Property Assessed Clean Energy (PACE) Bond Reserve Fund – Senate Bill (SB) 77
On April 21, 2010 Governor Arnold Schwarzenegger signed Senate Bill 77 (Pavley) into law.
SB 77 authorizes the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to develop and administer a state Property Assessed Clean Energy (PACE) Bond Reserve Program (the Program) to assist in reducing the overall finance costs to consumers. The purpose of the Program is to assist local jurisdictions in financing the installation of distributed generation of renewable energy sources or energy or water efficiency improvements permanently affixed on residential and commercial properties through the use of a voluntary contractual assessment.
The full text of SB 77 can be found on the California Legislative Counsel’s website.
What is the PACE Bond Reserve Program?
Launched in California in 2008, PACE programs provide assessments, similar to a loan, to property owners to finance energy retrofits. The assessments can typically be repaid over 20 years via an annual assessment on the property tax bill. PACE bonds can be issued by municipal financing districts to assist in financing these loans.
If developed and implemented, the PACE Bond Reserve Program will be used to reduce the overall costs of PACE bonds issued by a local jurisdiction. Specifically, SB 77 authorizes CAEATFA to use up to $25 million to finance reserves for qualifying PACE bonds. The purpose is to minimize the cost of the PACE bonds, which in turn could potentially reduce the cost of underlying PACE assessments. As a result, it is anticipated that these savings would be passed on to the consumer.
Status of Program Development
In June 2010, CAEATFA held one public workshop in Van Nuys, California. The focus of the workshop was to obtain initial input from local jurisdictions and other stakeholders familiar with PACE financing. Soon after CAEATFA began the initial outreach to develop the Program, several legal issues raised by the Federal Housing Financing Agency (“FHFA”) caused many local jurisdictions to put a hold on developing, launching and administering their PACE residential programs. CAEATFA has continued to monitor the legal and legislative efforts at the federal level. As the federal issues are resolved, CAEATFA will consider launching the rulemaking process to establish the PACE Bond Reserve Program.
To learn more about CAEATFA’s ongoing efforts to develop the PACE Bond Reserve Program, please refer to CAEATFA’s 2011 Annual Report on SB 77.
If you have any questions about the SB 77 Program, please contact: