SR-080527-13B~~
Date: April 21, 2008
To: Mayor and City Council
From: Joan Akins, Acting Director of Environmental and Public Works
Management
Subject: Summary of AB 811 Allowing Cities to Establish Voluntary Energy
Efficiency and Solar Assessment Districts for Property Owners
Introduction
This information item provides additional information in relation to item 13-D on the April
22 Council agenda. AB 811 (Levine and Beall) is a bill to assist in financing the upfront
costs of solar power and other energy efficiency improvements through an existing
public improvement assessment program, by authorizing cities and counties to provide
low interest loans to free ahd willing property owners with long-term repayments added
to their annual property taxes bills. If the bill passes, the City could help address the
fiscal restraints often experienced by property owners who want to .install solar.
Establishment of a Solar Santa Monica solar assessment district would accelerate the
installation of solar and achievement of the City's energy independence goals.
Background
In 2006,- the Legislature approved SB 1 to accelerate the State's use of solar and to
implement the California Solar Initiative (CSI), a program to install 3,000 megawatts of
solar electricity by 2017. The CSI provides property owners financial incentives to offset
the first costs, of solar electricity during the early years of the program. The money
available for distribution decreases each year until the funds are exhausted. The goal
of the CSI is to help establish the solar industry in California so that when the CSI ends
the solar industry can remain cost-effective without the need for government subsidies.
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While the CSI and other federal subsidies have made solar more. affordable, these
incentives only offset a portion of the upfront costs of installatie i. Although solar
eventually pays fpr itself, property owners who want to invest in the technology often
cannot afford the high initial cost of a solar photovoltaic system.
Discussion
AB 811 would help finance the upfront costs of solar and other .energy efficiency
improvements that are permanent fixtures to a property by authorizing cities and
counties to provide low interest loans to property owners with long-term repayments
added to their ahnual property tax bills. Homeowners and small businesses that wish to
participate would be required to repay the cost of their project plus a small fee to
administer the program. A city or county could provide funding for projects from a bond
or a loan that would be repaid through voluntary fees on participating owners' annual
property tax bills.
AB 811 was crafted in response to interest shown by the cities of Berkeley and Palm
Desert in establishing solar assessment districts. The bill clarifies existing assessment
district law to specifically. allow energy efficiency and distributed generation renewable
energy projects. Berkeley is initiating a Sustainable Energy Financing District program
that will finance the capital and installation costs of solar systems for property owners
who agree to pay back the loan over a 20 year period. It is estimated that the
assessment amount would be the equivalent or less than what the property owners
would save on their electric bills. The solar system would stay with the property even if
the owner sold, and the new owner would assume the assessment's remaining balance.
Summary
The. Assembly has passed the bill with more than atwo-thirds majority vote. The
Senate will vote on the bill on May 7, 2008. If the bill passes and the Governor signs it,
AB 811 could become law this summer. Then the City Council must determine whether
it is in the public's interest to support establishment of a Solar Santa Monica
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assessment district. Council must then adopt a Resolution of Intent that states how the
City would structure the district, identify the boundaries of the district, and identify the
funding source.
Prepared By: Susan Munves, Energy and Green Building Programs Administrator
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