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RESOLUTION NO. 2015-191 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA CONSENTING TO INCLUSION OF PROPERTIES WITHIN THE CITY’S JURISDICTION IN THE CALIFORNIA HERO PROGRAM TO FINANCE DISTRIBUTED GENERATION RENEWABLE ENERGY SOURCES, ENERGY AND WATER EFFICIENCY IMPROVEMENTS AND ELECTRIC VEHICLE CHARGING INFRASTRUCTURE, APPROVING AN AMENDMENT TO THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS JOINT POWERS AGREEMENT TO ADD THE CITY AS A MEMBER, AND APPROVING AN INDEMNITY AGREEMENT WITH THE PROGRAM ADMINISTRATOR
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
On June 6, 2015, per Resolution 2015-115, City Council approved Property Assessed Clean Energy (PACE) Program Guidelines to help guide expansion of PACE program offerings available to Chula Vista property-owners. Currently, Chula Vista property-owners can only choose between two different PACE programs: the local Clean Energy Chula Vista program (administered by Ygrene Energy Fund) and the statewide CaliforniaFIRST program (administered by the California Statewide Community Development Authority & Renewable Funding). The City is adding the HERO Program as another PACE program offering in order to provide property-owners with more choices, potentially create more competitive rates in the market, and maximize the number of completed energy and water efficiency retrofits in the community.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
BOARD/COMMISSION RECOMMENDATION
On October 13, 2014, the Resource Conservation Commission recommended that the City Council expand Property Assessed Clean Energy (PACE) program offerings in Chula Vista to provide greater customer choice and to maximize energy and water efficiency retrofit opportunities.
DISCUSSION
As part of its Climate Action Plan implementation, the City has been pursuing the establishment of Property Assessed Clean Energy (PACE) programs, which allow property-owners to finance energy and water-saving improvements through a voluntary tax assessment on their property. The resulting utility savings are used to help offset the new assessment and the assessment obligations generally transfer with the property upon sale, because the new owner continues to benefit from the efficiency improvements. PACE programs were authorized under California Assembly Bill 811 and Senate Bill 555 and have successfully facilitated building energy and water upgrades in over 230 California communities, while creating local economic development benefits. Typically, third-party administrators, on behalf of host jurisdictions or joint powers authorities, manage the day-to-day program operations including contractor outreach, property-owner enrollment, and private financing coordination.
The City established its first PACE program in December 2013 and has since been approached by other providers who would like to offer their programs to City residents. One of those is the HERO Program (“HERO”). HERO would allow property owners in the City another PACE financing option. If a property owner chooses to participate, the installed improvements will be financed by the issuance of bonds by a joint powers authority, Western Riverside Council of Governments (“WRCOG”). The bonds are secured by a voluntary contractual assessment levied on such owner’s property, with no recourse to the City. Participation in the program is voluntary. Property owners who wish to participate in the program agree to repay the amount borrowed through the voluntary contractual assessment collected together with their property taxes. This financing is available for eligible improvements on both residential and non-residetnial properties.
The HERO Program (for PACE financing) has been very successful in Western Riverside County, since its launch in late 2011; the Program has funded over $570 million in projects for 29,000 projects to date. Because of its success, the California HERO Program is now being offered to provide additional California cities and counties with a turnkey program that saves significant time, cost and local resources that would otherwise be needed to develop a new local program. Over 290 jurisdictions in California have approved the HERO Program for their residents to date. The California HERO program complies with the City’s program and underwriting guidelines that ensure high levels of program accountability and consumer protection.
Participants in the PACE program will be assessed via their regular property tax bill. The County of San Diego has entered into an Agreement for Collection of Taxes and Special Assessments with WRCOG (see Attachment 1 to this report). Funds will be collected by the County of San Diego and remitted directly to WRCOG. The City of Chula Vista will have no role in the placement of PACE assessments on the tax roll or the remittance of funds collected to WRCOG.
Approval of this resolution will expand PACE program choices from two to three. Staff will be submitting additional PACE program offerings for City Council’s consideration in the future.
Adoption of the resolution will approve an amendment to the WRCOG Joint Powers Agreement (the “Amendment”) to add the City as an Associate Member to the Authority for the purpose of facilitating implementation of the HERO Program in the City, and will also approve an indemnity agreement with the HERO Program’s third party administrator, Renovate America, Inc (the “Agreemet”). The Amendment and the Agreement require the WRCOG and Renovate America, Inc. to defend and indemnify the City and to conduct the HERO Program in accordance with state and local law, and the City’s PACE Program Guidelines.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the 500-foot rule found in California Code of Regulations Title 2, section 18705.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. PACE programs support the Healthy Community goal as they fund energy and water upgrades in the community, which is a key objective under Initiative 3.2.1. - “Design and implement innovative environmental & conservation programs.”
CURRENT YEAR FISCAL IMPACT
There is no net fiscal impact to the City’s General Fund from adding California HERO Program as another PACE program offering. PACE programs are implemented at no-cost to the City and staff time associated with reviewing additional PACE programs would be reimbursed through the City’s Local Government Partnership with San Diego Gas & Electric.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact to the City’s General Fund from expanding PACE program offerings.
ATTACHMENTS
1. County of San Diego Agreement for Collection of Taxes and Special Assessments with WRCOG
2. Addendum to JPA (Exhibit A)
3. Indemnification Agreement (Exhibit B)
Staff Contact: Robert Beamon