COMPLETED BOARD ORDER�"�
�67.2
Before the Board of Supervisors in and for the
County of Monterey, State of California
a. Receive a status report on recent action by federal agencies with regard to
Property Assessed Clean Energy PACE) Programs;
b. Adopt a Resolution to support congressional action to authorize legislation
allowing PACE programs;
c. Direct the Director of Building Services to submit a letter Exhibit B) to
Congress on behalf of the Board in support of legislation that guarantees local
government the right to establish clean energy programs.
d. Direct the Director of Building Services to submit a letter Exhibit C) to the
California Energy Commission CEC) on behalf of the Board in support of the
continued financial support of the CaliforniaFIRST PACE program.
Upon motion of Supervisor Potter, seconded by Supervisor Armenta, and carried by those
members present, the Board hereby:
a. Received a status report on recent action by federal agencies with regard to Property
Assessed Clean Energy PACE) Programs;
b. Adopted Resolution No. 10-236 to support congressional action to authorize legislation
allowing PACE programs;
c. Directed the Director of Building Services to submit a letter Exhibit B) to Congress on
behalf of the Board in support of legislation that guarantees local government the right to
establish clean energy programs.
d. Directed the Director of Building Services to submit a letter Exhibit C) to the California
Energy Commission CEC) on behalf of the Board in support of the continued financial
support of the CaliforniaFIRST PACE program.
PASSED AND ADOPTED this 27th day of July, 2010, by the following vote, to wit:
AYES: Supervisors Armenta, Calcagno, Salinas, Parker, Potter
NOES: None
ABSENT: None
I, Gail T. Borkowski, Clerk of the Board of Supervisors of the County of Monterey, State of California, hereby
certify that the foregoing is a true copy of an original order of said Board of Supervisors duly made and entered in
the minutes thereof of Minute Book 75 for the meeting on July 27, 2010.
Dated: July 29, 2010 Gail T. Borkowski, Clerk of the Board of Supervisors
County of Monterey, State of California
By
Deputy
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COMPLETED RESOLUTION NO. 10-2��67.2
Before the Board of Supervisors in and for the
County of Monterey, State of California
Resolution No: 10 236
Adopt Resolution of the County of Monterey in
support of immediate Congressional action to
authorize legislation allowing property assessed clean
energy programs.
WHEREAS, utility bills represent a major cost of operating costs for home and business
owners;
WHEREAS, persistent unemployment, particularly in the construction industry, continues to
burden our families and communities;
WHEREAS, energy security and reliance on fossil fuels continue to threaten public health and
the environment;
WHEREAS, residential and commercial buildings consume nearly 40% of all electricity and
are responsible for 40% of U.S. annual carbon dioxide emissions;
WHEREAS, investing in cost-effective energy efficiency and renewable energy improvements
to homes and businesses can save energy, cut utility bills, create thousands of local jobs,
reduce reliance on fossil fuels, and dramatically reduce greenhouse gas emissions;
WHEREAS, the upfront cost and potentially long payback periods prevent property owners
from making otherwise cost-effective clean energy improvements;
WHEREAS, Property Assessed Clean Energy PACE) financing programs are an innovative
local government solution to help property owners finance energy efficiency and renewable
energy improvements such as energy efficient boilers, upgraded insulation, new windows,
solar installations, etc. to their homes and businesses;
WHEREAS, twenty-two states have passed laws enabling local governments to develop PACE
programs.
WHEREAS, White House and the U.S. Department of Energy strongly support PACE, have
dedicated $150 million to develop local PACE programs and issued guidelines to ensure that
PACE programs meet safety and soundness requirements and adequately protect both bond
buyers and property owners; and,
WHEREAS, despite PACE's great promise, the Federal Housing Finance Agency FHFA) and
the Office of the Comptroller of the Currency OCC) on July 6th issued statements that
immediately forced existing PACE programs to halt operations and froze the development of
dozens of PACE programs nationwide.
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COMPLETED RESOLUTION NO. 10-2��67.2
NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of
Monterey as follows:
Urges the California congressional delegation to support legislation that clearly guarantees
local governments the right to assess special taxes for clean energy programs and restore the
promise of PACE.
PASSED AND ADOPTED on this 27th day of July, 2010, upon motion of Supervisor Potter,
seconded by Supervisor Armenta, by the following vote, to-wit:
AYES: Supervisors Armenta, Calcagno, Salinas, Parker, Potter
NOES: None
ABSENT: None
I, Gail T. Borkowski, Clerk of the Board of Supervisors of the County of Monterey, State of California, hereby
certify that the foregoing is a true copy of an original order of said Board of Supervisors duly made and entered in
the minutes thereof of Minute Book 75 for the meeting on July 27, 2010.
Dated: July 29, 2010 Gail T. Borkowski, Clerk of the Board of Supervisors
County of Monterey, State of California
By
If
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SIGNED BOARD REPORTX��"��MONTEREY COUNTY BOARD OF SUPERVISORS
MEETING: July 27, 2010
AGENDA NO.:
SUBJECT: a) Receive a status report on recent action by federal agencies with regard
to Property Assessed Clean Energy PACE) Programs;
b) Adopt a Resolution to support congressional action to authorize legislation
allowing PACE programs;
c) Direct the Director of Building Services to submit a letter Exhibit B) to
Congress on behalf of the Board in support of legislation that guarantees local
government the right to establish clean energy programs.
d) Direct the Director of Building Services to submit a letter Exhibit C) to the
California Energy Commission CEC) on behalf of the Board in support of the
continued financial support of the CaliforniaFIRST PACE program.
DEPARTMENT: RMA Building Services Department
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a) Receive a status report on recent action by federal agencies with regard to Property
Assessed Clean Energy PACE) Programs;
b) Adopt a Resolution to support congressional action to authorize legislation allowing PACE
programs;
c) Direct the Director of Building Services to submit a letter Exhibit B) to Congress on behalf
of the Board in support of legislation that guarantees local government the right to establish
clean energy programs.
d) Direct the Director of Building Services to submit a letter Exhibit C) to the California
Energy Commission CEC) on behalf of the Board in support of the continued financial
support of the CaliforniaFIRST PACE program.
SUMMARY
The Federal Housing Finance Agency FHFA) recently issued a statement that has effectively frozen
residential Property Assessed Clean Energy PACE) Programs across the country. In response,
PACEnow, a national coalition of PACE advocates and stakeholders, has launched a campaign to
engage local government partners across the country, calling for immediate congressional action to
approve legislation allowing PACE to continue. To that end, on July 15, 2010, the PACE
Assessment Protection Act of 2010 was introduced to Congress as legislation. PACEnow has
requested that local government partners immediately send letters of support to enable Congress to
act prior to their recess after the first week of August.
The California Energy Commission will meet on July 28, 2010 to consider making revisions to the
State Energy Program including PACE programs. Revisions may include alternative financing
mechanisms in addition to the PACE programs unless other options are authorized.
Immediate action is necessary for our opinions to be heard in both Congress and the California
Energy Commission meeting.
DISCUSSION
On May 5, 2010, Fannie Mae and Freddie Mac issued Lender Letters that stated PACE loans
generally have automatic first lien priority over previously recorded mortgages. The terms of the
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SIGNED BOARD REPORTX��"��Fannie Mae/Freddie Mac Uniform Security Instruments prohibit loans that have senior lien status to
a mortgage." Fannie Mae and Freddie Mac are regulated by the Federal Housing Finance Agency
FHFA). On July 6, 2010, the FHFA posted a statement reaffirming that a senior PACE lien is in
violation of any Fannie Mae or Freddie Mac mortgage contract. PACEnow, a nationwide PACE
coalition is working to take legislative action that will correct this issue. The coalition has asked all
jurisdictions to sign letters to their congressional representatives and pass resolutions in support of
PACE Exhibit B). For additional information about the benefits of PACE, please refer to the
PACE Finance Summary Sheet," Exhibit A).
Additionally, on July 28, 2010 the California Energy Commission will be meeting to consider
amending the guidelines for the State Energy Grant fund allocation under Program Opportunity
Notice PON) No. 400-09-401, from which we were awarded $16.5 million as part of a 14 county
collaborative proposal. The amendment to be discussed is the possible adoption of resolution to
cancel and amend PON No. 400-09-401 Municipal Financing Program), and the Notice of Proposed
Awards, in response to direction of the United States Department of Energy DOE). The DOE
directed the states to consider financing options in addition to Property Assessed Clean Energy
PACE) financing and issued this direction in response to regulatory uncertainty created by the
Federal Housing Finance Agency FHFA) affecting PACE financing. As this PON solicitation only
allowed for financing through first-priority liens, such as PACE, the addition of other financing
mechanisms is prudent. Please see letter of support attached as Exhibit C.
OTHER AGENCY INVOLVEMENT
The Board Committee on Alternative Energy and Environment concurred with staff recommendations
after receiving the presentation of this information at their regular meeting on July 22, 2010 and advised
adding this item to the supplemental agenda for the July 27, 2010 meeting of the Board of Supervisors.
FINANCIAL
Therc will be no impact to the Department's Fiscal Year 2010-11 budget as a result of this action.
Approved by:
Karen Riley-Olms / Timothy P. McCormick, P.E. & C.B.O.
Management Analyst II Interim) Director of Building Services
Attachments: Board Order, Resolution, Exhibit A, Exhibit B, Exhibit C.
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EXHIBIT - A�X��"��EXHIBIT A
PACE Finance Summary Sheet
Energy Efficiency & Renewable Energy Financing for Property Owners
What is PACE?
Property Assessed Clean Energy PACE) is a local government program that allows property
owners to finance energy efficiency and renewable energy improvements using low-interest
bonds that generally have no recourse to the municipality. Interested residential and commercial
property owners opt-in to receive long term financing up to 20 years) for these improvements,
which is repaid through an assessment on their property taxes. This arrangement spreads the cost
of clean energy improvements such as energy efficient boilers, upgraded insulation, new
windows, solar installations, etc over the expected life of the measure and allows for the
repayment obligation to automatically transfer to the next property owner if the property is sold.
The following states are currently PACE enabled: CA, CO, FL, GA, IL, LA, ME, MD, MN,
MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, WI
Why is PACE so innovative?
High upfront cost is the single largest barrier to increased adoption of energy efficiency and
small-scale renewable energy. The second barrier is the uncertainty as to whether property buyers
will pay more for efficiency improved properties. PACE removes the upfront cost barrier and
removes the uncertainty barrier as the new buyer inherits the annual tax surcharges.
Historical precedent
PACE is a type of land-secured financing district, which has a 100+ year history in the U.S. to
pay for improvements in the public interest. Over 37,000 land secured districts already exist and
are a familiar tool of municipal finance. They are used to finance projects which serve a public
purpose, including street paving, parks, open space, water and sewer systems, street lighting, and
seismic strengthening, among others.
Benefits to Existing Lenders
Lower Default Risk Owner's cash flow position is improved as PACE programs are designed
to have annual energy savings exceed the annual PACE assessment payments. Owner is now in a
better position to make mortgage payments.
Better Loan-to-Value Ratio Since PACE improvements have a positive net present value, they
increase the lender's collateral which improves the loan-to-value ratio.
Best Practice Framework Adopted The White House PACE Best Practice Framework" and the
Department of Energy Guidelines" are now being incorporated into PACE programs nationwide
to help ensure that PACE programs benefit existing lenders.
PACE Senior lien status is immaterial less than $200 per home) & more than offset by value
enhancement PACE assessments are treated as senior liens which is critical for the success of
the programs but the seniority amount is immaterial due to the per property size limits of PACE
finance and other best practice measures.
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EXHIBIT - A�X��"��What are the benefits to participating property owners?
No Upfront Cost Removes the upfront cost barrier of energy efficiency and renewable energy
improvements. Most programs only charge a small fee to property owners.
Improved Cash Flow Owner's cash flow position is improved as PACE programs are designed
to have annual energy savings exceed the annual PACE assessment payments.
Less Investment Risk Removes the uncertainty of recovering the cost of improvements if the
property is sold, because the financing runs with the property via the tax assessment.
Benefits to Municipalities
Local Job Growth PACE has the ability to stimulate local job creation through the installation
of efficiency and energy improvements. It is estimated that for every $1 mm spent on clean
energy improvements, 10 jobs are created. For every 100,000 homes that are retrofitted, with an
average expenditure of $10,000, more than 10,000 jobs would be created.
No Credit or General Obligation Risk PACE bonds are typically not general obligation or
appropriation bonds, so the municipality's credit is not placed on the line. The obligation resides
exclusively with the property owner.
Opt-in Assessments The assessments are only placed on those properties where the owner
voluntarily opts-in" to the financing program.
Meet Carbon Reduction Goals Counties, Cities, Towns and Villages can use this tool to move
quickly toward achieving their carbon reduction and energy independence goals.
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EXHIBIT - B�X��"��EXHIBIT B
MONTEREY COUNTY
RESOURCE MANAGEMENT
BUILDING SERVICES
Timothy P. McCormick P.E. & C.B.O.
Director of Building Services
168 West Alisal Street, 2no Floor
Salinas, CA 93901
831) 755-5027
Fax: 831) 757-9516
www.co.m onterey. ca. us/rm a
July 27, 2010
Senator Dianne Feinstein
Senator Barbara Boxer
Congressman Sam Farr
The Honorable Christopher J. Dodd, Chairman
Sen. Richard C. Shelby, Ranking Member
Senate Banking Committee
The Honorable Jeffrey Bingaman, Chairman
Sen. Lisa Murkowski, Ranking Member
Energy & Natural Resources
U. S. Senate
Washington, DC 20510
The Honorable Barney Frank, Chairman
Spencer Bachus, Ranking Member
House Committee on Financial Services
The Honorable Henry Waxman, Chairman
Rep. Joe Barton, Ranking Member
Energy & Commerce Committee
U.S. House of Representatives
Washington, D.C. 20515
Dear members of Congress:
We are writing as the Board of Supervisors of Monterey County in California's 17th Congressional District to ask
you to support legislation that guarantees local government the right to establish clean energy programs, known as
Property Assessed Clean Energy PACE). PACE is a local government solution that helps home and building
owners finance energy efficiency and renewable energy improvements and is supported by a century of legal and
historical precedent for special assessment districts, including more than 37,000 districts that have been used to
finance sewers, sidewalks, and other projects that serve a public purpose.
We strongly believe that recent actions by federal regulators infringe upon state's rights to utilize
assessment districts and that PACE is good for our nation's housing industry and mortgage investors. The
regulators disagree. We must protect our state's rights and let the facts and data from our nation's PACE
pilot programs determine who is correct. We urge you to support federal legislation H R 5766 Rep
Thompson) known as the PACE Assessment Protection Act of 2010 and similar legislation in the senate
so our nation's PACE pilot programs can proceed.
In just the past two years, twenty-two states have passed laws enabling local governments to develop PACE
programs CA, CO, FL, GA, IL, LA, ME, MD, MN, MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, WI). State and
local governments have embraced PACE because of its tremendous potential to cut energy bills, increase
homeowner cash flow for mortgage payments, reduce mortgage default risk, create tens of thousands of local jobs
and dramatically reduce greenhouse gas emissions by spurring investment in clean energy improvements. PACE
has received strong bipartisan support nationwide in red states and blue states because creating jobs, saving
energy and reducing utility bills for families and businesses is important to all Americans. Our nation's PACE
programs were set to launch a 24 month pilot period this summer, funded by $150 million in grants from the
Department of Energy, incorporating safety and soundness consumer and lender protections that were developed
by a White House led inter-agency working group consisting of HUD, NEC, OMB, CEQ and DOE.
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EXHIBIT - B�X��"��Unfortunately, despite PACE's great promise, the Federal Housing Finance Agency FHFA) and the Office of the
Comptroller of the Currency OCC, collectively the Regulators") issued recent statements blocking our nation's
PACE pilot programs. The Regulators action is a direct challenge to state's rights to levy tax assessments for a
public purpose and wrongly asserts that the consumer and lender protections were not sufficient. The DOE funded
PACE programs have been specifically designed to help the mortgage market yet the Regulators statements simply
rehashed old concerns that were cured See PACE response to the Regulators concerns). Because of FHFA's
oversight of Fannie Mae and Freddie Mac, and OCC's influence over our nation's banks, the statements forced
existing PACE programs to halt and froze the ability to launch PACE programs already under development
nationwide.
Congress, which chartered Fannie Mae and Freddie Mac, and which established FHFA & OCC, must quickly
intervene to pass legislation that guarantees the right of state and local government to form special
assessment districts to promote clean energy programs and restore the promise of PACE.
Sincerely,
Board of Supervisors, County of Monterey
Fernando Armenta
Louis R. Calcagno
Simon Salinas
Jane Parker
Dave Potter
cc: Ben Bernanke, Chairman, US Federal Reserve; Ed DeMarco, Acting Director, FHFA; Tim Geithner, Secretary of
the Treasury, US Treasury Department; Sheila C. Bair, Chairman, FDIC; John C. Dugan, Comptroller of the Currency,
OCC
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EXHIBIT - C�X��"��Exhibit C
MONTEREY COUNTY
RESOURCE MANAGEMENT
BUILDING SERVICES
Timothy P. McCormick P.E. & C.B.O.
Director of Building Services
July 22, 2010
California Energy Commission
Karen Douglas, Chair
1516 Ninth Street
Sacramento, CA 95814
168 West Alisal Street, 2"� Floor
Salinas, CA 93901
831) 755-5027
Fax: 831) 757-9516
www.co.montereV.ca.us/rmg
Dear Chair Douglas,
We are writing as the Board of Supervisors of Monterey County to ask you to support CaliforniaFIRST's efforts in enabling the
County of Monterey to launch an energy efficiency retrofit pilot program, with a Property Assessed Clean Energy PACE) or other
financing mechanism.
We are concerned about the potential cancellation of 400-09-401 contracts, but understand the need to adjust the solicitation in light of
the Federal Housing Finance Authority FHFA) statements, and are pleased to see that the Energy Commission is willing to modify
their process while continuing to support an array of financing options along with PACE for energy efficiency retrofits. We feel it is
imperative that the CEC use these funds to support the development and rollout of innovative financing tools for these types of
programs.
Please understand that our jurisdiction, in coordination with the CaliforniaFIRST program, is ready to substitute other financing
mechanisms and still have a robust retrofit program if allowed this opportunity. We have high hopes that PACE will be viable in the
near future and that the CaliforniaFIRST contract will deliver the benefits of job creation and energy use reduction for our citizens and
business community.
We feel that it is critical that the CEC use these funds to support financing for energy retrofits in California and that these efforts must
be done quickly to stimulate the job market and leverage additional ARRA funds such as those from other SEP retrofit programs and
the Energy Efficiency Conservation Block Grants, Investor-owner Utility rebate programs, and the proposed federal HOME STAR
program. The CaliforniaFIRST program, with 141 participating jurisdictions, is in a unique position to deploy these funds efficiently,
effectively and expeditiously with a broad reach across the state.
Sincerely,
Board of Supervisors, County of Monterey
Fernando Armenta Jane Parker
Louis R. Calcagno Dave Potter
Simon Salinas
cc: James D. Boyd, CEC Vice Chair; Jeffrey D. Byron, CEC Commissioner; Robert Weisenmiller, CEC Commissioner; Anthony
Eggert, CEC Commissioner; California State Legislature
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