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BOARD STANDING COMMITTEES - 03092015 - Internal Ops Cte Min
INTERNAL OPERATIONS COMMITTEE March 9, 2015 2:30 P.M. 651 Pine Street, Room 101, Martinez Supervisor Karen Mitchoff, Chair Supervisor John Gioia, Vice Chair Agenda Items: Items may be taken out of order based on the business of the day and preference of the Committee 1.Introductions 2.Public comment on any item under the jurisdiction of the Committee and not on this agenda (speakers may be limited to three minutes). 3. CONSIDER approving nomination of Patricia Mantelli Bristow (Byron) to the County seat on the Contra Costa Transportation Authority Citizens Advisory Committee to a four-year term ending on March 31, 2019. (Jamar Stamps, Conservation and Development Department) 4. INTERVIEW four candidates and DETERMINE nomination for the At Large #1 seat on the Aviation Advisory Committee, for recommendation to the Board of Supervisors. (Keith Freitas, Airports Manager) 5. CONSIDER follow-up report from the Conservation and Development Department on the establishment of Property Assessed Clean Energy (PACE) financing districts in Contra Costa County. (Jason Crapo, Conservation and Development Department) 6. CONSIDER report and recommendations from the Behavioral Health Director regarding the roles of the Health Services Director's Consolidated Planning Advisory Workgroup and the Mental Health Commission of the Board of Supervisors in the development and oversight of the Mental Health Services Act Three-Year Plan and annual updates thereof. (Cynthia Belon, Behavioral Health Services Director) 7.The next meeting is currently scheduled for April 13, 2015. 8.Adjourn 1 The Internal Operations Committee will provide reasonable accommodations for persons with disabilities planning to attend Internal Operations Committee meetings. Contact the staff person listed below at least 72 hours before the meeting. Any disclosable public records related to an open session item on a regular meeting agenda and distributed by the County to a majority of members of the Internal Operations Committee less than 96 hours prior to that meeting are available for public inspection at 651 Pine Street, 10th floor, during normal business hours. Public comment may be submitted via electronic mail on agenda items at least one full work day prior to the published meeting time. For Additional Information Contact: Julie DiMaggio Enea, Committee Staff Phone (925) 335-1077, Fax (925) 646-1353 julie.enea@cao.cccounty.us 2 INTERNAL OPERATIONS COMMITTEE 3. Meeting Date:03/09/2015 Subject:NOMINATION TO THE CONTRA COSTA TRANSPORTATION AUTHORITY CITIZEN ADVISORY COMMITTEE Submitted For: John Kopchik, Director, Conservation & Development Department Department:Conservation & Development Referral No.: IOC 15/5 Referral Name: ADVISORY BODY RECRUITMENT Presenter: Jamar Stamps Contact: Jamar Stamps (925) 674-7832 Referral History: The Contra Costa Transportation Authority Citizens Advisory Committee (CCTA CAC) reviews transportation issues pertaining to Contra Costa County, advising and providing recommendations to the Transportation Authority's Board. Among other transportation issues the committee will assist the Authority in reviewing the Biennial Growth Management Compliance checklists submitted by local jurisdictions. The IOC reviews nominations to the County Representative seat. The County’s previous citizen appointee, Jeff Altman, resigned in September 2014. Referral Update: In September 2014, the Conservation and Development Department advertised a vacancy on the CCTA CAC and received one application. The attached memo contains DCD’s recommended appointment. Recommendation(s)/Next Step(s): APPROVE nomination of Patricia Mantelli Bristow (Byron) to the County seat on the Contra Costa Transportation Authority Citizens Advisory Committee to a four-year term ending on March 31, 2019. Fiscal Impact (if any): No County cost. If authorized, CAC members may be reimbursed by the CCTA for travel expenses incurred to attend meetings. Attachments DCD Recruitment Material for CCTA CAC Candidate Application_CCTACAC_Patricia Mantelli Bristow 3 4 CONTRA COSTA COUNTY DEPARTMENT OF CONSERVATION & DEVELOPMENT 30 Muir Road Martinez, CA 94553 Telephone: 674-7832 Fax: 674-7258 TO: Members, Board of Supervisors Members, Municipal Advisory Council FROM: John Kopchik, Interim Director By: Jamar Stamps, Planner DATE: September 5, 2014 SUBJECT: Vacancy on the Citizen Advisory Committee of the Contra Costa Transportation Authority This is to inform you that there is currently a vacancy for County representation on the Citizen Advisory Committee (CAC) of the Contra Costa Transportation Authority (CCTA). The CCTA CAC is comprised of 23 members, 20 of whom are individually appointed by the 20 local governments within Contra Costa (The County, cities and towns); and, three “at-large” members nominated by community-based stakeholder organizations within Contra Costa, and subsequently appointed to the CAC by CCTA. All CAC members serve a four-year term in volunteer capacity. The Department of Conservation and Development (DCD) is seeking candidates who reside in unincorporated areas to represent the County on the CCTA CAC. Relevant information on the function of the CAC and a copy of the ordinance and by-laws governing the Committee is enclosed for your reference. This information can also be found on the DCD website at http://www.contracosta.ca.gov/. In addition, Contra Costa Television (CCTV) will forward a news release to various daily and weekly newspapers and publications for countywide public advertisement. DCD is accepting applications until Friday, October 10, 2014. Interested candidates can either apply on line, or download the application and fax the completed form to DCD. Should you have any questions, please contact Jamar Stamps at (925) 674-7832, or via email at jamar.stamps@dcd.cccounty.us. Enclosures cc: Clerk of the Board CAO GTC Staff Better Government Ordinance file J. Cunningham, DCD A. Bhat, DCD 5 Call for a County Representative Citizen Advisory Committee of the County’s Transportation Authority Contra Costa County seeks a resident from an unincorporated area to fill a vacancy on the Citizen Advisory Committee (CAC) of the Contra Costa Transportation Authority (CCTA). The CAC members serve a four-year term in a volunteer capacity and are eligible to receive travel expenses. The CAC meetings are held at CCTA on the fourth Wednesday of each month at 6:00 p.m. The CCTA offices are located at 2999 Oak Road, Suite 100, Walnut Creek, CA 94597. The Transportation Authority maintains its standing CAC in order to provide citizen perspective, participation and involvement in CCTA’s $3 billion voter-approved Transportation Expenditure Plan and Growth Management Program. The CAC members have an opportunity to learn about and influence transportation and growth issues within Contra Costa County and in other jurisdictions through scheduled presentation by transportation experts, advocates and CCTA staff. CCTA CAC is comprised of 23 members, 20 of whom are individually appointed by the 20 local governments within Contra Costa (The County, cities and towns); and, three “at- large” members nominated by community-based stakeholder organizations within Contra Costa, and subsequently appointed to the CAC by CCTA. The CAC Charter and Bylaws are provided below for your reference. For further information regarding transportation projects and programs, please visit the CCTA website at www.ccta.net. Should you have any questions, please call (925) 674-7832. To apply for this vacant CAC position, you can fill out the application form online at http://www.contracosta.ca.gov/ under Departments>Conservation and Development > Committees and Commissions. Alternatively, you can download the application and fax the completed form to the attention of Jamar Stamps at (925) 674-7258. Interested residents should apply by Friday, October 10, 2014. 6 7 8 9 10 11 12 13 NEWS RELEASE Contra Costa County Department of Conservation and Development For Immediate Release: Friday, September 5, 2014 Contact: Jamar Stamps, Department of Conservation and Development (925) 674-7832 Citizen Advisory Committees on Transportation Seeks New Representative The Contra Costa County Board of Supervisors is seeking one resident to serve on the Citizen Advisory Committee (CAC) as Public Representative on behalf of the County. The Contra Costa Transportation Authority (CCTA) CAC reviews transportation programs and plans throughout the County with the objective of advising and providing recommendations to the Authority’s Board of Directors. The individual selected for this position must live in the unincorporated area of the County and be available to attend committee meetings on the 4th Wednesday of every month at 6:00 p.m. at the CCTA offices in Walnut Creek. CCTA maintains its standing CAC in order to provide citizen perspective, participation and involvement in the $3 billion voter-approved Transportation Expenditure Plan and Growth Management Program. The CAC members have an opportunity to learn about and influence transportation and growth issues within Contra Costa County and in other jurisdictions through scheduled presentations by transportation experts, advocates and CCTA staff. The deadline to apply is Friday, October 10, 2014. To request an application or for more information call (925) 674-7832 or go to the Department of Conservation and Development website at: http://www.co.contra-costa.ca.us/ 14 Citizens Advisory Committee Application The Contra Costa Transportation Authority (CCTA) maintains a standing Citizens Advisory Committee (CAC) to provide citizen perspective, participation and involvement in the CCTA’s $3 billion voter-approved Transportation Expenditure Plan and Growth Manage- ment Program. The CAC is comprised of 23 members: 20 are appointed by each of the 20 local jurisdictions within Contra Costa (the cities, towns, and the County); three “at- large” members are nominated by community-based stakeholder organizations within Contra Costa, and subsequently appointed to the CAC by CCTA. To become a member of the CAC, you must reside within the local jurisdiction making the appointment, and your Council or Board must take formal action to confirm your membership on the Committee. At-large members should be residents of Contra Costa. Meetings are scheduled for the fourth Wednesday of the month at 6:30 p.m. in the CCTA’s Walnut Creek offices at 2999 Oak Road, Suite 100. CAC members are ap- pointed to serve for a four-year term without compensation. Members will, however, re- ceive reimbursement for travel expenses to and from the CAC meetings. For further information regarding transportation projects and programs Contra Costa, please visit the CCTA website at www.ccta.net. To view the CAC Charter and Bylaws, or to download the Word® file for this application, go to http://www.ccta.net/GEN/downloads.htm. This application is for (check one): Local Jurisdiction At-large member Name of Appointing Agency/Organization: ___________________________________________ Name Address Street City Zip Code Phone E-mail Fax How many years have you lived in Contra Costa County? Are you registered to vote in Contra Costa County? Yes No Education 15 Contra Costa Transportation Authority CAC Application – Page 2 Briefly describe your interest in serving on the Citizens Advisory Committee, citing any re- levant volunteer or work experience. List and briefly describe any participation in volunteer, community or professional organi- zations that are relevant to your candidacy for the Citizens Advisory Committee. What is your particular interest in transportation? I have sufficient time to devote to this responsibility and will attend the required meetings if appointed to the Citizens Advisory Committee. Applicant’s Signature Date 16 Contra Costa Transportation Authority CAC Application – Page 3 INSTRUCTIONS APPLICANTS: Submit your completed application directly to your city or town of resi- dence or appointing organization. JURISDICTIONS/STAKEHOLDER ORGANIZATIONS: Following formal action by your Council or Board, please forward a copy of your candidate’s application and appointment con- firmation letter to: CAC Staff Liaison – Diane Bodon Contra Costa County Transportation Authority 2999 Oak Road, Suite 100 Walnut Creek, CA 94597 dbodon@ccta.net Phone 925-256-4720 17 18 19 INTERNAL OPERATIONS COMMITTEE 4. Meeting Date:03/09/2015 Subject:CANDIDATE INTERVIEWS FOR AVIATION ADVISORY COMMITTEE Submitted For: Keith Freitas, Airports Director Department:Airports Referral No.: IOC 15/5 Referral Name: ADVISORY BODY RECRUITMENT Presenter: Keith Freitas Contact: Natalie Oleson (844) 359-8687 Referral History: The Aviation Advisory Committee was established by the Board of Supervisors in 1977. It's current charge is to provide advice and recommendations to the Board of Supervisors on the aviation issues related to the economic viability and security of airports in Contra Costa County and to advance and promote the interests of aviation and protect the general welfare of the people living and working near the airport and the County in general. The IOC interviews candidates for the two At Large seats on the committee. The At Large #1 seat became vacant when the term expired on February 28, 2015. Seat terms are three years. Referral Update: A recruitment conducted by the Airports Department garnered four applications: Elizabeth Clough (Byron) Maurice Gunderson (Orinda) Charles Kreling Gary Olsen (Pacheco) All of the applicants were invited to interview with the IOC today. Recommendation(s)/Next Step(s): INTERVIEW four candidates and DETERMINE nomination for the At Large #1 seat on the Aviation Advisory Committee, for a three-year term ending on February 28, 2018. Fiscal Impact (if any): None. Attachments Candidate Application_Elizabeth Clough_AAC 20 Candidate Application_Maurice Gunderson_AAC Candidate Application_Charles Kreling_AAC Resume_Charles Kreling Candidate Application_Gary Olsen_AAC 21 22 23 24 25 26 27 28 29 30 31 THIS FORM IS A PUBLIC DOCUMENT BOARD, COMMITTEE OR COMMISSION NAME AND SEAT TITLE YOU ARE APPLYING FOR: ____________________________________________________ ____________________________________________________ PRINT EXACT NAME OF BOARD, COMMITTEE, OR COMMISSION PRINT EXACT SEAT NAME (if applicable) 5. EDUCATION: Check appropriate box if you possess one of the following: High School Diploma G.E.D. Certificate California High School Proficiency Certificate Give Highest Grade or Educational Level Achieved________________________________________________ Names of colleges / universities attended Course of Study / Major Degree Awarded Units Completed Degree Type Date Degree Awarded Semester Quarter A) Yes No B) Yes No C) Yes No D) Other schools / training completed: Course Studied Hours Completed Certificate Awarded: Yes No For Reviewers Use Only: Accepted Rejected Contra Costa County Contra Costa County CLERK OF THE BOARD 651 Pine Street, Rm. 106 Martinez, California 94553-1292 PLEASE TYPE OR PRINT IN INK (Each Position Requires a Separate Application) BOARDS, COMMITTEES, AND COMMISSIONS APPLICATION MAIL OR DELIVER TO: 1. Name:_______________________________________________________________________ (Last Name) (First Name) (Middle Name) 2. Address: ________________________________________________________ (No.) (Street) (Apt.) (City) (State) (Zip Code) 3. Phones: _________________________________________________________ (Home No.) (Work No.) (Cell No.) 4. Email Address: ____________________________________________ For Office Use Only Date Received: For Reviewers Use Only: Reason: Education Experience Incomplete Other 32 THIS FORM IS A PUBLIC DOCUMENT 6. PLEASE FILL OUT THE FOLLOWING SECTION COMPLETELY. List experience that relates to the qualifications needed to serve on the local appointive body. Begin with your most recent experience. A resume or other supporting documentation may be attached but it may not be used as a substitute for completing this section. A) Dates (Month, Day, Year) From To Total: Yrs. Mos. Hrs. per week_____ . Volunteer Title Duties Performed Employer’s Name and Address B) Dates (Month, Day, Year) From To Total: Yrs. Mos. Hrs. per week_____ . Volunteer Title Duties Performed Employer’s Name and Address C) Dates (Month, Day, Year) From To Total: Yrs. Mos. Hrs. per week_____ . Volunteer Title Duties Performed Employer’s Name and Address D) Dates (Month, Day, Year) From To Total: Yrs. Mos. Hrs. per week_____ . Volunteer Title Duties Performed Employer’s Name and Address 33 34 THIS FORM IS A PUBLIC DOCUMENT THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA and for Special Districts, Agencies and Authorities Governed by the Board Adopted Resolution no. 2011/55 on 2/08/2011 as follows: WHEREAS the Board of Supervisors wishes to avoid the reality or appearance of improper influence or favoritism; IN THE MATTER OF ADOPTING A POLICY MAKING FAMILY MEMBERS OF THE BOARD OF SUPERVISORS INELIGIBLE FOR APPOINTMENT TO BOARDS, COMMITTEES OR COMMISSIONS FOR WHICH THE BOARD OF SUPERVISORS IS THE APPOINTING AUTHORITY NOW, THEREFORE, BE IT RESOLVED THAT the following policy is hereby adopted: 1. Mother, father, son, and daughter; 2. Brother, sister, grandmother, grandfather, grandson, and granddaughter; I. SCOPE: This policy applies to appointments to any seats on boards, committees or commissions for which the Contra Costa Co unty Board of Supervisors is the appointing authority. II. POLICY: A person will not be eligible for appointment if he/she is rela ted to a Board of Supervisors’ Member in any of the following relationships: 3. Great-grandfather, great-grandmother, aunt, uncle, nephew, niece, great-grandson, and great-granddaughter; 4. First cousin; 5. Husband, wife, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepson, and stepdaughter; 6. Sister-in-law (brother’s spouse or spouse’s sister), brother-in-law (sister’s spouse or spouse’s brother), spouse’s grandmother, spouse’s grandfather, spouse’s granddaughter, and spouse’s grandson;; 7. Registered domestic partner, pursuant to Californi a Family Code section 297. 8. The relatives, as defined in 5 and 6 above, for a registered domestic partner. 9. Any person with whom a Board Member shares a financial interest as defined in the Political Reform Act (Gov’t Code §87103, Financial Interest), such as a business partner or business associate. 35 Charles J. Kreling, CMA, CHP Mobile Walnut Creek, CA 94598 Accounting/Finance/Audit/Compliance/Information Technology Leader An experienced compliance and audit professional with a focus on strategy, delivery and improvement of regulatory compliance and internal controls processes and procedures. High-value combination of business and information technology disciplines. Highly effective leader focused on prioritization, implementation and attainment of results via team development, coaching, and collaboration across diverse organizations. Specialties: Executive level leadership, strong technical skills in accounting, finance, internal controls, audit, SOX, compliance, risk management, NAIC Model Audit Rule (MAR), HIPAA Security, Meaningful Use and Information Technology. Professional Experience Independent Consultant 2014 - Present Audit, Compliance, Finance, SOX, Model Audit Rule, HIPAA, IT, SOC2 Bazell Technologies, Independent – Executive dashboards, Business Planning, IT Strategy. Abbyy, Accretive Solutions – HIPAA Security. Castlight Health, BVOH – SOC2 policies & procedures. GoodData, Accretive Solutions – HIPAA Security/Privacy risk analysis. Autodesk, Accretive Solutions – IT SOX, IT Compliance Strategy. Prothena, Accretive Solutions – IT SOX. Wells Fargo Bank, Accretive Solutions – Loan Portfolio Compliance. Kaiser Permanente Information Technology 2012 - 2014 Executive Director, HIPAA Security Developed and achieved a comprehensive, risk-based strategy for Kaiser’s HIPAA Security compliance program. Provided leadership, direction, and oversight for technology-related aspects of the HIPAA Omnibus Rule. Led compliance with the HIPAA Security Rule ensuring privacy and security of member electronic protected health information (ePHI). Collaborated across diverse organizations including information technology and business senior leadership, the National Compliance Office, Internal Audit Services, the SOX PMO, Medical Group leadership, and Finance. Combined disparate groups into an integrated team of twenty-four professionals while promoting nine individuals and creating a high performing team. Kaiser Permanente 2007 - 2012 Executive Director, Sarbanes-Oxley Provided strategic leadership to the Company through the SOX Project Management Office (PMO) and facilitation for all key SOX functions: Scoping and Planning, Design, Documentation, Remediation, Testing and Evaluation. Led an integrated SOX/NAIC Model Audit Rule (MAR) initiative across all locations and for all business processes to completion for the first time at Kaiser Permanente. Attained the goal of no Material Weaknesses set by the SOX Governance Board. Partnered with Ernst & Young (SOX Advisors), KPMG (External Auditor) and multiple business leaders to achieve results through collaboration and teamwork across a diverse and complex organization. Subject matter expert on SOX, PCAOB and NAIC Model Audit Rule (MAR) internal controls guidelines for the Company. Authored whitepapers for complex SOX issues. Created and implemented a comprehensive, automated risk rating model that determined the testing strategy for the Company. 36 Charles J. Kreling Mobile Page 2 Developed the methodology for evaluation of control deficiencies for the Company and presented to senior leadership and the Audit and Compliance Committee. Communicated and presented regularly to senior leadership the status and issues related to the project and its outcomes. Recruited and developed a high performing team. Kaiser Permanente 2006 - 2007 Director, SOX Information Systems & Processes Partnered with Senior Leadership (SOX Governance Board, Audit and Compliance Committee) to create meaningful metrics and reporting for internal controls. Implemented a national compliance tool (Risk Navigator) enabling tracking, reporting and measurement of internal controls performance. Developed and implemented the first integrated executive reporting dashboards for SOX and other compliance areas. Hired and led a team of professionals. Developed and delivered national training materials and education for regional SOX teams, process leads and key project participants. Resources Global Professionals 2005 - 2006 Finance / Information Technology Consultant at Kaiser Permanente Provided leadership and solutions for Sarbanes Oxley (SOX) systems architecture and applications leading to efficient project management at the Company’s Corporate Program Offices and Northern California regional headquarters. Implemented Risk Navigator, an Enterprise Risk Management solution that provides data storage, reporting and accountability services to the entire enterprise wide SOX project. Member of key committees creating and deploying SOX project methodologies, plans , training and directions across the organization. Bazell Technologies Corporation 2002 - 2005 Chief Financial Officer, Chief Technology Officer Managed all accounting, financial reporting, administration, human resources and information technology functions. Key strategist in company turnaround from annual losses to profitability through process improvement, cost cutting, and faster, accurate information processing and presentm ent. Created and implemented custom software and database applications that improved productivity of operations and financial activities. Successfully m anaged relationships with banking and credit facilities. Led all finance and accounting activities during acquisition due diligence process. Past Experience Independent Consultant – Principal, Finance, Accounting, Information Technology Telocity - Senior Director Financial Information Systems AirTouch Communications - Director Financial Information Systems Pacific Bell - Applications Development Manager / Senior Accounting Manager Coopers & Lybrand - Senior Associate, EDP Auditor, Consultant Arthur Andersen & Co. - In-Charge Accountant, EDP Auditor 37 Charles J. Kreling Mobile Page 3 Education and Certifications Certified Management Accountant (CMA) Certified HIPAA Professional (CHP) B.S. Business Administration, University of California Berkeley, Summa Cum Laude, University Certificate of Distinction, University Medal Finalist Professional and Community Affiliations Institute of Management Accountants, Past Treasurer, Director of Corporate Relations and Director of Academic Relations United States Coast Guard Auxiliary, Staff Officer / Instructor, Flotilla 1-9, US Coast Guard Air Station San Francisco San Francisco Sheriff’s Air Squadron, Special Deputy, Pilot, Past Commander Federal Aviation Administration, Licensed Pilot, Advanced/Instrument Ground Instructor Contra Costa County Merit Board, Chair (similar to a civil service commission) 38 39 40 41 INTERNAL OPERATIONS COMMITTEE 5. Meeting Date:03/09/2015 Subject:FOLLOW-UP REPORT ON PROPERTY ASSESSED CLEAN ENERGY (PACE) FINANCING DISTRICTS Submitted For: John Kopchik, Interim Director, Conservation & Development Department Department:Conservation & Development Referral No.: IOC 15/9 Referral Name: PACE Financing Districts Presenter: Jason Crapo, County Building Official Contact: Jason Crapo (925) 674-7722 Referral History: California law allows cities, counties, and other authorized public agencies to establish voluntary financing districts to facilitate energy and water efficiency improvements to existing residential and commercial properties. Such financing is commonly referred to as Property Assessed Clean Energy (PACE) financing. Once established, property owners within the boundaries of such a district can opt to borrow funds from the district to make energy efficiency improvements, and repay the funds in installments on their property tax bill. PACE financing districts represent a form of lending activity that can generate both environmental and economic benefits to County residents. However, the extent of these benefits is uncertain because PACE financing is relatively new and the degree to which it might be utilized by property owners is unknown. Furthermore, because of regulatory intervention by the federal government to discourage the use of PACE financing, such programs carry potential risks and costs. Therefore, the County should carefully review the design of such programs before authorizing them to become operational. On June 22, 2010, the Board of Supervisors adopted Resolution No. 2010/331 authorizing the formation of a PACE financing district for the CalforniaFIRST program, a partnership between a private financial services firm called Renewable Funding and the joint powers authority, California Statewide Communities Development Authority (CSCDA), of which Contra Costa County is a member. CSCDA is a public agency having the legal authority to establish a PACE financing district within the County. Shortly thereafter, however, the Federal Housing Finance Agency (FHFA) issued a statement advising Fannie Mae and Freddie Mac to avoid buying mortgages with PACE assessments and hinted at more drastic actions, such as finding PACE homeowners in default under their mortgages. These actions stalled the development of residential PACE programs throughout most of the State. Many developments related to clean energy financing have occurred since the Board's resolution to join CaliforniaFIRST in 2010. These developments, which are discussed throughout this report, include: 42 regulatory intervention by the federal government with consequential prohibitions and prospective negative actions, lawsuits challenging this federal intervention, in which the federal government's right to intervene was upheld, changes to State law expanding the authority to form and operate such financing districts, the establishment of a State-funded loan loss reserve for PACE loans, the emergence of additional firms proposing to operate Clean Energy Financing Districts within the county, and the emergence of conventional financing specifically for energy retrofit projects. In light of the rapidly changing landscape of developments in energy retrofit financing, the Board of Supervisors, on August 14, 2012, referred to the IOC a re-evaluation of establishing PACE financing districts within the county. The matter was taken up by the IOC in December 2012, but as new information became available regarding legal and federal regulatory issues, Supervisor Mitchoff, who introduced the matter to the Board for study, decided to withdraw her committee referral. Resolution in 2013 of the lawsuit filed by the State of California et al vs. FHFA, in favor of the FHFA, and also the establishment by the State of a loan loss reserve for PACE loans, have revived interest in offering PACE lending as an option to residential property owners within the county. The Board on September 9, 2014 referred PACE district financing to the IOC for further study and recommendation, to consider recent developments on this issue. District Formation and Property Owner Participation State law allows for the formation of a PACE district either under the Improvement Act of 1911 as amended by AB 811 or the Mello-Roos Community Facilities Districts Act of 1982 as amended by SB 555, for the purpose of financing energy or water efficiency improvements to existing residential and commercial properties. Once established, the district would raise capital either through selling bonds or securing financing from banks or other lenders. The raised capital would be made available to finance energy efficiency improvements on private property. If the County were to establish a PACE district, property owners within the district boundary could voluntarily opt into the district by entering into a contract with the County. By entering into such a contract, a property owner would be able to borrow funds from the district to construct energy or water efficiency improvements. The loan would be repaid in installments collected on property tax bills. If the property owner were to default on the loan, the County would have the authority to foreclose on the property to collect the outstanding balance. Demand for PACE Financing Uncertain PACE financing benefits property owners by providing an additional source of capital to fund energy efficiency improvements. Such lending activity also has the potential to produce indirect public benefits that are consistent with County policy objectives. Improved energy efficiency on private property reduces greenhouse gas emissions and the associated negative impacts of climate change, consistent with the County’s Climate Action Plan. Construction of energy and water efficiency improvements on private property also stimulates the local economy, expanding employment and increasing tax revenue for the County. However, the extent to which PACE financing may generate public and private benefits within the County is unknown. PACE is a relatively new financial product, and the market for the services 43 offered by PACE districts is still evolving. PACE financing is in competition with other established forms of energy efficiency financing, such as equipment leasing and conventional bank lending, that offer competitive financing terms (see examples in Attachments F and G). As the housing market recovers and home owners gain equity in their property, more will qualify for conventional financing, such as an equity line of credit. In light of the uncertain public demand for PACE financing, and the sensitivity of the free market, which is beginning to respond with competitive conventional financing options that do not conflict with FHFA regulations, the County should be judicious in expending its resources to form and operate a PACE program. Federal Intervention to Regulate Residential PACE In 2010, soon after the County adopted a resolution to participate in CaliforniaFIRST, the FHFA intervened and took the position that PACE financing represents a form of lending that is detrimental to the mortgage industry, and directed Fannie Mae and Freddie Mac to restrict their purchase of mortgages where PACE districts exist (Attachment A). Fannie Mae and Freddie Mac subsequently stopped purchasing mortgages for properties that had been opted into PACE districts (Attachment B). The federal government’s assertion that PACE financing has an adverse impact on mortgage lenders results from the senior position the PACE lien has over other debts on the property, such as a mortgage or other forms of private lending. The federal government argues that the senior position of a PACE lien undermines the credit value of other debt on a property, such as a mortgage. FHFA’s actions have created negative financial impacts for property owners with PACE loans. Due to FHFA’s actions and resulting decisions by Fannie Mae and Freddie Mac to cease purchases of mortgages for properties with PACE liens, home owners have sometimes been required to pay off their PACE loans in order to obtain new mortgage financing on their property, as is typically necessary to sell a home or refinance an existing mortgage. For residential properties, this requirement countervails one of the primary features of PACE financing, which is that the loan obligation attaches to the property rather than the initiating property owner. However, FHFA rules notwithstanding, the PACE industry reports that the banks are permitting the transfer of the PACE lien during sale and refinancing. In November 2014 we updated the Committee on several new developments: State and Federal Officials in Continuing Disagreement Regarding PACE Shortly after FHFA intervened to regulate residential PACE lending in 2010, the State of California and several local jurisdictions, including Sonoma County, litigated against the federal government over its regulatory intervention into this area, arguing that FHFA had not followed the required rulemaking process for establishing such regulation. The State ultimately lost this lawsuit in federal court in 2013. Failing to overturn FHFA’s position in court, the State has subsequently attempted to address FHFA’s concerns regarding the negative impacts of PACE on the mortgage industry by establishing a PACE Loss Reserve Program to insure mortgage lenders against financial losses resulting from PACE liens (Attachments C ahd H). The creation of California’s Loss Reserve Program has resulted in renewed interest in residential PACE lending throughout the state. This program represents a positive step by the State to provide appropriate regulation of the emerging PACE industry to ensure basic standards of lending criteria and program effectiveness are being achieved. However, despite these efforts, FHFA remains opposed to residential PACE lending and 44 continues to prevent Fannie Mae and Freddie Mac from purchasing mortgages on properties with a PACE lien. This position was reiterated in a recent letter from the Director of FHFA to Governor Brown (Attachment D). The ongoing dispute between the State of California and FHFA places local jurisdictions that implement residential PACE programs and consumers who subordinate their mortgage loan with a PACE loan at risk of potential negative action by FHFA. The magnitude of this risk is unknown. However, FHFA’s General Counsel has recently sent letters to county counsels in California, such as the County Counsel for Santa Clara County (Attachment E) requesting that counties participating in PACE disclose the potential adverse implications of PACE loans to property owners. City Participation in PACE Programs Most of the PACE lenders do not require formation of a county PACE financing district as a prerequisite for city participation. CalforniaFirst recently announced that in early 2015 it will, likewise, offer individual cities the option to participate in CaliforniaFirst without participation by the county in which the city is located. Free Market is Responding For both the lease and purchase of solar panels for residential properties, other types of private financing are emerging that will be in direct competition with PACE financing (Attachment F). While qualifying for PACE financing is easier than conventional financing, the interest rates for PACE financing are generally 1-2% higher than comparable conventional financing and are repaid in fewer installments and possibly over longer periods of time. Referral Update: At the conclusion of our November 2014 report and after public comment and discussion including receipt of written public comment (Attachment I), the Committee asked that this matter be brought back in March 2015 and that the following information be gathered by staff, PACE lenders/administrators, mortgage lenders, and the realtors' association: How many counties and cities have implemented PACE Programs and what are the populations of those jurisdictions? Of the counties that have implemented a PACE program(s), which, if any, are Teeter counties? 1. From the PACE lenders, what is your monitoring and foreclosure process for Teeter counties? 2. With regard to the State's PACE loss reserve, what constitutes a default that is covered by the reserve? Is the lender not being paid or the tax lien not being paid? (This is significant for Teeter counties.) 3. In those counties or cities that obtained indemnification agreements, what did the indemnification cover? In the case of a JPA, who is the indemnifying party? 4. What is the measurable increase in property tax revenue due to the energy efficiency upgrades? Assessor/industry. 5. What problems do mortgage lenders report regarding mortgage sales and refinancing of properties withe PACE liens? 6. Number of PACE loan defaults by implementing jurisdiction and how much was defaulted?7. What remains of the State of California's PACE loan loss reserve and what is the mechanism to replenish the reserve? Is the fund protected from seizure or the whims of the state budget process? 8. What is the position of the local real estate association boards on PACE financing? 9. 45 What is the position of the local real estate association boards on PACE financing? 9. What happens when a new buyer doesn't want to assume the PACE lien?10. What financing alternatives to PACE currently exist for energy efficiency upgrades?11. How is the property owner protected from being misled or inadequately informed of the possible consequences of PACE financing? 12. How many PACE lienholders were able to sell/refinance since the settlement of the FHFA lawsuit without having to repay the entire PACE loan balance? How many instances have occurred of a buyer withdrawing from a sale or requiring the owner to remove equipment or repay the PACE balance because the buyer refused the PACE upgrade/encumbrance? 13. Is there any evidence that PACE projects actually increase a property's appraised value or, conversely, that a PACE lien has been a hindrance to resale? 14. A significant amount of written materials, articles, and comments have been received in response to the Committee's November request for additional information. Staff has organized this information as follows: PACE Programs. CaliforniaFIRST, Figtree, and HERO PACE Programs collaborated to provide the unified response to all of the Committee's questions, representing the PACE financing industry, included as Attachment J. Attachment J includes the following exhibits: A: Where is PACE in California as of 1/25/14 B1: Draft Indemnification Agreement_CA First and City of Concord B2: Draft Indemnification Agreement_ HERO and City of Antioch C: Dec 2014 email from California Alternative Energy and Advanced Transportation Financing Authority indicating no PACE defaults D: Energy upgrade financing alternatives comparisons E: Consumer protections and Quality Assurance Measures in PACE Programs F: Annotated Excerpts from November IOC meeting comments Contra Costa Association of Realtors . The Contra Costa Association of Realtors collaborated to provide the unified response to Items 6, 9, 10, 13 and 14, contained in Attachment K. Attachment K includes the following exhibits: A: American Bankers Association, Consumer Mortgage Coalition, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America and Mortgage Bankers Association – September 13, 2012 B: Inland Valleys Association of REALTORS® Backgrounder C: Statement of Melvin L. Watt Director, FHFA Before the U.S. House of Representatives Committee on Financial Services (ref on page 12 of the statement)– January 27, 2015 E: Statement of the Federal Housing Finance Agency on Certain Super Priority Liens – December 22, 2014 F: Two letters to California Governor Brown – May 1, 2014 County Staff: County Auditor-Controller Bob Campbell researched Item 3 and the 1/22/15 email message, included as Attachment L, provides the explanation. Staff surveyed California counties to determine the current status of PACE programs implemented at the county level. The compilation of survey responses is included as Attachment M for reference. We received responses from 17 counties, nine of which reported that they had formed PACE 46 districts and eight of which reported that they had not done so. Of the eight no-PACE respondents, three are currently researching it and one, San Diego County, opted to join statewide PACE districts in lieu of establishing its own. Attachment N contains San Diego County's April 2014 Board documents containing actions to expand that County’s existing PACE program participation to include residential properties. Of the nine responding PACE counties, two -- San Bernardino and Yolo -- reported funding any residential loans as of December 2014. Placer has funded loans but it is unclear whether any of the loans were residential. Note that Sacramento County, which has an active PACE program did not respond to the survey. Administration or processing fees appear not to be of significant concern or issue for the reporting counties. Most of the PACE counties use a third-party administrator to operate the programs and the few that have incurred staff costs either planned for them or recouped those costs through fees. The PACE counties generally were unable to report much in the way of statistics because the programs are so new. No loan defaults were reported. Both Placer and San Bernardino reported that a small percentage (less than 1% for Placer) of PACE loans had to be paid off due to FHFA restrictions. Interest rates ranged from 6-9% depending on the length and type of loan. Recommendation(s)/Next Step(s): The potentially significant environmental and economic benefits of PACE financing suggest the County may want to consider participating in such programs. However, ongoing efforts by FHFA to discourage mortgage lending on residential properties with PACE loans requires that the County act prudently in considering the formation and operation of PACE financing districts. Should the Board decide to permit PACE financing within the county unincorporated area, each proposal to form a PACE district should be evaluated by County staff to ensure the benefits of PACE financing can be made available while also protecting the interests of the County and the public. Factors such as a PACE program's participation in the State's Loss Reserve Program, disclosure of potential negative impacts to participating property owners resulting from federal regulatory action, and agreement to release the County from liability associated with operation of the program should all be considered as preferred program elements. To this end, we recommend that entities interested in forming PACE financing districts within the unincorporated area of the county submit an application with their proposal to the Department of Conservation and Development (DCD), which will serve as the central point of contact for applicants and would work closely with other County departments, including County Counsel, the County Auditor-Controller and the County Treasurer Tax-Collector, in the review of applications. Following a satisfactory review of application materials, staff would proceed to develop contracts with program providers to operate PACE programs within the county. Such contracts would be developed in consultation with County Counsel and would include terms requiring that program providers participate in the State’s PACE Loss Reserve Program, disclose potential mortgage risk to borrowers resulting from federal regulatory actions, and indemnify the County from claims that may arise from operation of PACE programs within the county. Other conditions may also apply based on staff review of application materials. Following successful negotiation of contracts with PACE providers, staff would submit such contracts to the Board of Supervisors for consideration. DCD proposes to collect an initial deposit of $5,000 from each applicant to pay for County staff 47 DCD proposes to collect an initial deposit of $5,000 from each applicant to pay for County staff time and other costs incurred by the County to review an application. Staff may seek additional reimbursement of application processing costs from program providers if such costs exceed the initial $5,000 application fee deposit. Any portion of the deposit not spent will be returned to the applicant at the conclusion of the application process. Fiscal Impact (if any): None at this time, as this report is informational. The staff recommendation anticipates that should the Board want to implement a PACE program(s), County costs would be covered by application review fees. Attachments Attachment A FHFA Statement Attachment B Fannie Mae Statement Attachment C Program Summary Attachment D Letter to Gov. Brown Attachment E_FHFA Letter to Santa Clara County Counsel Attachment F_SolarCity news article 10-8-14 Attachment G EMPower Program Attachment H_Suspension of Fees for CA PACE Loss Reserve Attachment I_Public Comment from Renewable Funding_November 2014 Attachment J_Pace Industry Response to IOC Request for PACE Information Attachment K_CC Assoc of Realtors Response to IOC Request for PACE Information Attachment L_Email to Bob Campbell re Pace Loss Reserve Attachment M_Survey on CA Counties re PACE Attachment N_San Diego County PACE Implementation Attachment O_Diablo Solar Svcs Ltr of Support for PACE 48 49 50 51 52 53 54 55 Federal Housing Finance Agency Constitution Center 400 7th Street, S.W. Washington, D.C. 20024 Telephone: (202) 649-3800 Facsimile: (202) 649-1071 www.fhfa.gov August 20, 2014 Orry P. Korb County Counsel Office of County Counsel for County of Santa Clara 70 West Heading Street, East Wing, 9th Floor San Jose, CA 95110-1770 RE: PACE Lending Dear Mr. Korb: The Federal Housing Finance Agency has been advised that a number of communities in Cahfornia, including yours, recendy announced plans to move forward with programs to approve Property Assessed Clean Energy (PACE) loans with a first Hen on residential properties. Consequendy, I am writing to remind you that Fannie Mae and Freddie Mac do not purchase mortgages for either home sales or re-financings that are encumbered with first Hen PACE (or similar program) loans. This pohcy has been in place since 2010 and was reaffirmed by FHFA in 2014. The Federal Home Loan Banks, which also are regulated by FHFA, have been directed to protect their interests in the coUateral they accept for advances, which could become subject to PACE encumberances. FHFA urges your community to inform potential borrowers of the pohcies of Fannie Mae and Freddie Mac and to provide them the web addresses that homeowners can utilize to determine whether their loan is currendy held or guaranteed by one of the Enterprises. These websites are https://knowyouroptions.com/loanlookup for Fannie Mae and for Freddie Mac https: / / ww3.freddiemac.com/loanlookup /?intcmp=LLT-HPstepl. Thank you for your attention in this matter. If you have any questions, you may contact me direcdy at 202 649 3050. With aU.best wishes, I am Sincerely, General Counsel 56 HOT TOPICS:I-80 wildfires (/california/ci_26694187/i-80-wildfires?source=inthenews)HomeBusinessStoryMORE VIDEOS:IMF casts gloomy cloudFinancial TimesSolarCity to offer solar loans to homeowners, which could juice market - ContraCostaTimes.com http://www.contracostatimes.com/business/ci_26686359/solarcity-offer-solar-loans-homeowne...1 of 610/9/2014 12:31 PM57 By Jonathan Fahey0 COMMENTSAssociated PressPOSTED: 10/08/2014 08:57:08 AM PDT | UPDATED: NAN YEARS AGO(/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=6295122)In this undated photo provided by SolarCity, workers install solar panels on the roof of a home. SolarCity will begin offering loansto homeowners for rooftop solar systems, a move that analysts say could reshape the market for rooftop solar and propel its rapidadoption. (AP Photo/Courtesy SolarCity) ( Uncredited )NEW YORK -- SolarCity will begin offering loans to homeownersfor solar systems, a move that industry analysts say could reshapethe market for rooftop solar and propel its rapid adoption.Most current rooftop solar deals involve a lease or an agreement tobuy power over a period of time, but the company owns the panels.San Mateo-based SolarCity's loan will allow customers to own theirsystems and still pay less for electricity, a simpler and cheaperprospect."The value proposition is becoming clearer and less complicated for consumers," says PatrickJobin, an analyst at Credit Suisse. "Solar is going mainstream."Other solar companies have begun to offer loans in recent months, but SolarCity is the nation'sbiggest installer, and its loan has a twist that may convince reluctant customers to sign up: Thecustomer pays the loan back based only on the electricity that the panels produce.The growth of rooftop solar has been propelled by financing schemes that allow customers to havesolar panels installed for little or no money down. The solar company installs the system, andAlternative energy, cleantechand related topics.(http://www.mercurynews.com/green-energy)SolarCity to offer solar loans to homeowners, which could juice market - ContraCostaTimes.com http://www.contracostatimes.com/business/ci_26686359/solarcity-offer-solar-loans-homeowne...2 of 610/9/2014 12:31 PM58 Advertisementcustomers either lease it or enter an agreement to pay for the power over a 20-year period. Thecombined price that customers pay to the solar company and the electric utility is less than whatthe customer paid for power without solar panels.Those plans were rolled out in 2007 and 2008by SunRun, SolarCity, Sungevity and others.Last year, two-thirds of all solar systems wereinstalled under those types of plans, accordingto Shayle Kann, senior vice president of GTMResearch, an analysis and consulting firm.But they are more confusing than a loan andsome states do not allow third-party ownershipof solar panels.Lyndon Rive, SolarCity's CEO, said in aninterview that many customers say they'drather own, but then sign up for a lease becauseit has been the only way to get a system without high upfront costs."Ownership is an important factor for our customers," he says.The company can offer the loans now because it has better access to financing, it can predict theperformance of panels well, and it has decreased installation costs dramatically, Rive says.The loans will be offered at 4.5 percent over 30 years. But customers won't pay a fixed amountevery month. Instead, they will pay only for the power the panels produce. If the panels producemore in given month, customers will pay their loan off faster. But because the solar power ischeaper than power from the electric utility, it means the customer's monthly electricity cost wouldfall further.If the panels produce less, the customer pays less to SolarCity, and, in theory, will not have to paythe loan off in full. But SolarCity is confident that it can predict the output of the panels over 30years well enough to ensure the loan will be repaid."It takes the production risk of the system off the customer's plate and puts it on Solar City's,"Kann says.Another important factor that could make these loans more attractive is how the federal tax creditfor solar will be handled.With a solar lease, the credit of 30 percent of the cost of the system goes to the solar company orits financiers. With a loan, it goes to the customer. Assuming the customer uses the tax credit,$9,000 for a $30,000 system, to help pay down the loan, customer power prices would fallsignificantly.For example, Rive calculates that a California solar loan customer would pay the equivalent of 16cents per kilowatt-hour in the first year, but then the equivalent of 11 to 12 cents in the second yearand beyond if the tax credit is used to pay down the loan. The average electricity rate for aCalifornia residential customer this year through July was 15.9 cents per kilowatt-hour, accordingto the Energy Department.Rive says he expects that by the middle of next year more than half of SolarCity customers willchose to go with a loan instead of a lease.Search by keyword or ZipWalnut Creek Local Guide(http://mylocal.contracostatimes.com/)Featured BusinessesCarpet One Livermore(http://mylocal.contracostatimes.com/livermore-CA/house-and-home/home-furnishings/Carpet-One-Livermore-925-455-9210)Able Hearth & Home(http://mylocal.contracostatimes.com/antioch-CA/house-and-home/household-appliances/Able-Hearth-and-Home-925-586-0378)Wilson Property Mgmt(http://mylocal.contracostatimes.com/pleasanton-CA/business-services/management-services/Wilson-Property-Mgmt-925-462-1101)City of Sacramento(http://mylocal.contracostatimes.com/sacramento-CA/community/government-office/City-of-Sacramento-916-264-5011)st. 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[Results couldbe shocking]14 Benefits MostSeniors Didn’t KnowThey HadRecommended for YouBarnidge: Helping the severely mentally illwho...Jahi McMath: Attorney shows video he says...Richmond looks to earmark $15 million tosave...California wildfires: Eastbound I-80 closed, 80...Alameda: Interest growing over new housing...Alameda briefs: Blue Angels may bring noiseto...-- SPONSORED LINK --Out of the Mouths of Constituents,Candidates Find a Message(From DailyMe.com)SolarCity to offer solar loans to homeowners, which could juice market - ContraCostaTimes.com http://www.contracostatimes.com/business/ci_26686359/solarcity-offer-solar-loans-homeowne...4 of 610/9/2014 12:31 PM60 • Article commenting rules of the road (/opinion/ci_24039589/article-commenting-rules-road)Purdy: Giants take advantage of Nationals'inexperience Rodeo-Hercules fire district candidates differwidely on pay, resource deployment Danville: I-680 lanes closed after debris causesdozens of flat tires Raiders quarterback David Carr expects to playSunday Please Don't RetireAt 62. Here's Why.The Motley FoolSocial Security: HowTo Get $1,000 More aMonthMoneynewsControversial "SkinnyPill" Sweeps theNationFit Mom DailyHow New iPads areSelling for Under $40Lifefactopia0 Comments SolarCity to offer solar loans to homeowners, which could juice market - ContraCostaTimes.com http://www.contracostatimes.com/business/ci_26686359/solarcity-offer-solar-loans-homeowne...5 of 610/9/2014 12:31 PM61 Copyright © 2014 Contra Costa TimesCopyright (http://www.contracostatimes.com/copyright)Privacy Policy (http://www.contracostatimes.com/portlet/layout/html/privacypolicy/privacypolicy.jsp?siteId=571)Site Map (http://www.contracostatimes.com/site-map)MNG Corporate (http://www.medianewsgroup.com/Pages/default.aspx)(http://www.contracostatimes.com) Sponsored bySolarCity to offer solar loans to homeowners, which could juice market - ContraCostaTimes.com http://www.contracostatimes.com/business/ci_26686359/solarcity-offer-solar-loans-homeowne...6 of 610/9/2014 12:31 PM62 emPower Central Coast Program Information This program was initially developed by the County of Santa Barbara to help homeowners countywide overcome obstacles to making energy saving improvements to their homes. Now they are also partnering with the Counties of San Luis Obispo and Ventura to offer program services throughout the Tri County region. By making home upgrade projects easier and more affordable through incentives, financing, qualified contractors and expert energy advice, emPower helps homeowners be more comfortable in their homes and lower utility bills. There are several important aspects of this program: · Free Energy Coach home consultation and assistance throughout your upgrade · Utility rebates up to $6,500 to lower project costs · Lower interest, longer term unsecured loans by local credit unions* o Rates starting at 5.90% (fixed, vary based on creditworthiness) o Loan size $1,000-$25,000 o Terms up to 15 years o No equity or collateral required o No pre-payment penalties (can use pre-payment for one-time reamortization) o No closing costs or fees o Approval time in 1 day or less · Directory of qualified contractors with advanced skills to get results · Friendly customer service to answer questions and suggest other useful resources (i.e. tax credits, income qualified programs) · Community workshops and educational events to help the community learn how energy improvements can help them 63 An Opportunity to Prove a Concept and Scale Up By spreading out upfront costs, credit enhancement financing programs help address a key obstacle homeowners face when considering energy upgrades to their home. Programs like emPower allow more homeowners to take advantage of the many benefits of home performance, thereby accelerating progress towards important local, State and national goals related to energy and green economic growth. While effective, CE programs were not designed as a permanent solution, but rather a first step in phased approach to market transformation. These programs provide a safer opportunity for otherwise hesitant lenders to enter a new market. The experience gained by a sufficient sampling size of participating lenders will produce data that can inform the future of energy efficiency financing. It is hoped that this data will prove that energy efficiency loans are under demand, can result in real energy savings and low default rates, and can therefore perform better than conventional asset classes. If this occurs, it is expected that lenders will no longer need government enticement or subsidy to continue offering energy efficiency financing at favorable terms and rates for consumers, and that other primary lenders will enter the market, spurring natural and healthy competition. It is also expected that secondary markets will become comfortable purchasing energy efficiency loan assets, which is key to scalability. CE programs have begun to ignite an otherwise stalled market, but it is unlikely that government funds will be available to enhance private credit for every home upgrade in the nation. It is the job of early programs to prove market viability and set the stage for the private sector to offer lasting, attractive, mainstream products without subsidy. If revenue streams are identified, local govs can continue to serve as important leaders and partners in comprehensive program delivery. Appropriate Roles Support Sustainable Market Transformation Lenders lend private capital, service loans, hold and transfer CE funds, collect required documentation and track loan performance. The lending partnership offers a valuable opportunity for lenders to do something positive for their local community, create new lines of business, and gain the credibility through County partnership. Local government identifies lenders, establishes local, customized lending partnership agreement to make the most of public funds, develops effective procedures, and administers critical program delivery functions including customer service, contractor recruitment, training and management, driving demand through extensive outreach and education, and free on-site advising through expert Energy Coaches. The County, as a neutral public agency with a community mission, is well positioned to be a trusted messenger. It also has the proximity to adequately implement a new program. Working with local lenders keeps the investment circulating in the local economy, creating additional stimulus. Contractors complete sales, perform testing and install upgrades. Participating contractors enjoy the credibility of County and utility program qualification and marketing to drive demand their way, meaning more work and more local jobs. Utilities determine appropriate energy efficiency measures and metrics, administer quality control and project verification, and pay a rebate to homeowners based on savings. More Than Just a Loan It is important to note that effective financing programs involve far more than just financing products. Loan products must be connected to programmatic infrastructure that can establish eligible measures, verify projects, calculate energy and loan data, and drive demand through marketing and contractor engagement efforts. A Better Financing Option for Homeowners Through a partnership with CoastHills Federal Credit Union and Ventura County Credit Union, emPower gives homeowners an affordable way to overcome the upfront cost of energy –saving home improvements. This local partnership provides more attractive terms and rates than otherwise available in the current unsecured financing market. Long terms: Up to 15 years, with no prepayment penalty Low rates: Starting at 3.90% Accessibility: Must have over 590 FICO and meet underwriting criteria. Homeowners can access up to $25,000 in financing. Convenience: Unsecured products are quick and easy, with 20 minute pre-approval available 24- 7. Participating contractors steward the process, built to be streamlined with utility rebates. Real outcomes: Energy measurement and project verification enables good choices and real savings. Leveraging Private Resources In 2011, the County dedicated $1 million in federal stimulus grant funds to a loan loss reserve (LLR) available to cover 90% of a default loss, up to 5% of the loan portfolio. In exchange, lending partners agreed to facilitate up to $20M in unsecured loans for County residents at longer terms and lower rates. In 2014, the program received additional stimulus and ratepayer dollars and expanded the program to Ventura and San Luis Obispo Counties, while piloting an interest rate buy down. The program currently has $3M in credit enhancements (CE) available to support up to $56M in emPower loans. Utility incentive programs also add tremendous value through utility rebates and project verification. Big community impact with little public investment By offering $3M in credit enhancements to local credit unions for home energy financing, Santa Barbara County created tens of millions of dollars in value for Santa Barbara, Ventura and San Luis Obispo Counties, while achieving lasting outcomes for homeowners, the local economy and environment. Why does a local credit enhancement (CE) financing program make sense? 64 emPowering a Lasting Energy Improvement Market With Credit Enhancements and Credit Unions 65 Program Background •County program designed to help owners and builders overcome obstacles to improving existing buildings –County awarded ARRA funding in 2010, program launched in Nov 2011 –Expanded to Ventura and SLO Counties in 2014 with ARRA and IOU funding •Goal: to lower energy use and create jobs •Vision: a sustainable energy improvement market that can support efficient, safe and comfortable buildings throughout the Central Coast region 66 Program Background: Homeowner Services Incentives up to $6,500 Qualified contractors Low-interest unsecured loans Personalized customer support Community education Onsite expert energy advice 67 Program Background: Contractor Services Tool lending library Trainings and enrollment Personalized support and input Exposure and lead generation Mentorship Retrofit rewards 68 Getting Started •First, let emPower’s Energy Coach and Participating Contractors help you select the best qualifying upgrades for your home •The emPower advantage: •An Energy Coach site visit is free •Participating Contractors are specially trained in home efficiency •Participating Contractors handle all paperwork •Eligible upgrades are qualified for incentives and financing ELIGIBLE UPGRADE OPTIONS DETAILS UTILITY INCENTIVES Whole House. Install 3 or more measures. Opt to add solar PV. Up to $2,500 Whole House. Install 2 or more measures. Opt to add solar PV. Up to $4,500 $6,500 Use sun’s warmth to heat water. Opt to add solar PV. Up to $2,719 30% tax credit Select one or more measures: hvac, insulation, or water heating Varies by measure 69 Program Background: Financing •Rebates aren’t always enough to achieve affordability •Loans must be affordable, accessible and convenient •Credit enhancements engage lenders in making home energy loans –County offers loan loss reserve and interest rate buy down –Selected CoastHills and Ventura County Credit Union (leveraging private capital 20:1) $56M $2.8M 70 Program Background: Financing Attributes emPower loan HELOC/Refi Other unsecured Loan Type Unsecured Secured Unsecured Starting rate 3.90% (fixed)3-6% variable 13-30% Loan size $1,000 - 25000 90% Loan to Value $5-15,000 Term 15 years 5- 30 years 5 or less Collateral None required Home None required Equity required No Yes No Closing costs No Maybe No Fees 0 Yes Maybe Prepayment penalties No Maybe Maybe Approval time 1 day or less 3+ weeks 1 day or less Minimum FICO 590 varies varies 71 Program Background: Financing Combining rebates and low-cost local financing make home energy improvements affordable 72 Recent Program Enhancements •Tri-County expansion (SLO and Ventura) = 315,000 sf homes •Interest buy down to SB County residents (starting at 3.9%) •Progress payment option •Prepayment reamortization option •New Eligible Energy Efficiency Measures 73 Home Upgrade Loan Success Story Ortega family from Santa Maria Issues in the home: •House was freezing or boiling hot •Starting to smell mold and see dry rot •Air and water coming in through doors •Leaking, single paned windows didn’t close Obstacles: •Traditional financing had high interest rates and short terms, or tightened lending restrictions End results: •Received $3,000 utility incentive •31.5% model annual energy savings = $351 monthly cost savings •Paying $225/month with emPower Home Upgrade Loan •Could tackle a larger project instead of “micky mouse” patches and repairs: -Whole House Air Sealing - Roof & Attic Insulation -Wall Insulation - Sealed & Insulated HVAC Duct System - Energy Efficient Windows - Insulated How Water Pipes “All the things we upgraded pointed toward energy efficiency but also solved practical problems. We are believers now. Our home is comfortable instead of being an oven where you just want to escape. So many homes in our area could use the exact same types of upgrades. It’s really a quality of life issue.” 74 Lessons Learned •Financing alone is not a silver bullet •Credit Unions are a good fit •Market is transforming, but lenders still need subsidy •Project eligibility is key to volume (i.e. solar only, single measures), but funding constraints limit •Must measure energy saving to demonstrate program outcomes •Build ongoing relationships with lenders and contractors •Contractor cash flow and capacity are still a challenge •Don’t sell loans, solve problems 75 Make Your Home More Comfortable & Energy Efficient with emPower This Program is funded by California utility ratepayers and administered by Southern California Gas Company, Southern California Edison and Pacific Gas & Electric under the auspices of the California Public Utilities Commission. Incentives & Financing for Home Energy Upgrades ELIGIBLE UPGRADE OPTIONS DETAILS ELIGIBLE MEASURES INCENTIVES Home Upgrade Whole house. Install 3 or more measures eligible through Home Energy Upgrade program. Point-based incentive. Opt to add solar PV. HVAC, Water Heaters, Windows, Cool Roofs, Insulation, Air Sealing $1,000–$2,500 Advanced Home Upgrade Whole house. Install 2 or more measures eligible through Home Energy Upgrade Program. Incentive based on % of modeled energy usaage reduced. Opt to add solar PV. HVAC, Water Heaters, Windows, Cool Roofs, Insulation, Air Sealing $1,500–$6,500 Solar Water Heating Upgrade Install a solar water heater system eligible through the California Solar Initiatives Solar Thermal program. Opt to add solar PV. CSI-Thermal Approved Solar Water Heating System Up to $2,719 30% tax credit Simple Start Upgrade Select one or more energy efficiency measures eligible for utility rebates. HVAC, Water Heaters and Insulation Varies by measure/utility From small improvements to complete home energy upgrades, single-family homeowners can choose from the following upgrade options. Benefits of upgrading include: saving energy and resources, a more comfortable home, and improved indoor air quality. These upgrade options qualify for incentives from your utility provider and low-cost financing through the emPower program: To learn more visit emPowerSBC.org or call (805) 568-3566 Starting at For SB COUNTY RESIDENTS 3.9%Limited time only! LOW-INTEREST LOANS See reverse for details... 76 Contact emPower at (805) 568-3566 or visit www.emPowerSBC.org • Interest rates start at 3.9%* • Financing amounts: $1,000-$25,000 • Up to 15-year term • Type of loan: unsecured • No home equity or collateral required • No prepayment penalties, fees or closing costs • Single-family detached home • Property located in Santa Barbara, San Luis Obispo or Ventura County • Work must be performed by an emPower participating contractor to install an eligible home upgrade project (see reverse for eligible upgrade options) emPower Financing Details Eligibility Requirements Interest rates starting at3.9%* Flexible Financing for Your Energy Efficiency Upgrades Easy, Affordable, Accessible You’ve picked your upgrades and know you’ll get incentives to reduce the overall cost of your project. But you’re struggling to find an affordable way to pay for the rest. emPower low-interest rate financing is specifically designed to help, so you can start your home upgrade project today! Lending Partners Contact us to get started today!• Find an emPower participating contractor • Get a free Energy Coach site visit How to Make Home Energy Upgrades with emPower 1 2 3 4 Choose Your Upgrades Contractor Helps You Apply for Utility Incentives and Financing (if needed) Install Upgrades Receive Funds and Enjoy the Benefits! *Limited time! (Rates usually start at 5.9%) 77 Summation of some of the key program outcomes through Sept 2014 (Tri-County Expansion just took place in July 2014) 78 1 Julie Enea Subject:FW: News Release: Treasurer Chiang Suspends Fees for Water and Energy Efficiency Program Treasurer Chiang Suspends Fees for Water and Energy Efficiency Program Annual Savings Could Total $750,000 for Participants PR15:04 1/21/15 Contact: Jacob Roper 916-653-2995 SACRAMENTO – State Treasurer John Chiang today announced the suspension of administrative fees for the Property Assessed Clean Energy (PACE) Loss Reserve Program, which allows California homeowners to finance energy and water efficiency projects through property assessment payments over a five-, 10- or 20-year period. "This popular program enables homeowners to finance energy-efficient windows, heating and air-conditioning systems, solar power and water conservation measures," Chiang said. "I hope that by cutting fees we will make it more affordable for more Californians to make green investments in their own homes." The program, which currently supports $350 million of PACE financing, is part of the State’s larger efforts to promote California- based jobs and reduce greenhouse gas emissions while limiting air and water pollution. The fees were cut when the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), chaired by Chiang, adopted emergency regulations at a meeting Tuesday in Sacramento. The most active PACE program is the Western Riverside County of Government’s Home Energy Renovation Opportunity (HERO) Program, which has enrolled $189 million in financings. Another $80 million has been enrolled by a similar program in neighboring San Bernardino County. A complete list of local programs can be found here. "We in Sonoma County are very pleased that Treasurer Chiang took no time in removing the fees for the CAEATFA loss reserve program. This program protects mortgage lenders from any losses that could result from a PACE assessment," said David Sundstrom, Sonoma County’s auditor-controller and treasurer-tax collector. "Removing the fees will help promote energy efficient retrofits and move us toward our goals of reducing greenhouse gas emissions and our dependency on foreign oil." Previously, the program required participants to pay an administrative fee of one quarter of one percent of the principal value of each enrolled financing, or roughly $50 for each $20,000 of financing. Suspension of the program’s administrative fee could save enrolled PACE programs and homeowners an estimated $750,000 annually. The PACE Loss Reserve program has supported 17,401 financings since its launch. It covers first mortgage lenders for PACE payments paid while the first mortgage lender is in possession of a foreclosed property and losses incurred resulting from PACE assessments being paid before the outstanding balance in a forced sale. Visit the Treasurer’s website to learn more about the PACE Loss Reserve Program. Read this press release in Spanish. For more news, please follow the Treasurer on Twitter at @CalTreasurer , and on Facebook at California State Treasurer's Office . ### 79 1 MEMORANDUM TO: Contra Costa County Internal Operations Committee FROM: Jonathan Kevles, CaliforniaFIRST PACE Financing Program DATE: November 3, 2014 RE: Update on Property Assessed Clean Energy (PACE) Financing for Residential Properties Preface This memorandum speaks exclusively to Residential PACE financing. Residential PACE financing is limited to residential properties that have up to three residential units.1 Introduction The Contra Costa County Board of Supervisors voted to opt into the CaliforniaFIRST program in 2010. In response to the statement issued by the Federal Housing Finance Agency (FHFA) in July of 2010, the California Statewide Communities Development Authority (CSCDA), which sponsors the CaliforniaFIRST program, put the program on hold. Following the creation in 2013 of the Governor’s and State Treasurer’s PACE Loss Reserve Program, in the summer of 2014, CSCDA re- launched the CaliforniaFIRST program in 17 California counties, including most Bay Area counties. For the reasons outlined below, we urge the Board of Supervisors to re-affirm its resolution opting into the CaliforniaFIRST program. CaliforniaFIRST costs the County nothing and poses no liability to the County. CaliforniaFIRST is a program of CSCDA, which is a trusted partner with Contra Costa County. CSCDA has worked with Contra Costa County and its constituent cities since 1988 to issue $1.7 billion in bonds to finance public improvements in the County. Because CaliforniaFIRST operates under CSCDA’s Joint Powers Authority structure, there is no cost to Contra Costa County for the operation of the CaliforniaFIRST program, and no liability to the County for the issuance of the bonds, as CSCDA is the entity that issues the CaliforniaFIRST bonds for residential PACE transactions. Through CaliforniaFIRST, the unincorporated areas of Contra Costa County (as well as the incorporated cities within Contra Costa County) would participate in the program through a statewide AB 811 Special District, which we fully expect to be in 1 CaliforniaFIRST and other PACE programs offer PACE financing for commercial properties as well as for residential. Given that a) many of the questions concerning PACE in the County staff report and elsewhere stem from statements made by the Federal Housing and Finance Administration (FHFA), and b) FHFA does not buy mortgages connected to commercial properties and thus has no position on commercial PACE, addressing commercial PACE in this memo would not be relevant. 80 2 effect beginning November 18, 2014. This statewide district eliminates the need for the County to go through its own, separate AB 811 Special District validation process. As such, the County would have no need to form and fund any separate infrastructure to manage or otherwise administer the CaliforniaFIRST program. FHFA risk is minimal and is managed by the California PACE Reserve. In July 2010, FHFA instructed Fannie Mae and Freddie Mac not to purchase mortgages on properties with PACE assessments attached to them. It also threatened to take more drastic action: to change underwriting standards in communities with PACE programs. FHFA has not taken more aggressive action against the nearly 250 local governments in California that are now operating PACE programs. Also, it has not taken action against the 20,000+ California homeowners that have PACE assessments on their properties. It is important to note that FHFA did not question the right of state and local governments to place valid assessments on properties. California has more than 4,700 special assessment districts – including many that are voluntary like PACE. FHFA hasn’t taken issue with any of the other special assessment districts. Governor Brown and the California Legislature in 2013 passed SB 96, which established a $10 million PACE Loss Reserve that is administered by an agency (he California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) within the Office of the California Treasurer. The California PACE Reserve protects Fannie and Freddie from losses associated with PACE assessments by paying the outstanding PACE assessments in the event of a foreclosure on a home with a PACE assessment. (Note that the amount due in the event of foreclosure is only the amount of the PACE assessment that is in arrears, not the full remaining balance of the PACE assessment.) The CaliforniaFIRST application discloses clearly the Fannie/Freddie risk to participating homeowners: Before completing a program application, you should carefully review any mortgage agreement(s) or other security instrument(s) that affect the property or to which you as the property owner are a party. Entering into an assessment contract without the consent of your existing lender(s) could constitute an event of default under such agreements or security instruments. Defaulting under an existing mortgage agreement or security instrument could have serious consequences to you, which could include the acceleration of the repayment obligations due under such agreement or security instrument. In addition, Fannie Mae and Freddie Mac, the owner of a significant portion of all home mortgages, stated that they would not purchase home loans with assessments such as those offered by CSCDA. This may mean that property owners who sell or refinance their 81 3 property may be required to prepay such assessments at the time they close their sale or refinancing. Finally, if FHFA decides to take more aggressive action against PACE programs and the communities that offer them, Contra Costa County can simply opt out of the program and CaliforniaFIRST will cease operations within the County. The Demand for PACE is Large and Growing. Nearly 20,000 California homeowners have completed projects financed with PACE – totaling more than $350 million in energy efficiency, renewable energy, and water efficiency investments. These investments are estimated to save homeowners more than $500 million on their utility bills over the life of the water and energy improvements. Further, nearly 250 local governments have opted into or are creating their own PACE program – including all the other Bay Area counties, and Los Angeles, San Diego, San Bernardino, Riverside, and Sacramento counties. The point here is not that Contra Costa County should opt into a PACE program because other local governments are doing so, but rather that if FHFA hasn’t yet taken more drastic action, it becomes increasingly unlikely that it will take action if local governments throughout California have adopted PACE. CaliforniaFIRST has robust consumer protections and contractor standards. The program has strong consumer protections: Disclosure of Fannie/Freddie risks and financing costs/terms Contractors are registered and monitored Contractors must be licensed, bonded and have a good Better Business Bureau rating The program verifies that proper local building permits are issued The program verifies that only eligible products are installed, e.g. Energy Star rated by U.S. Department of Energy The program ensures the project is completed The program utilizes an independent, third party to verify quality installation of all products The program provides dispute resolution for homeowner and contractor if necessary A County Application Process for PACE Program Applicants Would Be Unnecessary There is no need for County staff to conduct its own evaluation of the CaliforniaFIRST PACE Financing program. Such an evaluation would add unnecessary costs and delays to the launch of CaliforniaFIRST in the unincorporated areas of the County. The following points support this position: An evaluation of each PACE program where such evaluation would include the factors outlined in the staff report would duplicate the oversight and review tasks already undertaken or currently overseen by California state agencies. 82 4 As a CSCDA-sponsored program, the County can rely on its long history with CSCDA and the $1 billion+ of public infrastructure projects that CSCDA has financed within the County since CSCDA's inception in 1988. The County should be assured of CSCDA's competence and experience. CaliforniaFIRST is a participant in CAEATFA's Loss Reserve Program, and thus abides by all of the Program's rules and regulations, and provides regular reports to CAEATFA of its PACAE activities. CaliforniaFIRST provides the relevant disclosures pertaining to FHFA risk in the PACE Assessment Contract documentation. Renewable Funding can provide the County a supplementary Indemnification Agreement to shield the County from liability concerns. No other County or City across the state that has a PACE program in place has required such a study, nor the associated funding of the administrative fees for conducting such a study. The CaliforniaFIRST program would not require any new County expenditures to create or manage the program’s activities. All program activities are the responsibility of CSCDA, and carried out by Renewable Funding, who serves as CSCDA’s Program Administrator for CaliforniaFIRST. o The program does create minor administrative costs borne by the County – for the one-time recording of the PACE assessment, and for the collection and disbursement of PACE assessment payments over the term of each PACE contract. These costs are paid by the property owner and are collected through fees included in each PACE contract. 83 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 1 1. How many counties and cities have implemented PACE Programs and what are the populations of those jurisdictions? Of the counties that have implemented a PACE program(s), which, if any, are Teeter counties? • Statistics are as of January, 2014 • Statewide: • There are PACE programs in 320+ jurisdictions, across 41 of California’s 58 counties. • The total population covered is more than 25 million, which represents over 66% of the state’s population. • Of the covered jurisdictions, 24 are in unincorporated County areas • These figures do not include most of Los Angeles County, whose Board of Supervisors has approved the creation of its own, multi-PACE provider program that would cover all 88 cities in the County as well as the County’s unincorporated County areas. That program is expected to launch by summer, 2014. LA County’s launch will add another 7.6 million people to the population coverage figures, increasing statewide coverage to well over 80%. • In Contra Costa County: • Eleven cities have one or more active PACE programs covering 67% of the county’s population, and 79% of the populations of the incorporated cities. The cities are: • Antioch • Brentwood • Concord • Lafayette • Martinez • Oakley • Pittsburg • Richmond • San Pablo • San Ramon • Walnut Creek • See Exhibit “A” for a county-by-county list of jurisdictions that have one or more PACE programs. • Teeter: • According to our research, all counties in the state are Teeter counties, excepting: Alpine, Calaveras, Los Angeles, and Mariposa. 2. From the PACE lenders, what is your monitoring and foreclosure process for Teeter counties? • Note: State law allows counties to remove certain special districts from their Teeter plans, including AB 811 PACE special districts. • Figtree’s Response: • In the event of a delinquency PACE programs remove the assessment in question from the secured roll and place it on the unsecured roll. Once placed on the unsecured roll it should no longer be subject to the Teeter Plan and therefore no longer a concern in this regard. 84 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 2 • CaliforniaFIRST Response: • The CaliforniaFIRST Program team monitors 1st and 2nd property tax installment payments, and performs an annual review to check for delinquencies. If a property owner is delinquent, the Program will send letters to the property owner requesting that the past due amount be paid and advising the property owner that the property is subject to foreclosure for non-payment. The Program pursues payment on all delinquent accounts, regardless if the jurisdiction has a Teeter Program. In accordance with sections 8830 and 8835 of the Bond Act, the Program has the right to foreclose on the property. However, the mortgage lender will typically step in to ensure that foreclosure does not occur by paying delinquent taxes and, until the property is sold, keeping the property current on incoming tax payment obligations, including the PACE assessment payments. The State’s PACE Loss Reserve will make the lender whole for any portion of the property taxes associated with the PACE lien that the mortgage lender paid. • HERO Response • The Western Riverside Council of Governments (WRCOG) monitors 1st installments, 2nd installments and performs an annual review to check for delinquencies. If a property owner is delinquent, WRCOG will send letters to the property owner requesting the past due amount to be paid and advising the property is subject to foreclosure for non- payment. WRCOG pursues payment on all delinquent accounts, regardless if the jurisdiction has a Teeter Program. In accordance with sections 8830 and 8835 of the Bond Act, WRCOG has the right to foreclose on the property. However, the mortgage lender will typically step in to ensure that foreclosure does not occur by paying delinquent taxes and any other taxes until the property is sold - including the PACE lien. The PACE Loss Reserve will make the lender whole for any portion of the property taxes that the mortgage lender paid associated with the PACE lien. 3. With regard to the State's PACE loss reserve, what constitutes a default that is covered by the reserve? Is the lender not being paid or the tax lien not being paid? (This is significant for Teeter counties.) • PACE Liens have accelerated foreclosure provisions. In the event that a property owner does not pay their PACE lien for a year (which would also mean that all other property taxes have not been paid; counties do not accept partial payment of property taxes, nor a partial payment that is earmarked for one or more line items on the property tax bill), the PACE foreclosure process can begin. The mortgage lender will typically step in to ensure that foreclosure does not occur by paying delinquent taxes and any other taxes until the property is sold - including the PACE lien. The PACE Loss Reserve will make the lender whole for any 85 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 3 portion of the property taxes that the mortgage lender paid associated with the PACE lien. 4. In those counties or cities that obtained indemnification agreements, what did the indemnification cover? In the case of a JPA, who is the indemnifying party? • A draft of the CaliforniaFIRST indemnification agreement is provided as Exhibit “B1,” and of the HERO indemnification agreement as Exhibit “B2.” • Figtree response: • Figtree, on behalf of itself and its JPA the California Enterprise Development Authority, agrees to defend, indemnify and hold harmless the Public Entity, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all actions, suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and attorneys’ fees, for injury or damage due to negligence or malfeasance of any type claims as a result of the acts or omissions of Figtree, except for such loss or damage which was caused by the sole negligence or willful misconduct of the Public Entity. This indemnity applies to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Figtree. 5. What is the measurable increase in property tax revenue due to the energy efficiency upgrades? Assessor/industry. • The following table provides a summary of three studies, two on solar PV and the other on energy efficiency, which estimate the increase in property value that would result from an energy efficiency upgrade with some form of “green labeling” provided, or a solar PV system installation. These property value gains would result in property tax gains when the properties are sold (per the limits of Proposition 13) Name of Study and Source Year Published Findings Selling Into the Sun, Lawrence Berkeley National Laboratory (LBNL) and Adomatis Appraisal Services 2014 Existing homes with PV sell for a premium of $4.51/watt. Exploring California PV Home Premiums, Lawrence Berkeley National Laboratory (LBNL) 2013 For 5KW PV systems that are 5 years old, each kilowatt adds a $5,495 premium to the sale price. (Study looked at 1,600 homes with PV systems, and 6,140 homes without PV systems.) 86 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 4 Name of Study and Source Year Published Findings The Value of Green Labels in the California Housing Market: An Economic Analysis of the Impact of Green Labeling on the Sales Price of a Home, UC Berkeley, UCLA, and Maastricht University (Netherlands) 2012 A green label adds an average 9% price premium to sale price versus other comparable homes. (Study looked at 1.6 million homes.) • The size of the average solar system installed in Contra Costa County is 6 KWs (according to the California Solar Initiative database). Using the second study referenced above, the resulting price premium would be $33,000, which translates to a $300/per home increase in property tax revenues. • The estimated median market value of homes in Contra Costa County is now approximately $469,500. Thus the premium for each Green Labeled home would by $42,000, which translates to between a $400/per home increase in property tax revenues. • If in one year, 0.75% of the single family homes in all of Contra Costa County were to use PACE financing to upgrade their homes to improve energy efficiency, and 0.25% used PACE to install solar PV systems, and 0.05% implemented both kinds of upgrades, the increase in property tax revenues would be about $800,000 greater, once these homes sold, than if these homes were not to make these upgrades before selling. Over a ten year period, the increase in property tax revenues would be $8 million. 6. What problems do mortgage lenders report regarding mortgage sales and refinancing of properties withe PACE liens? • The PACE providers have not received any reports from mortgage lenders regarding mortgage sales and refinancing. • Sonoma County Experience and Data: “Sonoma's records also reflect that 98 different lending institutions did not make new financing subject to the PACE lien being paid-off. This indicates that pay-off of the PACE lien is more likely due to buyer preference than due to lender requirement.” (from Placer County staff report, June, 2013, page 4.) • HERO Program Experience and Data: Of the 20,197 projects that the HERO Program has financed to date, 2,233 property owners have successfully refinanced or sold their property. According to the data below, 55% of property owners who sold their property transferred the remaining balance of their PACE lien to the new owner. Of those who refinanced, 85% kept the PACE assessment in place (i.e. the mortgage lender did not require that it be paid off). Property owners have the right to pay off their PACE lien should they choose to do so- with no pre-payment penalty. Property owners choose to pay off their PACE lien for various reasons, including access to a lower interest rate, receipt of a large tax refund or inheritance, or negotiation with a buyer. Some property owners 87 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 5 opted to pay off their PACE lien during a refinance because the interest rate for the new first mortgage was lower. That’s not surprising given that interest rates on first mortgages have been at a historic low over the last few years. Properties Sold Properties Refinanced Number of Properties 355 1,878 PACE Assessment Not Paid-Off 197 (55% 1,602 (85%) PACE Assessments Paid-Off 158 (45%) 276 (15%) HERO’s data show that the vast majority of banks allow the PACE lien to stay on the property during a sale or refinance, including larger banks like Wells Fargo, Bank of America and Citibank. It’s clear from the data that no bank has taken a stance against PACE. If a bank were opposed to PACE, they would require EVERY customer with a PACE lien to pay it off during a sale or refinance. This is simply not the case. Property owners are paying off their PACE lien for the reasons mentioned above. 7. Number of PACE loan defaults by implementing jurisdiction and how much was defaulted? • In an email exchange on December 4, 2014 with Noah Proser from CAEATFA (the agency in the California State Treasurer’s Office that manages the PACE Loss Reserve Fund), Mr. Proser stated that as of that date, there have been zero defaults. A copy of this email exchange is provided in Exhibit “C.” 8. What remains of the State of California's PACE loan loss reserve and what is the mechanism to replenish the reserve? Is the fund protected from seizure or the whims of the state budget process? • Given that there have been zero defaults, there has been no draw on the PACE Loss Reserve Program’s Fund. It’s balance remains at its originally funded amount of $10 million. • The administration of the fund is paid for in part by a fee of 0.25% on each PACE-financed project’s costs, thereby not drawing on the Fund to cover such expenses. • The fund was established by state law. Eliminating the fund is always a possibility, in much the same way that a reduction in the flow of funds from the federal government or the state government to county governments is also always a possibility. That being said, the newly re-elected Governor and the state legislature are highly committed to PACE programs, including the Fund. 9. What is the position of the local real estate association boards on PACE financing? CCAR to provide response. 88 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 6 10. What happens when a new buyer doesn't want to assume the PACE lien? • When a new buyer does not want to assume the PACE lien, the seller has the option of paying off the full remaining balance of the PACE assessment. • In the Figtree, HERO and CaliforniaFIRST programs, there are no pre- payment penalties imposed for taking advantage of the pre-payment option. 11. What financing alternatives to PACE currently exist for energy efficiency upgrades? • There are numerous ways for a homeowner to pay for an investment that consists of renewable energy, energy efficiency, and water conservation. Some of these ways fit well with some homeowners, and other ways fit well with others. Some ways are simply not available to certain homeowners because of their financial situation, and some may take too long to secure approval – such as the need for a new HVAC system in heat of summer or the cold of winter. • Home Equity Lines of Credit (HELOCs) are often cited as a better option than PACE. According to the US Census’ 2009 American Housing Survey, only 12% of all owner- occupied homes in the country have a HELOC in place. Looking at just those households whose owners self-identify as Black or Hispanic, and the numbers drop even lower, to 7% and 9%, respectively. • Comparing financing alternatives requires looking at a handful of key variables: o Interest rates, with lower interest payments leading to lower payments § And the tax deductibility of the interest portion of financing payments, which if allowed, can be translated as lower effective interest rates o Minimum and maximum amounts that can be financed o Loan terms, with longer loan terms allowing for lower payments o The speed with which the financing can be approved o The ability to qualify for the financing o The consumer protections in place to ensure high and long-term customer satisfaction o Availability – geographically, and the amount of capital available to fund projects The following discussion refers to the table in Exhibit “D,” which assesses PACE against more traditional financing products • Interest Rates and Deductibility of Interest: PACE financing interest rates range from about 5% to 9% - depending on the PACE program and, more so, on the loan term selected (shorter loan terms providing lower interest rates). Compared to a personal loan or credit card – whose interest costs are not deductible – the deductibility of the interest makes the effective interest rate between 200 and 300 basis points (or 2% to 3%) lower, depending on the financing term, the amount financed, and the tax bracket of the homeowner. • Comparing Interest Rates: One of the most commonly cited alternatives to PACE is a Home Equity Loan (HEL) or a Home Equity Line of Credit (HELOC). Like PACE, both allow the deduction of interest payments for income tax purposes. However, unlike 89 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 7 PACE, both home equity products can take at least a month to put in place; PACE approval can take just one day. HELOC rates are similar to today’s mortgage rates, which are both more competitive than PACE interest rates. HEL rates are comparable to PACE rates. PACE has much better interest rates than a credit card, and PACE interest rates are comparable to or better than a personal loan. • Additional PACE-HELOC Comparison Notes: o If you've had your HELOC open for a while, it may expire in only a few years, thereby forcing a shorter loan term than may be desired. There are often options to lock in HELOC balances and pay them off over terms up to 20 years, yet this option typically leads to a higher fixed interest rate. Through a PACE- financed project, interest rates are locked in for the term of the loan. o Using PACE to finance a home's energy upgrade leaves the HELOC balance free from that draw, allowing the HELOC to be used for other purposes. o Using PACE financing – and thus having the additional line item on a property tax bill – does not impact the homeowner’s debt-to-income ratio, which is important when applying for future debt, such as a car loan. • Qualifying – Speed and Criteria: For those homeowners who do not have a HELOC or HEL in place when the need comes for a new HVAC system, roof, or other upgrade – which is the case for some 85% of homeowners in Contra Costa County, according to US Census figures – qualifying for one can be much more difficult than qualifying for PACE. PACE applications do not require a minimum FICO score in order to secure a competitive interest rate, whereas HELOC and HEL applications do consider one’s FICO score in the application process. • Consumer Protections: Through the PACE project development and application process, and after project completion, there are numerous protocols in place in each PACE program that exist to protect the consumer. These consumer protections include: o Certification of each contractor company to ensure quality work o Ensuring that all products to be installed meet high levels of energy or water- saving performance o Ensuring that all required permits are pulled o Post-install installation assessments by third party Quality Assurance companies o A process for identifying and disciplining badly performing contractors, which can lead to probation and ultimately to removal of a contractor from a PACE Program’s certified contractor list o A dispute resolution process to resolve disagreements between a homeowner and her contractor. Conventional financing alternatives do not come with any of these consumer protection measures. For more detail on each program’s consumer protection measures, please see Exhibit “E.” 90 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 8 12. How is the property owner protected from being misled or inadequately informed of the possible consequences of PACE financing? • All PACE programs provide very similar disclosure language in the financing documentation. • The CaliforniaFIRST language is as follows (and is presented in ALL CAPS format in the document, to help assure that homeowners review the language): “Before completing a program application, you should carefully review any mortgage agreement(s) or other security instrument(s) that affect the property or to which you as the property owner are a party. Entering into an assessment contract without the consent of your existing lender(s) could constitute an event of default under such agreements or security instruments. Defaulting under an existing mortgage agreement or security instrument could have serious consequences to you, which could include the acceleration of the repayment obligations due under such agreement or security instrument. In addition, Fannie Mae and Freddie Mac, the owner of a significant portion of all home mortgages, stated that they would not purchase home loans with assessments such as those offered by CSCDA. This may mean that property owners who sell or refinance their property may be required to prepay such assessments at the time they close their sale or refinancing.” • Figtree Response: o Figtree believes strongly that property owners should make fully informed decisions regarding PACE. To this end property owners in our residential program will be provide disclosures during the application process which outline the potential risk posed by the FHFA uncertainty, the impact this may have on their current mortgage contract, and information regarding the rates and fees being charged. o Figtree also believes strongly in maintaining a personal relationship with each and every customer. Based on our experience contractors often lack the ability to properly educate customers regarding the intricacies of PACE financing. Prior to financing each transaction Figtree intends to communicate directly with each property owner in order to ensure they understand how the program works, the disclosures they have signed, and the rates and fees associated with the program. o Figtree also maintains a zero tolerance policy for contractors who misled or cheat customers. Contractors engaging in this type of behavior are ejected from our program. This hasn’t happened to date as we have an extensive on boarding process for contractors wishing to participate in our program. Contractors must demonstrate they have been licensed for three years, bonded, and participate in a mandatory training program prior to serving Figtree PACE customers. 91 Submitted January, 26, 2015: Responses to Questions Regarding PACE Financing, Received from Julie Enea, Staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. Responses provided by the following PACE Programs: CaliforniaFIRST, Figtree, and HERO 9 13. How many PACE lienholders were able to sell/refinance since the settlement of the FHFA lawsuit without having to repay the entire PACE loan balance? • Note #1: The lawsuit brought against FHFA by the State of California and other parties was not settled. The courts instead found that when FHFA issued its 2010 letter that put residential PACE programs to a halt, that FHFA was acting in the role of conservator of the assets of the government sponsored enterprises that it overseas, rather than as a regulator; the plaintiffs arguments were founded on FHFA acting improperly as a regulator. As a result, the lawsuit did not proceed any further. • Note #2: We fail to see a connection between the FHFA lawsuit and an increase or decrease in the instances of homeowners who must pre-pay their PACE assessment in full upon sale or refinance. That being said, please see the statistics provided in the response to Question #6 above. How many instances have occurred of a buyer withdrawing from a sale or requiring the owner to remove equipment or repay the PACE balance because the buyer refused the PACE upgrade/encumbrance? • There are no data nor anecdotes available that reveal how many – if any – buyers withdrew from a sale because of the presence of the PACE assessment, or sellers who refused to pay off the PACE assessment’s balance. • In those instances when a homeowner paid her PACE assessment in full at the time of sale or refinance, we do not have data that tells us why the homeowner took that action. 14. Is there any evidence that PACE projects actually increase a property's appraised value or, conversely, that a PACE lien has been a hindrance to resale? • To our knowledge, no studies have been done specifically on the impact of PACE financing on a home’s market value, nor if the presence of a PACE assessment is a hindrance to sale. That being said, the data referenced in Question #5 above show that the types of projects that PACE financing facilitates lead to an increase in property values. Such increases will be partially offset by the balance of the PACE assessment; the impact of the offset will decrease as a result of two factors: the inevitable rise in utility rates, and, as time goes by, the reduction in the PACE assessment balance as payments are made. In addition to providing responses to the questions above, Exhibit “F” provides comments and responses to statements made by opponents to PACE Programs during the November 3 meeting of the Internal Operations Committee of the Contra Costa County Board of Supervisors. 92 EXHIBIT "A" Source: 328 Total CA Population Covered 25,493,121 % of CA Population Covered 66% POPULATION County / City Total Alameda County Alameda 75,988 75,988 Albany 18,472 18,472 Berkeley 117,372 117,372 Dublin 53,462 53,462 Emeryville 10,491 10,491 Fremont 223,972 223,972 Hayward 151,037 151,037 Livermore 84,852 84,852 Newark 43,856 43,856 Oakland 404,355 404,355 Piedmont 11,023 11,023 Pleasanton 73,067 73,067 San Leandro 87,691 87,691 Union City 72,155 72,155 Unincorporated County 145,461 145,461 Incorporated 1,427,793 County Total 1,573,254 Butte Biggs 1,684 Chico 88,389 88,389 Gridley 6,739 Oroville 15,980 15,980 Paradise 26,109 26,109 Unincorporated County 83,415 83,415 Incorporated 138,901 County Total 222,316 Contra Costa Antioch 106,455 106,455 Brentwood 54,741 54,741 Clayton 11,200 Table 2: E-5 City/County Population and Housing Estimates, 1/1/2014 Jurisdictions with ACTIVE PACE Programs http://www.dof.ca.gov/research/demographic/reports /estimates/e-5/2011-20/view.php # of Jurisdictions in CA with at least one active PACE program, as of 12/4/2014 93 EXHIBIT "A" Concord 124,656 124,656 Danville 43,146 El Cerrito 24,087 Hercules 24,572 Lafayette 24,659 24,659 Martinez 36,842 36,842 Moraga 16,348 Oakley 38,075 38,075 Orinda 18,089 Pinole 18,794 Pittsburg 66,368 66,368 Pleasant Hill 33,872 Richmond 106,138 106,138 San Pablo 29,465 29,465 San Ramon 77,270 77,270 Unincorporated County 166,048 Walnut Creek 66,183 66,183 Incorporated 920,960 County Total 1,087,008 El Dorado Placerville 10,527 South Lake Tahoe 21,409 21,409 Unincorporated County 150,468 Incorporated 31,936 County Total 182,404 Fresno Fresno 515,609 515,609 Unincorporated County 169,500 169,500 Clovis 102,188 102,188 Sanger 24,908 24,908 Selma 23,977 23,977 Reedley 25,122 25,122 Kingsburg 11,685 11,685 Kerman 14,339 14,339 Coalinga 16,467 Parlier 15,019 Mendota 11,225 Orange Cove 9,410 9,410 Fowler 5,883 5,883 Firebaugh 7,809 7,809 San Joaquin 4,056 4,056 Huron 6,843 6,843 Incorporated 794,540 County Total 964,040 94 EXHIBIT "A" Glenn County Orland 7,683 7,683 Willows 6,154 6,154 Unincorporated County 14,516 Incorporated 13,837 County Total 28,353 Imperial County Brawley 25,897 25,897 Calexico 40,564 Calipatria 7,517 7,517 El Centro 44,311 44,311 Holtville 6,154 Imperial 16,708 Westmorland 2,301 Unincorporated County 37,220 37,220 Incorporated 143,452 County Total 180,672 Kern County Arvin 20,226 20,226 Bakersfield 367,315 367,315 California City 13,276 13,276 Delano 52,591 52,591 Maricopa 1,180 McFarland 13,745 13,745 Ridgecrest 28,638 28,638 Shafter 17,461 17,461 Taft 8,942 8,942 Tehachapi 13,346 Wasco 26,159 26,159 Unincorporated County 310,213 310,213 Incorporated 562,879 County Total 873,092 Kings County Avenal 13,239 Corcoran 22,515 Hanford 55,283 Lemoore 25,281 25,281 Unincorporated County 33,863 Incorporated 116,318 County Total 150,181 95 EXHIBIT "A" Lake County Clearlake 15,194 15,194 Lakeport 4,807 4,807 Unincorporated County 44,698 Incorporated 20,001 County Total 64,699 Los Angeles County Agoura Hills 20,625 Alhambra 84,697 84,697 Arcadia 57,500 57,500 Artesia 16,776 Avalon 3,820 Azusa 48,385 48,385 Baldwin Park 76,715 76,715 Bell 35,972 Bellflower 77,741 77,741 Bell Gardens 42,667 Beverly Hills 34,677 Bradbury 1,082 1,082 Burbank 105,543 Calabasas 23,943 Carson 92,636 92,636 Cerritos 49,741 Claremont 35,920 35,920 Commerce 13,003 13,003 Compton 98,082 Covina 48,619 48,619 Cudahy 24,142 Culver City 39,579 Diamond Bar 56,400 56,400 Downey 113,363 Duarte 21,668 El Monte 115,064 115,064 El Segundo 16,897 16,897 Gardena 60,082 60,082 Glendale 195,799 Glendora 51,290 51,290 Hawaiian Gardens 14,456 Hawthorne 86,644 86,644 Hermosa Beach 19,750 19,750 Hidden Hills 1,901 Huntington Park 59,033 Industry 438 Inglewood 111,795 111,795 Irwindale 1,466 1,466 La Canada Flintridge 20,535 20,535 La Habra Heights 5,420 96 EXHIBIT "A" Lakewood 81,224 La Mirada 49,178 Lancaster 159,878 159,878 La Puente 40,478 La Verne 32,228 32,228 Lawndale 33,228 33,228 Lomita 20,630 20,630 Long Beach 470,292 Los Angeles 3,904,657 Lynwood 70,980 Malibu 12,865 Manhattan Beach 35,619 Maywood 27,758 Monrovia 37,162 37,162 Montebello 63,527 63,527 Monterey Park 61,777 61,777 Norwalk 106,630 Palmdale 155,657 155,657 Palos Verdes Estates 13,665 Paramount 55,051 Pasadena 140,879 Pico Rivera 63,873 Pomona 151,713 151,713 Rancho Palos Verdes 42,358 42,358 Redondo Beach 67,717 Rolling Hills 1,895 1,895 Rolling Hills Estates 8,184 8,184 Rosemead 54,762 54,762 San Dimas 34,072 34,072 San Fernando 24,222 San Gabriel 40,313 40,313 San Marino 13,341 13,341 Santa Clarita 209,130 Santa Fe Springs 17,349 Santa Monica 92,185 92,185 Sierra Madre 11,094 11,094 Signal Hill 11,411 South El Monte 20,426 20,426 South Gate 96,057 South Pasadena 26,011 26,011 Temple City 36,134 36,134 Torrance 147,706 147,706 Vernon 122 Walnut 30,112 30,112 West Covina 107,828 107,828 West Hollywood 35,072 Westlake Village 8,386 Whittier 86,538 Unincorporated County 1,046,557 Incorporated 8,995,240 97 EXHIBIT "A" County Total 10,041,797 Madera County Chowchilla 18,971 18,971 Madera 63,008 Unincorporated County 71,918 71,918 Incorporated 81,979 County Total 153,897 Marin County Belvedere 2,094 Corte Madera 9,381 9,381 Fairfax 7,541 7,541 Larkspur 12,102 12,102 Mill Valley 14,257 14,257 Novato 52,967 52,967 Ross 2,461 2,461 San Anselmo 12,514 12,514 San Rafael 58,566 58,566 Sausalito 7,175 Tiburon 9,090 9,090 Unincorporated County 67,698 67,698 Incorporated 188,148 County Total 255,846 Mendocino County Fort Bragg 7,350 Point Arena 454 Ukiah 16,185 Willits 4,937 Unincorporated County 60,103 Incorporated 28,926 County Total 89,029 Merced County Atwater 29,050 29,050 Dos Palos 5,050 Gustine 5,648 Livingston 13,793 Los Banos 37,168 Merced 81,130 81,130 Unincorporated County 93,083 93,083 Incorporated 171,839 98 EXHIBIT "A" County Total 264,922 Mono County Mammoth Lakes 8,098 8,098 Unincorporated County 6,045 6,045 Incorporated 8,098 County Total 14,143 Monterey County Carmel-By-The-Sea 3,722 3,722 Del Rey Oaks 1,665 1,665 Gonzales 8,383 8,383 Greenfield 16,919 16,919 King City 13,211 13,211 Marina 20,268 20,268 Monterey 28,381 28,381 Pacific Grove 15,431 15,431 Salinas 155,205 155,205 Sand City 343 343 Seaside 33,534 33,534 Soledad 24,997 24,997 Unincorporated County 103,697 103,697 Incorporated 322,059 County Total 425,756 Napa County American Canyon 20,001 20,001 Calistoga 5,224 5,224 Napa 78,358 78,358 St Helena 5,943 5,943 Yountville 3,017 3,017 Unincorporated County 26,712 26,712 Incorporated 112,543 County Total 139,255 Nevada County Grass Valley 12,668 Nevada City 3,016 3,016 Truckee 15,981 Unincorporated County 65,560 Incorporated 31,665 County Total 97,225 Orange County 99 EXHIBIT "A" Anaheim 348,305 348,305 Huntington Beach 195,999 195,999 Santa Ana 331,953 331,953 Irvine 242,651 Unincorporated County 121,473 Garden Grove 173,953 173,953 Orange 139,279 Mission Viejo 95,334 Fullerton 140,131 Newport Beach 86,874 86,874 Yorba Linda 67,069 Costa Mesa 111,846 111,846 Westminster 91,652 91,652 San Clemente 64,874 64,874 Lake Forest 79,139 79,139 Laguna Niguel 64,460 Buena Park 82,344 82,344 Fountain Valley 56,702 La Habra 61,717 Placentia 52,094 52,094 Cypress 48,886 48,886 Tustin 78,360 78,360 Rancho Santa Margarita 48,834 48,834 Brea 42,397 42,397 Dana Point 34,037 Laguna Beach 23,225 Aliso Viejo 49,951 49,951 San Juan Capistrano 35,900 Laguna Hills 30,857 30,857 Seal Beach 24,591 La Palma 15,896 15,896 Stanton 38,963 38,963 Los Alamitos 11,729 Villa Park 5,935 Laguna Woods 16,581 Incorporated 2,992,518 County Total 3,113,991 Riverside County Banning 30,325 30,325 Beaumont 40,876 40,876 Blythe 18,992 Calimesa 8,231 8,231 Canyon Lake 10,826 10,826 Cathedral City 52,595 Coachella 43,633 Corona 159,132 159,132 Desert Hot Springs 28,001 Eastvale 59,185 59,185 Hemet 81,537 81,537 100 EXHIBIT "A" Indian Wells 5,137 Indio 82,398 82,398 Jurupa Valley 97,774 97,774 La Quinta 39,032 Lake Elsinore 56,718 56,718 Menifee 83,716 83,716 Moreno Valley 199,258 199,258 Murrieta 106,425 106,425 Norco 26,582 26,582 Palm Desert 50,417 Palm Springs 46,135 46,135 Perris 72,103 72,103 Rancho Mirage 17,745 Riverside 314,034 314,034 San Jacinto 45,563 45,563 Temecula 106,289 106,289 Unincorporated County 363,590 363,590 Wildomar 33,718 33,718 Incorporated 1,916,377 County Total 2,279,967 Sacramento County Citrus Heights 84,544 84,544 Elk Grove 160,688 160,688 Folsom 74,014 Galt 24,289 24,289 Isleton 815 Rancho Cordova 67,839 67,839 Sacramento 475,122 475,122 Unincorporated County 567,095 567,095 Incorporated 887,311 County Total 1,454,406 San Benito County Hollister 36,676 36,676 San Juan Bautista 1,905 1,905 Unincorporated County 18,936 18,936 Incorporated 38,581 County Total 57,517 San Bernardino County Unincorporated County 297,425 297,425 San Bernardino 212,721 212,721 Fontana 202,177 202,177 Rancho Cucamonga 172,299 172,299 Ontario 167,382 167,382 101 EXHIBIT "A" Victorville 120,590 120,590 Rialto 101,429 101,429 Hesperia 91,506 91,506 Chino 81,747 81,747 Chino Hills 76,131 76,131 Upland 75,147 75,147 Apple Valley 70,755 70,755 Redlands 69,882 69,882 Highland 54,033 54,033 Colton 53,057 53,057 Yucaipa 52,654 52,654 Montclair 37,374 37,374 Adelanto 32,511 32,511 Twentynine Palms 26,576 26,576 Loma Linda 23,614 23,614 Barstow 23,292 23,292 Yucca Valley 21,053 21,053 Grand Terrace 12,285 12,285 Big Bear Lake 5,121 5,121 Needles 4,908 4,908 Incorporated 1,788,244 County Total 2,085,669 San Diego County Carlsbad 110,169 110,169 Chula Vista 256,139 256,139 Coronado 23,419 23,419 Del Mar 4,234 4,234 El Cajon 101,256 101,256 Encinitas 61,204 61,204 Escondido 147,102 147,102 Imperial Beach 26,675 26,675 La Mesa 58,769 58,769 Lemon Grove 25,928 25,928 National City 59,381 59,381 Oceanside 171,183 171,183 Poway 48,979 48,979 San Diego 1,345,895 1,345,895 San Marcos 90,179 90,179 Santee 55,806 55,806 Solana Beach 13,099 13,099 Vista 96,122 96,122 Unincorporated County 498,823 498,823 Incorporated 2,695,539 County Total 3,194,362 San Francisco County San Francisco 836,620 836,620 102 EXHIBIT "A" San Joaquin County Stockton 300,899 300,899 Unincorporated County 146,146 Tracy 85,146 85,146 Manteca 72,880 Lodi 63,651 63,651 Lathrop 19,831 Ripon 14,855 Escalon 7,323 Incorporated 564,585 County Total 710,731 San Luis Obispo County Arroyo Grande 17,334 17,334 Atascadero 28,675 28,675 El Paso De Robles 30,469 30,469 Grover Beach 13,153 13,153 Morro Bay 10,276 10,276 Pismo Beach 7,705 San Luis Obispo 45,473 45,473 Unincorporated County 119,272 Incorporated 153,085 County Total 272,357 San Mateo County Atherton 6,917 6,917 Belmont 26,559 26,559 Brisbane 4,431 4,431 Burlingame 29,685 29,685 Colma 1,470 1,470 Daly City 105,076 105,076 East Palo Alto 28,934 28,934 Foster City 32,168 32,168 Half Moon Bay 11,721 11,721 Hillsborough 11,260 11,260 Menlo Park 32,896 32,896 Millbrae 22,605 22,605 Pacifica 38,292 38,292 Portola Valley 4,480 4,480 Redwood City 80,768 80,768 San Bruno 43,223 43,223 San Carlos 29,219 29,219 San Mateo 100,106 100,106 South San Francisco 65,710 65,710 Woodside 5,496 5,496 Unincorporated County 64,177 64,177 103 EXHIBIT "A" Incorporated 681,016 County Total 745,193 Santa Barbara County Buellton 4,893 Carpinteria 13,442 Goleta 30,202 Guadalupe 7,144 Lompoc 43,314 Santa Barbara 90,385 Santa Maria 101,103 Solvang 5,363 Unincorporated County 137,552 Incorporated 295,846 County Total 433,398 Santa Clara County Campbell 41,993 41,993 Cupertino 59,946 59,946 Gilroy 52,413 52,413 Los Altos 29,969 29,969 Los Altos Hills 8,354 8,354 Los Gatos 30,532 30,532 Milpitas 70,092 70,092 Monte Sereno 3,450 3,450 Morgan Hill 41,197 41,197 Mountain View 76,781 76,781 Palo Alto 66,861 66,861 San Jose 1,000,536 1,000,536 Santa Clara 121,229 121,229 Saratoga 30,887 30,887 Sunnyvale 147,055 147,055 Unincorporated County 87,263 Incorporated 1,781,295 County Total 1,868,558 Santa Cruz County Capitola 10,136 10,136 Santa Cruz 63,440 63,440 Scotts Valley 11,954 11,954 Watsonville 52,508 52,508 Unincorporated County 133,557 133,557 Incorporated 138,038 104 EXHIBIT "A" County Total 271,595 Shasta County Anderson 10,361 10,361 Redding 91,207 Shasta Lake 10,128 Unincorporated County 67,716 67,716 Incorporated 111,696 County Total 179,412 Solano County Benicia 27,454 27,454 Dixon 19,005 19,005 Fairfield 110,018 110,018 Rio Vista 7,934 Suisun City 28,549 28,549 Vacaville 93,613 93,613 Vallejo 118,470 118,470 Unincorporated County 19,190 19,190 Incorporated 405,043 County Total 424,233 Sonoma County Unincorporated County 147,713 147,713 Santa Rosa 170,236 Petaluma 59,000 Windsor 27,104 Rohnert Park 40,722 Healdsburg 11,541 Sonoma 10,801 Cloverdale 8,641 Sebastopol 7,440 Cotati 7,288 Incorporated 342,773 County Total 490,486 Stanislaus County Ceres 46,463 Hughson 7,118 Modesto 206,785 206,785 Newman 10,668 10,668 Oakdale 21,442 21,442 Patterson 20,922 Riverbank 23,243 23,243 Turlock 70,132 70,132 Waterford 8,619 8,619 105 EXHIBIT "A" Unincorporated County 110,650 Incorporated 415,392 County Total 526,042 Sutter County Live Oak 8,481 8,481 Yuba City 65,677 65,677 Unincorporated County 21,575 Incorporated 74,158 County Total 95,733 Tulare County Dinuba 23,666 Exeter 10,539 10,539 Farmersville 10,932 10,932 Lindsay 12,650 Porterville 55,697 Tulare 61,857 61,857 Visalia 129,582 129,582 Woodlake 7,711 7,711 Unincorporated County 146,812 146,812 Incorporated 312,634 County Total 459,446 Ventura County Camarillo 66,752 66,752 Fillmore 15,339 15,339 Moorpark 35,172 35,172 Ojai 7,594 7,594 Oxnard 203,645 203,645 Port Hueneme 22,399 22,399 San Buenaventura 108,961 108,961 Santa Paula 30,448 30,448 Simi Valley 126,305 126,305 Thousand Oaks 129,039 129,039 Unincorporated County 97,313 97,313 Incorporated 745,654 County Total 842,967 Yolo County Davis 66,656 66,656 West Sacramento 50,836 50,836 Winters 6,979 6,979 106 EXHIBIT "A" Woodland 57,223 57,223 Unincorporated County 24,687 24,687 Incorporated 181,694 County Total 206,381 107 SAMPLE INDEMNIFICATION AGREEMENT 1 INDEMNIFICATION AND INSURANCE AGREEMENT BY AND BETWEEN CITY OF CONCORD AND RENEWABLE FUNDING, LLC This Indemnification and Insurance Agreement (the “Agreement”) is entered into by and between the City of Concord a municipal corporation (“City”) and Renewable Funding, LLC, a California limited liability company (the “Administrator”), the administrator of the CaliforniaFIRST Program, which is a program of the California Statewide Communities Development Authority, a California joint exercise of powers authority (the “Authority”). RECITALS WHEREAS, the Authority is a joint exercise of powers authority whose members of which include the City in addition to other cities and counties in the State of California; and WHEREAS, the Authority established the CaliforniaFIRST Program (“PACE Program”) to allow the financing of certain renewable energy, energy efficiency and water efficiency improvements that are permanently affixed to real property through the levy of assessments voluntarily agreed to by the participating property owners pursuant to Chapter 29 of Division 7 of the Streets and Highways Code (“Chapter 29”) and the issuance of improvement bonds under the Improvement Bond Act of 1915 upon the security of the unpaid assessments; and WHEREAS, the Authority has conducted or will conduct proceedings required by Chapter 29 with respect to the territory within the boundaries of the City; and WHEREAS, on January 19, 2010, the City Council of the City of Concord adopted a resolution authorizing the City to join the PACE Program, authorizing the Authority to accept applications from eligible property owners, conduct assessment proceedings and levy assessments within the territory of the City and authorizing related actions; and WHEREAS, the Authority is solely responsible for the formation, operation and administration of the PACE Program as well as the sale and issuance of any bonds in 108 SAMPLE INDEMNIFICATION AGREEMENT 2 connection therewith, including the conduct of assessment proceedings, the levy and collection of assessments and any remedial action in the case of such assessment payments, and the offer, sale and administration of any bonds issued by the Authority on behalf of the PACE Program; and WHEREAS, the Administrator is the administrator of the PACE Program and agrees to indemnify the City and provide insurance and add the City as an additional insured on its insurance policy or policies in connection with the operations of the PACE Program as set forth herein; and NOW, THERFORE, in consideration of the above premises and of the City’s agreement to join the PACE Program, the parties agree as follows: 1. Agreement to Indemnify. The Administrator agrees to defend, indemnify and hold harmless the City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, fines, penalties, judgments, demands and defense costs (including, without limitation, actual, direct, out-of-pocket costs and expenses and amounts paid in compromise or settlement and reasonable outside legal fees arising from litigation of every nature or liability of any kind or nature including civil, criminal, administrative or investigative) arising out of or in connection with the PACE Program except such loss or damage which was caused by the sole negligence or willful misconduct of the City. The Administrator will conduct all defenses at its sole cost and expense and the City shall reasonably approve selection of the Administrator’s counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies of the Administrator, its affiliates or any other parties are applicable thereto. The policy limits of any insurance of the Administrator, its affiliates or other parties are not a limitation upon the obligation of the Administrator including without limitation the amount of indemnification to be provided by the Administrator. 2. Insurance. The Administrator agrees that, at no cost or expense to the City, at all times during the operation of the PACE Program, to maintain the insurance coverage set forth in Exhibit A to this Agreement. 109 SAMPLE INDEMNIFICATION AGREEMENT 3 3. Amendment/Interpretation of this Agreement. . This Agreement, including all Exhibits attached hereto, represents the entire understanding of the parties as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. This Agreement shall not be interpreted for or against any party by reason of the fact that such party may have drafted this Agreement or any of its provisions. 4. Section Headings. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 5. Waiver. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof. 6. Severability and Governing Law. If any provision or portion thereof of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed in California. 7. Notices. All notices, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed certified or registered mail and addressed 110 SAMPLE INDEMNIFICATION AGREEMENT 4 as follows: If to the Administrator Renewable Funding, LLC 500 12th Street, #300 Oakland, CA 94607 If to the City: City of Concord 8. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, which together shall constitute the same instrument. 9. Effective Date. This Agreement will be effective as of the date of the signature of City’s representative as indicated below in the City’s signature block. IN WITNESS HEREOF, the parties hereto duly executed this Agreement as of the date below. 111 SAMPLE INDEMNIFICATION AGREEMENT 5 APPROVED AS TO FORM: ______________________________ NAME Title “City” City of Concord, a municipal corporation By_______________________________ Date: _____________________________ “Administrator” Renewable Funding, LLC By_______________________________ Name: Title: Date: _____________________________ 112 ATTACHMENT A A-1 EXHIBIT A INSURANCE A. Minimum Scope of Insurance Coverage shall be at least as broad as: 1. The coverage provided by Insurance Services Office Commercial General Liability coverage (“occurrence”) Form Number CG 0001; and 2. The coverage provided by Insurance Services Office Form Number CA 0001 covering Automobile Liability. Coverage shall be included for all owned, non- owned and hired automobiles; and 3. Workers' Compensation insurance as required by the California Labor Code and Employers Liability insurance; and 4. Professional Liability Errors & Omissions for all professional services. There shall be no endorsement reducing the scope of coverage required above unless approved by the City’s Risk Manager. B. Minimum Limits of Insurance Administrator shall maintain limits no less than: 1. Commercial General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit; and 2. Automobile Liability: $1,000,000 combined single limit per accident for bodily injury and property damage; and 3. Workers' Compensation and Employers Liability: Workers' Compensation limits as required by the California Labor Code and Employers Liability limits of $1,000,000 per accident; and 4. Professional Liability Errors & Omissions $1,000,000 per occurrence/ aggregate limit. 113 ATTACHMENT A A-2 C. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to, and approved by City's Risk Manager. At the option of City, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its officers, employees, agents and contractors; or Administrator shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses in an amount specified by the City’s Risk Manager. D. Other Insurance Provisions The policies are to contain, or be endorsed to contain, the following provisions: 1. Commercial General Liability and Automobile Liability Coverages a. City of Concord, its officers, employees, agents and contractors are to be covered as additional insureds as respects: Liability arising out of activities performed by or on behalf of, Administrator; products and completed operations of Administrator; premises owned, leased or used by Administrator; and automobiles owned, leased, hired or borrowed by Administrator. The coverage shall contain no special limitations on the scope of protection afforded to City, its officers, employees, agents and contractors. b. Administrator's insurance coverage shall be primary insurance as respects City, its officers, employees, agents and contractors. Any insurance or self-insurance maintained by City, its officers, employees, agents or contractors shall be excess of Administrator's insurance and shall not contribute with it. c. Any failure to comply with reporting provisions of the policies by Administrator shall not affect coverage provided City, its officers, employees, agents, or contractors. d. Coverage shall state that Administrator’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability. e. Coverage shall contain a waiver of subrogation in favor of the City, its officers, employees, agents and contractors. 2. Workers’ Compensation and Employers’ Liability Coverage shall contain waiver of subrogation in favor of City of Concord, its officers, employees, agents and contractors. 114 ATTACHMENT A A-3 3. All Coverages Each insurance policy required by this AGREEMENT shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium. E. Acceptability of Insurers Insurance is to be placed with insurers acceptable to City's Risk Manager. F. Verification of Coverage Administrator shall furnish City with certificates of insurance and with original endorsements affecting coverage required by this AGREEMENT. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. Proof of insurance shall be either emailed in pdf format to: ____________, or mailed to the following postal address or any subsequent address as may be directed in writing by the Risk Manager: ADDRESS of City of Concord G. Subcontractors Administrator shall include all subcontractors as insureds under its policies or shall obtain separate certificates and endorsements for each subcontractor. 115 116 117 118 119 120 121 122 123 Jonathan Kevles <jkevles@renewfund.com> Quick question on PACE defaults - any? 3 messages Jonathan Kevles <jkevles@renewfund.com>Thu, Dec 4, 2014 at 2:46 PM To: noah.proser@treasurer.ca.gov Noah - Hello. This is Jonathan Kevles from Renewable Funding. I have a quick question for you. Can you provide me the number of defaults there have been to date by properties with PACE assessments? I recall you saying on a RAC call back in November that there have been zero defaults. Please confirm that that number is still accurate. I need your response in writing as I am preparing a response to questions from the Contra Costa County Board of Supervisors. Thank you very much for your assistance, Jonathan Kevles ——————————————————————— Jonathan Kevles Senior Director, PACE Bay Area Region Renewable Funding (Program Administrator for CaliforniaFIRST) 500 12th Street, Suite #300 Oakland, CA 94607 (510) 350-‐3709 (o) // (213) 610-‐6805 (m) jkevles@renewfund.com // www.renewfund.com Proser, Noah <Noah.Proser@treasurer.ca.gov>Thu, Dec 4, 2014 at 2:48 PM To: Jonathan Kevles <jkevles@renewfund.com> Hi Jonathan, There have been no claims or associated defaults reported to CAEATFA as part of the PACE Loss Reserve Program to date, and as far as I’m aware, none outside of that either. Hope that helps, Noah Noah Proser California Alternative Energy 124 and Advanced Transportation Financing Authority (CAEATFA) (916) 653-‐3032 Noah.Proser@treasurer.ca.gov www.treasurer.ca.gov/caeatfa From: Jonathan Kevles [mailto:jkevles@renewfund.com] Sent: Thursday, December 04, 2014 2:46 PM To: Proser, Noah Subject: Quick question on PACE defaults - any? Noah - Hello. This is Jonathan Kevles from Renewable Funding. I have a quick question for you. Can you provide me the number of defaults there have been to date by properties with PACE assessments? I recall you saying on a RAC call back in November that there have been zero defaults. Please confirm that that number is still accurate. I need your response in writing as I am preparing a response to questions from the Contra Costa County Board of Supervisors. Thank you very much for your assistance, Jonathan Kevles ——————————————————————— Jonathan Kevles Senior Director, PACE Bay Area Region Renewable Funding (Program Administrator for CaliforniaFIRST) 500 12th Street, Suite #300 Oakland, CA 94607 (510) 350-‐3709 (o) // (213) 610-‐6805 (m) jkevles@renewfund.com // www.renewfund.com Jonathan Kevles <jkevles@renewfund.com>Thu, Dec 4, 2014 at 2:49 PM To: "Proser, Noah" <Noah.Proser@treasurer.ca.gov> Perfect. Thank you for the super rapid reply! 125 ——————————————————————— Jonathan Kevles Senior Director, PACE Bay Area Region Renewable Funding (Program Administrator for CaliforniaFIRST) 500 12th Street, Suite #300 Oakland, CA 94607 (510) 350-‐3709 (o) // (213) 610-‐6805 (m) jkevles@renewfund.com // www.renewfund.com On Thu, Dec 4, 2014 at 2:48 PM, Proser, Noah <Noah.Proser@treasurer.ca.gov> wrote: Hi Jonathan, There have been no claims or associated defaults reported to CAEATFA as part of the PACE Loss Reserve Program to date, and as far as I’m aware, none outside of that either. Hope that helps, Noah Noah Proser California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) (916) 653-‐3032 Noah.Proser@treasurer.ca.gov www.treasurer.ca.gov/caeatfa From: Jonathan Kevles [mailto:jkevles@renewfund.com] Sent: Thursday, December 04, 2014 2:46 PM To: Proser, Noah Subject: Quick question on PACE defaults - any? Noah - Hello. This is Jonathan Kevles from Renewable Funding. I have a quick question for you. Can you provide me the number of defaults there have been to date by properties with PACE assessments? I recall you saying on a RAC call back in November that there have been zero defaults. Please confirm that that number is still accurate. I need your response in writing as I am preparing a response to questions from the Contra Costa County Board of Supervisors. 126 Thank you very much for your assistance, Jonathan Kevles ——————————————————————— Jonathan Kevles Senior Director, PACE Bay Area Region Renewable Funding (Program Administrator for CaliforniaFIRST) 500 12th Street, Suite #300 Oakland, CA 94607 (510) 350-‐3709 (o) // (213) 610-‐6805 (m) jkevles@renewfund.com // www.renewfund.com 127 Exhibit D -‐ Financing Alternatives Comparison Table PACE Home Equity Line of Credit Home Equity Loan Personal Unsecured Loan Credit Card Interest Rate 5% -‐ 9% (fixed) 3% -‐ 7% (variable) 6% -‐ 9% (fixed) 6% -‐ 10% + (fixed) 5% -‐ 25% (variable) Tax Deductibility of Interest Portion of Payments Yes Yes Yes No No Minimum Finance Amounts $5K $1 $1,000 $1 $1 Maximum Finance Amounts, and primary limiting factors Lesser of $200K or 10% of home equity Limited by home’s Combined Loan-‐ to-‐Value and debt-‐ to-‐income ratios Limited by home’s Combined Loan-‐to-‐ Value and homeowner’s debt-‐ to-‐income ratios Limited by homeowner’s debt-‐ to-‐income ratio Limited by homeowner’s debt-‐ to-‐income ratio Minimum Loan Term 5 years 1 day 1 day 1 day 1 day Maximum Loan Term 20 years (25 for solar w/CAFIRST) 20 years 20 years Unlimited Unlimited Speed to Approve Financing Application 1 day 1 month 1 month 1-‐2 weeks 1 day Key Qualifying Criteria Equity in the home FICO score, Combined Loan-‐ to-‐Value and debt-‐ to-‐income ratios FICO score, Combined Loan-‐to-‐ Value and debt-‐to-‐ income ratios FICO score, homeowner’s debt-‐ to-‐income ratio FICO score, homeowner’s debt-‐ to-‐income ratio 128 1 Exhibit E – Quality Assurance and Consumer Protection Measures in PACE Programs The following quality assurance and consumer protection measures provided through CaliforniaFIRST do not exist when a homeowner finances their energy and water upgrade projects through their home equity line of credit, home equity loan, personal unsecured loan, or credit card. Many of the consumer protection measures are in place because of requirements for participation in the State of California’s PACE Loss Reserve Program. The three PACE Programs all participate in this Loss Reserve Program. The most widely known element of this Program is the Loss Reserve fund itself, which exists to ensure mortgage lenders and mortgage note buyers (e.g., Fannie Mae and Freddie Mac) that they are protected from the potential loss of unpaid PACE assessment payments should a home be foreclosed upon; the Program reimburses the note holder 100% of the unpaid PACE assessments that need to be paid before the property is sold to a new owner. (Note: As of October 31, 2014, zero properties have defaulted on their PACE assessment payments, and thus no claims have been made from the Loss Reserve's fund.) An important but lesser known element of the program serves to protect consumers (as well as mortgage note holders). The Program's regulations require underwriting standards to ensure that homeowners do not over-leverage their properties. These standards are: • All property taxes for the assessed property are current for the previous three years or since the current owner acquired the property, whichever period is shorter. • The property is not subject to any involuntary lien in excess of $1,000. • The property is not subject to any notices of default. • The property owner is not in bankruptcy proceedings. • The property owner is current on all mortgage debt. • The Assessment is for less than ten percent (10%) of the value of the property. CaliforniaFIRST's underwriting standards exceed and add to those prescribed by the PACE Loss Reserve Program: • No current involuntary liens and/or judgments totaling more than $1,000 for all Property Owners • Property Owners must be current on all subject Property-secured debt at the time of application and cannot have had more than one 30-day mortgage-related late payment over the previous 12 months • There must be no notices of default or foreclosure filed against the Property within the last 2 years • No bankruptcies (business or personal) in the last 2 years. 129 2 • The Property must not be an asset in any bankruptcy proceeding • Property title cannot be subject to power of attorney, easements or subordination agreements restricting authority of the Property Owner(s) to a PACE lien • Maximum financing amount is the lesser of $200,000 or 10% of the value of the Property and combined amount financed under the Program plus mortgage-related debt cannot exceed 100% of the value of the Property • Financing term cannot exceed the useful life of the highest cost Eligible Product (see below) • The all-in tax rate on the Property (including the Assessment and other assessments) may not exceed 5% of the Property value These same regulations also require PACE providers to include a detailed description of "Requirements for quality assurance and consumer protection, as related to achieving efficiency and clean energy production." To meet this requirement, CaliforniaFIRST includes the following quality assurance and consumer protection measures in our program: • Only products from the program’s Eligible Products list qualify for financing. To be on the list, a product must meet minimum efficiency and/or other performance standards. Not only does the eligible product list ensure that a CaliforniaFIRST-financed project meet the requirements of state law, it also helps assure that the project will yield utility bill savings through reduced water use and demand for utility-provided electricity and natural gas. • All Eligible Products must be installed by a Participating Contractor. • All required permits must be pulled. • Participating contractors must become certified. The program’s certification process includes a check of the contractor's: o Better Business Bureau grade (grade "B" or better) o License status with the California Contractors State Licensing Board (CSLB) o Bonding and workers’ compensation insurance coverages, to ensure that they meet the CSLB’s requirements o Liability insurance (minimum coverage of $1 million) • A third party quality assurance firm conducts a minimum check of contractors' projects, with newer contractors and contractors on probation receiving more frequent checks • A process for putting contractors on probation for bad work quality or validated consumer complaints, which can ultimately lead to removal of the contractor from the Participating Contractor pool. • A dispute resolution process for homeowners and contractors 130 Exhibit “F” – Comments on Excerpts from the Contra Costa County Board of Supervisors’ November 3, 2014 Internal Operations Committee meeting The text below is excerpted from the "Record of Action" document, which was prepared by Julie Enea, staff to the Contra Costa County Board of Supervisors’ Internal Operations Committee. The “Record of Action” documents the discussions that took place at this Committee’s meeting on November 3, 2014. These excerpts are followed with comments, written by Jonathan Kevles, representing the CaliforniaFIRST PACE Financing Program. Statements in quotation marks are taken verbatim from the “Record of Action” document. “Nick Solis [CEO of Platinum Real Estate Group] later pointed out PACE-financed upgrades increase the asking price for a property, making it harder to afford and sell when combined with the additional tax obligation of the new owner.” Comment: If this statement is based on empirical data, such data should be provided. That being said, a good realtor will help a seller a) understand the value of the PACE- financed upgrades and their remaining useful life, b) understand how that value may be offset by however much the remaining balance is of the PACE assessment, and c) then set an asking price for the home based on numerous variables, including the home’s amenities, recent upgrades (PACE-financed and otherwise), PACE assessment obligations, location, etc. “Nick Solis pointed out that the main reason so many PACE loans have been made is that private lenders have the backstop of the State of California, in the form of a loan loss reserve, to make "risky" loans.” Comment: This statement is inaccurate. The Loss Reserve Fund does not serve as a backstop to protect the entities that provide PACE financing. The Loss Reserve Fund exists to protect the mortgage lenders in the event that default on the property results in the mortgage lender paying off the one year of unpaid PACE assessment payments that may have accrued. PACE financings are not risky – they are secured by the property. In addition, PACE financings are not loans. They are tax assessments. Then-California State Attorney General Jerry Brown made this point in the brief he filed with the United States District Court September 15, 2010. The difference between loan and tax assessment is not merely one of semantics; the differences between the two carry important legal and financial implications. “Solis also stated that the rapid growth of PACE financing has been driven less by consumer demand and benefit and more by private lenders wanting to make money with the benefit of State and local government sponsorship.” Comment: This statement is unsubstantiated; if this statement is based on empirical data, such data should be provided. The statement is wrong on how markets work. The supply of a product – financial or otherwise – does not create demand; a consumer need met by a quality, cost-effective product creates demand for that product. The growing demand for PACE financing is the result of pent up demand for which the marketplace did not supply a solution prior to the introduction of PACE. 131 Exhibit “F” – Comments on Excerpts from the Contra Costa County Board of Supervisors’ November 3, 2014 Internal Operations Committee meeting To the issue of government sponsorship: Mr. Solis’ comment seems contrary to an action of the Contra Costa Association of Realtors (CCAR) prior to the November 3 meeting. Prior to that meeting, CCAR presented County officials with information related to the emPower program in Santa Barbara County. Presented by CCAR as an alternative to PACE, the empower program also helps finance residential energy efficiency projects. This program exists in large part through government support, being "funded in part by the American Recovery and Reinvestment Act via the U.S. Department of Energy’s Better Buildings program and the California Energy Commission" (http://www.empowersbc.org/about-program). Mr. Solis and the Realtors do not seem to be consistent on their position vis-à-vis government support for energy efficiency financing. It is not clear if Mr. Solis and CCAR support such programs, or if they oppose them. If the latter, then do they also oppose other government programs that support investments in – and drive tremendous demand for – housing, such as the mortgage interest deduction, or FHA's first-time homebuyer program? “Nick Solis later contended that the reason mortgage lenders have not taken issue with the PACE liens is because they may not be aware of them. Since the PACE lien does not appear as a debt on a credit report, it is up to the borrower to disclose the PACE lien to the lender. The only independent way for the lender to become aware of a PACE lien is through a title search, which may not clearly identify a PACE encumbrance since it is an optional tax bill payment and not a tax.” Comment: All mortgage lenders routinely review title reports. All title reports will include clear mention of a PACE assessment if one is attached to the property. The mortgage lender will factor all property taxes into the underwriting of a prospective borrower, and thus that borrower’s ability to make all of her property-related payment obligations, including mortgage, insurance, all property taxes, and insurance premiums. A sample title report is provided as Addendum “A” to this exhibit. In addition, it is inaccurate to state that a “PACE encumbrance . . . is an optional tax bill payment.” There is no such thing as an “optional tax.” A tax is a tax and must be paid; there is nothing “optional” about it. A PACE encumbrance results in a tax payment, processed through the property tax bill. 132 1 MEMORANDUM FOR THE CONTRA COSTA COUNTY BOARD OF SUPERVISORS TO: Internal Operations Committee FROM: Tyra Wright, Chair, Local Government Relations Committee, Contra Costa Association of REALTORS® Carla Weston, Local Government Relations Committee, Contra Costa Association of REALTORS® Nick Solis, Local Government Relations Committee, Contra Costa Association of REALTORS® Heather Schiffman, Director of Government Affairs, Contra Costa Association of REALTORS® RE: Requested Information DATE: February 27, 2015 We appreciate the opportunity to respond to the questions that were asked during the Internal Operation Committee Meeting on November 3, 2014 with Supervisor Karen Mitchoff and Candace Andersen. As it was explained during the meeting the Contra Costa Association of REALTORS® (CCAR) appreciates the County’s efforts to provide constituents with options to update their homes with energy saving products. We also respect private property rights and the ability of individuals to enter into contracts. However, as representatives of over 3,600 real estate professionals in the county, our concern is that PACE/HERO loans have significant potential problems. As requested by the Internal Operation Committee, we would like to provide the following answers to the questions provided by Julie Enea, Senior Deputy County Administrator and liaison to the Internal Operation Committee: 6. What problems do mortgage lenders report regarding mortgage sales and refinancing of properties with PACE/HERO liens? Attached is a letter from the American Bankers Association in conjunction with the Consumer Mortgage Coalition, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America and the Mortgage Bankers Association, dated September 13, 2012. When an attempt was made to reach out to banks such as Wells Fargo, their representative was not willing to provide anything in writing as they follow the directive of FHFA and referred me back to their letters. 9. What is the position of the local real estate association boards on PACE/HERO financing? CCAR supports voluntary programs over mandatory, therefore we have not taken an official position on opposition to the programs, as they are voluntary. However, we are very concerned about these programs. The disclosures are unclear, the potential liability to our members are uncertain, and the risks to the homeowners could be substantial. When a homeowner perceives that the County is backing a program like this it appears as a stamp of approval and therefore, homeowners are not likely to seek additional information regarding the programs offered. 133 2 10. What happens when a new buyer doesn’t want to assume the PACE/HERO lien? One of two things can occur; the seller must pay the loan in full, plus interest or the buyer walks away and sale does not go through. 13. How many PACE/HERO lienholders were able to sell/finance since the settlement of the FHFA lawsuit without having to repay the entire PACE loan balance? How many instances have occurred of a buyer withdrawing from the sale or requiring the owner to remove the equipment or repay the PACE/HERO balance because the buyer refused to PACE/HERO upgrade/encumbrance? As this program is so new, there is lack of information currently available at the state or local level. However, we would suggest that you refer to the attached backgrounder information provided by the Inland Valleys Association of REALTORS® (Riverside County), where the programs began and where most of the loans reside. Additionally, our Sacramento Lobbyists have requested data from HERO regarding transactions and have yet to receive any documentation to date. 14. Is there any evidence that PACE/HERO projects actually increase a property’s appraised value or, conversely, that a PACE lien has been a hindrance to resale? There is no way to prove that a home with a PACE/HERO or any energy modification to the homes can increase a property’s value. When in process of selling a home, appraised values are determined by finding properties nearby (generally within half mile to one mile radius) that have sold recently and are of the same or similar configurations (generally no longer than 12 months ago) that would support a price. Even though there was not a question confirming that status of the Federal Housing Finance Agency’s (FHFA) position regarding these types of loan, we have included past and a recent statement dated December 22, 2014 from FHFA stating, “FHFA has an obligation to protect Fannie Mar’s and Freddie Mac’s rights, and will aggressively do so by bringing actions to void foreclosures that purport or extinguish Enterprise property interests in a manner that contravenes federal law.” Please find attached the following items: American Bankers Association, Consumer Mortgage Coalition, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America and Mortgage Bankers Association – September 13, 2012 Inland Valleys Association of REALTORS® Backgrounder Statement of Melvin L. Watt Director, FHFA Before the U.S. House of Representatives Committee on Financial Services (ref on page 12 of the statement)– January 27, 2015 Statement of the Federal Housing Finance Agency on Certain Super Priority Liens – December 22, 2014 Two letters to California Governor Brown – May 1, 2014 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 1 Julie Enea From:Proser, Noah <Noah.Proser@treasurer.ca.gov> Sent:Thursday, January 22, 2015 12:35 PM To:Bob Campbell Cc:Bonnett, Ashley Subject:RE: PACE Loan Loss Reserve Hi Bob, I have cc’d my colleague, Ashley Bonnett, who is taking over as lead analyst for the PACE Loss Reserve program. Please include her on any follow‐up questions you might have. Regarding your question, the PACE Loss Reserve is only intended to cover losses to the first mortgage lender of a property with a PACE lien. The scenario you describe would most likely not be eligible for reimbursement, but I think we would need a little more information. Here’s the relevant section from the Program regulations: §10083. Claims Against the Loss Reserve Pool. Any PACE Program may make claim for payment from the loss reserve pool for the following losses incurred by first mortgage lenders and limited to losses on the Financings described in Section 10082 directly attributable to the existence of a PACE Program lien on a specified property. Losses include: (a) Losses resulting from the first mortgage lender’s payment of any PACE assessment paid while in possession of the property subject to the PACE assessment. Losses may also include penalties and interest where they have accrued through no fault of the first mortgage lender. (b) In any forced sale for unpaid taxes or special assessments, losses incurred by the first mortgage lender resulting from PACE assessments being paid before the outstanding balance. If your intent with the scenario you described was that the sale of the property didn’t cover the outstanding property taxes, penalties, etc. before even considering the mortgage debt then the county’s losses would not be eligible for reimbursement from the reserve, but the mortgage lender’s losses would be eligible for reimbursement (up to the amount of outstanding PACE assessments and the related proportion of penalties, etc.). On the other hand, if the county had allowed proceeds from the sale to go to the mortgage lender before covering the PACE‐related amount of taxes, then the county could claim those costs from the reserve. I know there’s a lot to unpack there, so if it’s helpful we could set up a time to talk on the phone. Let me know. Best, Noah Noah Proser California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) (916) 653‐3032 170 2 Noah.Proser@treasurer.ca.gov www.treasurer.ca.gov/caeatfa From: Bob Campbell [mailto:Bob.Campbell@ac.cccounty.us] Sent: Thursday, January 22, 2015 10:36 AM To: Proser, Noah Subject: PACE Loan Loss Reserve I think we talked last month regarding the PACE Loan Loss Reserve and if a county would be eligible if they incurred a loss through a tax auction. Below is the general scenario that may occur. A PACE assessment is put on the tax bill for collection under the alternate method of tax apportionment (Teeter Plan). The parcel goes delinquent for 5 + years and is sold at auction for a net loss. Can the county claim that portion of loss associated from the PACE assessment, (assessment, penalty, interest, and fees), from the state loan loss reserve? Bob Campbell Auditor-Controller Contra Costa County (925) 646-2184 171 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYRESPONDENT CONTACT1) Has your county established one or more PACE financing districts and, if so, under which CA law: “The Improvement Act of 1911 as amended by AB 811” or “The Mello‐Roos Community Facilities Districts Act of 1982 as amended by SB 555”?2a) If “no” to Question 1, had your county considered a PACE district and decided against it and, if so, why?ButteJennifer McCarthy JMacarthy@buttecounty.netButte County has two non‐residential PACE programs. Figtree PACE is based on AB811 and Ygrene is based on SB555N/AMonoJim Leddy jleddy@mono.ca.govYes, AB811N/AMontereyRon Holly HollyR@co.monterey.ca.usYes. Opted into CAFirst under AB 811 and also joined the Western Riverside Council of Governments (WRCOG) as an associate member to be able to offer the HERO program out of San Diego. They too established the districts under AB811. In addition, CSCDA is currently conducting the validation hearings for “Open Pace” which will initially consist of CaliforniaFIRST, a consortium of advisors – administration – and funding from Deutsche Bank, as well as possibly the HERO program. The idea behind open pace is to allow multiple providers under a single validation hearing, all utilizing the same documents. We at Monterey County, as well as CSCDA, believe that competition is KING in keeping costs down and eventually lowering the interest rates on PACE programs, which are currently in the 7+% range.N/A172 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYRESPONDENT CONTACT1) Has your county established one or more PACE financing districts and, if so, under which CA law: “The Improvement Act of 1911 as amended by AB 811” or “The Mello‐Roos Community Facilities Districts Act of 1982 as amended by SB 555”?2a) If “no” to Question 1, had your county considered a PACE district and decided against it and, if so, why?NapaSteve Lederer Steven.Lederer@countyofnapa.orgNapa County has joined 2 existing PACE programs, California First and HERO. To the best of my knowledge both of these were established per AB 811.N/APlacerJenine Windeshausejwindesh@placer.ca.govYes. We implemented our own PACE program in Spring of 2010 under the AB811 platform. The program serves the unincorporated area and the six cities within the County.We also administer a program for the City of Folsom which is in an adjacent county. We developed the Folsom program under the Mello‐Roos platform. (She attached a statistical report.)N/ASan BernardinoDuane Baker DBaker@sanbag.ca.govA PACE District has been formed in San Bernardino County with the local Council of Governments, San Bernardino Associated Governments, serving as the lead and issuer of debt. The PACE District was formed pursuant to The Improvement Act of 1911.N/A173 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYRESPONDENT CONTACT1) Has your county established one or more PACE financing districts and, if so, under which CA law: “The Improvement Act of 1911 as amended by AB 811” or “The Mello‐Roos Community Facilities Districts Act of 1982 as amended by SB 555”?2a) If “no” to Question 1, had your county considered a PACE district and decided against it and, if so, why?San Luis Obispo Leslie Brown labrown@co.slo.ca.usOn December 8, 2009 the Board passed a resolution to join the CaliforniaFirst PACE program. The County held off with residential PACE when FHFA had concerns with the loans. When CaliforniaFirst launched their commercial PACE program in January 2012, this adopted resolution authorized CaliforniaFirst to implement their commercial program in our jurisdiction. However, staff has indicated to CaliforniaFirst that before they operate their newly launched residential PACE program in our jurisdiction, we would request that our Board consider a new resolution reflecting the current implementation arrangement. At this time staff has advised our Board to delay consideration of any resolutions to participate in a residential PACE program until further progress has been made by the Governor’s Office to alleviate or reduce the Federal Housing Finance Agency’s concerns related to first lien PACE obligations. Ideally the FHFA will end its ban on the purchase of mortgages by Fannie May and Freddie Mac that are encumbered with a first lien PACE loan.VenturaSusan Hughes Susan.Hughes@ventura.orgYes. The Improvement Act of 1911 as amended by AB 811.N/AYoloPatrick Blacklock Patrick.Blacklock@yolocounty.orgYes, Yolo County has established two PACE districts. One under SB 555 (Ygrene) and one under AB 811 (CaliforniaFIRST). N/A174 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYRESPONDENT CONTACT1) Has your county established one or more PACE financing districts and, if so, under which CA law: “The Improvement Act of 1911 as amended by AB 811” or “The Mello‐Roos Community Facilities Districts Act of 1982 as amended by SB 555”?2a) If “no” to Question 1, had your county considered a PACE district and decided against it and, if so, why?COUNTIES THAT HAVE NOT FORMED PACE FINANCING DISTRICTS:AmadorChuck Iley ciley@amadorgov.orgNoNoCalaveresShirley Ryan sryan@co.calaveras.ca.usNoA Board member has asked staff to research and make recommendations.KingsLarry Spikes Larry.Spikes@co.kings.ca.usWe here in Kings County have done nothing with PACE, although, personally, I’m interested in looking into it further. When you’ve compiled your results, could I get a copy? Thanks.No responseNevadaRick Haffey Rick.Haffey@co.nevada.ca.usNoWe're seriously considering it and will be deciding on an approach in JanuarySan DiegoDonald Steuer Donald.Steuer@sdcounty.ca.govSan Diego has not established its own district. San Diego participates in statewide programs of CaliforniaFIRST, HERO and FigTree.San Diego had considered establishing its own program, however, after all of the analysis had been done it decided not to opt into the statewide program models for the following reasons: 1) the needs of the citizen can be met through the statewide programs; 2) no additional benefit was gained by establishing a local program; 3) economies of scale and 4) shifting of StanislausStan Risen risens@stancounty.comNoBrief consideration; have not pursued further because while I recognize the merits of energy efficiency improvements, I feel that allowing the property tax bill to be the vehicle for repayment of construction financing arrangements is short sighted and adds to the perception of high tax burdens imposed by government. In addition, there have been Fannie Mae challenges associated with this program.SutterJames Arkens JArkens@co.sutter.ca.usNoWe're looking into it.175 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYRESPONDENT CONTACT1) Has your county established one or more PACE financing districts and, if so, under which CA law: “The Improvement Act of 1911 as amended by AB 811” or “The Mello‐Roos Community Facilities Districts Act of 1982 as amended by SB 555”?2a) If “no” to Question 1, had your county considered a PACE district and decided against it and, if so, why?TuolumneCraig Pedro cpedro@co.tuolomne.ca.usNo.N/A176 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYButteMonoMonterey2b) If “no” to Question 1 and 2a, has your county never considered it?c) Does your county offer any alternative home energy project financing incentives?3) If “yes” to Question 1, a) Has the program made both residential and commercial loans? 3) If “yes” to Question 1, b) Is the program administered by a county department or a JPA or other independent agency.N/AN/ANon‐residential onlyBoth programs are third‐party administrators. For the program run by Figtree, the County's interaction is minimal. Figtree does all of the marketing (although we also have it on our website, and we provide information to local businesses that we are working with). We request quarterly reports on the status of the program to stay up‐to‐date. The Ygrene program was just launched in November. Our role will be less hands‐off with Ygrene. Staff will need to review and sign‐off on all applications. We have not had any applications to date. N/AN/AHave not funded any loans to date.Administered by a JPA (Western Riverside COG).N/AN/ASo far in Monterey County, no loans, either commercial or residential have been funded. The program kicked off in September. Independent program administrators run the programs.177 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYNapaPlacerSan Bernardino2b) If “no” to Question 1 and 2a, has your county never considered it?c) Does your county offer any alternative home energy project financing incentives?3) If “yes” to Question 1, a) Has the program made both residential and commercial loans? 3) If “yes” to Question 1, b) Is the program administered by a county department or a JPA or other independent agency.N/AN/AHERO offers both residential and commercial loans. CaliforniaFirst has always done commercial, but only recently added residential. In both cases the programs are run by an independent party. CalFirst is an outgrowth of CSCDA and HERO is an outgrowth of Western Riverside COG.N/AN/AThe program provides both residential and non‐residential financing. After launching the program in the Spring of 2010, we suspended the residential program from July 2010 until July of 2013 when we lifted the residential program suspension. The non‐residential program has been in continuous operation since the Spring of 2010.The program was implemented and is administered by the Treasurer‐Tax Collector Office.N/AN/A The program has made both residential and commercial loans.The program is administered by the local Council of Governments which is a JPA178 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYSan Luis ObispoVenturaYolo2b) If “no” to Question 1 and 2a, has your county never considered it?c) Does your county offer any alternative home energy project financing incentives?3) If “yes” to Question 1, a) Has the program made both residential and commercial loans? 3) If “yes” to Question 1, b) Is the program administered by a county department or a JPA or other independent agency.N/AYes, we are implementing the emPower program in our County. This is a tri county program effort with Santa Barbara and Ventura counties.Only open to commercial PACE at this time. To our knowledge, no commercial loans have been issued at this time.CA First administers this program. Our County is not involved.N/AN/AThere is currently one program operating in Ventura County – CaliforniaFIRST – and they operate both a residential and commercial program. There are two other entities – Figtree and HERO – requesting the County sign on to their programs. The program is administered by CaliforniaFIRST.N/AN/AYesThe programs are administered by Ygrene and CalFIRST. County Administrator Office (CAO) staff monitor and coordinate with Ygrene and CalFIRST. In addition, CAO staff administer the contract with Ygrene and execute loan contract documents with Ygrene.179 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYCOUNTIES THAT HAVE AmadorCalaveresKingsNevadaSan DiegoStanislausSutter2b) If “no” to Question 1 and 2a, has your county never considered it?c) Does your county offer any alternative home energy project financing incentives?3) If “yes” to Question 1, a) Has the program made both residential and commercial loans? 3) If “yes” to Question 1, b) Is the program administered by a county department or a JPA or other independent agency.Amador County has never considered a PACE DistrictAmador County does not offer any such incentivesN/A N/AN/A No N/A N/AN/A No response N/A N/AN/A No N/A N/AN/A No N/A N/AN/ASome HOME program opportunities.N/A N/AN/A No N/A N/A180 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYTuolumne2b) If “no” to Question 1 and 2a, has your county never considered it?c) Does your county offer any alternative home energy project financing incentives?3) If “yes” to Question 1, a) Has the program made both residential and commercial loans? 3) If “yes” to Question 1, b) Is the program administered by a county department or a JPA or other independent agency.We have never considered it.No but funding for home energy saving projects for low income persons is offered through a local non‐profit.181 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYButteMonoMonterey3) If “yes” to Question 1, c) Has your county incurred staff or other county costs?3) If “yes” to Question 1, d) Have any of the loans defaulted?3) If “yes” to Question 1, e) Have the program participants been required to pay off their PACE loans in order to sell their properties or 3) If “yes” to Question 1 ,f) What is the current interest rate being offered for your district loans?The formation process with Figtree was easy, although there was some staff time involved which was not recouped. The Ygrene process was much more cumbersome. They reimbursed the County for our staff time costs. Both programs will pay for the NoThe County would not make that requirement, since the assessment goes with the property as opposed to the owner. That being said, it is my understanding that a bank has the right to request such a pay‐off. There are only 2 PACE loans on the book at this point, so we have not run into this issue.The rate is controlled by the third‐party administrator. Figtree rates are roughly 7+%, and Ygrene is around 6.5%NoN/AN/AResidential: 5.95% ‐ 8.95% for 5‐20 year terms. Commercial: 7.0%‐7.75% for 5‐20 year terms.The County incurs absolutely no staff or other costs. Placement of liens on the parcels is reimbursed at the statutory rate of 0.25% of sums collected. The program administrators do all the rest. N/AN/A7+% range182 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYNapaPlacerSan Bernardino3) If “yes” to Question 1, c) Has your county incurred staff or other county costs?3) If “yes” to Question 1, d) Have any of the loans defaulted?3) If “yes” to Question 1, e) Have the program participants been required to pay off their PACE loans in order to sell their properties or 3) If “yes” to Question 1 ,f) What is the current interest rate being offered for your district loans?Relatively minor during the process of joining the programs (analyst, county counsel, agenda items with the Board). We did not quantify it, but I doubt if it None that we are aware of.There are rumors to that affect statewide, but we have no knowledge of it actually occurring in Napa. That possibility is fully disclosed to buyers during the loan process.I believe it is about 6%, but it is set by the program. The PACE program has been set up as an enterprise fund. Yes, we have incurred start‐up and ongoing administrative costs. However, we also receive revenues from processing fees and interest on assessments that result in revenues exceeding costs No.Some lenders require payoff, while others do not. Property owners are provided with disclosures during the application process indicating that the lien may need to be paid off in the event of a sale or refinance. Out of about 700 assessments, only 6 have paid off.For your reference, I have attached our November month‐end statistical report. Please do not hesitate to contact me if you would like more detailed information about our program or our experience. The county has not incurred any direct or staff costs.No loans have defaulted.Some property owners have been required to pay off the PACE loan prior to a sale or refinance.5 yrs. – 5.95%, 10 yrs. – 7.95%; 15 yrs. – 8.75%; 20 yrs. – 8.95%183 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYSan Luis ObispoVenturaYolo3) If “yes” to Question 1, c) Has your county incurred staff or other county costs?3) If “yes” to Question 1, d) Have any of the loans defaulted?3) If “yes” to Question 1, e) Have the program participants been required to pay off their PACE loans in order to sell their properties or 3) If “yes” to Question 1 ,f) What is the current interest rate being offered for your district loans?NoN/AN/ACaliforniaFirst commercial PACE program interest rate is 6‐8.75%. emPower residential program interest rates start at 5.9% and depend on FICO score.Yes, there are costs associated with setting up the assessment; although there is fee associated with those costs.There are only two loans. The program has only been operating in Ventura County since September.It is too soon to know.As we understand it, 6.75 percent to 8.75 percent for the residential program. Yes. Staff costs for monitoring and coordination with Ygrene and CalFIRST and regional coordination with participating cities.NoNo, however, Yolo’s programs are still relatively new so you can’t glean too much from our experience. I would recommend you contact the HERO program for more reliable statistics Commercial ‐ 20 year fixed 6.5 to 7% / Residential @ 8.25%184 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYCOUNTIES THAT HAVE AmadorCalaveresKingsNevadaSan DiegoStanislausSutter3) If “yes” to Question 1, c) Has your county incurred staff or other county costs?3) If “yes” to Question 1, d) Have any of the loans defaulted?3) If “yes” to Question 1, e) Have the program participants been required to pay off their PACE loans in order to sell their properties or 3) If “yes” to Question 1 ,f) What is the current interest rate being offered for your district loans?N/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/A185 SURVEY OF CALIFORNIA COUNTIES ON PACE FINANCING DISTRICT IMPLEMENTATIONDECEMBER 2014COUNTYTuolumne3) If “yes” to Question 1, c) Has your county incurred staff or other county costs?3) If “yes” to Question 1, d) Have any of the loans defaulted?3) If “yes” to Question 1, e) Have the program participants been required to pay off their PACE loans in order to sell their properties or 3) If “yes” to Question 1 ,f) What is the current interest rate being offered for your district loans?186 04/15/14 1 COUNTY OF SAN DIEGO BOARD OF SUPERVISORS TUESDAY, APRIL 15, 2014 MINUTE ORDER NO. 23 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) OVERVIEW: On August 6, 2013 (15) your Board of Supervisors took the necessary action to adopt into two Commercial PACE Programs, California HERO and Figtree PACE Program, in addition to the County’s existing participation in CaliforniaFIRST. Staff has been monitoring recent developments made at the State level in hopes of mitigating concerns from the Federal Housing Finance Authority (FHFA). Governor Jerry Brown included a proposal in the Enacted FY 2013-14 State Budget authorizing the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to establish a PACE Loss Reserve Program through Senate Bill 96. This program was specifically designed to address FHFA’s concerns through the use of a reserve fund that would reimburse residential PACE programs for costs associated with keeping mortgage interests whole in the event of a foreclosure or forced sale. The Loss Reserve Program will compensate mortgage lenders for losses resulting from the existence of a PACE lien in a foreclosure or forced sale. Claims will be paid from the reserve to the PACE program and may be used as a reimbursement to that program. PACE programs will pay a small administrative fee based on loan volume to help sustain this program. Governor Brown has allocated $10 million for the implementation of this program in the 2013-14 State budget. The PACE Loss Reserve Program was officially launched in March and is currently accepting applications. Today’s recommendation is to take the necessary actions to expand the County’s existing PACE program participation to include residential properties; contingent on the PACE Program being enrolled in the PACE Loss Reserve Program. The PACE Program will also provide disclosures to participants of the possibility of acceleration of existing obligations or prepayment of assessments to ensure property owners are aware of the potential risks. FISCAL IMPACT: There are no fiscal impacts associated with today’s action. BUSINESS IMPACT STATEMENT: N/A RECOMMENDATION: CHIEF ADMINISTRATIVE OFFICER Adopt the resolutions entitled: A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS TO EXPAND PROGRAM PARTICIPATION IN THE HERO 187 04/15/14 2 PACE PROGRAM CONT INGENT ON CERTAIN PROGRAM REQUIREMENTS; A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE FIGTREE PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS; and A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE CALIFORNIAFIRST PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS. ACTION: ON MOTION of Supervisor D. Roberts, seconded by Supervisor R. Roberts, the Board took action as recommended, adopting the following: Resolution No. 14-039, entitled: A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS TO EXPAND PROGRAM PARTICIPATION IN THE HERO PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS; Resolution No. 14-040, entitled: A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PART ICIP ATION IN THE FIGTREE PACE PROGRAM CONT INGENT ON CERTAIN PROGRAM REQUIREMENTS; and Resolution No. 14-041, entitled: A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE CALIFORNIAFIRST PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS. AYES: Cox, Jacob, D. Roberts, R. Roberts, Horn 188 04/15/14 State of California) County of San Diego) § I hereby certify that the foregoing is a full, true and correct copy of the Original entered in the Minutes of the Board of Supervisors. THOMAS J. PASTUSZKA Clerk of the Board of Supervisors By_____________________________ Marvice E. Mazyck, Chief Deputy - - - I hereby certify that the foregoing is a full, true and correct copy of the Original entered in the Minutes of the Board of Supervisors. Clerk of the Board of Supervisors By_____________________________ Marvice E. Mazyck, Chief Deputy 3 I hereby certify that the foregoing is a full, true and correct copy of the Original entered in the 189 COUNTY OF SAN DIEGO AGENDA ITEM BOARD OF SUPERVISORS GREG COX First District DIANNE JACOB Second District DAVE ROBERTS Third District RON ROBERTS Fourth District BILL HORN Fifth District D4.0 1 DATE:April 15, 2014 23 TO:Board of Supervisors SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) Overview On August 6, 2013 (15) yo ur Board of Supervisors took the necessary action to adopt into two Commercial PACE Programs, California HERO and Figtree PACE Program, in addition to the County’s existing participation in CaliforniaFIRST. Staff has been monitoring recent developments made at the State level in hopes of mitigating concerns from the Federal Housing Finance Authority (FHFA). Governor Jerry Brown included a proposal in the Enacted FY 2013- 14 State Budget authorizing the California Alternative Energy and Advanced Transportation Financing Authorit y (CAEATFA) to establish a PACE Lo ss Reserve Program through Senate Bill 96. This program was specifically designed to address FHFA’s concerns through the use of a reserve fund that would reimburse residential PACE programs for costs associated with keeping mortgage interests whole in the event of a foreclosure or forced sale.The Loss Reserve Program will compensate mortgage lenders for losses resulting from the existence of a PACE lien in a foreclosure or forced sale. Claims will be paid from the reserve to the PACE program and may be used as a reimbursement to that program. PACE programs will pay a small administrative fee based on loan volume to help sustain this program. Governor Brown has allocated $10 million for the implementation of this program in the 2013-14 State budget.The PACE Loss Reserve Program was officially launched in March and is currently accepting applications. Today’s recommendation is to take the necessary actions to expand the County’s existing PACE program participation to include residential properties;contingent on the PACE Program being enrolled in the PACE Lo ss Reserve Program.The PACE Program will also provide disclosures to participants of the possibility of acceleration of existing obligations or prepayment of assessments to ensure property owners are aware of the potential risks. Recommendation(s) CHIEF ADMINISTRATIVE OFFICER Adopt the resolutions entitled: 190 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 2 A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS TO EXPAND PROGRAM PARTICIPATION IN THE HERO PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE FIGTREE PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE CALIFORNIAFIRST PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS Fiscal Impact There are no fiscal impacts associated with today’s action. Business Impact Statement N/A Advisory Board Statement N/A Background In 2008, AB 811 was enacted in California with the hope of stimulating the increased energy efficiency and use of alternative energy sources by home, business and industrial property owners. AB 811 established parameters for financing alternative energy sources or greater energy efficiencies for property owners by enabling the County to facilitate loans to propert y owners for making energy efficient property improvements (“Improvements”)with pay-back through an assessment attached to the annual property tax bills. It is important to note that AB 811 did not provide for any funding, nor did it offer specifics as to how local jurisdictions could fund or administer such programs. Since that time additional State legislation has been enacted to expand the scope of AB 811 programs to include water efficiency improvements in efforts to help stimulate AB 811-type programs. On December 9, 2008 (37), your Board approved exploring the feasibility of forming an AB 811 program, now known as a PACE program,in the County of San Diego, with the restriction that the County would seek to recover the cost of forming a PACE program through property assessments. Staff subsequently determined estimated costs associated with the County forming and administering a local PACE district were significant, and further determined that the recovery of these costs and the timing of their recovery were uncertain. On September 23, 2009 (15), your Board directed staff to explore the cost, benefits, and feasibility of County participation in CaliforniaFIRST,a statewide PACE program.On December 8, 2009 (30) your 191 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 3 Board approved the County’s participation in CaliforniaFIRST, a statewide AB 811 Property Assessed Clean Energy (PACE) program offered through California Statewide Communities Development Authority (CSCDA). The CaliforniaFIRST PACE program initially stalled due to issues brought forth by the Federal Housing Finance Authority (FHFA)on the residential side of the program. CaliforniaFIRST initiated their commercial program in September 2012, in which the County of San Diego is a participant by virtue of opting into the original program. On February 26, 2013 (26) your Board of Supervisors directed the Chief Administrative Officer to review and analyz e all commercial and residential PACE programs that currently exist and operate throughout the State of California and to report back to the Board of Supervisors within 120 days. On May 14, 2013 (13) your Board received the staff report. On June 18, 2013 (26), your Board directed the Chief Administrative Officer to return to the Board of Supervisors within 60 days with the necessary actions to expand the County’s commercial PACE program. The action also requested a report back on the expansion of residential PACE with vendors under both the AB 811 and SB 555 models with specific conditions: 100% indemnification to the County of San Diego; full cost recovery for the County of San Diego; a Letter of Credit in case of default with no risk to the County of San Diego; limit residential PACE to non-Federal Housing Finance Agency loans and homes without a loan; borrowers in San Diego County will not have their loan-to-value ratios adjusted as a result of expanding the PACE program. Separate action from the Board of Supervisors directed the Chief Administrative Officer to seek clarification from the FHFA on whether or not the loan-to-value ratios would be adjusted in a jurisdiction with a non- FHFA PACE program; provide options for both a Consent and a Notification PACE program with the pros and cons of each option; draft a letter for the Chair’s signature to the President of the United States encouraging modification of existing PACE policies; and to draft a letter to Gary Gallegos, Executive Director of SANDAG, asking that the SANDAG Board consider evaluating the various PACE options and explore whether there are any regional benefits to having SANDAG establish a PACE district. In response to the Board’s direction, staff sent all applicable letters pertaining to the FHFA issue. Staff also sent a letter to SANDAG asking the SANDAG Board of Directors to consider evaluating PACE options from their regional perspective. Additionally, Purchasing & Contracting issued a Request For In formation (RFI) at the end of June for program vendors to provide information on their respective PACE program, both commercial and residential. On August 6, 2013 (15) yo ur Board received a staff report and recommendations to join the two Joint Powers Agreements for commercial PACE programs that the County was not a participant in. Your Board approved the County’s participation in the Commercial California HERO Property Assessed Clean Energy Program and the Commercial Figtree PACE Program, joining the CaliforniaFIRST PACE Program that your Board had previously opted to join. At this time yo ur Board also directed the Chief Administrative Officer to look at legislative options that would legally allow a PACE lien to be subordinated and to include this action in the County’s Legislative Program. The County’s Office of Strategy and Intergovernmental Affairs included this in the 2014 Legislative Program’s Sponsorship Proposals approved by your Board on December 3, 2013. 192 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 4 In an effort to specifically address the concerns posed by FHFA, Governor Jerry Brown included a proposal in the Enacted FY 2013-14 State Budget authorizing the California Alternative Energy and Advanced Transportation Financing Authorit y (CAEATFA) to establish a PACE Loss Reserve program through Senate Bill 96. This program seeks to address FHFA’s concerns through the use of a reserve fund that would reimburse residential PACE programs for costs associated with keeping mortgage interests whole in the event of a foreclosure or forced sale. The Loss Reserve Program will compensate mortgage lenders for losses resulting from the existence of a PACE lien in a foreclosure or forced sale. Claims will be paid from the reserve to the PACE program and may be used as a reimbursement to that program. PACE programs will pay a small administrative fee based on loan volume to help sustain this program. Governor Brown has allocated $10 million for the implementation of this program in the 2013-14 State budget.Although FHFA has not yet commented on the Governor’s action, the PACE Loss Reserve Program was officially launched in March and is currently accepting applications. Linkage to the County of San Diego Strategic Plan Today’s proposed recommendation supports the Sustainable Environments Strategic Initiative in the County of San Diego’s 2014-2019 Strategic Plan by expanding on the County’s existing Residential Property Assessed Clean Energy (PACE) program. Respectfully submitted, HELEN N. ROBBINS-MEYER Chief Administrative Officer ATTACHMENT(S) 1-County Resolution-California HERO 2-County Resolution-Figtree 3-County Resolution-CaliforniaFIRST 193 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 5 AGENDA ITEM INFORMATION SHEET REQUIRES FOUR VOTES:[ ]Yes [X]No WRITTEN DISCLOSURE PER COUNTY CHARTER SECTION 1000.1 REQUIRED [ ]Yes [X]No PREVIOUS RELEVANT BOARD ACTIONS: August 6, 2014 (15) EXPANSION OF COMMERCIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM AND UPDATE ON RESIDENTIAL PACE PROGRAM (DISTRICTS: ALL) June 18, 2013 (26) RESPONSE TO EVALUATION OF PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAMS (DISTRICTS: ALL) May 14, 2013 (13) RESPONSE TO EVALUATION OF PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAMS (DISTRICTS: ALL) February 26, 2013 (2) EVALUATING PACE PROGRAMS (DISTRICTS: ALL) BOARD POLICIES APPLICABLE: N/A BOARD POLICY STATEMENTS: N/A MANDATORY COMPLIANCE: N/A ORACLE AWARD NUMBER(S) AND CONTRACT AND/OR REQUISITION NUMBER(S): N/A ORIGINATING DEPARTMENT:Chief Administrative Office OTHER CONCURRENCES(S): County Counsel CONTACT PERSON(S): Rachel H. Witt Donald F. Steuer Name Name (619) 531-6205 (619) 531-4940 Phone Phone Rachel.Witt@sdcounty.ca.gov Donald.Steuer@sdcounty.ca.gov E-mail E-mail 194 COUNTY OF SAN DIEGO AGENDA ITEM BOARD OF SUPERVISORS GREG COX First District DIANNE JACOB Second District DAVE ROBERTS Third District RON ROBERTS Fourth District BILL HORN Fifth District D4.0 1 DATE:April 15, 2014 23 TO:Board of Supervisors SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) Overview On August 6, 2013 (15) yo ur Board of Supervisors took the necessary action to adopt into two Commercial PACE Programs, California HERO and Figtree PACE Program, in addition to the County’s existing participation in CaliforniaFIRST. Staff has been monitoring recent developments made at the State level in hopes of mitigating concerns from the Federal Housing Finance Authority (FHFA). Governor Jerry Brown included a proposal in the Enacted FY 2013- 14 State Budget authorizing the California Alternative Energy and Advanced Transportation Financing Authorit y (CAEATFA) to establish a PACE Lo ss Reserve Program through Senate Bill 96. This program was specifically designed to address FHFA’s concerns through the use of a reserve fund that would reimburse residential PACE programs for costs associated with keeping mortgage interests whole in the event of a foreclosure or forced sale.The Loss Reserve Program will compensate mortgage lenders for losses resulting from the existence of a PACE lien in a foreclosure or forced sale. Claims will be paid from the reserve to the PACE program and may be used as a reimbursement to that program. PACE programs will pay a small administrative fee based on loan volume to help sustain this program. Governor Brown has allocated $10 million for the implementation of this program in the 2013-14 State budget.The PACE Loss Reserve Program was officially launched in March and is currently accepting applications. Today’s recommendation is to take the necessary actions to expand the County’s existing PACE program participation to include residential properties;contingent on the PACE Program being enrolled in the PACE Lo ss Reserve Program.The PACE Program will also provide disclosures to participants of the possibility of acceleration of existing obligations or prepayment of assessments to ensure property owners are aware of the potential risks. Recommendation(s) CHIEF ADMINISTRATIVE OFFICER Adopt the resolutions entitled: 195 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 2 A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS TO EXPAND PROGRAM PARTICIPATION IN THE HERO PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE FIGTREE PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE CALIFORNIAFIRST PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS Fiscal Impact There are no fiscal impacts associated with today’s action. Business Impact Statement N/A Advisory Board Statement N/A Background In 2008, AB 811 was enacted in California with the hope of stimulating the increased energy efficiency and use of alternative energy sources by home, business and industrial property owners. AB 811 established parameters for financing alternative energy sources or greater energy efficiencies for property owners by enabling the County to facilitate loans to propert y owners for making energy efficient property improvements (“Improvements”)with pay-back through an assessment attached to the annual property tax bills. It is important to note that AB 811 did not provide for any funding, nor did it offer specifics as to how local jurisdictions could fund or administer such programs. Since that time additional State legislation has been enacted to expand the scope of AB 811 programs to include water efficiency improvements in efforts to help stimulate AB 811-type programs. On December 9, 2008 (37), your Board approved exploring the feasibility of forming an AB 811 program, now known as a PACE program,in the County of San Diego, with the restriction that the County would seek to recover the cost of forming a PACE program through property assessments. Staff subsequently determined estimated costs associated with the County forming and administering a local PACE district were significant, and further determined that the recovery of these costs and the timing of their recovery were uncertain. On September 23, 2009 (15), your Board directed staff to explore the cost, benefits, and feasibility of County participation in CaliforniaFIRST,a statewide PACE program.On December 8, 2009 (30) your 196 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 3 Board approved the County’s participation in CaliforniaFIRST, a statewide AB 811 Property Assessed Clean Energy (PACE) program offered through California Statewide Communities Development Authority (CSCDA). The CaliforniaFIRST PACE program initially stalled due to issues brought forth by the Federal Housing Finance Authority (FHFA)on the residential side of the program. CaliforniaFIRST initiated their commercial program in September 2012, in which the County of San Diego is a participant by virtue of opting into the original program. On February 26, 2013 (26) your Board of Supervisors directed the Chief Administrative Officer to review and analyz e all commercial and residential PACE programs that currently exist and operate throughout the State of California and to report back to the Board of Supervisors within 120 days. On May 14, 2013 (13) your Board received the staff report. On June 18, 2013 (26), your Board directed the Chief Administrative Officer to return to the Board of Supervisors within 60 days with the necessary actions to expand the County’s commercial PACE program. The action also requested a report back on the expansion of residential PACE with vendors under both the AB 811 and SB 555 models with specific conditions: 100% indemnification to the County of San Diego; full cost recovery for the County of San Diego; a Letter of Credit in case of default with no risk to the County of San Diego; limit residential PACE to non-Federal Housing Finance Agency loans and homes without a loan; borrowers in San Diego County will not have their loan-to-value ratios adjusted as a result of expanding the PACE program. Separate action from the Board of Supervisors directed the Chief Administrative Officer to seek clarification from the FHFA on whether or not the loan-to-value ratios would be adjusted in a jurisdiction with a non- FHFA PACE program; provide options for both a Consent and a Notification PACE program with the pros and cons of each option; draft a letter for the Chair’s signature to the President of the United States encouraging modification of existing PACE policies; and to draft a letter to Gary Gallegos, Executive Director of SANDAG, asking that the SANDAG Board consider evaluating the various PACE options and explore whether there are any regional benefits to having SANDAG establish a PACE district. In response to the Board’s direction, staff sent all applicable letters pertaining to the FHFA issue. Staff also sent a letter to SANDAG asking the SANDAG Board of Directors to consider evaluating PACE options from their regional perspective. Additionally, Purchasing & Contracting issued a Request For In formation (RFI) at the end of June for program vendors to provide information on their respective PACE program, both commercial and residential. On August 6, 2013 (15) yo ur Board received a staff report and recommendations to join the two Joint Powers Agreements for commercial PACE programs that the County was not a participant in. Your Board approved the County’s participation in the Commercial California HERO Property Assessed Clean Energy Program and the Commercial Figtree PACE Program, joining the CaliforniaFIRST PACE Program that your Board had previously opted to join. At this time yo ur Board also directed the Chief Administrative Officer to look at legislative options that would legally allow a PACE lien to be subordinated and to include this action in the County’s Legislative Program. The County’s Office of Strategy and Intergovernmental Affairs included this in the 2014 Legislative Program’s Sponsorship Proposals approved by your Board on December 3, 2013. 197 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 4 In an effort to specifically address the concerns posed by FHFA, Governor Jerry Brown included a proposal in the Enacted FY 2013-14 State Budget authorizing the California Alternative Energy and Advanced Transportation Financing Authorit y (CAEATFA) to establish a PACE Loss Reserve program through Senate Bill 96. This program seeks to address FHFA’s concerns through the use of a reserve fund that would reimburse residential PACE programs for costs associated with keeping mortgage interests whole in the event of a foreclosure or forced sale. The Loss Reserve Program will compensate mortgage lenders for losses resulting from the existence of a PACE lien in a foreclosure or forced sale. Claims will be paid from the reserve to the PACE program and may be used as a reimbursement to that program. PACE programs will pay a small administrative fee based on loan volume to help sustain this program. Governor Brown has allocated $10 million for the implementation of this program in the 2013-14 State budget.Although FHFA has not yet commented on the Governor’s action, the PACE Loss Reserve Program was officially launched in March and is currently accepting applications. Linkage to the County of San Diego Strategic Plan Today’s proposed recommendation supports the Sustainable Environments Strategic Initiative in the County of San Diego’s 2014-2019 Strategic Plan by expanding on the County’s existing Residential Property Assessed Clean Energy (PACE) program. Respectfully submitted, HELEN N. ROBBINS-MEYER Chief Administrative Officer ATTACHMENT(S) 1-County Resolution-California HERO 2-County Resolution-Figtree 3-County Resolution-CaliforniaFIRST 198 SUBJECT:UPDATE AND EXPANSION ON RESIDENTIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM (DISTRICTS: ALL) D4.0 5 AGENDA ITEM INFORMATION SHEET REQUIRES FOUR VOTES:[ ]Yes [X]No WRITTEN DISCLOSURE PER COUNTY CHARTER SECTION 1000.1 REQUIRED [ ]Yes [X]No PREVIOUS RELEVANT BOARD ACTIONS: August 6, 2014 (15) EXPANSION OF COMMERCIAL PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM AND UPDATE ON RESIDENTIAL PACE PROGRAM (DISTRICTS: ALL) June 18, 2013 (26) RESPONSE TO EVALUATION OF PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAMS (DISTRICTS: ALL) May 14, 2013 (13) RESPONSE TO EVALUATION OF PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAMS (DISTRICTS: ALL) February 26, 2013 (2) EVALUATING PACE PROGRAMS (DISTRICTS: ALL) BOARD POLICIES APPLICABLE: N/A BOARD POLICY STATEMENTS: N/A MANDATORY COMPLIANCE: N/A ORACLE AWARD NUMBER(S) AND CONTRACT AND/OR REQUISITION NUMBER(S): N/A ORIGINATING DEPARTMENT:Chief Administrative Office OTHER CONCURRENCES(S): County Counsel CONTACT PERSON(S): Rachel H. Witt Donald F. Steuer Name Name (619) 531-6205 (619) 531-4940 Phone Phone Rachel.Witt@sdcounty.ca.gov Donald.Steuer@sdcounty.ca.gov E-mail E-mail 199 RESOLUTION NO. ______________ A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS TO EXPAND PROGRAM PARTICIPATION IN THE HERO PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS WHEREAS, on August 6, 2013, the Board of Supervisors adopted Resolution No. 13-105 (“Authorizing Resolution”), which authorized the Western Riverside Council of Governments (“WRCOG”) to, among other things, conduct assessment proceedings within the unincorporated area of the County of San Diego (“County”) to allow certain eligible property owners to participate in the HERO PACE Program; and WHEREAS, the HERO PACE Program provides financing for certain renewable energy, energy efficiency and water efficiency improvements (Improvements) through the levy of voluntary contractual assessments under the Bond Improvement Act of 1915; and WHEREAS, the Authorizing Resolution limited the availability of the HERO PACE Program to commercial properties due to issues raised by the Federal Housing Financing Authority (“FHFA”) regarding residential Property Assessed Clean Energy (“PACE”) programs; and WHEREAS, in September 2013, the Governor of the State of California signed Senate Bill 96, a residential PACE Loss Reserve Program (“PACE Loss Reserve Program”) specifically designed to address the FHFA’s and the California Alternative Energy and Advanced Transportation Financing Authority (“Authority”) launched the PACE Loss Reserve Program in March 2014; WHEREAS, in light of this new development, the County deems it prudent to offer residential PACE options to eligible participants in the unincorporated areas contingent on the HERO PACE Program meeting certain programmatic requirements; WHEREAS, this resolution authorizes the expansion of the HERO PACE Program to include residential properties within the unincorporated areas of the County; NOW, THEREFORE, BE IT RESOLVED, by the Board of Supervisors of the County of San Diego that the HERO PACE Program shall be available to all eligible property owners in the unincorporated areas of the County of San Diego, including owners of residential properties BE IT FURTHER RESOLVED, the County’s participation in the HERO PACE Program is contingent on the HERO PACE Program meeting the following 200 program requirements: 1. The HERO PACE Program is enrolled in the State PACE Loss Reserve Program; 2. The HERO PACE Program provides full disclosures to participants, including, but not limited to the disclosure that participation in the PACE Program may trigger acceleration of existing obligations of an existing mortgage and that the participant may be required to prepay the contractual assessments upon the refinancing or sale of the property. BE IT FURTHER RESOLVED, this resolution shall take effect immediately upon its adoption and the Clerk of the Board of Supervisors is authorized and directed to transmit a certified copy of this resolution to the Secretary of WRCOG. APPROVED AS TO FORM AND LEGALITY THOMAS E. MONTGOMERY, COUNTY COUNSEL BY: RACHEL H. WITT, SENIOR DEPUTY 201 RESOLUTION NO. ______________ A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE FIGTREE PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS WHEREAS, on August 6, 2013, the Board of Supervisors adopted Resolution No. 13-106 (“Authorizing Resolution”), which authorized the California Enterprise Development Authority (“CEDA”) to, among other things, conduct assessment proceedings within the unincorporated area of the County of San Diego (“County”) to allow certain eligible property owners to participate in the Figtree PACE Program; and WHEREAS, the Figtree PACE Program provides financing for certain renewable energy, energy efficiency and water efficiency improvements (Improvements) through the levy of voluntary contractual assessments under the Bond Improvement Act of 1915; and WHEREAS, the Authorizing Resolution limited the availability of the Figtree PACE Program to commercial properties due to issues raised by the Federal Housing Financing Authority (“FHFA”) regarding residential Property Assessed Clean Energy (“PACE”) programs; and WHEREAS, in September 2013, the Governor of the State of California signed Senate Bill 96, a residential PACE Loss Reserve Program (“PACE Loss Reserve Program”) specifically designed to address the FHFA’s and the California Alternative Energy and Advanced Transportation Financing Authority (“Authority”) launched the PACE Loss Reserve Program in March 2014; WHEREAS, in light of this new development, the County deems it prudent to offer residential PACE options to eligible participants in the unincorporated areas contingent on the Figtree PACE Program meeting certain programmatic requirements; WHEREAS, this resolution authorizes the expansion of the Figtree PACE Program to include residential properties within the unincorporated areas of the County; NOW, THEREFORE, BE IT RESOLVED, by the Board of Supervisors of the County of San Diego that the Figtree PACE Program shall be available to all eligible property owners in the unincorporated areas of the County of San Diego, including owners of residential properties BE IT FURTHER RESOLVED, the County’s participation in the Figtree PACE Program is contingent on the Figtree PACE Program meeting the following 202 program requirements: 1. The Figtree PACE Program is enrolled in the State PACE Loss Reserve Program; 2. The Figtree PACE Program provides full disclosures to participants, including, but not limited to the disclosure that participation in the PACE Program may trigger acceleration of existing obligations of an existing mortgage and that the participant may be required to prepay the contractual assessments upon the refinancing or sale of the property. BE IT FURTHER RESOLVED, this resolution shall take effect immediately upon its adoption and the Clerk of the Board of Supervisors is authorized and directed to transmit a certified copy of this resolution to the Secretary of CEDA. APPROVED AS TO FORM AND LEGALITY THOMAS E. MONTGOMERY, COUNTY COUNSEL BY: RACHEL H. WITT, SENIOR DEPUTY 203 RESOLUTION NO. ______________ A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO EXPAND PROGRAM PARTICIPATION IN THE CALIFORNIAFIRST PACE PROGRAM CONTINGENT ON CERTAIN PROGRAM REQUIREMENTS WHEREAS, on December 8, 2009, the Board of Supervisors adopted Resolution No. 09-245 (“Authorizing Resolution”), which authorized the California Statewide Communities Development Authority (“California Communities”) to, among other things, conduct assessment proceedings within the unincorporated area of the County of San Diego (“County”) to allow certain eligible property owners to participate in the CaliforniaFIRST PACE Program; and WHEREAS, the CaliforniaFIRST PACE Program provides financing for certain renewable energy, energy efficiency and water efficiency improvements (Improvements) through the levy of voluntary contractual assessments under the Bond Improvement Act of 1915; and WHEREAS, on August 4, 2010, California Communities adopted a resolution suspending the residential component of its PACE program due to issues raised by the Federal Housing Financing Authority (“FHFA”) regarding residential Property Assessed Clean Energy (“PACE”) programs; and WHEREAS, in September 2013, the Governor of the State of California signed Senate Bill 96, a residential PACE Loss Reserve Program (“PACE Loss Reserve Program”) specifically designed to address the FHFA’s and the California Alternative Energy and Advanced Transportation Financing Authority (“Authority”) launched the PACE Loss Reserve Program in March 2014; WHEREAS, on March 6, 2014, as a result of the State’s creation of the PACE Loss Reserve Program, California Communities adopted a resolution to rescind its prior resolution to suspend residential PACE and take actions to launch the residential component of its PACE program. WHEREAS, in light of this new development, the County deems it prudent to offer residential PACE options to eligible participants in the unincorporated areas contingent on CaliforniaFIRST PACE Program meeting certain programmatic requirements; WHEREAS, this resolution authorizes the expansion of the CaliforniaFIRST PACE Program to include residential properties within the unincorporated areas of the County; NOW, THEREFORE, BE IT RESOLVED, by the Board of Supervisors of the County of San Diego 204 that the CaliforniaFIRST PACE Program shall be available to all eligible property owners in the unincorporated areas of the County of San Diego, including owners of residential properties BE IT FURTHER RESOLVED, the County’s participation in the CaliforniaFIRST PACE Program is contingent on the CaliforniaFIRST PACE Program meeting the following program requirements: 1. The CaliforniaFIRST PACE Program is enrolled in the State PACE Loss Reserve Program; 2. The CaliforniaFIRST PACE Program provides full disclosures to participants, including, but not limited to the disclosure that participation in the PACE Program may trigger acceleration of existing obligations of an existing mortgage and that the participant may be required to prepay the contractual assessments upon the refinancing or sale of the property. BE IT FURTHER RESOLVED, that should CaliforniaFIRST fail to meet the program requirements required by this resolution, the County shall opt-out of the CaliforniaFIRST residential PACE Program. BE IT FURTHER RESOLVED, this resolution shall take effect immediately upon its adoption and the Clerk of the Board of Supervisors is authorized and directed to transmit a certified copy of this resolution to the Secretary of California Communities. APPROVED AS TO FORM AND LEGALITY THOMAS E. MONTGOMERY, COUNTY COUNSEL BY: RACHEL H. WITT, SENIOR DEPUTY 205 206 207 INTERNAL OPERATIONS COMMITTEE 6. Meeting Date:03/09/2015 Subject:Composition of Stakeholder Group for MHSA Plan Monitoring Submitted For: William Walker, M.D., Health Services Director Department:Health Services Referral No.: IOC 15/11 Referral Name: Mental Health Services Act Budget Oversight Process Presenter: Cynthia Belon, Behavioral Services Director Contact: Warren Hayes (925) 957-5201 Referral History: Welfare and Institutions Code Section 5898 states that each Mental Health Services Act (MHSA) Three Year Program and Expenditure Plan and annual Plan Update is to be developed in partnership with stakeholders to: Identify community issues related to mental illness resulting from lack of community services and supports, including any issues identified during the implementation of the Mental Health Services Act. 1. Analyze the mental health needs in the community.2. Identify and re-evaluate priorities and strategies to meet those mental health needs.3. California Code of Regulations Title 9, Division 1 section 3200.270 defines stakeholders as individuals or entities with an interest in mental health services in the State of California, including but not limited to: individuals with serious mental illness and/or serious emotional disturbance and/or their families; providers of mental health and/or related services such as physical health care and/or social services; educators and/or representatives of education; representatives of law enforcement and any other organization that represents the interests of individuals with serious mental illness and/or serious emotional disturbance and/or their families. In order to comply with the above statute and regulation, Contra Costa County Behavioral Health Services commissioned in 2009 an ongoing advisory body, entitled the Consolidated Planning Advisory Workgroup (CPAW), to assist and advise the Behavioral Health Services Director in implementing the required community program planning process that is part of development of the MHSA Three Year Program Plan and annual Plan Update. The Membership Committee of CPAW accepts and reviews applications from the public, and makes recommendations to the Behavioral Health Services Director for appointment to CPAW. The Membership Committee also analyzes stakeholder characteristics and affiliations, and assists in recruitment of individuals from stakeholder groups who are underrepresented. 208 Given the above, the Board of Supervisors’ Internal Operations Committee (IOC) has asked for a review of the County’s process for recommendation, review, and monitoring of the MHSA budget, the role of the CPAW and the Mental Health Commission in this process, and the protocol for identification and mitigation of any potential financial conflicts of interests by individuals who serve on either body. Referral Update: In 2011, Contra Costa Mental Health (now part of Behavioral Health Services) reported to the IOC on: 1) the status of its compliance with statute and regulations pertaining to MHSA stakeholder participation, 2) a plan to ensure broad representation, 3) the necessity of service providers to be involved, and 4) the requirements for CPAW members to declare any potential conflict of interest, and to refrain from being involved in any decision-making or recommendations that might present a conflict of interest to them and/or their agency. In 2012, the Office of the County Counsel provided a legal opinion for all County Boards, Commissions and their Administrative Officers and Secretaries pertaining to compliance with selected Brown Act and Better Government Ordinance provisions. The Mental Health Commission is subject to the provisions of the Brown Act, while CPAW is not. However, County Counsel stated that County bodies that are not subject to the Brown Act nevertheless must comply with comparable provisions under the Better Government Ordinance. CPAW has been operating under the intent of the Brown Act by holding all meetings open for public attendance and participation, and by publicly advertising and providing advance notice for meetings at fixed times and places. In 2013, CPAW revisited its governance and membership provisions in order to more closely align its role as an advisory body for ensuring representative stakeholder input regarding priority mental health needs, strategies to meet those needs, and active ongoing participation in the MHSA-prescribed community program planning process. It was clarified that CPAW’s role does not include providing funding recommendations to the Behavioral Health Services Director or approval authority for MHSA programs, plan elements, categories, components or the MHSA budget in total. CPAW does not make recommendations on contract awards. A revised working agreement stipulates that any individual, whether a CPAW member or not, must identify to the group any perspective, affiliation or potential conflict of interest in discussions that lead to group positions or recommendations. All current members completed a revised membership application that updated their characteristics and affiliations. Analysis of these applications indicate that over 50% of CPAW members identify as consumers and/or family members, with five of the 22 members employed by a County contract provider, three employed by Contra Costa County, two serving on the NAMI board, and four serving on the Mental Health Commission (including the current chairperson). In 2014, the MHSA Three Year Program and Expenditure Plan included a new chapter, entitled 209 In 2014, the MHSA Three Year Program and Expenditure Plan included a new chapter, entitled Evaluating the Plan. In partnership with the Mental Health Commission’s MHSA/Finance Committee, staff developed and implemented a comprehensive program and fiscal review process of each MHSA funded program and plan element in order to evaluate the effective use of funds provided by the MHSA. In addition, a monthly Finance Report was developed and generated to depict funds budgeted versus spent for each program and plan element. This enables fiscal transparency and accountability, as well as provides information with which to engage in sound planning. The results of both program reviews and monthly Finance Reports are shared with both CPAW in its planning and evaluation advisory role to the Behavioral Health Services Director, and the Mental Health Commission in its monitoring role to the Board of Supervisors. Neither entity recommends or approves MHSA budgets, as this is the purview of the County and the Board of Supervisors. Recommendation(s)/Next Step(s): The IOC review the above information and analysis and request the County to clarify the following respective roles pertaining to the MHSA budget process: The Board of Supervisors approves the MHSA Three Year Program and Expenditure Plan and yearly Plan Updates. a. The County Administrator’s Office provides recommendations to the Board of Supervisors regarding the MHSA Three Year Plan and Updates prepared by the Health Services Department. b. The Mental Health Commission reviews the adopted MHSA Three Year Plan or Update, and makes recommendations to the Behavioral Health Services Director for any revisions. The Mental Health Commission also monitors the implementation of the MHSA Three Year Plan or Update through Program Review reports and monthly Finance Reports as part of its review and evaluation of the community’s mental health needs, services facilities, and special problems, and reports to the Board of Supervisors. c. The Consolidated Planning Advisory Workgroup advises the Behavioral Health Services Director regarding prioritized service needs and strategies to meet these needs, and assists the County to implement a comprehensive community program planning process in order to ensure active participation by the community in public mental health planning and evaluation efforts. d. All bodies commissioned by the County to support the above efforts are to abide by the letter and/or intent of the Brown Act to identify and mitigate any potential conflict of interest pertaining to recommendations regarding use of public resources, to include MHSA funds. e. Fiscal Impact (if any): None. Attachments Board Order Referral_MHSA Synopsis of CPAW (Consolidated Planning Advisory Workgroup) 210 RECOMMENDATION(S): REFER to the Internal Operations Committee a review of the process used by the Health Services Department for the recommendation, review and monitoring of the Mental Health Services Act budget. FISCAL IMPACT: No fiscal impact. BACKGROUND: The California Department of Mental Health mandates that a community program planning process serve as the basis for all Mental Health Services Act (Proposition 63) planning. In Contra Costa County, the Consolidated Planning Advisory Workgroup (CPAW) serves in this capacity, assisting the Mental Health Division with integrated planning, increasing the transparency of MHSA efforts, and advising the Mental Health Division on how to integrate MHSA principles and practices. CPAW gives a variety of members from the mental health community an opportunity to provide input for system growth and change. Welfare and Institutions Code section 5848 states: "Each plan and plan update shall be developed with local stakeholders, including adults and seniors with severe mental illness, families of children, adults, and seniors with severe mental illness, providers of mental health services, law enforcement agencies, education, social service agencies, veterans, representatives from veteran's organizations, and other important interests" (emphasis added). Additionally, The California Code of Regulations, Title 9, Chapter 14, Section 3200.270 states: "'Stakeholders means individuals or entities with an interest in mental health services in the State of California, including but not limited to: APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 01/20/2015 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Dorothy Sansoe, 925-335-1009 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: January 20, 2015 David J. Twa, County Administrator and Clerk of the Board of Supervisors By: Chris Heck, Deputy cc: C. 56 To:Board of Supervisors From:David Twa, County Administrator Date:January 20, 2015 Contra Costa County Subject:Referral to Internal Operations Committee 211 individuals with serious mental illness and/or serious emotional disturbance and/or their families; providers of mental health and/or related services such as physical health care and/or social services; educators and/or representatives of education; representatives of law enforcement; and any other organization that represents the interests of individuals with serious mental illness and/or serious emotional disturbance and/or their families". 212 BACKGROUND: (CONT'D) It is important to note that CPAW is not an advisory board, committee or commission to the Board of Supervisors. It is a workgroup established under State statute to advise County Mental Health staff, not the County Board of Supervisors. It is not required to function under the Brown Act or Better Government Ordinance, although all of its meetings are publicly noticed and the public are invited to attend. The Mental Health Commission is an advisory body to the Board of Supervisors and is required under Welfare and Institutions Code section 5600. As a legislatively created advisory body the Commission must follow the Ralph M. Brown Act and the County Better Government Ordinance., It has been suggested that the Commission take on the role currently performed by CPAW with regards to making recommendations, reviewing and monitoring the MHSA budget. Many other counties use their local mental health commission to perform the duties under the MHSA that are performed by CPAW in Contra Costa County. This referral should include a review of potential conflicts of interest for the members of CPAW who are contractors receiving funding through the MHSA budget. CONSEQUENCE OF NEGATIVE ACTION: A review of the responsibilities of the Consolidated Planning Advisory Workgroup and the Mental Health Commission will not be undertaken. CHILDREN'S IMPACT STATEMENT: Not applicable. 213 Consolidated Planning Advisory Workgroup (CPAW) - The California Department of Mental Health mandates that a community program planning process serve as the basis for all Mental Health Services Act (Proposition 63) planning. In Contra Costa County, the Consolidated Planning Advisory Workgroup (CPAW) serves in this capacity, assisting the Mental Health Division with integrated planning, increasing the transparency of MHSA efforts, and advising the Mental Health Division on how to integrate MHSA principles and practices. CPAW gives a variety of members from the mental health community an opportunity to provide input for system growth and change. Welfare and Institutions Code section 5848 states: "Each plan and plan update shall be developed with local stakeholders, including adults and seniors with severe mental illness, families of children, adults, and seniors with severe mental illness, providers of mental health services, law enforcement agencies, education, social service agencies, veterans, representatives from veteran's organizations, and other important interests" (emphasis added). Additionally, The California Code of Regulations, Title 9, Chapter 14, Section 3200.270 states: "'Stakeholders means individuals or entities with an interest in mental health services in the State of California, including but not limited to: individuals with serious mental illness and/or serious emotional disturbance and/or their families; providers of mental health and/or related services such as physical health care and/or social services; educators and/or representatives of education; representatives of law enforcement; and any other organization that represents the interests of individuals with serious mental illness and/or serious emotional disturbance and/or their families". It is important to note that CPAW is not an advisory board, committee or commission to the Board of Supervisors. It is a workgroup established under State statute to advise County Mental Health staff, not the County Board of Supervisors. It is not required to function under the Brown Act or Better Government Ordinance, although all of its meetings are publicly noticed and the public are invited to attend. Purpose CPAW has 35 seats and 22 members currently representing various stakeholder entities as described in the above regulations. They are actively recruiting to fill the vacancies. Individual members can represent several of the disciplines listed. For example, one member represents the following areas: Transitional Age Youth, Planning and Early Intervention for those over 25 years of age, Workforce Education and Training, Information Technology, Consumer, Mental Health Provider, and Central Contra Costa County. The Mental Health Commission has appointed two of its members to represent the Commission on the Workgroup. CPAW members are appointed by the Mental Health Director, and represent stakeholders who receive or provide services, or who are otherwise involved in public mental health services in Contra Costa County. CPAW 1) assists in the ongoing development and 214 evaluation of the programs and plan elements that comprise the MHSA Three Year Program and Expenditure Plan, and subsequent yearly Plan Updates, 2) advises on the integration of the values and principles inherent in MHSA into the larger public mental health system, and 3) promotes transparency of effort by sharing information with the stakeholder community CPAW Committees CPAW meets to discuss and advise on areas of topical interest, and to receive reports from the following CPAW sponsored sub-committees: Steering. Develops the CPAW Committee meeting agenda, and represents CPAW on selected issues. Membership. Recommends prospective applicants to the CCMH Director for membership. Innovation. Recommends new Innovation Projects and monitors and evaluates existing projects. Social Inclusion. Oversees mental health stigma and discrimination reduction initiatives. Housing. Plans and advises on new and existing housing and homeless services. Age-related Committees. Children’s, Transition Age Youth, Adult, and Aging/Older Adult sub-committees advise on planning and evaluation of services and supports specific to the age groups served by CCMH. 215