DATE: March 6, 2018
TO: Board of Supervisors
SUBMITTED BY: Jean M. Rousseau, County Administrative Officer
SUBJECT: Property Assessed Clean Energy Program - California Enterprise Development Authority
RECOMMENDED ACTION(S):
TITLE
1. Adopt Resolution approving Associate Membership by the County in the California Enterprise Development Authority and authorizing and directing the execution of an Associate Membership Agreement relating to Associate Membership of the County in the Authority, authorizing the County of Fresno to join the Figtree PACE program, authorizing the California Enterprise Development Authority to conduct Voluntary Contractual Assessment Proceedings and levy Voluntary Contractual Assessments within the Territory of the County of Fresno, and authorizing related actions.
2. Approve and authorize the Chairman to execute Indemnification Agreement by and between the County of Fresno and Figtree Company, Inc.
3. Approve and authorize the Chairman to execute Agreement for the Collection of Special Assessments with the California Enterprise Development Authority for the reimbursement of costs to the Auditor-Controller/Treasurer-Tax Collector’s office for placement of the California Enterprise Development Authority Figtree PACE Program voluntary contractual assessments on current secured property tax bills. This agreement is effective upon execution and renews automatically for each fiscal year unless either party gives written notice of nonrenewal.
REPORT
The recommended actions will allow the California Enterprise Development Authority (CEDA) to offer a Property Assessed Clean Energy (PACE) program to property owners within the unincorporated areas of Fresno County. This program is non-exclusive and is similar to other programs offered and previously approved by the Board.
ALTERNATIVE ACTION(S):
The Board may deny the request of CEDA with respect to their proposed PACE program. Other programs have been approved by the Board and may be available to property owners wanting to participate in such a program.
FISCAL IMPACT:
There is no Net County Cost related to the recommended actions. County costs related to this program will be reimbursed by CEDA.
DISCUSSION:
The CEDA is a Joint Powers Authority formed to assist local governments, non-profit organizations and businesses by promoting economic, cultural and community development, with the financing of economic development and charitable activities throughout California.
As part of its economic and community development, the CEDA along with its current Program Administrator, Dividend Finance (Dividend), is offering PACE financing for residential and commercial property owners in its member territories. The CEDA is expected to issue limited obligation bonds, notes or other forms of indebtedness to fund the projects. The County is not obligated to repay the bonds issued by CEDA or to pay the voluntary contractual assessments levied on the participating properties. The County will not incur any cost or involvement, and there are no administrative responsibilities, marketing obligations, or financial exposures to the County with respect to the issuance of the CEDA bonds.
PACE is a way to finance energy efficiency, water efficiency, and renewable energy upgrades for residential and commercial buildings. Property owners who participate in the program repay the loans through a voluntary contractual assessment collected together with their property taxes. That means the assessments levied by CEDA would have equal priority with the County’s general property taxes. (Government Code § 53935.) The loan is attached to the property rather than belonging to an individual. Therefore, when the owner sells the property, the loan may be paid off during the sale or stay with the property and be paid off by the new owner, who might also benefit from the upgrades that were completed.
CEDA has obtained a final judgment in a validation action establishing that its bonds and voluntary contractual assessments are valid under California law, including Proposition 218.
The proposed Resolution authorizes the CEDA to accept applications from owners of property within the unincorporated territory of the County for municipal financing of authorized improvements through the Figtree PACE Program. It also authorizes the CEDA to conduct voluntary contractual assessment proceedings and levy voluntary contractual assessments against the property of participating owners within the incorporated territory of the County.
The proposed Resolution also requires CEDA to sign a reimbursement agreement for the County’s collection costs. Cities in Fresno County may also approve the levy of voluntary contractual assessments by CEDA and the agreement would cover the costs of collection for those assessments.
The program administrator for the Figtree PACE Program will sign an agreement indemnifying the County for negligence or malfeasance of any type as a result of the acts or omissions of the program administrator, its officers, employees, subcontractors, and agents, arising from or related to the Figtree PACE Program.
As PACE programs in general have now been operating for a few years, concerns have developed that there was insufficient oversight of the programs with respect to consumer protections and protections for other creditors. This included some instances when the additional assessments were more than could be absorbed by the property owner leading to early defaults on property taxes and assessments. In response to these concerns, the State legislature enacted AB 1284 and SB 242 to address these issues, including the establishment of the Department of Business Oversight as the regulator for the PACE industry. Included within these bills are provisions that would establish a regulatory framework for licensing both the lenders and the participating contractors, strengthening existing underwriting standards regarding property owner equity and on-time mortgage and tax payment history and adding new underwriting standards to evaluate the property owner’s ability to pay. The recommended resolution and the collection agreement both include requirements that CEDA and its program administrator comply with these new laws.
REFERENCE MATERIAL:
BAI #33 - August 23, 2016
BAI #31 - March 1, 2016
BAI #26 - March 24, 2015
BAI #23 - August 19, 2014
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Resolution
On file with Clerk - Indemnification Agreement
On file with Clerk - Collection of Special Assessments Agreement
CAO ANALYST:
John Hays