demand, calculated on the basis that all cost-effective energy efficiency measures have been installed on the eligible real property, for the permanent fixtures that consume energy.
(3) Meet all applicable safety and performance standards established by the National Electrical Code, the Institute of Electrical and Electronic Engineers, accredited testing laboratories, such as Underwriters Laboratories, and, where applicable, rules of the Public Utilities Commission regarding safety and reliability.

(x)

(y) “Repayment installation” means the monthly amount specified pursuant to the agreed schedule for repayment approved by the commission.

(y)

(z) “Third-party administrator” means an entity selected by the commission through a request for a proposal to manage project applications and make recommendations to the commission as to an individual project’s compliance with this chapter.

(z)

(aa) “Warehouse financier” means a financial entity, bank, or pension fund, chosen by the commission through a request for proposal to provide an ongoing and revolving source of financing for applications approved pursuant to Section 25987.20.

Article  2. Nonresidential Real Property Energy Retrofit Financing Program

25987.5.
 The purpose of the Nonresidential Real Property Energy Retrofit Financing Program is to help provide the special benefits of water efficiency improvements, renewable energy improvements, and building energy efficiency improvements to owners of eligible real properties who voluntarily participate in the program by establishing, developing, financing, and administering a program to assist those owners in completing improvements.

25987.6.
 The commission shall have and exercise all rights and powers necessary or incidental to or implied from the specific powers granted to the commission by this chapter. Those specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes and intent of this chapter.

25987.7.
 (a) The commission shall establish, develop, finance, and administer, consistent with Section 25987.9, the Nonresidential Building Real Property Retrofit Financing Program. The commission shall provide general direction and oversight to the authority as they complete duties specified in this chapter. The program shall be designed to provide financial assistance for an owner of an eligible real property to use one or more energy efficiency specialists to retrofit or benefit the property with one or more renewable energy improvements, building energy efficiency improvements, or water efficiency improvements, by applying to the commission for inclusion of the owner’s project in a portfolio that will be financed through the use of the revenue bonds issued pursuant to this chapter. These bonds shall be secured by revenues generated through energy remittance repayment agreement liens recorded against the real properties benefited by the projects in the portfolio.
(b) The program shall provide financial assistance for projects when the total energy and water cost savings realized by the real property owner, and any successor or successors to the real property owner, during the useful life of the improvements, as determined by an analysis required pursuant to subdivision (i) of Section 25987.13 are expected to equal or exceed the total costs incurred by the owner pursuant to the program.
(c) In developing rules to certify an energy efficiency specialist, the commission shall consult with the Public Utilities Commission, the investor-owned utilities, the contractor community, and other entities the commission deems appropriate and consider existing trade certifications or licensing requirements applicable to occupations that perform work contemplated pursuant to this chapter.
(d) (1) Within six months after the first two years of implementation of the program established pursuant to subdivision (a) or after the expenditure of the first two hundred fifty million dollars ($250,000,000) of proceeds authorized pursuant to Section 25987.29, whichever occurs earlier, the commission shall prepare and make publicly available a report on the efficacy of the program in achieving the purposes of the program as specified in Section 25987.5 and recommendations that would enhance the ability of the program to achieve those purposes.
(2) The commission shall post the report on its Internet Web site.
(3) Prior to the additional expenditure of the proceeds authorized pursuant to Section 25987.29, the commission shall hold at least one public hearing and take public comments on the report.

25987.8.
 To receive financial assistance pursuant to this chapter, a qualified applicant shall contractually agree to the recording of an energy remittance repayment agreement lien on the eligible real property that is being retrofitted or benefited.

25987.9.
 By July 1, 2015, the commission shall develop a request for proposal to develop the program by a third-party administrator. The third-party administrator shall administer the program and establish an automated, asset-based underwriting system for all eligible real properties in the state. The third-party administrator shall provide consultation to the commission in developing guidelines for the program. The third-party administrator shall provide an independent energy advisor to assist owners of real properties in evaluating projects. The party selected as the third-party administrator shall only be selected if the program proposal submitted by the party requires all costs, including startup costs of the program, to be covered by the loan recipients, the administrator, the bond purchasers, or some combination thereof. The program selected shall not include General Fund costs or liabilities.

25987.10.
 The third-party administrator shall establish underwriting guidelines that consider an applicant’s qualifications, and other appropriate factors, including, but not limited to, credit reports and loan-to-value ratios, consistent with good and customary lending practices, necessary for the authority to obtain a bond rating for bonds issued pursuant to Article 3 (commencing with Section 25987.29) for a successful bond sale.

25987.11.
 The third-party administrator shall disclose to an owner of an eligible real property all fees imposed pursuant to this chapter, including the loan loss reserve fee, the program administration cost fee, and the interest rate charged, prior to the submission of an application by the owner.

25987.12.
 (a) An owner of an eligible real property undertaking a project shall submit to the third-party administrator an application to participate in the program.
(b) The submission of an application is deemed to be a voluntary agreement by the owner for the commission to record the energy remittance repayment agreement lien against the eligible real property upon the approval of the application.
(c) The application form developed by the third-party administrator shall include a statement in no less than 12-point type stating the following:

SUBMISSION OF THIS APPLICATION CONSTITUTES THE VOLUNTARY CONSENT OF THE APPLICANT FOR THE RECORDATION OF THE ENERGY REMITTANCE REPAYMENT AGREEMENT LIEN AGAINST THE ELIGIBLE REAL PROPERTY. UPON THE APPROVAL BY THE COMMISSION OF THE APPLICATION AND THE RECORDATION OF THE ENERGY REMITTANCE REPAYMENT AGREEMENT LIEN, A LIEN IN THE AMOUNT SPECIFIED IN THE ENERGY REMITTANCE REPAYMENT AGREEMENT SHALL BE RECORDED ON THE PROPERTY TO SECURE THE AGREEMENT.

25987.13.
 The owner of an eligible real property shall include all of the following information in the application:
(a) The name, business address, and email address of the owners of the eligible real property.
(b) The names of all entities that hold a secured lien on the eligible real property and their contact information.
(c) The total dollar amount of liens that have been recorded against the eligible real property.
(d) An appraisal of the value of the eligible real property that has been conducted within the past six months or during an appropriate timeframe consistent with industry practices for underwriting of nonresidential buildings.
(e) A detailed description of the project to be funded.
(f) The name of the financial institution providing interim financing for the project or the warehouse line of credit developed pursuant to Section 25987.26.
(g) The structure of the loan financing the project.
(h) Any information that the commission or third-party administrator requires to verify that the owner will complete the project.
(i) An analysis performed by an energy efficiency specialist to quantify the costs of the project, and total energy and water cost savings realized by the owner or his or her successor during the effective useful life of, and estimated carbon impacts of, the project, including an annual cashflow analysis.
(j) Copies of an application that have been made for energy efficiency incentives identified pursuant to subdivision (d) of Section 25987.19 for any applicable retrofits.
(k) Other information deemed necessary by the commission or the third-party administrator.
(l) The total amount of the loan requested showing any and all adjustments to reduce the loan amount after all federal, state, local, and ratepayer-funded incentives have been applied.

25987.14.
 In addition to the information required under Section 25987.13, an applicant shall provide in the application a detailed description of all of the following:
(a) The eligible real property.
(b) The transactional activities associated with the project, including the transactional costs.
(c) Other information deemed necessary by the commission or the third-party administrator.

25987.15.
 (a) The third-party administrator shall make recommendations to the commission regarding the approval or disapproval of an application.
(b) The commission may approve and accept an applicant into the program if both of the following conditions are met:
(1) The applicant is a qualified applicant.
(2) Prior to receiving funding for renewable energy improvement, the applicant shall show both of the following:
(A) Evidence of intent to make feasible energy efficiency upgrades recommended by the analysis required pursuant to subdivision (i) of Section 25987.13.
(B) Evidence of intent to enroll in eligible demand response programs, if appropriate.
(c) The commission shall determine appropriate guarantees necessary to ensure cost neutrality of the improvements.

25987.16.
 (a) Upon the mutual agreement of the participant and the third-party administrator, the third-party administrator shall establish an annualized schedule for the repayment with monthly repayment installments required by the energy remittance repayment agreement, including the interest charged, administrative cost fee, and loan loss reserve fee.
(b) (1) The period for repayment of the energy remittance repayment agreement shall not exceed the effective useful life of the improvements or 20 years, whichever is shorter.
(2) The calculated effective useful life of the building energy efficiency and renewable energy improvements, shall be calculated using methodologies adopted by the commission, in consultation with the Public Utilities Commission.
(A) The commission shall hold at least one public hearing on the useful life of the improvement to take public and industry comments on the commission’s determinations.
(B) The commission shall update the useful life of improvements as new information becomes available and when new technologies become available and shall make this information publicly available on its Internet Web site.
(C) The commission shall remove any improvements from its information on improvements if the improvement is no longer available or if the commission determines that manufacturer defects disqualify the improvement from loan eligibility.
(c) The commission shall collect the repayment installments that become due and payable and repayment installments that are delinquent. A repayment installment is delinquent upon the failure of the participant to pay any installment due and payable pursuant to the schedule for repayment.
(d) The commission may prescribe, adopt, and enforce guidelines relating to the collection of the delinquent repayment installments. The guidelines adopted pursuant to this section shall be exempt from the Administrative Procedures Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(e) Upon the full repayment of the balance of the energy remittance repayment agreement lien and accrued interest, the commission shall record with the county in which the eligible real property is located a release of the energy remittance repayment agreement lien.

25987.18.
 (a) Prior to approving an application for inclusion into a loan portfolio and the recordation of the energy remittance repayment agreement lien, or a modification of an approved application, the commission shall conduct a public meeting on the proposed application or modification.
(b) The commission shall post a notice of the hearing on the commission’s Internet Web site and provide the notice, in writing, to all lienholders of the eligible building no later than 30 days prior to the public meeting.
(c) The notice shall specify all of the following:
(1) The name of the qualified applicant.
(2) The address of the eligible real property.
(3) The amount required to be repaid secured by the energy remittance repayment agreement lien proposed to be recorded against the eligible real property.
(4) The date and place of the public meeting.
(5) The schedule for repayment of the contractual energy remittance and associated costs as agreed upon between the qualified applicant and the commission.
(6) The interest rate assessed pursuant to the energy remittance repayment agreement.
(7) A detailed description of the proposed modification, if applicable.
(d) The notice shall inform the lienholder that any complaints or objections to either the approval of the application and the recordation of the energy remittance repayment agreement lien on the eligible real property or the modification of an approved application shall be submitted, in writing, to the commission not less than 10 days prior to the public meeting.

25987.19.
 In evaluating the eligibility of an applicant, the commission shall consider the creditworthiness of the applicant and the effectiveness of the improvements applying the following criteria, which may include, but not be limited to, all of the following:
(a) Whether applicants are legal owners of the underlying real property.
(b) Whether applicants are current on any outstanding mortgage and property tax payments.
(c) Whether applicants are in default or in bankruptcy proceedings.
(d) Whether applicants have applied for incentives, if they are available, through the energy efficiency programs offered by an electrical or gas corporation or a publicly owned utility.
(e) Whether improvements financed by the program follow applicable standards including any guidelines adopted by the commission.

25987.20.
 (a) The commission shall approve an application at a business meeting. Upon approval of an application, the commission shall record the energy remittance repayment agreement lien against the eligible real property.
(b) The commission shall specify the amount required to be paid pursuant to the energy remittance repayment agreement lien, the schedule of repayment that details the monthly repayment installment amount and due date, and the interest rate charged.
(c) The commission shall approve a modification of an approved application at a business meeting.

25987.21.
 (a) The energy remittance repayment agreement lien recorded pursuant to this section shall have a prominent header on the document that reads “Energy Remittance Repayment Agreement Lien” in 14-point type and contains all of the following information related to the eligible real property:
(1) The assessor’s parcel number.
(2) The owners of record.
(3) The legal description.
(4) The street address.
(5) The amount of the lien.
(b) The energy remittance agreement lien shall have the force, effect, and priority of a judgment lien from the time of recording in the county where the eligible real property is located.

25987.22.
 (a) No later than 30 days after the approval of an application, the commission or the third-party administrator shall record with the county in which the eligible real property is located the energy remittance repayment agreement lien. The third-party administrator shall notify the commission upon the recordation of the energy remittance repayment agreement lien.
(b) Within 60 days of the notice of recording of the energy remittance repayment agreement lien, the commission shall include the approved application in a portfolio posted on the commission’s Internet Web site.

25987.23.
 (a) The commission shall deposit into the Nonresidential Real Property Energy Retrofit Debt Servicing Fund established pursuant to Section 25987.38, or the accounts within the fund, any moneys collected pursuant to this chapter.
(b) This chapter shall not be construed to require investor-owned utilities or municipal utilities to serve in the role as a third-party private guarantor or loan servicer or otherwise provide credit support for the loan program.

25987.24.
 (a) A local government that has issued revenue bonds pursuant to a program providing financial assistance to owners of nonresidential buildings undertaking a renewable energy, water efficiency, or energy efficiency retrofit improvement on the real properties may apply to the commission for participation in the program.
(b) Upon the approval of an application submitted by the local government, the authority may purchase all those outstanding revenue bonds issued by the local government.
(c) Upon the purchase of the revenue bonds issued by the local government by the authority, the authority succeeds to all rights conferred upon the bondholder by those revenue bonds and the local government shall remit revenue that is used to secure those revenue bonds to the commission.

25987.25.
 (a) To the extent that the commission determines necessary to effectively complete the duties specified by this chapter, the commission shall do all of the following:
(1) (A) Analyze and evaluate standards for nonresidential energy building retrofits previously developed by various national and international organizations to provide uniformity and transparency for financial institutions evaluating loan proposals for energy improvements to nonresidential buildings. To the extent that the commission determines necessary, this evaluation shall be completed not later than January 1, 2016.
(B) The evaluation shall review existing protocols or a combination of elements of existing measurement protocols and shall be made available in an electronic format to financial institutions and local governments initiating loans pursuant to this chapter.
(2) Develop, in consultation with the Department Bureau of Real Estate and representatives from the commercial real estate industry, a model energy aligned lease provision that modifies, upon the agreement between the owner and tenants of eligible real property, a commercial lease agreement allowing the owners to recover the costs of the renewable energy, water efficiency, or energy efficiency retrofit improvements that result in operational savings based on the useful life of the retrofit while protecting tenants from underperformance of the building energy efficiency improvements.
(3) Develop a request for proposal to contract with one or more financial institutions to secure a short-term, revolving credit facility (warehouse line of credit) for the purpose of creating an interim financing mechanism for the loans that would be aggregated for the purposes of issuance of a revenue bond pursuant to Section 25987.29. The warehouse line of credit shall be drawn by the third-party administrator for origination of direct loans to qualified applicants.
(b) In implementing this chapter, the commission shall do all of the following:
(1) Consult with the Public Utilities Commission, representatives from the investor-owned and publicly owned utilities, local governments, real estate licensees, commercial builders, commercial property owners, small businesses, financial institutions, commercial property appraisers, energy rating organizations, and other entities the commission deems appropriate.
(2) Hold at least one public hearing.
(3) Adopt guidelines and standards for the purposes of implementing this chapter at a publicly noticed meeting offering all interested parties an opportunity to comment. For the initial adoption of the guidelines and standards, the commission shall provide a written public notice at least 30 days prior to the meeting. For the adoption of any substantive change to the guidelines and standards, the commission shall provide a written public notice at least 10 days prior to the meeting. Notwithstanding any other law, guidelines or standards adopted pursuant to this section shall be exempt from the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. In implementing the requirements of this chapter, in the interest of promoting consistency across the demand-side management programs statewide, the commission shall seek to harmonize these requirements, to the greatest extent practicable, with the rules and requirements of the Public Utilities Commission for its nonresidential energy efficiency, distributed generation, demand response, and other demand-side management programs.
(4) Establish loan limits for each type of eligible improvements for commercial or public buildings.
(5) Establish standard metrics for estimating performance of eligible improvements for different building types to be used in underwriting loans made pursuant to the program.
(6) Establish standard assumptions to be used for estimating the energy benefits of improvements that shall include a reasonable assumption for the cost of kilowatthours and therms and a reasonable assumption of future expectations of the rate these costs will increase.
(7) Establish those standards, guidelines, and procedures, through regulation, including, but not limited to, standards of creditworthiness for qualification of program applicants, that are necessary to ensure the financial stability of the program and otherwise prevent fraud and abuse.
(8) Establish those measurement and verification standards necessary to ensure that the building energy efficiency improvements financed pursuant to this chapter are realized at a level specified by the commission.
(9) Consider reliance on existing trade certifications or licensing requirements applicable to occupations that perform the work contemplated under this chapter.
(10) Establish qualifications for the certification of contractors to construct or install building energy efficiency improvements.
(11) Contract with a party, public or private, to do any of the following:
(A) Ensure that appropriate and reasonable steps are taken to monitor and verify the quality and longevity of building energy efficiency improvements financed pursuant to this program and measure the total energy savings achieved by the program.
(B) Determine the median, average, and aggregate amount financed by an applicant for eligible improvements to different building types under the program. Make data on program participation publicly available in a timely manner and in an aggregate format that would not provide identifying information about individual customers of the electrical and gas corporations and include, at a minimum, the types of energy efficiency measures installed, the location of each customer receiving ratepayer-funded energy efficiency assistance, the amount of funds expended at each site, the expected annual energy savings and reduced energy usage expected in kilowatthours or therms. Unless the affected person, customer, or entity consents, the information, data, and reports required to be provided pursuant to this section shall not include any of the following:
(i) Personal information as defined in subdivision (e) of Section 1798.80 of the Civil Code.
(ii) A customer’s electrical or gas consumption data as defined in subdivision (a) of Section 8380.
(iii) Other information excluded from public disclosure pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
(12) Adopt a standard notice and disclosure form for the purposes of Section 25987.27.

25987.26.
 Credit issued under the warehouse line of credit shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, or a pledge of the full faith and credit of the state or of any political subdivision, but shall be payable solely from the funds provided therefor. All credit instruments shall contain a statement to the following effect:

“Neither the faith and credit nor the taxing power of the State of California is pledged to the payment of principal and interest on this credit instrument.”

25987.27.
 (a) From the date upon which financial assistance is approved by the commission pursuant to Section 25987.20 and for all subsequent transactions entered into pursuant to this chapter, a seller of real property subject to an energy remittance repayment agreement shall deliver to the buyer an energy remittance repayment agreement notice and disclosure as adopted by the commission pursuant to paragraph (12) of subdivision (b) of Section 25987.25.
(b) (1) Upon the delivery of the completed notice and disclosure form to the buyer of real property, the seller and his or her agent is not required to provide additional information relative to the energy remittance repayment agreement.
(2) The information in the notice and disclosure form is deemed sufficient to provide notice to the buyer of the existence of the energy improvements and of the energy remittance repayment agreement lien.
(3) The commission or the third-party administrator shall report periodically, but no less often than once annually, on the number and amount of loans that are made available in areas of the state where climate conditions are more extreme and in disadvantaged communities.

25987.28.
 No later than June 30, 2016, and no later than June 30 of every fifth year thereafter, the California State Auditor shall conduct, or cause to be conducted, a performance audit of the program. Notwithstanding Section 10231.5 of the Government Code, the California State Auditor shall prepare a report and recommendations on each audit conducted and present the report and recommendations to the President pro Tempore of the Senate and the Speaker of the Assembly.

Article  3. Nonresidential Real Property Energy Retrofit Bond

25987.29.
 The authority, on behalf of the commission, may incur indebtedness and issue and renew negotiable bonds, notes, debentures, or other securities of any kind or class. All indebtedness, however evidenced, shall be payable solely from moneys received pursuant to this chapter and the proceeds of its negotiable bonds, notes, debentures, or other securities and shall not exceed the sum of two billion dollars ($2,000,000,000).

25987.30.
 The Legislature may, by statute, authorize the authority to issue bonds in excess of the amount provided in Section 25987.29.

25987.31.
 (a) On a semiannual basis, the authority shall conduct a meeting to adopt a resolution authorizing the issuance of negotiable bonds, notes, debentures, or other securities (collectively called “bonds”) for the purposes of generating sufficient moneys to fund the approved applications in the portfolio at the time of the meeting or to repay an outstanding balance of the participant on whose behalf the commission has provided funds through the warehouse line of credit. In anticipation of the sale of bonds as authorized by Section 25987.29, or as may be authorized pursuant to Section 25987.30, the authority, on behalf of the commission, may issue negotiable bond anticipation notes and may renew the notes from time to time. The bond anticipation notes may be paid from the proceeds of sale of the bonds of the authority in anticipation of which they were issued. Notes and agreements relating to the notes and bond anticipation notes (collectively called “notes”) and the resolution or resolutions authorizing the notes may contain any provisions, conditions, or limitations that a bond, agreement relating to the bond, and bond resolution of the authority may contain. However, a note or renewal of the note shall mature at a time not exceeding two years from the date of issue of the original note.
(b) Every issue of its bonds, notes, or other obligations shall be general obligations of the authority payable from revenues or moneys received pursuant to this chapter. Notwithstanding that the bonds, notes, or other obligations may be payable from a special fund, they are for all purposes negotiable instruments, subject only to the provisions of the bonds, notes, or other obligations for registration.
(c) Subject to the limitations in Sections 25987.29 and 25987.30, the bonds may be issued as serial bonds or as term bonds, or the authority, in its discretion, may issue bonds of both types. The bonds shall be authorized by resolution of the authority and shall bear the date or dates, mature at the time or times, not exceeding 30 years from their respective dates, bear interest at the rate or rates, be payable at the time or times, be in the denominations, be in the form, either coupon or registered, carry the registration privileges, be executed in a manner, be payable in lawful money of the United States of America at a place or places, and be subject to terms of redemption, as the resolution or resolutions may provide. The sales may be a public or private sale, and for the price or prices and on the terms and conditions, as the authority shall determine after giving due consideration to the recommendations of any participating party to be assisted from the proceeds of the bonds or notes. Pending preparation of the definitive bonds, the authority may issue interim receipts, certificates, or temporary bonds that shall be exchanged for the definitive bonds. The authority may sell bonds, notes, or other evidence of indebtedness at a price below their par value. However, the discount on a security sold pursuant to this section shall not exceed 6 percent of the par value.
(d) A resolution or resolutions authorizing bonds or an issue of bonds may contain provisions that shall be a part of the contract with the holders of the bonds to be authorized, as to all of the following:
(1) Pledging the moneys collected pursuant to this chapter from the portfolio of approved applications that are funded by the bonds, to secure the payment of the bonds or of any particular issue of bonds, subject to the agreements with bondholders as may then exist.
(2) The setting aside of reserves or sinking funds, and the regulation and disposition of the reserves or sinking funds.
(3) Limitations on the right of the authority or the commission or their agent to restrict and regulate the use of the project or projects to be financed out of the proceeds of the bonds or any particular issue of bonds.
(4) Limitations on the purpose to which the proceeds of sale of an issue of bonds then or thereafter to be issued may be applied and pledging those proceeds to secure the payment of the bonds or the issue of the bonds.
(5) Limitations on the issuance of additional bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding bonds.
(6) The procedure, if any, by which the terms of a contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to the amendment or abrogation, and the manner in which that consent may be given.
(7) Limitations on expenditures for operating, administrative, or other expenses of the authority or commission.
(8) Defining the acts or omissions to act that constitute a default in the duties of the authority or commission to holders of its obligations and providing the rights and remedies of the holders in the event of a default.
(e) The authority, the commission, and any person executing the bonds or notes shall not be liable personally on the bonds or notes or be subject to personal liability or accountability by reason of the issuance of the bond or note.
(f) The authority shall have power out of any funds available for these purposes to purchase its bonds or notes. The authority may hold, pledge, cancel, or resell those bonds, subject to and in accordance with agreements with bondholders.
(g) The commission and the authority may enter into a memorandum of understanding providing for the transfer of energy remittance payments between the two agencies in furtherance of this chapter.
(h) If there is insufficient project valuation or insufficient demand for the revenue bonds authorized by this chapter, the commission shall continue to collect the energy remittance installment payments that become due and payable and service the loans, and the commission shall continue to collect delinquent repayment installments. Failure to sell the revenue bonds shall not create any liability for the state.

25987.32.
 In the discretion of the authority, any bonds issued under the provisions of this article may be secured by a trust agreement by and between the authority and a corporate trustee or trustees, which may be the authority or any trust company or bank having the powers of a trust company within or without the state. The trust agreement or the resolution providing for the issuance of the bonds may pledge or assign the revenues to be received pursuant to this chapter, to be financed out of the proceeds of the bonds. The trust agreement or resolution providing for the issuance of the bonds may contain provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including particularly provisions specifically authorized by this chapter to be included in any resolution or resolutions of the commission authorizing bonds. Any bank or trust company doing business under the laws of this state which may act as depositary of the proceeds of bonds or of revenues or other moneys may furnish indemnifying bonds or pledge securities as may be required by the authority. Any trust agreement may set forth the rights and remedies of the bondholders and of the trustee or trustees, and may restrict the individual right of action by bondholders. In addition to the foregoing, any trust agreement or resolution may contain other provisions as the authority may deem reasonable and proper for the security of the bondholders. Notwithstanding any other law, the authority shall not be deemed to have a conflict of interest by reason of acting as trustee pursuant to this chapter.

25987.33.
 Bonds issued under the provisions of this article shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, other than the authority, or a pledge of the faith and credit of the state or of any political subdivision, but shall be payable solely from the funds provided by this chapter. All bonds shall contain on the face thereof a statement to the following effect: “Neither the faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of or interest on this bond.” The issuance of bonds under the provisions of this article shall not directly or indirectly or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation or to make any appropriation for their payment. Nothing contained in this section shall prevent or be construed to prevent the authority from pledging its full faith and credit to the payment of bonds or issue of bonds authorized pursuant to this chapter.

25987.34.
 (a) The authority is hereby authorized to provide for the issuance of bonds of the authority for the purpose of refunding any bonds, notes, or other securities of the authority then outstanding, including the payment of any redemption premium and any interest accrued or to accrue to the earliest or subsequent date of redemption, purchase, or maturity of the bonds.
(b) The proceeds of any bonds issued for the purpose of refunding outstanding bonds, notes, or other securities may, in the discretion of the authority, be applied to the purchase or retirement at maturity or redemption of outstanding bonds either on their earliest or any subsequent redemption date or upon the purchase or retirement at the maturity thereof and may, pending application, be placed in escrow to be applied to purchase or retirement at maturity or redemption on a date as may be determined by the authority.
(c) Pending use, any escrowed proceeds may be invested and reinvested by the authority in obligations of, or guaranteed by, the United States of America, or in certificates of deposit or time deposits secured by obligations of, or guaranteed by, the United States of America, maturing at the time or times as shall be appropriate to ensure the prompt payment, as to principal, interest, and redemption premium, if any, of the outstanding bonds to be so refunded. The interest, income, and profits, if any, earned or realized on any investment may also be applied to the payment of the outstanding bonds to be so refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of proceeds and interest, income, and profits, if any, earned or realized on the investments may be returned to the authority for use by it in any lawful manner.
(d) These bonds shall be subject to the provisions of this division chapter in the same manner and to the same extent as other bonds issued pursuant to this chapter.

25987.35.
 Bonds issued by the authority are legal investments for all trust funds, the funds of all insurance companies, banks, both commercial and savings, trust companies, savings and loan associations, and investment companies, for executors, administrators, trustees, and other fiduciaries, for state school funds, and for any funds which may be invested in county, municipal, or school district bonds, and the bonds are securities which may properly and legally be deposited with, and received by, any state or municipal officer or agency or political subdivision of the state for any purpose for which the deposit of bonds or obligations of the state, is now, or may hereafter be, authorized by law, including deposits to secure public funds if, and only to the extent that, evidence of indebtedness or debt securities of the participating party receiving financing through the issuance of bonds qualify or are eligible for those purposes and uses.

25987.36.
 The state hereby pledges and agrees with the holders of the bonds and with a participant with an approved application that the state will not limit, alter, restrict, or impair the rights vested in the authority or the commission or the rights or obligations of a person or entity with which the commission contracts to fulfill the terms of an agreement made pursuant to this chapter. The state further agrees that it will not in any way impair the rights or remedies of the holder of the bonds until the bonds have been paid or until adequate provision for payment has been made. The authority may include this provision and undertaking for the authority in its bonds.

25987.37.
 (a) Bonds issued pursuant to this division chapter shall be exempt from all taxation and assessment imposed pursuant to state law.
(b) No later than February 1, 2015, the commission shall apply to the United States Department of the Treasury under the Energy Tax Incentives Act of 2005 (Title XIII of Public Law 109-58) for the authority to issue tax advantage bonds under the federal Clean Renewable Energy Bonds program or any other applicable programs.

Article  4.  Nonresidential Real Property Energy Retrofit Debt Servicing Fund

25987.38.
 (a) The Nonresidential Real Property Energy Retrofit Debt Servicing Fund is hereby established in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the fund are hereby continuously appropriated to the authority without regard to fiscal years for the purposes of paying the principal and interest on bonds issued by the authority pursuant to Section 25987.29, servicing the warehouse line of credit, and defraying any direct and indirect costs incurred by the Treasurer in executing duties required by this chapter.
(b) All interest and income derived from the deposit and investment of moneys in the fund shall be credited to the fund, and all unexpended and unencumbered moneys in the fund at the end of any fiscal year shall remain in the fund.

25987.39.
 The Loan Loss Reserve Account is hereby established in the Nonresidential Real Property Energy Retrofit Debt Servicing Fund. The commission shall deposit the portion of the repayment installation that is the loan loss reserve fee into the account. Notwithstanding Section 13340 of the Government Code, the moneys in the account are hereby continuously appropriated to the authority without regard to fiscal years for the purposes of paying outstanding balances due under an energy remittance repayment agreement on a building that has been foreclosed upon if the proceeds generated from the foreclosure proceedings are insufficient to pay any past due payments under the energy remittance repayment agreement, including accrued interest and fees. All interest and income derived from the deposit and investment of moneys in the account shall be credited to the account, and all unexpended and unencumbered moneys in the account at the end of any fiscal year shall remain in the account.

25987.40.
 The Administration Account is hereby established in the Nonresidential Real Property Energy Retrofit Debt Servicing Fund. The commission shall deposit into the account the program administration fee collected pursuant to this chapter. Notwithstanding Section 13340 of the Government Code, moneys in the account shall be continuously appropriated without regard to fiscal years to the authority and the commission for the costs of implementing this chapter.

Article  5. Miscellaneous

25987.41.
 (a) The commission and the authority shall be authorized to promulgate necessary regulations to implement and administer this chapter.
(b) Guidelines for the purposes of implementing this chapter shall be adopted by the commission or authority at a publicly noticed meeting offering all interested parties an opportunity to comment. For the initial adoption of the guidelines and standards, the commission or authority shall provide a written public notice at least 30 days prior to the meeting. For the adoption of any substantive change to the guidelines and standards, the commission or authority shall provide a written public notice at least 10 days prior to the meeting. Notwithstanding any other law, guidelines or standards adopted pursuant to this section shall be exempt from the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.