CITY COUNCIL: Resolution Authorizing City to Join CaliforniaFIRST Municipal Finance Program

City Council
Agenda Item Summary

Name: Consideration of a Resolution authorizing the City to join the CaliforniaFIRST Municipal Finance Program to fund energy efficiency improvements and alternative energy systems.

Description: AB 811 was adopted to address global climate change and the high upfront cost of energy efficient systems. AB 811 allows property owners to voluntarily participate in a parcel assessment district that provides financing for energy efficient improvements and alternative energy conservation systems.

The California Statewide Communities Development Authority (CSCDA) is
creating a statewide program to implement AB 811, which it is calling CaliforniaFIRST. The program provides for an economy of scale of local jurisdictions for the program, which will include administration, financing costs and addressing legal issues. To participate in this program, Monterey County, along with at least one city within the County, must adopt a resolution to join.

Three Monterey County cities have already adopted resolutions to join
CaliforniaFIRST: Pacific Grove, King City and Greenfield. Other cities within the County are in the process of adopting the resolution. Thirteen counties, including Monterey County, have prepared a collaborative
grant application for submission to the California Energy Commission (CEC) to cover the setup fees and administrative costs for all participating cities and the County.

Overall Cost:
City Funds: $10,000 setup fee
Grant Funds: $10,000 CEC grant application

Staff Recommendation: Adopt the Resolution to join CaliforniaFIRST.

Important Considerations: The County of Monterey will seek grant funds through the CEC State Energy Program to pay for the CaliforniaFIRST setup fee. Though this grant has not yet been approved, the Monterey County staff is confident that the CEC will approve the County’s grant application. If, by some chance this grant application is denied, the City Council must decide whether or not the City should fund the $10,000 setup fee.

Decision Record: No prior action has been taken by the City Council on this statewide issue.

Reviewed:

Rich Guillen, City Administrator Date

CITY OF CARMEL-BY-THE-SEA
STAFF REPORT
TO: MAYOR McCLOUD AND COUNCIL MEMBERS
FROM: RICH GUILLEN, CITY ADMINISTRATOR
DATE: FEBRUARY 2, 2010
SUBJECT: CONSIDERATION OF A RESOLUTION AUTHORIZING THE CITY TO JOIN THE CALIFORNIAFIRST MUNICIPAL FINANCE PROGRAM TO FUND ENERGY EFFICIENCY
IMPROVEMENTS AND ALTERNATIVE ENERGY SYSTEMS

SUMMARY RECOMMENDATION
Adopt a Resolution to join the CaliforniaFIRST municipal finance program.

BACKGROUND
To address global climate change and the high upfront cost of installation, Assembly Bill 811 allows property owners to voluntarily participate in an assessment district that provides financing for the installation of distributed generation renewable energy sources or energy
efficiency improvements that are permanently fixed to residential, commercial, industrial, or other real property. After first receiving local municipal approval, property owners contract directly with qualified contractors and installers for energy efficiency and/or energy generating projects.

Assembly Bill 811
To address global climate change and the high upfront cost of installation, Assembly Bill 811 allows property owners to voluntarily participate in an assessment district that provides financing for the installation of distributed generation renewable energy sources or energy
efficiency improvements that are permanently fixed to residential, commercial, industrial, or other real property. After first receiving local municipal approval, property owners contract directly with qualified contractors and installers for energy efficiency and/or energy
generating projects.

Assembly Bill 474
Similar to AB 811, AB 474 allows property owners to voluntarily participate in an assessment district providing financing for the installation of water conservation improvements.

Existing Municipal Finance Programs
Monterey County staff conducted research on existing programs and found that they all had two problems in common. First, legal ambiguity exists on whether a voluntary assessment is senior to previously existing mortgages. This resulted in problems with bonds being sold in the public market and validation hearings must take place in an effort to resolve this issue.

Second, administration costs for the program are significant. These include the costs for application and project review, credit verification, document processing, collection and reserves, etc. There is also the additional cost of placing and maintaining the assessments on the tax rolls. The legal and administrative costs of program development and implementation have been an obstacle for most of the counties and cities working individually. Taking advantage of economies of scale by working collaboratively is a more cost effective approach for all entities involved.

CaliforniaFIRST
County staff also researched opportunities with the California State Association of Counties subsidiary the California Statewide Communities Development Authority (“CSCDA”). The CSCDA is creating a statewide program for the implementation of AB 811 called CaliforniaFIRST, and while not included in the pilot phase, it will include implementation of AB 474 in the full program launch so that water conservation improvements can be included.

Such a program could enable statewide economies of scale for program administration, financing costs and addressing legal issues. The pilot program is expected to launch between June and August 2010, followed by full program implementation in the last quarter of calendar year 2010. Program administration for both the pilot and the full program will be
provided. Each municipality would be responsible only for their locally incurred expenses for marketing, education and internal administration costs.

To participate in the pilot program, the City of Carmel-by-the-Sea must adopt a Resolution to join CaliforniaFIRST and pay the one time set-up fee. The City’s set-up fee will be no more than $10,000 and will be used for validation proceedings, data acquisition, systems configuration, and web portal customization. Thirteen counties, including Monterey County, have prepared a collaborative grant application to be submitted to the California Energy Commission for State Energy Program to cover the set-up fees and administration costs for all participants. Sacramento County is the lead applicant for this collaborative effort. CaliforniaFIRST program materials document that any city that wishes to discontinue participation in the program may do so at any time and without financial penalty.

FISCAL IMPACT
No impact for the City’s 2009-10 FY budget. Monterey County will seek grant funds through the California Energy Commission's State Energy Program to pay for the one-time CaliforniaFIRST program set-up fee and for marketing, education and administrative costs.

CITY COUNCIL
CITY OF CARMEL-BY-THE-SEA
RESOLUTION 2010-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING THE CITY TO JOIN THE CALIFORNIAFIRST MUNICIPAL FINANCE PROGRAM TO FUND ENERGY EFFICIENCY IMPROVEMENTS AND ALTERNATIVE ENERGY SYSTEMS

WHEREAS, the current economic crisis has placed California cities under incredible financial pressure and caused city officials to contemplate painful cuts, including reduction in the City’s work force, decreased maintenance and operations of public facilities, and reductions in
direct services to keep spending in line with declining revenues; and
WHEREAS, the California Statewide Communities Development Authority
(“California Communities”) is a joint exercise of powers authority the members of which include numerous cities and counties in the State of California, including the City of Carmel-by-the-Sea (the “City”); and

WHEREAS, California Communities has established the CaliforniaFIRST program
(the “CaliforniaFIRST Program”) to allow the financing of certain renewable energy, energy efficiency and water efficiency improvements (the “Improvements”) through the levy of contractual assessments pursuant to Chapter 29 of Division 7 of the Streets & Highways Code (“Chapter 29”) and the issuance of improvement bonds (the “Bonds”) under the Improvement Bond Act of 1915 (Streets and Highways Code Sections 8500 and following)
(the “1915 Act”) upon the security of the unpaid contractual assessments; and

WHEREAS, Chapter 29 provides that assessments may be levied under its
provisions only with the free and willing consent of the owner of each lot or parcel on which an assessment is levied at the time the assessment is levied; and

WHEREAS, the City desires to allow the owners of property within its jurisdiction (“Participating Property Owners”) to participate in the CaliforniaFIRST Program and to allow California Communities to conduct assessment proceedings under Chapter 29 and to issue Bonds under the 1915 Act to finance the Improvements; and

WHEREAS, California Communities will conduct assessment proceedings under
Chapter 29 and issue Bonds under the 1915 Act to finance Improvements;

WHEREAS, the territory within which assessments may be levied for the
CaliforniaFIRST Program shall be coterminous with the County’s official boundaries of record at the time of adoption of the ROI (the “Proposed Boundaries”); and

WHEREAS, the County will not be responsible for the conduct of any assessment proceedings; the levy or collection of assessments or any required remedial action in the case of delinquencies in such assessment payments; or the issuance, sale or administration of the Bonds or any other bonds issued in connection with the CaliforniaFIRST Program; and

WHEREAS, pursuant to Government Code Section 6586.5, a notice of public
hearing has been published once at least five days prior to the date hereof in a newspaper of general circulation in the County and a public hearing has been duly conducted by this City Council concerning the significant public benefits of the CaliforniaFIRST Program and the financing of the Improvements;

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carmel-by-the-Sea as follows:

Section 1. On the date hereof, the City Council of the City of Carmel-by-the-Sea held a public hearing and the hereby finds and declares that the issuance of bonds by California Communities in connection with the CaliforniaFIRST Program will provide significant public benefits, including without limitation, savings in effective interest rate, bond preparation, bond underwriting and bond issuance costs and reductions in effective user charges levied by water and electricity providers within the boundaries of the County.

Section 2. In connection with the CaliforniaFIRST Program, the City hereby consents to the conduct of special assessment proceedings by California Communities pursuant to Chapter 29 on any property within the Proposed Boundaries and the issuance of Bonds under the 1915 Act; provided, that
(1) Such proceedings are conducted pursuant to one or more Resolutions of
Intention in substantially the form of the ROI; and
(2) The Participating Property Owners, who shall be the legal owners of such property, execute a contract pursuant to Chapter 29 and comply with other applicable provisions of California law in order to accomplish the valid levy of assessments.

(3) The City will not be responsible for the conduct of any assessment
proceedings; the levy of assessments or any required remedial action in the case of delinquencies in such assessment payments; or the issuance, sale or administration of the Bonds or any other bonds issued in connection with the CaliforniaFIRST Program.

(4) The issuance of Bonds will occur following receipt of a final judgment in a validation action filed by California Communities pursuant to Code of Civil Procedure Section 860 that the Bonds are legal obligations of California Communities.

Section 3. Pursuant to the requirements of Chapter 29, California Communities has prepared and will update from time to time the “Program Report” for the CaliforniaFIRST Program (the “Program Report”), and California Communities will undertake assessment proceedings and the financing of Improvements as set forth in the Program Report.

Section 4. The appropriate officials and staff of the City are hereby authorized and directed to make applications for the CaliforniaFIRST program available to all property owners who wish to finance improvements; provided, that California Communities shall be responsible for providing such applications and related materials at its own expense.

The following staff persons, together with any other staff persons chosen by the City Administrator from time to time, are hereby designated as the contact persons for California Communities in connection with the CaliforniaFIRST Program:
• Community Planning and Building Director
• Building Official
• Assistant City Administrator/City Clerk

Section 5. The appropriate officials and staff of the City are hereby authorized and directed to execute and deliver such closing certificates, requisitions, agreements and related documents as are reasonably required by California Communities in accordance with the Program Report to implement the CaliforniaFIRST Program for Participating Property Owners.

Section 6. Upon receipt of the State Energy Program grant funds, the appropriate officials and staff of the City are hereby authorized and directed to pay California Communities a fee in an amount not to exceed $10,000.00, which California Communities will use to pay for the costs of implementing the CaliforniaFIRST Program in the City, including the payment of legal costs incurred in connection with judicial validation of the CaliforniaFIRST Program.

Section 7. The City Council hereby finds that adoption of this Resolution is not a “project” under the California Environmental Quality Act, because the Resolution does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment, as contemplated by Title 14, California Code of Regulations, Section 15378(b)(4).

Section 8. This Resolution shall take effect immediately upon its adoption. The City Clerk is hereby authorized and directed to transmit a certified copy of this resolution to the Secretary of California Communities.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA
on this 2nd day of February 2010 by the following roll call vote:

AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:

SIGNED:

_________________________
SUE McCLOUD, MAYOR

ATTEST:

____________________________
Heidi Burch, City Clerk