4 clean energy options would join existing 2

Benicia City Council may decide Tuesday to expand the number of Property Assessed Clean Energy (PACE) programs available to residents, and to start streamlining the process by which property owners can put solar panels on their roofs.

Community Development Director Christina Ratcliffe wrote City Manager Brad Kilger on Aug. 12, recommending the Council let Benicia join the California Home Finance Authority so that any property could install renewable energy equipment through Ygrene Works PACE programs.

Ratcliffe also is seeking Council approval of resolutions that would let the city join the California Enterprise Development Authority’s statewide PACE assessment district so residents also could choose to participate in the Fig Tree Energy Resources PACE program, and join the California Statewide Communities Development Authority’s Open PACE program administered by AllianceNRG and Renewable Funding.

Benicia already has two PACE programs, HERO and CaliforniaFIRST, that offer financing to commercial businesses and industries as well as to residents who want to install sustainable energy and water-conserving permanent improvements, Ratcliffe wrote.

“Staff recommends that the city offer these four programs in addition to the existing two programs,” she wrote.

All of the programs issue bonds through joint powers authorities.

PACE programs allow a property owner to finance permanent renewable energy and water-saving projects through additional assessments paid when they pay their property taxes.

Earlier versions of PACE for homeowners ran into conflicts with the Federal Housing Finance Agency programs “Fannie Mae” and “Freddie Mac.”

As conservator of loans owned or guaranteed by those two financing programs, FHFA decided that any “super-priority liens” would increase the risk of losses to taxpayers, and insisted that mortgages issued under the programs “must remain in first-lien position.”

Many PACE financing programs have been structured so that their payoffs would take place ahead of FHFA loans, which troubled the federal agency. However, PACE programs that are structured as secondary liens were acceptable, according to information provided by the federal agency.

California Senate Bill 96 directed the California Alternative Energy and Advanced Transportation Financing Authority in 2013 to develop the PACE Loss Reserve program to mitigate risks to lenders.

“The $10 million Loss Reserve will make first mortgage lenders whole for any losses in foreclosure or forced sale,” Ratcliffe wrote in her Aug. 12 report. “The goal of the Loss Reserve program is to put first mortgage lenders in the same position they would be without a PACE lien.”

However, the number of defaults has been low — in the past five years, Sonoma County’s program has had no defaults and less than a 1-percent delinquency rate while it provided more than $69 million to finance nearly 2,100 residential energy efficiency retrofit projects and more than 60 commercial upgrades. HERO has a zero-percent default rate, Ratcliffe wrote.

Benicia joined CaliforniaFirst in 2009, and HERO in 2014.

PACE programs were authorized in California under Assembly Bill 811. In 2011, Senate Bill 555 was signed into law, authorizing community districts to finance energy efficiency, water conservation and renewable energy projects.

“In essence, the city can establish a PACE district which property owners can opt into,” Ratcliffe wrote.

“All the PACE programs offer financing options to individual property owners to install sustainable energy and water efficiency projects on their property.”

They differ in contractor certification, financing interest rates, eligibility requirements and other details, she explained.

Those PACE programs formed under SB 555 have some advantage, Ratcliffe wrote, including special taxes that finance the improvements that are imposed without the recording of an assessment, “which is preferable to some mortgage lenders. Only the annual assessment is recorded.”

In addition, SB 555 allows districts to fund public as well as private property, to refinance existing improvements and provide funding for new and existing buildings. Tax levies were extended past the AB 811 limit of 20 years, lowering the annual payments.

The districts, called Mello-Roos Districts, are considered well established, offering better bond ratings and lower interest rates.

Ratcliffe wrote that the city’s two existing PACE programs operate under AB 811, but Ygrene has a program formed under SB 555.

She wrote that in addition to the resolutions that would allow the expansion of PACE programs offered in Benicia, city employees also have written a Collaborative Services agreement that would set the terms, conditions and roles of each PACE provider.

“All programs are completely voluntary and are administered by the individual programs,” she wrote.

The item is on the Council’s Consent Calendar, which means it and several other matters could be decided without comment by a single vote.

Also on the Consent Calendar is the first reading of an ordinance that would modify Benicia Municipal Code’s process for permitting small residential rooftop solar systems. City Manager Brad Kilger wrote the Council on July 31 to recommend introducing the amendment, explaining it would bring Benicia into compliance with Assembly Bill 2188.

That measure requires local governments to comply in expediting the permitting process for small residential rooftop solar energy systems no later than Sept. 30.

California’s Solar Rights Act was created in 1978 with the passage of Assembly Bill 3250. It provides a legal framework for consumer access to solar energy, preventing the shading of solar systems and limiting the ability of homeowner associations and local governments to prevent installation of those systems.

AB 2188 standardizes statewide requirements at the local government level, particularly for 10-kilowatt or smaller systems, which are standardized in their manufacturing, Kilger wrote.

“The Benicia Building Division has been processing small residential rooftop solar systems as an over-the-counter permit for the last two years,” he wrote.

In other matters, the Council will consider whether to adopt a resolution in support of the League of California Cities board of directors’ stand on sustainable funding for transportation infrastructure.

The LCC board resolved July 16 to seek support of state and local transportation funding, especially for projects that meet local governments’ priorities. Now the board is seeking support from local governments, Kilger wrote in an Aug. 10 report.

In addition, the LCC wants the state Legislature to make significant investment in transportation; maintain and rehabilitate current roads, streets and highways; provide an equal split between state and local projects; use multiple methods to raise money for those projects; invest a portion of diesel tax, cap-and-trade revenue or both into high-priority projects that would improve the movement of goods; require strong accounting to protect taxpayer investments; and provide consistent funding annually.

“Benicia’s street network has approximately 196 lane miles and is valued at $111.5 million,” Kilger wrote. In the latest pavement maintenance management program analysis, the city’s roads were rated “at risk,” with an overall score of 58, down from a ranking of 70 in 2006. Some streets are worse — 36 percent are listed as having “poor or failed” pavement.

To improve the streets properly would take about $48 million during the next 10 years, Kilger wrote, adding that while the Measure C penny sales tax, the Solid Waste Agreement and California gas tax revenue provide some funding for pavement maintenance and repair, gas tax revenues have declined by 24 percent.

The city has delayed some repairs to accommodate some revenue shortfalls. But, Kilger wrote, it’s less expensive to repair streets in good condition than those that have failed: repairing good-condition pavement costs about $2 a square yard, while repairing deteriorated streets can take from $48 to $95 a square yard to overlay or rebuild.

Also Tuesday, the Council will name Mayor Elizabeth Patterson as its voting delegate and an alternate delegate for the League of California Cities annual business meeting Sept. 30 to Oct. 2 in San Jose.

The Council will meet at 6:30 p.m. Tuesday in a closed session to discuss potential litigation. The regular meeting will start at 7 Tuesday night in the Council Chamber of City Hall, 250 East L St.