REPORT TO THE CITY COUNCIL Date: October 22, 2015 FROM: JENNIFER CLARK, Director Development and Resource Management THROUGH: DANIEL ZACK, Assistant Director Development and Resource Management By: JOSE R GONZALEZ, Energy Program Administrator Sustainable Fresno Division, Development and Resource Management SUBJECT ..Title Actions pertaining to the City's participation in the California Home Finance Authority's Property Assessed Clean Energy programs to help Fresno property owners finance renewable energy generation, energy efficiency, water conservation, and electric vehicle charging infrastructure improvements 1. ***RESOLUTION - Consenting to the inclusion of properties within the City's incorporated area in the California Home Finance Authority's Community Facilities District No. 2014-1 (Clean Energy) (5 affirmative votes) 2. ***RESOLUTION - Consenting to inclusion of properties within the City's incorporated area in the California Home Finance Authority's Property Assess Clean Energy Program 3. Approve associate membership in the California Home Finance Authority (5 affirmative votes) ..Body RECOMMENDATION Staff recommends that the Council (1) adopt a resolution consenting to the inclusion of properties within the City's incorporated area in the California Home Finance Authority's Community Facilities District No. 2014-1 (Clean Energy); (2) adopt a resolution consenting to inclusion of properties within the City's incorporated area in the California Home Finance Authority's (Authority)Property Assess Clean Energy (PACE) Program; and (3) approve associate membership in the Authority and authorize the appropriate City officials to execute documents necessary to effectuate such membership. EXECUTIVE SUMMARY In 2009, the Sustainable Fresno Division of the Development and Resource Management Department began implementation of no-cost, in-home residential energy surveys to help homeowners in Fresno reduce costs for energy through efficiency upgrades. This service was designed to work in conjunction with residential PACE financing programs under development at that time. PACE financing is designed to give property owners a method to upgrade for energy efficiency, water conservation, and renewable energy and pay back the costs through their property tax bills. PACE financing is authorized under Assembly Bill 811 (2008) and Assembly Bill 274 (2009), which amended the Streets and Highways Code to allow for PACE financing and Senate Bill 555 (2011), which amended the Mello Roos Community Facilities Act in the Government Code to allow for the formation of PACE financing districts. Although implementation of residential PACE financing was initially delayed because of concerns expressed by the Federal Housing Finance Agency (FHFA) in 2010, PACE financing has become widely accepted in California and utilization by property owners, continues to grow. Over 350 California cities and counties have authorized PACE programs, and most have multiple PACE programs. PACE financings in California now exceed 50,000 properties and approximately $1 billion in project funding. The City of Fresno previously authorized several PACE programs operating under AB 811. Staff recommends that the Council authorize the inclusion of properties within the City of Fresno's jurisdiction in the Authority PACE programs and approve associate membership in the Authority Joint Powers Agreement (JPA). The recommended actions would make a PACE program operating under SB 555 available in the City of Fresno. BACKGROUND Consistent with prior actions taken by the Sustainable Fresno Division of the Development and Resource Management Department and this Council, the recommended actions will establish the City of Fresno's association with the Authority and Ygrene Energy Fund CA LLC (Ygrene) and make the Ygrene Works for California PACE financing available to property owners in the City. The Ygrene Works financing allows eligible property owners, both residential and nonresidential, to install renewable energy systems and energy- and water-efficient improvements and repay the financing through a voluntary annual amount added to their property tax bill. There are no hard costs and no dedicated staff resources required for the City of Fresno to participate. The California legislature has established two separate PACE laws. Assembly Bills 811 (signed into law on July 21, 2008) and 474 (effective January 1, 2010) amended Chapter 29 of Part 3 of Division 7 of the California Streets & Highways Code. Senate Bill 555 (signed into law on October 5, 2011) amended the Mello-Roos Community Facilities Act set forth in sections 53311 through 53368.3 of the California Government Code. Both laws authorize a legislative body to allow property owners to enter into voluntary assessments and/or special tax levies to finance the installation of certain renewable energy sources, energy efficiency, and/or water efficiency improvements permanently fixed to real property. PACE financing provides property owners in participating cities with an option to finance approved energy- and water-saving improvements. If a property owner chooses to participate, the installed improvements are financed by the PACE program administrator. The loan is secured by the property itself with no obligation to the participating jurisdictions. Property owners agree to repay the amount borrowed through an additional annual increment collected via their property tax bills. In most cases, when the property is sold, the financed amount transitions to the new owner; however, applicants are advised to consult their mortgage company for confirmation. PACE financing is available for eligible improvements on both residential and nonresidential properties. The Council has previously adopted resolutions authorizing Fresno property owners to participate in PACE financing programs including: (1) California First (offered by the California Statewide Communities Development Authority JPA and Renewable Funding); (2) California HERO (offered by the Western Riverside Council of Governments JPA and Renovate America; and (3) Figtree Financing (offered by the California Enterprise Development Authority JPA and Figtree Financing Inc. These three providers use the AB 811 statutory framework for their PACE programs. Authority has established both AB 811 and SB 555 PACE programs in order to maximize the benefits and cost effectiveness. Authority and Ygrene use the SB 555 legislative framework because of the advantages available to consumers under the Mello-Roos Act. The Authority PACE Programs are currently available in over 150 jurisdictions in California. Approving the Ygrene Works PACE programs expands the available options and adds an SB 555 program for Fresno property owners. By offering low cost financing, the Authority PACE programs allow construction of eligible projects to proceed and, in the process, stimulates building activity and the overall local economy, reduce peak energy demand, reduce water consumption, increase property values, and generate savings on utility bills for property owners. The program will not add to or require any additional responsibilities for the City. To participate in the PACE programs, the City must become an Associate Member of the Authority (JPA Agreement attached). Associate membership requires no dues or other costs to the City but permits participation in all Authority programs including the PACE programs. Financing and administration of the PACE programs are the sole responsibility of the Authority JPA and do not place any debt or financial responsibilities on associate member cities nor expose the cities to liability. ENVIRONMENTAL FINDINGS By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, this item does not qualify as a "project" for the purposes of CEQA LOCAL PREFERENCE Local preference was not implemented because this item does not include a competitive bid. FISCAL IMPACT There are no negative impacts to the General Fund from this project. All costs associated with these agreements will be paid for with funding from Pacific Gas and Electric Company and the California Public Utilities Commission. The Master Service Agreement with PG&E is a reimbursement based program and funding is available in December 31, 2015. Attachments: Resolution No. _____ - Authority Community Facilities District No. 2014-1 (SB 555) Resolution No. _____ - Authority PACE Program (AB 811) California Home Finance Authority Joint Powers Agreement 1