HomeMy WebLinkAbout06/30/2014BAKERSFIELD
Staff:
Steven Teglia, Assistant to the City Manager
1. ROLL CALL
Committee mer
Willie Rivera, Ch�
Ken Weir
Terry Maxwell
REGULAR MEETING OF THE
BUDGET AND FINANCE COMMITTEE
of the City Council - City of Bakersfield
Monday, June 30, 2014
12:00 p.m.
City Hall North
1600 Truxtun Avenue, Bakersfield, CA 93301
First Floor, Conference Room A
AGENDA
2. ADOPT APRIL 28, 2014 AGENDA SUMMARY REPORT
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Update Report and Committee Recommendation regarding th�
Participating in the PACE/HERO Program - Teglia
B. Continued Discussion regarding Funding for TRIP Projects - Tandy
5. COMMITTEE COMMENTS
BAKERSFIELD
/s / ste�v�w Te,g (,i,a�
Staff: Steven Teglia
Assistant to the City Manager
AGENDA SUMMARY REPORT
REGULAR MEETING OF THE
BUDGET AND FINANCE COMMITTEE
Committee Mei
Willie Rivera, Cr
Ken Weir
Terry Maxwell
Monday, April 28, 2014
12:00 p.m.
City Hall North - Conference Room A
1600 Truxtun Avenue, Bakersfield, CA 93301
The meeting was called to order at 12:04 p.m.
1. ROLL CALL
Committee members:
Councilmember Willie Rivera, Chair
Vice Mayor Ken Weir
Councilmember Terry Maxwell - Absent
City Staff:
Alan Tandy, City Manager
Rhonda Smiley, Assistant to the City Manager
Steven Teglia, Assistant to the City Manager
Chris Huot, Assistant to the City Manager
Caleb Blaschke, Management Assistant-City Manager's Office
Virginia Gennaro, City Attorney
Joshua Rudnick, Deputy City Attorney
Nelson Smith, Finance Director
Tera Loveless, Accountant II - Financial Services
Randy McKeegan, Accounting Supervisor - Financial Services
Art Chianello, Water Resources Manager
Nick Fidler, Acting Public Works Director
AGENDA SU�
Budget and Finance Comr
Monda�
2. ADOPT FEBRUARY 26, 2014 AGENDA SUMMARY REPORT
The Report was unanimously adopted as submitted. Note: It was incorre
on the agenda as the January 27, 2014 Agenda Summary Report.
3. PUBLIC STATEMENTS
None
4. NEW BUSINESS
A. Discussion reqardinq the Open Gov Budqet Data Sharinq Webs
Finance Director Smith reported that Councilmember Johnson
item to Committee at the City Council meeting on March 5, 201
Public Statement portion of that meeting, a brief presentation
Gov software was given by a representative of the Kern Citizens fc
Government.
He stated that the City is in support of transparency, and has, fo
posted financial statements and all Budget documents on the w
is fully accessible by the public. Further, the Government Fin�
Association (GFOA) requires a high level of disclosure and trans�
the City of Bakersfield has repeatedly met that criterion, as e
multiple awards bestowed on the City by the Association.
Staff researched both the Open Gov software and a product
another firm, Socrata. Cost estimates were received. The yearl
Open Gov software is $12,000 and $22,000 per year for the Socrat
Assistant to the City Manager
Budget information posted on
navigational tools. The format
documents from 1999 forward,
posted.
Huot provided a practical ovE
the City's website, including ho
is considered to be user friendl�
including a condensed "Budget
At the Committee's request, Finance Director Smith accessed tr
website, and presented a random overview of its capabilities.
that it is an alternative method to viewing the information th
available on the City's website.
City Manager Tandy added that other than being able to
preferred type of chart, all of the information is the same as �
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AGENDA SU�
Budget and Finance Comr
Monda�
Committee Chair Rivera asked when the City's Budget informat
posted on our website.
Assistant to the City Manager Huot said that it will be posted the
City Council meeting during which the Council is provided thE
The Telecommunications Division will upload the entire Counci
viewing, also.
Committee member Weir asked if there is any advantage to the
software.
City Manager Tandy said that staff does not see an advc
information is posted in both comprehensive and condensed fc
public.
Committee member Weir asked if staff had received any negati�
from the public about the Budget that is posted online.
Both City Manager Tandy and Finance Director Smith said that �
are received; and in response to those that are, those individu
walked through the online document, provided with a DVD of tr
or provided with an electronic copy of the specific section thE
see.
Committee member Weir asked if this would be an added
budget process, or if would change that process.
Finance Director Smith said that the process itself would not cha�
involve extra work on staff's part, however, as they would have tc
information the first time, then update the data on an annua
believes that it would not be worth the effort or expense for the fE
who look at the Budget online.
City Manager Tandy added that there would be no benefit to sta
Committee member Weir asked if there were any pending stc
issues that would require a standardization of formatting betv�
counties.
Citv Manaaer Tandv said that GFOA does not have specific form�
AGENDA SU�
Budget and Finance Comr
Monda�
Committee member Weir said that perhaps this could be kept ir
future, but he does not see a use for it at the present time.
Committee Chair Rivera agreed with that statement. He mentic
City's website is in need of update.
5. DEFERRED BUSINESS
A. Update on Validation Action
City Attorney Gennaro provided a verbal report on the proc
current status of the City's action. She said that this is a Court prc
City is using to approve or validate sources of funding and borrc
be used for TRIP projects.
The City's validation action was filed in Kern County Super
November 13, 2013. The City is represented by Neil Arney and Iv
Kutak Rock, LLP. Mr. Reppe has made presentations to the City C
topic.
The process involves statutory time limitations, after which adequ
and testimony is presented to the Court. If an objection is filec
becomes more complicated and lengthy. An administrative re�
created, and a hearing is scheduled. In the City's case, an objec
by the Westpark Homeowners Association, which is represented �
of Brumfield and Hagan.
Two status conferences have been held, and the case will a�
Judge David Lampe, who set a follow-up case management c�
May 21, 2014. The City Clerk is working diligently to put the c
record together, and it is estimated, when finalized, to contain ;
pages for the Court's review. It is the City's intention t�
administrative record with the Court by May 21, 2014. Judge La
schedule a hearing date for oral arguments and provide a
receipt of required backup documentation from both parties.
currently calendaring hearings in March of 2015, so there will
waiting period.
City Manager Tandy stated that the City will not need to formall
funds for at least two years, so the delay wi►I not encroach upon tl
B. Continued Discussion reaardina Fundina for TRIP Projects
r� _ __ _ __ _'ll _ _ __ _ _ __ _ 1_ _ __ \ I ___ _ _ _ II __ _ I _ _ _I ll_ __1 _I_ _ _ 1 _ I_ ' _ ___
TO:
FROM:
SU BJ ECT:
�
B A K E R S F I E L D
OFFICE OF THE CITY MANAGER
MEMORANDUM
June
Alan Tandy, City Manager
Steven Teglia, Assistant to the City Manager s�
Residential Property Assessed Clean Energy (PACE) Prograr�
On February 26, 2014, staff provided the Budget and Finance Cc
(Committee) with an update regarding the status of residential PACE �
in California. This discussion included the potential of the City of Bc
joining the HERO Residential PACE program. Staff provided the cc
members with a packet of information related to residential PACE and t
program (that information is provided once again for reference).
During the committee discussion staff conveyed concern in moving forv�
joining the HERO program at the time, due to the position the Federal
Finance Agency (FHFA) had taken regarding "first-lien" residenti�
programs. In response to
the process to create a
concerns.
the FHFA position, the state of California had
loss reserve fund, in an attempt to mitigat�
At the conclusion of the February 26th meeting, staff requested morE
evaluate the impact of the loss reserve fund on FHFA's position. The Cc
concurred with this request and directed staff to come back to the Cc
or the full council as appropriate.
Since that time, staff has received a copy of a letter from FHF�
�
B A K E R S F I E L D
OFFICE OF THE CITY MANAGER
MEMORANDUM
February 2
TO: Alan Tandy, City Manager
FROM: Steven Teglia, Assistant to the City Manager �'
SUBJECT: Residential Property Assessed Clean Energy (PACE) Program �
During the February 12, 2014 City Council Meeting, several public sp
spoke in favor of the City joining the HERO Residential PACE program. Fol
those statements, Councilmember Rivera referred the issue to the Buc
Finance Committee for further discussion.
Background:
In 2008, the State of California approved legislation that enabled countiE
cities to create PACE Programs to provide a mechanism for property owi
fund energy and water efficiency and other renewable energy projects �
their property as collateral. The legislation authorized the creation of asse�
districts, whereby commercial and residential property owners could finan
upfront capital costs of these projects and repay the amount financed tr
a contractual assessment on their property. The contractual assessmer
recorded as a lien (in most cases a priority lien) against the subject prc
entered in the County roll and collected through the property owner's ta>
the same time and in the same manner as traditional property assessmenl
concept is that the assessments that repay the efficiency project loan a
plus interest run with the property until the repayment term expires (Exhibit
In response to this movement, some cities and counties began to s�
administer and fund local PACE programs. At the same time, several stat
Resid
Febru<
In 2010, the City of Bakersfield and the County of Kern joined a large n
other cities and counties throughout California in approving participati
CaliforniaFIRST PACE program. This program was sponsored by �
Communities, a Joint Powers Authority established by the League of c
Cities and the California Association of Counties. Again, this was dc
effort to provide City residents and businesses with the opportunity to
statewide PACE financing program.
In April of 2013, the City expanded PACE program opportunities for City
and businesses by joining a second statewide PACE program sponsore
California Enterprise Development Authority, a statewide Joint Powers
similar to California Communities. This PACE program is commonly refer
the Figtree PACE Program, based on the name of the financing com�
administers it.
Federal Housing Finance Agency (FHFA) Issue:
FHFA is an independent federal agency which supervises and regulatE
Mae, Freddie Mac and the 12 Federal Home Loan Banks. Togetr
enterprises own or guarantee more than $5 trillion in residential mortgc
July 6, 2010, FHFA issued a statement raising concerns regarding PACE K
(Exhibit B). FHFA's primary concerns were related to the first-lien positio►
through the PACE programs and the effects that position could
mortgages, either owned or guaranteed by Fannie and Freddie.
In follow-up to the July statement, FHFA issued a February 28, 2011
which prohibited Fannie and Freddie from purchasing mortgage loans
by properties with outstanding first-lien PACE obligations and to undertc
steps necessary to "protect their safe and sound operations from thesf
PACE programs" (Exhibit C). Those other steps included:
• Carefully monitoring, through their seller-services any progrc
create such first-lien obligations;
• Continuing to operate in accordance with Lender Letters c
undertake other steps necessary to protect their safe anc
,
operations from these first-lien PACE programs.
' As a result of FHFA's reaction to PACE programs with priority lien com
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Resident
February
Home Energy Renovation Opportunity (HERO) Program:
Sponsored by the Western Riverside Council of Governments (WRCOC
HERO program functions similar to the CaliforniaFIRST and Figtree progr
that it is avaitable to all cities and counties (through joining WRCOG
associate member). The HERO program continued to develop and imp�.
its residential PACE option irrespective of the response from FHFA dis�
above. The HERO program has been primarily established in the Cour
Riverside, San Bernardino, Orange and San Diego. However, new addit
this list appear to be occurring on a regular basis with several cities and cc
poised to join the program.
California Response to FHFA:
In an effort to respond to FHFA's concerns, Governor Brown signed SB 96 ir
in September of 2013. This legislation authorized the California Altei
Energy and Advanced Transportation Financing Authority (CAEATf
establish a PACE Loss Reserve Program (Exhibit D). The reserve fund
reimburse residential PACE programs for costs associated with kE
mortgage interests whole in the event of a foreclosure or forced sale. C�
is currently in the process of adopting emergency regulations to establ
PACE Loss Reserve Program. This process is proposed to be complete a
regulations to be effective by March 9, 2014.
It is unclear at this time if this Loss Reserve Program will resolve the concer
have been put forth by FHFA or if FHFA will provide comment prior
implementation of the regulations in early March. Staff has been in p�
contact with FHFA's General Counsel regarding residential PACE and the�
clear at the time that their objection to the first-lien component of
programs remained. Staff has attempted on several occasions to again
out to FHFA to solicit feedback regarding the impact of the Loss R
Program and the proliferation of the HERO program, but has yet to rec
response. Staff was able to obtain a letter authored by FHFA in respons
request by San Diego County, when they were considering a residential
program, (Exhibit E) which again provides insight into FHFA's position.
Conclusion:
Staff has been involved in and tracking the development of PACE prc
since 2008. Currently, the City offers its residents PACE financing oppori
through two sources; the CaliforniaFIRST PACE program and the Figtree
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Resid�
Febru<
A recent update provided by the CaliforniaFIRST program did indicate t
state Loss Reserve Program is established, without comment from FHFA,
would begin moving forward with a residential PACE option by the sprin
To date, due to the uncertainty of the potential impact on the res
Bakersfield with respect to FHFA's current position and directives to Fa�
Freddy, staff has been reluctant to bring forward approval of any RE
PACE option, such as the HERO program. Staff is concerned that accE
secondary mortgage market could be impacted if a residential PACE
was established, thus impacting residents opportunities to sell or refina
homes.
Staff maintains the position that it would be prudent to allow more timE
and evaluate the impact of and reaction to residential PACE programs
HERO, before moving forward with residential PACE in Bakersfield.
establishment of the California Loss Reserve Program proves to be a sc
the concerns of FHFA and other residential PACE programs move foi
indicated, joining the WRCOG HERO program would be advisable at tl
Staff should have a good indication in the next month or two if circur
have changed enough to warrant moving forward with Residential PAC
cc: Dovg Mclsaac, Community Development Director
Nelson Smith, Finance Director
Virginia Gennaro, City Attorney
� �
�
• Summary Articles Regarding
Residential PACE and the HERO
Program
CaliforniaFIRST
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2013-08-25
Page 1 of 4
Residential PACE Energy Programs Pursue
Innovative Approaches
Although the Federal Housing Finance Agency (FHFA) has created strict requirements for residential
property-assessed clean energy (PACE) programs, a few states and cities are continuing to develop
programs and pass legislation.
PACE programs make it possible for homeowners to finance energy efficiency retrofits and pay for
them gradually through property assessments.
To avoid putting homeowners at risk, some programs are attempting to work within the guidelines of
the FHFA by making PACE liens lower-priority than mortgages, providing insurance for them,
providing homeowners with disclaimers, and/or exploring other legal options.
These limitations don't apply to commercial PACE programs, which are growing and thriving in
many states.
A FHFA Statement Stalled the Growth of PACE Programs
In July 2010, the new residential PACE movement nearly stalled. The FHFA, newly created to protect
the damaged housing market, issued a statement saying PACE iinancing would pose substantial risks
to lenders and the loans "do not have the traditional community beneiits associated with taxing
initiatives." The FHFA also expressed skepticism about the performance of the retrofits and the
resulting energy savings. The agency advised Fannie Mae and Freddie Mac to avoid buying
mortgages for properties with PACE assessments.
The FHFA has said that if communities go ahead with PACE programs that take precedence over
mortgages and do not meet the FHFA criteria, it will direct Fannie Mae and Freddie Mac to tighten
local loan-to-value ratios and make local income criteria stringent. Thus far, FHFA has not taken such
measures with any communities.
"It took us by surprise," said Cliff Staton, executive vice president of Renewable Funding, a company
https://californiafirst.org/news/residential�ace_energy�rograms�ursue_innovative_appr... 2/ 18/2014
CaliforniaFIRST
Page 2 of 4
that provides financing and technology to advance clean energy. "We knew they had concerns about
it, but there were many players in the administration who were actively supporting PACE — and trying
to, in fact, spend hundreds of millions of dollars in DOE funding around the country."
Lawsuits and Proposed Legislation Have Not Altered the Picture
A large network of concerned organizations has challenged the FHFA's statement through both
lawsuits and legislation. But the FHFA's position remains unchanged.
"The timing of the rollout of PACE programs was difficult for FHFA and Fannie Mae and Freddie
Mac," Staton said. "They were suffering the worst of the housing meltdown. From their standpoint, I
could see how it might seem like a potential problem."
"The FHFA was created by Congress in response to the market meltdown," said David Gabrielson,
Executive Director of the advocacy organization PACENow.
Staton said the legislative challenge to the FHFA's position came from a congressional bill that was
introduced by Rep. Mike Thompson, D-Calif., in 2010. Despite widespread bipartisan support, the bill
became mired in gridlock and did not pass.
"We got over 50 co-sponsors for that bill in the House ranging the political spectrum from very liberal
to very conservative," Staton said. The supporters included hundreds of organizations from Fortune
500 companies to environmental organizations and chambers of commerce.
The broad bipartisan appeal of PACE programs is due to their job creation potential, minimal cost to
governments, and reduction of greenhouse gas emissions, Staton said. Local government rights are
also an important issue. He said conservatives thought the FHFA, as a federal organization, should not
dictate to states and localities that they should steer clear of creating PACE programs.
A few lawsuits were filed in response to the FHFA statement, but all of them have no��� run out of
steam without successfully pressuring the FHFA to change its position. The first two lawsuits, from
communities in New York and Florida, were dismissed. Another lawsuit in California made progress
until the U.S. Court of Appeals for the 9th Circuit stated the FHFA was acting as a conservator of the
public good and could not be pressured legally into changing its opinion.
Residential PACE Programs Are Moving Forward
Many states and municipalities have legislation that enables residential PACE. Some even have
residential PACE programs. These programs are continuing to advance and find innovative ways to
address the stringent requirements of the FHFA.
According to Gabrielson, state and local governments have taken a number of different approaches to
residential PACE as a result of the FHFA's positions. There are several approaches municipal and
county programs can take if they want to pursue residential PACE.
Some have chosen to make PACE a junior lien with lower priority than mortgage paym.ents. Staton
said four states have taken this approach — Vermont, Oklahoma, Maine and Rhode Island. However,
this approach is less attractive to investors than senior-lien PACE is, Staton said.
Gabrielson said Vermont Energy Investment Corporation has taken this approach to attract investors
https://californiafirst. org/news/residential�ace_energy�rograms�ursue_innovative_appr... 2/ 18/2014
CaliforniaFIRST
Page 3 of 4
to its subordinate lien program and has used funds from the Regional Greenhouse Gas Initiative to
insure PACE loans. The organization also collects an insurance premium from each participating
homeowner.
Some municipal and county programs keep PACE as a senior lien, providing disclaimers for
homeowners enrolling in the programs. Western Riverside Council of Governments has taken this
approach in California with the HERO Program. According to Staton, homeowners have been
responsive to the program.
Laura Franke, a senior managing consultant at Public Financial Management, a government and
nonprofit financial advisory firm, said the HERO program's developers have met with the FHFA's
general counsel. The program addressed the FHFA's requirements by giving homeowners two
cautionary messages. The first message tells homeowners they should review their mortgages for any
provisions that may be triggered by the assessment. The second message says they may have to pay
off their assessments when they sell or refinance their homes.
HERO Programs are expanding their reach throughout California. Franke said 31 cities in five
counties have passed resolutions authorizing participation in a statewide program. She also said
another HERO Program is being launched in San Bernardino County. This program will include 23
cities.
Existing PACE Programs Are Performing Well
The FHFA's concerns about risk have not been borne out by existing PACE programs thus far.
Gabrielson co-signed a lengthy statement addressed to the FHFA that cited the successzs of
residential PACE to date.
The statement provides evidence that PACE retrofits increase the value of homes. It also says PACE
does not affect the decisions of home appraisers. Some evidence shows PACE retrofits may reduce
the risk of defaults on mortgages by making energy more affordable.
"They think homeowners might go into default," Staton said. "That's not been happening. People are
not going into default."
Gabrielson said research from California shows that in three PACE programs with a total of around
3,000 homes, the default rate for mortgages has been less than one percent.
"Energy-efficient homes sell for a premium," Gabrielson said.
The statement came from over 29 organizations ranging from the American Council for an Energy-
Efficient Economy to the Vote Solar Initiative. According to the statement, over 3,000 comment
letters were submitted to the FHFA in support of residential PACE programs.
This story was originally published in the Clean Energy Finance Center's newsletter, the Clean
Energy Finance Source. To subscribe, please visit the Clean Energy Finance Center website.
• f�bor�Xi C;alifc�r�lia�'IRST
• Fc�r I:,enc�eE-s
• Fc7r Gavernn�ents
• News
https://californiafirst. org/news/residential�ace_energy�rograms�ursue_innovative_appr... 2/ 18/2014
HERO PACE Poised to Move into Most of California
.�'�.;. cieantechnica.com
Page 1 of 2
hltp�i/clean!e�hi�i:z.corr;zQ14/C2i14/hero-pace-5nancing-poise� move-califerniai
HERO PACE Financing Poised To Move Into Most Of California
Rov t. tia�c�s
Orrc�inaUy put�lished on the ECOrepo�#.
A little more than two years since it was launched in Riverside County, the Home Energy Ftenovatio�3 Opportunity (HERQ) financing program is on the verge of an
expansion that will soon be accessible to 70% of Californians.
"The past two years have confirmed that California cities are deriving great economic benefits from the HERO program," said Dean Hollander, HERO
spokesperson. "We're excited to be expanding into more than 100 California communities in 2014."
Homeowners who receive HERO financing for Property
Assessed Clean Energy (PACE) repay the debt through
property taxes and the interest is tax deductible. This
investment will stay with the property, if the homeowner
sells, and the annual payments are often much lower than
their current electric bills. Furthermore, the rate is fixed and
that means a lot at a time when utility bills keep getting
bigger.
HERO officially entered San Bernardino Counry during
October 2013, but it started lining up solar companies a
month before that. The installers immediately sought out
customers and millions of dollars worth of work were
waiting by the time HERO officially launched.
The same thing is happening in San Diego right now. The
cities of Carlsbad, Oceanside, Vista, San Marcos, Solana
Beach, and Lemon Grove have all opted to offer
homeowners HERO PACE Financing. HERO has set up
classes for contractors who want to utilize their program.
"I believe this will have a huge impact on the solar industry,
home performance and HVAC," said Ken Jutso, of ASI
Heating and Air. "We had an introduction to the program
last week. We have 3 day long trainings this week. Chula
Vista is scheduled to have their own version by March."
Siillivari Solar Power has issued a news release in which
it states, "An informational HERO Financing seminar will
be held on March 22, at the Oceanside Public Library from
11 a.m.-12 p.m."
The program is about to enter more than 100 cities
throughout California. HERO is moving onto the
Sacramento area and Southern Los Angeles County. The
cities of Fresno, San Jose, and Newport Beach are all
coming into the program.
HERO PACE can accommodate up to 3 million additional
households in 2014.
In the 25 months since the HERO program first started,
$200 million dollars have been allocated and an additional
$300 million has been approved. Most of that went into
Riverside county, but $110 million worth of applications
have been approved in San Bernardino County.
A number of solar contractors appeared today before the
council in Bakersfield, to ensure that the residents of their
city are among them.
Photo at top of page: AURE Solar Pawer at the home of
San Diego's East County Solar Guy.�
Tags: bakersfield, Bakersfi�Id solar, California, california
pace, Carlsbed, Carlsbad solai, Hero, NERO financing, HF_RG PACF Financing,
financinc�, Lemon Grove, Lemon Grove solar, Oceanside,
Beach, Solana B�ach soiar, Sullivan Solar Power, Vista,
Homa Energy Ranovation �ppoifunity, Home Energy Rencvation Opportunity
Oceanside solar, Pf�CE financiny, Riverside County, riverside salar, San Marcos, San Marcos solar, 5olana
vista splar
http://cleantechnica.com/2014/02/14/hero-pace-financing-poised-move-california/ 2/18/2014
� �
� �
• July 6, 2010 Statement from FHFA
FEDERAL HOUSING FINANCE AGENCY
For Immediate Release
July 6, 2oio
STATEMENT
Contact: Corinne Russell
Stefanie Mullin
FHFA Statement on Certain Energy
Retroiit Loan Programs
(202) 4i4-69
(202) 4i4-63
After careful review and over a year of working with federal and state government agencies, i
Federal Housing Finance Agency (FHFA) has determined that certain energy retrofit lendin�
programs present significant safety and soundness concerns that must be addressed by Fanr.
Mae, Freddie Mac and the Federal Home Loan Banks. Specifically, programs denominated �
Property Assessed Clean Energy (PACE) seek to foster lending for retrofits of residential or
commercial properties through a county or city's tax assessment regime. Under most of thes
programs, such loans acquire a priority lien over existing mortgages, though certain states h<
chosen not to adopt such priority positions for their loans.
First liens established by PACE loans are unlike routine tax assessments and pose unusual a�
difficult risk management challenges for lenders, servicers and mortgage securities investors
The size and duration of PACE loans exceed typical local tax programs and do not have the
traditional community benefits associated with taxing initiatives.
FHFA urged state and local governments to reconsider these programs and continues to call
a pause in such programs so concerns can be addressed. First liens for such loans represent
key alteration of traditional mortgage lending practice. They present significant risk to lendE
and secondary market entities, may alter valuations for mortgage-backed securities and are �
essential for successful programs to spur energy conservation.
While the first lien position offered in most PACE programs minimizes credit risk for investc
funding the programs, it alters traditional lending priorities. Underwriting for PACE progra:
results in collateral-based lending rather than lending based upon ability-to-pay, the absencE
Truth-in-Lending Act and other consumer protections, and uncertainty as to whether the ho
improvements actually produce meaningful reductions in energy consumption.
Efforts are just underway to develop underwriting and consumer protection standards as we
as energy retrofit standards that are critical for homeowners and lenders to understand the
risks and rewards of any energy retrofit lending program. However, first liens that disrupt a
fragile housing finance market and long-standing lending priorities, the absence of robust
On May 5, 2oio, Fannie Mae and Freddie Mac alerted their seller-servicers to gain an
understanding of whether there are existing or prospective PACE or PACE-like programs in
jurisdictions where they do business, to be aware that programs with first liens run contrary to
the Fannie Mae-Freddie Mac Uniform Security Instrument and that the Enterprises would
provide additional guidance should the programs move beyond the experimental stage. Those
lender letters remain in effect.
Today, FHFA is directing Fannie Mae, Freddie Mac and the Federal Home Loan Banks to
undertake the following prudential actions:
i. For any homeowner who obtained a PACE or PACE-like loan with a priority first lien
prior to this date, FHFA is directing Fannie Mae and Freddie Mac to waive
their Uniform Security Instrument prohibitions against such senior liens.
2. In addressing PACE programs with first liens, Fannie Mae and Freddie Mac should
undertake actions that protect their safe and sound operations. These include, but are
not limited to:
- Adjusting loan-to-value ratios to reflect the maximum permissible PACE loan
amount available to borrowers in PACE jurisdictions;
- Ensuring that loan covenants require approval/consent for any PACE loan;
- Tightening borrower debt-to-income ratios to account for additional obligations
associated with possible future PACE loans;
- Ensuring that mortgages on properties in a jurisdiction offering PACE-like programs
satisfy all applicable federal and state lending regulations and guidance.
Fannie Mae and Freddie Mac should issue additional guidance as needed.
g. The Federal Home Loan Banks are directed to review their collateral policies in order to
assure that pledged collateral is not adversely affected by energy retrofit programs that
include first liens.
Nothing in this Statement affects the normal underwriting programs of the regulated entities or
their dealings with PACE programs that do not have a senior lien priority. Further, nothing in
these directions to the regulated entities affect s in any way underwriting related to traditional
tax programs, but is focused solely on senior lien PACE lending initiatives.
FHFA recognizes that PACE and PACE-like programs pose additional lending challenges, but
also represent serious efforts to reduce energy consumption. FHFA remains committed to
working with federal, state, and local government agencies to develop and implement energy
retrofit lending programs with appropriate underwriting guidelines and consumer protection
standards. FHFA will also continue to encourage the establishment of energy efficiency
standards to support such programs.
FfS�
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the i2 Federal Home Loan Banks.
These gouernment-sponsored enterprises provide more than $5.9 trillion in funding for the U.S. mortgage markets
and financial institutions.
Announcement SEL-2010-12
Options for Borrowers with a PACE Loan
August 31,
On July 6, 2010, the Federal Housing Finance Agency (FHFA) issued a statement reg
Property Assessed Clean Energy (PACE) loan programs. PACE loans are made by local
finance residential energy improvements and are generally repaid through the homeownei
estate tax bill. In its July 6 statement, FHFA advised that PACE programs that provl
automatic lien priority over mortgage loans pose safety and soundness risk to mo
investors.
The purpose of this Announcement is to issue additional lender requirements to address
risks, and to issue special instructions regarding Fannie Mae borrowers who obtained
loans prior to July 6, 2010. The Selling Guide will be updated to incorporate these
changes at a future date.
Requirements for PACE loans originated prior to July 6, 2010
Fannie Mae is implementing specific requirements for lenders regarding borrower:
obtained PACE loans prior to July 6, 2010. These requirements are intended to address
and soundness concerns caused by PACE loans originated prior to the issuance of state
by FHFA and other banki ng regulators.
Fannie Mae is waiving the uniform security instrument prohibition against PACE loans w
priority for whole loans purchased before July 6, 2010 and for loans in an MBS pool v�
issue date on or before July 1, 2010.
Additionally, the following requirements apply to borrowers with loans that are owr
securitized by Fannie Mae who seek to refinance and who obtained a PACE loan prior to
2010. To mitigate the risk posed by PACE obligations that take lien priority over the mor
Fannie Mae is requiring that borrowers with sufficient equity pay off the existing PACE obl'
as a condition to obtaining a new mortgage loan. If a lender determines that a borrowe
not have sufficient equity to pay off the existing PACE obligation, the lender may underwr
loan as described in the second bullet below. This "waterfall" approach is designed to rr
Fannie Mae's exposure, while avoiding borrower hardship.
• Lender must first attempt to qualify the borrower for either a cash-out or limited ca
refinance option, with the PACE loan being paid off as part of the refinance. The pror
against using the proceeds of a limited cash-out refinance to pay off a loan not u
purchase the property will not apply. (See the Selling Guide, B2-1.2-02, Limited Ca:
Refinance Transactions, for structure and eligi bility requirements.)
• If the borrower is unable to qualify for a cash-out or limited cash-out refinance with su
proceeds to pay off the PACE loan, the lender may underwrite the loan as a limited
Note: The PACE loan must be included on the Uniform Residential Loan Application
1003) as an installment debt with the balance and payment reflected. If the PACE loan �
be paid off with the transaction, the payment must be included in the total expense ratio.
Due to the complexity of data entry options for limited cash-out refinance transactions in
the PACE loan is being paid off with mortgage proceeds, these transactions must be m<
underwritten.
Requirements for PACE loans originated on or after July 6, 2010
Fannie Mae will not purchase mortgage loans secured by properties with an outstanding
obligation unless the terms of the PACE program do not permit priority overfirst mortgage
Lenders are responsible for monitoring state and local law to determine whether a juris
has a PACE program that provides for lien priority.
Fannie Mae supports the need for programs to help homeowners fund energy effi
improvements, and believes it may be accomplished without altering the lien status
mortgages. In the event that PACE or similar programs with automatic lien priority proli
Fannie Mae will consider further limitations as necessary to address safety and sour
concerns posed by PACE programs, in line with the July 6 FHFA statement. These restr
may include tightening borrower debt-to-income ratios or loan-to-value ratios in jurisd
offering such programs.
Effective Date
This Announcement is effective immediately.
*****
Lenders who have questions about this Announcement should contact their Customer A�
Team.
John S. Forlines
Vice President
Single-Family Chief Risk Officer
� ��
• February 28, 2011 FHFA Directive
Case4:10-cv-03084-CW Document95-1 Filed03/02/11 Page2 of 2
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• California PACE Loss Reserve
Program Information
�
OFFICE OF 1'IIL GOVLRNOR
September 23, 2013
Edward DeMarco
Acting Director
rederal Housi�lg Finance Agency
1700 G S treet, N W
Washingion, DC 20552-0003
Re: PAC� Program in California; Resolution of Fannie Mae and Freddie Mac Issues
Dear Mr. DeMarco:
Last year, I asked President Oba�na to direct the Federal Housing Finance Agency to work with
California to revive Property Assessed Clean Energy (PACE} progranis, which provide home
owners with funding for energy-efficiency retrofts. The Pederal Housing Pinance Agency
prohibited Faiuzie Mae and Freddie Mac from purchasing mortgages subject to PAC� Ii��1s in
certain types of PACE programs.
Califori�ia has devised a rnecllanism d�at 4vill address the concen�s raised by FHPA and protect
the interest of Fannie Mae and Freddie Mac, wliich I describe below.
The California Alteinative Energy a�id Advanced Transportatiou Finaucing Authority
(Autl�ority), a�i e�isiing state agency chaired hy the California State Treasurer {Divisian 16
[commencin� with Section 2b000] of the Public Resources Code), will create a reserve fund for
PACE progra�ns. Any PACE progra�n that wishes to use tfie reserve fund will enter an
agreement that requires the PACE program to make �'annie Mae and Freddie Mac whoZ�,, as
roiioWS:
1. In any foreclasure, for any losses to Fannie Mae and Freddie Mac resulting from tlle
paymen# of any PACE assessment paid while i�i possession of the property, and
2. In any forced sale for ui�paid taxes or special assessments, for azly losses to Fanr,ie Mae
and Freddie Mac that result from PACE assessments being paid before the outstanding
mortgage.
GOVERNOR LD��IUND G. t3R0\1�N.JR. � SACCAI��tENTO. CAtlI=0R1`'lA 95�1-F •(91C�) =�-IS-2E�-11
-�-� ..
Edward DeMarco
September ?3, 20 l3
Page 2
PACE programs that enroll in the Auttiority reserve fund wiIl meet basic sh•uctural criteria,
con�ply witii underwriting criteria set by the Authority, and pay an annual premium based on the
size of their porl%lio. In the event af foreclosure, Fannie Mae and Freddie Mac will be able to
claini from the PACE program any an�ounts paid to keep the PACE assessment current until the
property is sold to a new buyer. If the property is sold for back ta�ces or speciat assessments, and
the sale results in insufticient filnds to satisfy the outstanding mortga�e because of PAC� lien
priority payments, Fannie Mae and Freddie Mac will be able to recover that amount fror,i the
PACE progra�n. In both instances, upon a showing that Fannie Mae and Freddie Mac have been
paid by the PACE progi�am, the Authority will reimburse the PACE program.
This process addresses tl�e issues t�aised by the Federal Housing Finance Agency and ensures tl�at
Pannie Mae and Freddie Mac wiil not be adversely impacted by the PACE first lien. Ti.e next
step in znoving this approlch to fruitioiz will be for ille Authority to issue draft regulations for
public comment, setting forth tlle requirements for PACE prograFns to participate in the reserve
account. We will provide you with notice of that pracess a�id invite your �articipation.
I loolc forward to moving ahead on a much larger scale with PACE in California.
Sincerely,
G.
.1r.
cc: Vzlerie Jarrett, Senior Advisor to the President, 'fihe White I-Iouse
Alfred Pollard, General Counsel, Federal I-Iousmg Fina�iee Agency
Bill LocI<yer, Treasurer, State of California
Members of the California Congressioual Delegation
CAEATFA PACE
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Property Assessed Clean Energy (PACE) Reserve Programs
What is PACE?
Page 1 of 2
Property Assessed Clean Energy (PACE) is an innovative method of financing renewable energy, energy or water
efficiency retrofits, or electric vehicle charging stations for residential and commercial properties. Property owners in
a PACE district can use PACE financing to retrofit their home or business with no money down and pay for the
assessment through their local property tax bill. PACE assessments are also easily transferrable upon the sale of a
property.
In July of 2010, the Federal Housing Finance Agency (FHFA) raised concerns regarding the effects of PACE liens on
mortgages held by Fannie Mae and Freddie Mac. Due to these concerns, in August of 2010 Fannie Mae and Freddie
Mac announced that they would no longer purchase mortgages for homes with first lien priority PACE obligations,
leading many PACE administrators to suspend their residential programs.
PACE Lass Reserve Program
In September of 2013, Governor Jerry Brown signed SB 96 into law, authorizing the California Alternative Energy
and Advanced Transportation Financing Authority (CAEATFA) to establish a PACE Loss Reserve program. 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 full text of SB 96 can be found on the California Legislative Counsel's website.
CAEATFA is proposing to adopt emergency regulations to establish the PACE Loss Reserve Program. CAEATFA
published an initial draft of these regulations on January 16, 2014 and held a public workshop to gather input from
stakeholders on January 24, 2014. After considering the comments received, CAEATFA published a revised draft of
the regulations on February 3 for additional comments. The final draft of the proposed regulations, available below,
balances stakeholders' comments with the Program's statutory, legal and administrative requirements.
The proposed regulations were approved by CAEATFA's Board at a publicly noticed meeting on February 18, 2014.
After a five-day notice period, CAEATFA will submit these regulations to the Office of Administrative Law (OAL) for
review on February 27, 2014. OAL will then have 10 calendar days to review the proposed regulations.
■ Notice of Emerqencv Requlations
■ Pr�osed Requlation Text
■ Findinq of Emerqencv
■ Staff Summarv Prepared for the Board
If you have any questions about the proposed regulations or the PACE Loss Reserve Program please contact Noah
Proser at (916) 653-3032.
PACE Bond Reserve Program
CAEATFA has put the development of the PACE Bond Rese►ve Program on hold pending the resolution of FHFA's
concems described above.
http://www.treasurer.ca.gov/caeatfalpace/index.asp 2/20/2014
CAEATFA PACE
Page 2 of 2
On April 21, 2010 Governor Arnold Schwarzenegger signed Senate Bill 77 (Pavley) into law, authorizing CAEATFA
to develop and administer a state PACE Bond Reserve Program. If developed and implemented, this reserve would
be used to pay bondholders in the event that a PACE program had insufficient funds. By reducing the risk to
bondholders, the reserve would facilitate lower interest rates for PACE bonds. Accordingly, participating PACE
programs would be able to offer lower interest rates to property owners. SB 77 authorizes CAEATFA to use up to
$25 million for this purpose.
The full text of SB 77 can be found on the California Legislative Counsel's website.
For more information about CAEATFA's role in facilitating PACE Financing in California, please contact:
CAEATFA
(916) 651-8157
http://www.treasurer.ca.gov/caeatfa/pace/index.asp 2/20/2014
Agenda Item — 4.A.
CALIFORNIA ALTERNATIVE ENERGY AND
ADVANCED TRANSPORTATION FINANCING AUTHORITY
Meeting Date: February 18, 2014
Request to Consider and Approve Emergency Regulations for the Property Assessed C[ean
Energy (PACE) Loss Reserve Program
Prepared By: Noah Proser
Issue. In 2013, Senate Bill 96 (Committee on Budget and Fiscal Review) authorized the
California Alternative Energy and Advanced Transportation Financing Authority (Authority or
CAEATFA) to create a risk mitigation program for Property Assessed Clean Energy (PACE)
loans using $10 million allocated in the Budget Act of 2013. Pursuant to this authority,
CAEATFA staff (Staf� are proposing emergency regulations to create a residential PACE Loss
Reserve Program (Program). The proposed regulations are included in Attachment A.
Background. PACE is an innovative financing method that uses community facility districts or
improvement districts to finance the installation of distributed generation renewable energy
sources, electric vehicle charging infrastructure, or energy or water efficiency improvements.
PACE improvements can be funded by bonds or other sources of capital that are repaid through
the property owner's property tax bill. PACE allows homeowners to finance retrofits over up to
20 years with no money down. Additionally, PACE obligations have lien-priority over other
voluntary obligations. The security provided by this priority allows PACE programs to offer
favorable interest rates.
In 2010, the Federal Housing Finance Agency (FHFA) raised concerns that Property Assessed
Clean Energy (PACE) financing created safety and soundness concerns for federal mortgage
enterprises due to its priority lien status over mortgages. FHFA directed federal mortgage
enterprises to adjust their lending criteria in areas with residential PACE programs and require
homeowners to seek approval from their mortgage lenders before taking on a PACE obligation.
Following this decision, many PACE administrators halted their residential PACE programs to
avoid placing homeowners in conflict with the terms of their mortgages. The State of California
and several other parties sued FHFA for making this decision without a formal rulemaking;
however, in March 20l 3, the 9th Circuit Court of Appeals ruled in FHFA's favor.
The proposed Program seeks to address FHFA's concerns regarding the senior lien priority of
PACE obligations by reimbursing first mortgage lenders for specified losses resulting from the
existence of a PACE lien on a property during a foreclosure or forced sale for unpaid property
taxes. Covering those losses should mitigate any additional risk to first mortgage lenders created
by PACE liens and allow residential PACE programs in California to move forward.
1
Agenda Item — 4.A.
PACE Loss Reserve Program Goals & Development.
1. Pro�ram Goals.
The Program is intended to remove any additional risk to the first mortgage lender resulting from
the existence of a PACE loan on a property in a foreclosure or forced sale for unpaid taxes. By
addressing the concerns raised by FHFA, the Program should provide additional safeguard for
both existing and new residential PACE programs to expand in California. If FHFA and the
federal mortgage enterprises are satisfied, they may allow mortgages to be purchased without
requiring the PACE loan to be extinguished. Lifting this requirement would restore one of the
principal advantages of PACE financing: transferability of the loan upon the sale of a home.
Additionally, by tracking the performance of PACE portfolios over the next several years, the
Program should provide more detailed information on the actual credit risk associated with
PACE financing than is currently available. This information will be useful for potential
investors in PACE bonds and securities and may allow them to accept lower returns on these
investments.
2. Pro�ram Development.
Staff has been working with stakeholders on program goals and potential structures since July
2013 and has determined that a loss reserve model would accomplish the Program's goals
efficiently and at a reasonable cost to participants and the State.
Staff provided the proposed regulations to the public for review and comment on January 16,
2014 and held a workshop on January 24, 2014. Forty-three stakeholders participated in the
workshop, and seven comment letters were submitted to the Authority. After considering the
comments received, Staff provided revisions to the proposed regulations on February 4, 2014
and received four additional comment letters to date.
Staff has analyzed and considered all comments and incorporated changes to the emergency
regulations when appropriate. The proposed final emergency regulations balance stakeholders'
comments with the statutory, legal and Program administration framework.
Program Structure.
1. Application — �10081
To apply for the Program, PACE program administrators will submit:
• the formation documents required by the PACE program's authorizing statute;
� documents showing the PACE program meets the Authority's underwriting criteria;
� a description of transactional activities including fees;
• a description of quality assurance and consumer protection protocols; and,
• information on the size of their existing loan portfolios.
�
Agenda Item — 4.A.
Additionally, applicants will agree to permit CAEATFA to audit their records as requested
by the Executive Director. CAEATFA will have 10 calendar days to review and approve
complete applications.
Kev Policy Issues and Decisions:
The Authority's statute specifies underwriting criteria that PACE programs receiving
assistance must meet. The underwriting criteria listed in the proposed regulations are largely
drawn from these statutory criteria. Stakeholders have commented that some of these criteria
are too restrictive and do not match their current practices.
Loan Value Limitation
CAEATFA's statute limits the value of loans receiving assistance to less than 10% of the
home value. � Several stakeholders have commented that this limitation will preclude
homeowners in less affluent areas from performing whole-house energy efficiency
retrofits or installing rooftop solar. While stakeholders have suggested several alternative
underwriting criteria that could provide similar or greater levels of protection, these
alternatives would require a statutory change.
Requirement to Meet Underwritin� Criteria in Full
Some stakeholders also suggested that PACE programs would appreciate the ability to
partially enroll in the Program, covering only those loans that met the criteria. Doing so
would provide those PACE programs using different underwriting criteria than the
Program with the flexibility to enroll without altering their current operations; however,
Staff determined that partial enrollment would weaken the impact of the Program.
Allowing partial enrollment would also create an administrative burden for mortgage
lenders, PACE programs, and the Authority to establish the eligibility and coverage status
of each loan.
In the application to the Program, PACE programs will demonstrate that these criteria are
met going forward, but their existing portfolios will not need to meet the criteria to be
covered as described below. It is unclear whether requiring full enrollment will deter
participation from PACE programs with less restrictive underwriting criteria. Some
stakeholders have indicated that they may temporarily alter their programs to meet the
underwriting criteria, but will seek legislative changes to the 10% limitation in the long term.
2. Function of the Reserve -&10083
The Program will cover two, specific types of losses for first mortgage lenders:
a. If a first mortgage lender forecloses on a property with a PACE loan, the Program
will cover the amount of property tax attributable to the PACE lien that is paid by the
first mortgage lender while in possession of the property. The Program will also cover
penalties and interest if accrued through no fault of the first mortgage lender.
1 Public Resources Code §26063(a)(4)
3
Agenda Item — 4.A.
b. If a county conducts a forced sale on a property for unpaid taxes, the Program will
cover any losses to the first mortgage lender up to the amount of overdue PACE
payments.
PACE programs will submit claims for eligible losses to CAEATFA and either accept
payment from the loss reserve as a reimbursement or as a pass-through to the frst mortgage
lender.
Staff analyzed several potential liability scenarios and determined that the $l0 million
authorized for the Program should last beyond 10 years in most cases. Even in the most
conservative scenario, the reserve is projected to last through year eight. While this scenario
is unlikely, it would still provide sufficient time to better understand the performance of
PACE portfolios and seek additional funds if necessary.
In reality, Staff expect the reserve funds to last beyond 10 years since losses are limited in
several ways. Unlike traditional property taxes, PACE loans are screened by PACE
programs' underwriting criteria to select homeowners that are likely to repay their
obligations. Where homeowners do fail to pay their obligations (either the PACE assessment
or the mortgage), claims to the reserve are limited to those cases where the first mortgage
lender takes possession of the home or where the property is sold by the county for less than
the combined value of the taxes and the frst mortgage. Since regular property tax payments
will resume upon the property's sale, the reserve will not be liable for the full PACE loan
amount, only those payment amounts described above.
Key Policy Issues and Decisions:
Eli�ibilitv ofLosses to Private MoNtgaQe Lenders
The proposed Program would cover losses to any frst mortgage lender as described
above. Some stakeholders have commented that reserve funds should solely be used to
compensate federal mortgage enterprises to address FHFA's specific concerns and
increase the lifespan of the $10 million currently allocated. Staff has determined that
discriminating between federal mortgage enterprises and other first mortgage lenders
would result in confusion and uncertainty in the market. Since mortgages are resold
regularly and private mortgage lenders may have similar concerns as FHFA, Staff is
proposing to cover all frst mortgage lenders for eligible losses.
Limitation of Losses to First Mort�age Lenders
Additionally, Staff had not originally specified that losses could only apply to first
mortgage lenders. Stakeholders commented that only first mortgage lenders should be
eligible to receive payments from the reserve, as second mortgages have a lesser lien
priority. It is unlikely that a second mortgage lender would incur the eligible losses
described; however, Staff has updated the proposed regulations to limit losses to first
mortgage lenders to address this possibility.
�
Agenda Item — 4.A.
3. Coverage of PACE Portfolios —&10082
The Program will cover PACE loans for the length of their terms for the losses allowed under
the Program as specified. All loans issued by enrolled programs and included on reports
submitted to the Authority will be covered by the reserve. In addition, the Program will
accommodate existing loan portfolios of existing programs that apply up to 90 days after the
regulations take effect, and any loans issued by a newly created PACE Program up to 30
days before its enrollment in the Program.
Kev Policv Issues and Decisions:
Accommodatin� Existin� PACE Programs' Loan Port olios
Staff has proposed to incorporate the existing portfolios of PACE programs to minimize
risk and uncertainty in the market and maximize the Program's impact. For existing
PACE Programs that apply within 90 days of the effective date of the regulations, the
Program will cover any loans issued through the enrollment date. These loans will be
covered at no charge since the PACE Programs have no means of collecting additional
fees from loans that have already been issued, and the Authority already has a budget
allocation for administrative expenses in the current year. Additionally, for new PACE
Programs, Staff has proposed a 30 day coverage window before enrollment to allow those
programs to begin lending during the Authority's review of their applications. Loans
issued within that 30 day period would also be covered at no charge. As discussed above,
the preexisting loans would not need to meet the Program's underwriting criteria to be
covered by the reserve.
4. PACE Prosram Reporting and Administrative Fee -&10086
Enrolled PACE programs will report to CAEATFA on March 1 St and October 1 St of each
year. The March 1 St report will include information on loans issued between July 1 and
December 31 of the previous year. The October 1 St report will include informations on loans
issued between January 1 and June 30 of that year, and cumulative information on the loan
portfolio and energy and water savings resulting from the PACE loans.
Each of these reports will be submitted with an administrative fee of 0.25% (25 basis points)
of the principal value of new loans issued during the reporting period. This fee will not be
assessed on the existing portfolio of loans described above.
Kev Policv Issues and Decisions:
Administrative Fee
The administrative fee is designed to cover the Authority's reasonable costs of
administering the Program over twenty or more years. Since many PACE loans have 20-
year terms, Staff expects to administer the Program for up to 20 years after the last loan is
issued. Fee revenue will depend on enrollment and loan activity, and may need to be
adjusted once a track record for the Program is established. Some stakeholders requested
a formal timeline for review of the fee amount. Staff is proposing to review the fee after
two years and annually thereafter or upon determination by the Board.
5
Agenda Item — 4.A.
5. Reports to the Legislature
As required by the Program's authorizing statute, the Authority will report the status of the
loss reserve account, a summary of the loans that received assistance, the amount of energy
savings resulting from and number of jobs created by those loans, and a summary of the
benefits provided by the Program to the Legislature on an annual basis. Due to the standard
timeframes for the preparation of annual tax levies, the reported data will be based on the
fiscal year.
Re�ulatorv Process.
Upon Board approval of the proposed final emergency regulations, the formal emergency
rulemaking process will begin. Staff will post the notice of emergency rulemaking, a finding of
emergency and the text of emergency regulations to the CAEATFA website. Staff will also
provide these documents to all interested parties through the e-mail listserv. Upon submittal of
the regulation package to the Office of Administrative Law ("OAL"), emergency regulations will
be subject to a five day public comment period. CAEATFA will have until day eight to respond
to any public comments that are submitted; and OAL must make a final decision on the tenth day
following submission. If on the tenth day OAL approves the emergency regulations, they will be
filed with the Secretary of State and become effective upon this filing date. The emergency
regulations will be valid for six months (180 days), during which time CAEATFA will begin the
regular rulemaking process.
Tentative Timeline.
All of the dates below are tentative and subject to change at any time.
February 1 gtn
CAEATFA Board reviews and approves emergency regulations and
proposed Program forms
February 25t" Emergency regulations are submitted to OAL five business days after
approval by the Board and notice by the Authority
March 7th
OAL decision deadline, emergency regulations in effect for 180 days
June 5`h Last day for existing PACE programs to apply to accommodate
existing portfolios
September 3rd
End of 180 Days for emergency regulations
0
Agenda Item — 4.A.
Recommendation. Staff recommends adoption of a resolution to approve the proposed
emergency regulations establishing the PACE Loss Reserve Program and authorize Staff to
undertake emergency and regular rulemaking proceedings and other actions related to
promulgation of the regulations.
Attachments:
� Attachment A— Proposed Text of Emergency Regulations
7
Agenda Item — 4.A.
Resolution of the California Alternative Energy and Advanced Transportation Financing
Authority Approving Regulations and Authorizing Emergency and Regular Rulemaking
Proceedings and Other Actions Related Thereto, Including the Public Notice and Comment
Procedures to Implement The PACE Loss Reserve Program
WHEREAS, the California Alternative Energy and Advanced Transportation
Financing Authority ("Authority") is authorized by California Public Resources Code Section
26009 to adopt regulations to implement and make specific the statutory provisions governing
the Authority; and
WHEREAS, the Authority has determined that amendments to the Authority's
regulations relating to its implementation of the PACE Loss Reserve Program (the Program), as
authorized in Section 26060 of the Public Resources Code, are necessary to be adopted at this
time to implement the Program.
NOW, THEREFORE, BE IT RESOLVED by the California Alternative Energy
and Advanced Transportation Financing Authority as follows:
Section l. The proposed form of Regulations, on file with the Authority, is hereby
approved. The Chair, Executive Director and Deputy Executive Director are hereby authorized to
file the Regulations, with the supporting documentation required by law, with the Office of
Administrative Law as emergency regulations in the form currently on file with the Authority.
Section 2. The Chair, Executive Director and Deputy Executive Director are
hereby authorized to proceed with the public notice and comment procedures required by
California Rulemaking Law prior to submitting emergency and regular regulations to the Office
of Administrative Law.
Section 3. The Chair, Executive Director and Deputy Executive Director of the
Authority are hereby authorized to take necessary actions, including making any necessary
changes to the Regulations to secure approval by the Office of Administrative Law, and to
execute and deliver any and all documents necessary or advisable in order to effectuate the
purposes of this resolution.
Section 4. This resolution shall take effect immediately upon its approval.
E
Agenda Item — 4.A.
Attachment A
PROPOSED TEXT OF REGULATIONS
CALIFORNIA CODE OF REGULATIONS
Title 4. Business Regulations
Division 13. California Alternative Energy and Advanced Transportation Financing
Authority
CALIFORNIA ALTERNATIVE ENERGY AND ADVANCED TRANSPORTATION
FINANCING AUTHORITY REGULATIONS IMPLEMENTING THE PACE LOSS
RESERVE PROGRAM
Article 4. PACE Loss Reserve Program
§10080. Definitions.
(a) "Authority" means the California Alternative Energy and Advanced Transportation
Financing Authority (CAEATFA) established pursuant to Division 16 (commencing with
Section 26000) of the Public Resources Code.
(b) "Executive Director" means the Executive Director of the Authority or his or her
designee.
(c) "Loan" means a loan issued by, or a contractual assessment or special tax levied by a
PACE program.
(d) "PACE Program" means a residential property assessed clean energy program financing
the installation of distributed generation renewable energy sources, electric vehicle charging
infrastructure, or energy or water efficiency improvements and established pursuant to:
(1) Chapter 29 (commencing with Section 5898.10) of Part 3 of Division 7 of the Streets
and Highways Code; or,
(2) Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of
the Government Code.
(3) A charter city's constitutional authority under Section 5 of Article XI of the
California Constitution.
(e) "Program" means the PACE Loss Reserve Program established pursuant to Chapter 4
(commencing with Section 26050) of Division 16 of the Public Resources Code.
§10081. Application by PACE Program to the PACE Loss Reserve. A PACE Program
seeking to participate in the PACE Loss Reserve Program shall complete an application that
shall include the following information:
(a) The formation documents required pursuant to:
A-1
Agenda Item — 4.A.
(1) Streets and Highways Code Sections 5898.12, 5898.14,and 5898.20 — 5898.22;
or,
(2) Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5
of the Government Code; or,
(3) In the case of a charter city, a copy of a resolution or other document adopted by
the city's governing board evidencing approval of the PACE Program.
(b) If not included in the documentation required in subdivision (a) above, documents
showing that the PACE Program requires that property owners can show all of the
following as part of the financing underwriting process:
(1) 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.
(2) The property is not subject to any involuntary lien in excess of $1,000.
(3) The property is not subject to any notices of default.
(4) The property owner is not in bankruptcy proceedings.
(5) The property owner is current on all mortgage debt.
(6) The party seeking �nancing is the holder of record on the property.
(7) The property is within the geographical boundaries of the PACE Program.
(8) The Loan is for a residential property of three units or fewer.
(9) The Loan is for less than ten percent (10%) of the value of the property.
(c) If not included in the documentation required in subdivision (a) above, a detailed
description o£
(1) The transactional activities associated with the Loan issuance, including all
transactional costs; and,
(2) Requirements for quality assurance and consumer protection, as related to
achieving efficiency and clean energy production.
(d) A summary of the PACE Program's existing residential financing portfolio certified
pursuant to Section 10087 as of the date of application. The summary shall include the
following information:
(1) The total number of Loans in the portfolio.
(2) The total value of the portfolio.
(e) The PACE Program's agreement to permit an audit of any of its records relating to
enrolled Loans, during normal business hours on its premises, by the Authority or its
agents, and to supply such other information concerning enrolled Loans as shall be
requested by the Executive Director.
A-2
Agenda Item — 4.A.
(� Upon receipt of a completed application, the Executive Director will within ten business
days review and determine whether additional information is required, or whether the
application is sufficient to enroll the PACE Program. The Executive Director's decision
whether an application is sufficient shall be final.
§10082. Coverage of PACE Loan Portfolios.
(a) For PACE Programs created before the effective date of these regulations and making
application pursuant to Section 10081 not more than 90 calendar days after the effective
date of these regulations, all PACE Loans outstanding at the time of enrollment shall be
covered by the loss reserve pool for the length of their term. In addition PACE Loans
originated after enrollment and included in reports as provided in Section 10085 shall be
covered by the loss reserve pool for the length of their term.
(b) For PACE Programs created after the effective date of these regulations, all PACE Loans
originated not more than 30 calendar days before the date of the PACE Program
enrollment pursuant to Section 10081 shall be covered by the loss reserve pool for the
length of their term. In addition PACE Loans originated after enrollment and included in
reports as provided in Section 10085 shall be covered by the loss reserve pool for the
length of their term.
§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 Loans 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.
In no instance shall the loss exceed the amount of the PACE assessment, or in the case of forced
sale for unpaid taxes or special assessments, the amount of the delinquent PACE assessments.
§10084. Claims Procedure.
(a) Any PACE Program seeking to make a claim against the loss reserve pool for losses as
described in Section 10083 shall submit satisfactory evidence of the eligible loss,
A-3
Agenda Item — 4.A.
including but not limited to the assessor's parcel number, the loss amount, the origination
date, the first mortgage lender, the date of the loss or losses, and the certification
described in Section 10087. The Authority shall make payments to PACE Programs
within 20 calendar days of receipt of a completed claim.
(b) In the event of an eligible claim on a Loan where the PACE Program has been terminated
pursuant to Section 10086, the Authority may seek additional evidence of the eligible loss
from the first mortgage lender.
§10085. PACE Program Reporting and Administrative Fee.
(a) Each enrolled PACE Program shall report to the Authority twice each calendar year.
These reports shall be certified pursuant to Section 10087.
(1) On March lst of each year, each enrolled PACE Program shall submit the
following for the period from July 1 through December 3l :
i. The assessor's parcel number, principal amount, annual assessment
amount and term of each new Loan originated in the reporting period.
ii. The total number and value of new Loans originated in the reporting
period.
iii. Payment of the administrative fee set forth in paragraph (b) of this section.
(2) On October 1 St of each year, each enrolled PACE program shall submit the
following for the period from January 1 through June 30:
i. The information and payment outlined in subdivision (a)(1) above.
ii. The total number of outstanding Loans.
iii. The total value of the Loan portfolio.
iv. Information on energy and water savings resulting from the projects
funded by the covered portfolio of Loans.
(b) The Authority shall assess an administrative fee of 0.0025 (0.25%) of the principal value
of each Loan issued by a Participating PACE Program during the period covered by the
report, except those outstanding at the time of enrollment as described in Section 10082.
Two years after the effective date of these regulations and every year thereafter, the
Authority shall review the fee. In addition, the Authority may review the fee at any time
upon a vote of a majority of the Authority.
(c) In the event that a report and payment is not received within 60 calendar days of the due
date as set forth in this section, the Authority may terminate the PACE Program's
enrollment, pursuant to Section 10086(b).
:�
Agenda Item — 4.A.
§10086. Termination and Withdrawal from the Program.
(a) Each enrolled PACE Program may withdraw from the Program after giving written
notice to the Authority. The notice shall specify either:
(1) That the enrolled PACE Program waives any further interest in the loss reserve
pool (including for the reason that all Loans covered by the loss reserve pool have
been repaid); or,
(2) That the enrolled PACE Program will not enroll any further financings under the
Program but shall continue to count on the loss reserve pool to secure all Loans
reported prior to the notice.
(b) The Executive Director may terminate participation of an enrolled PACE Program in the
Program, by notice in writing, upon the occurrence of any of the following:
(1) Entry of a cease and desist order, regulatory sanction, or any other action against
the PACE Program that may impair its ability to participate in the Program; or
(2) Failure of the enrolled PACE Program to abide by any applicable law, including
these regulations; or
(3) Failure of the enrolled PACE Program to report any Loans under the Program for
a period of one year; or
(4) Provision of false or misleading information regarding the enrolled PACE
Program to the Authority, or failure to provide the Authority with notice of
material changes in submitted information regarding the enrolled PACE Program.
In the event of termination, the enrolled PACE Program shall not be authorized to have
any further Loans covered by the loss reserve pool, but all previously enrolled Loans
shall continue to be covered by the loss reserve pool until they are paid, claims are filed,
or the enrolled PACE Program withdraws from the Program pursuant to this section.
§10087. Certification of Reports and Claims.
(a) All applications, reports and claims submitted by a PACE Program must be signed by
the PACE Program administrator certifying that they are accurate and true.
(b) If an application, report or claim is submitted by a third-party program administrator
on behalf of a PACE Program, an appropriate public official must provide the
Authority with a signed letter certifying that the PACE Program has the ability to
audit the records of the third-party administrator, including all information included
in the applications, reports and claims submitted to the Authority.
�
A-5
�
�
• July 29, 2013 FHFA Letter of Response
to San Diego County
1� edera� :I�ausing F���ance ���;��c�
�,�X1S1.Itll�l�i1 (;�11t��'
�00 i`h Str-eet, S.W.
i��as.taiTati,�on; :I�.t;. 20024
Tcic;pllotze: (20?) fi4�)-3�00
�i�acsirnile: {2�2) fi�19-10'71
rv�r��.�I�fa.gov
Jul�� 2�, 2013
Horioxable Greg Cox
Chairman
Sai� Die�o I3�ard of Su��er�risors
1600 Pacific High�va��
Rooin .335
San Diego, California 92101
Dear Chairman Cox:
In res�onsc to }�our communication to r�cting I7irector De141arco, I am pro�-iding the follo�-ing
information regarding residential Prc�pert�> �1.ssessed Clean Ts��ergy (PAC�) programs and the
pc�sirion of the Federal .[-{ousiz�� Tii.nance ��genc>> (Eii-II�.1).
FHFr'� has duected �'annie .[�Zae and Freddie Mac not to puxchase oiiginal loans or ie-financed loans
secured by pr.operties that hazre a first lien T'.��C_:T, obl.igation attached, rurther., rHF� has directed
the Federal Home Loan 13anks, also regulated entiries, to take actions ro protect theinselves froni
such £irst lie.�x P.;\CT:. Ic�ans in the coJ.lateral that tlie I3anks accept to support advances to their
member institution5. �HIi., based those directives on safety aud soundness considerations relating
r.c> financial risk. Tl�ese risks also i.uclude mortgagc-backed securities investments of Tannie A�Iae,
F�reddie Nf.ac and Yhe FTome Laan Banks— it�vestments which face adverse unpacts ui �-aluc by an
overla}' �at first-lien l?��CI�, loans on uz�derl}ru-cg mc�rtgages, regardless of wliether such mortgages
were awned or guaranteed bj- a regulated enrit��.
FF�I���'s directi�-es i.n no u=a3� prohibit the Count�• frozn creatin� a residential PACE program w-itli
such clzaracteristics as the County may deem appropriate. However, FH�11's duecti�•es to its
regulated entities, noted above, reznain ui place and will affect whether J�'annie A'Iae and Freddie �Iac
can purchase or hold moxtgages oi� pa��ticipating proper.ries. Indeed, three federal Cot�rt af
.��ppcals— the Secc�nd, Ninrh, and Is].eventli Circuits— have uniforrnly found NI-IF'A's issuance of
those direcrives as witivn its core responsibilities as Consen�axor for Fanrue Mae and Freddie Nfac
and rejected challe��ges to thc vaJiciity of the ciirectives.
In. }�oui letter, you suggest that youx Count�- may "establish a residential [I':10E� prograrn �vit}i
seniot� li.en piiorit�T, but specificall5� exclude FHr�1 mort�a�es," and solicit a response from FHF<�.
California's Tar�CI; statutes specifically provide first-lien priox.i.ry for P�'10E obligations; your letter
does not desc��ibe any mechaza.ism b}� whicli your pxo�rai�� would excludr Fannic. �Sae or Treddie
l��tac mortgages fr�m thcix operation. ticcordingly�, it is not possible tor rHFA to respond in detail
to i>our suggestion. Neverthe.less, yo�zr sug�esrion inay ue clifficult to unplement in regards to
Page 2
mortgages hcld or guaraiiteed by the Entea-prises or whicl� arc part of securities in�c>estments of the
regulated e.ntities.
T{T-II��1 ilas �.iot objected to sul�ordinate li.en, iesidcntial I't�CE loans that are offered in four states.
FHFtI continues its review of alternati�Te lendin.g programs that �vould facilitate ener�� retrofi.t
lending while not transferring risk to its r.egutated enrities and have appropriate consumer
protections and robust e��er�� standards.
I l�ope this provides the clar.ity you requested as to ]�'�-�.F��'s pc�siaon as you look to deplo�� a
pro�ratn for energ5� retrofits in the CountS-. I am available t� ans�ver an}� questions �ou or 3�our staff
may have and may be reached at 202 649 3050.
�X'ith all bcst �vishes, I am
Sinccrely,
1�
d I�1. Pollard
-� �-
=°;�)1111�1
�i��,
�� ... ..
TO:
FROM:
DATE:
S U BJ ECT:
MEMORANDUM
Budget and Finance Committee
Nelson K. Smith, Finance Director �S
June 26, 2014
Update to Budget Finance April 2014 Packet Information regar
TRIP Revenues and Expenses
The purpose of this memo is to provide supplemental information to thE
information originally provided to the committee members in the Ap
committee packet. The item regarding TRIP revenues and expenses was
the meeting of June 30, 2014.
In the April 24, 2014 cover memo to the TRIP agenda item the third
paragraphs discuss the amount of future borrowing and potential timing
2014 staff informed the Council that the future borrowing estimate was be
from $270 million down to $240 million.
Two things have changed since that time. First, KernCOG obtained add
Transportation funds, increasing their future contribution to the TRIP progr
million to $33 million. Second, the County of Kern has recently authorized c
contribution to the TRIP program this year where they had previously K
overall contribution of $57 million at some time in the future. The Cour
documentation to show that their expenditures to date were over $23 mi
the $40 million payment, so their total payments toward the TRIP projects
over $63 million.
The $40 million item was approved by Council on June 25, 2014. The net irr
two actions combined could lower the future borrowing needs of the Ci�
$12 million (additional future cost of $17 million offset by additional contrib�
--'ii� - - � i i - - - — - - - 1 - - rr' - - �� - �- — - - - - ii_ _ n�� i� --'n� - - �- - -- - -
Additionally, the $40 million from the County will allow the City to cash flc
needs for the next two to three years rather than have to borrow to covE
cash flow needs of fronting federal program funds. Staff has been workinc
months to establish a line of credit with a bank to address this issue, but �
million cash on hand we will now be able to terminate those discussions.
$40 million cash on hand will also get us further along in providing local p
needed for construction before we consider a long term borrowing to fir
projects.
cc: Alan Tandy, City Manager
Virginia Gennaro, City Attorney
�
�#�l �
� �,Jll��»�%
�� .. .
TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM
Alan Tandy, City Manager
Nelson K. Smith, Finance Director ��
April 24, 2014
Council Request for Information on TRIP Revenues and Expense
Councilmember Maxwell requested the Budget and Finance Committee k
a variety of information regarding TRIP revenues and expenses. A copy of
is attached for reference.
As a general review, back in February 2013 staff estimated total project �
multiple City TRIP projects at approximately $1.3 billion with a proje�
borrowing need of approximately $270 million to complete the projects.
Interchange is a completed project, as are several phases of the Westsic
Additionally, the Gap 58 project and Morning Drive Interchange are
construction. Hosking Road Interchange, Rosedale Highway Widenir
Operational Improvements and SR 178 Widening are all expected tc
construction within the next 6-12 months.
In March 2014 staff provided an update regarding the future financing n�
City. Based on updated revenue estimates and revised project cost figure
borrowing need was lowered by $30 million; now approximptely $240 millio�
recent update the City has received notice from the Kern Council of G
that they have been successful in obtaining additional State Transportation
increasing their share of future project costs from $4 million to a revised
These additional funds will further reduce the City's future borrowing need�
a precaution we are still technically estimating the borrowing amount at $2
Based on current project schedules we anticipate being able to pay cc
matching requirements for the next two to three years before the need a
long term borrowing to complete the remaining TRIP road projects.
Fiscal Year 2014-15 includes another $21 million.
In specific response to the questions posed by Councilmember Maxwell, t
questions was regarding the 24t" Street project. A response to Council
was distributed on or about March 27, 2014 which we believe addresse�
questions listed. A copy of that memo is attached for reference. In spec
to item #2, requesting specific vendor payments, the following s
information is as follows. As reported in the March 27 memo, actual cos
through June 30, 2013 were $10,796,296. Of this amount $5,734,313 �
Parsons for environmental work and $5,047,472 was paid to RBF C
environmental work. The balance of $14,51 1 was paid to other miscellanE
for support costs related to the environmental study (printing, p�blic adver
Question #4 is regarding the cost of landscaping. The budget
construction ($32.8 million) includes $2 million estimate for landscaping. T
expense to maintain the landscaping is difficult to estimate with great acc
point (since it hasn't been designed yet), but based on the current conc
date Parks staff has provided a rough estimate that annual maintenancE
24th Street corridor landscape will be roughly $13,000 per year.
The next set of questions was regarding Centennial Corridor. At1
spreadsheet similar to that provided on 24th Street, which provides a m
summary of actual costs to date, current budget figures and future cost
specific response to the request for specific vendor payments, tl
supplemental information is as follows. Actual costs expended through J
were $46,503,041. Of this amount $37,217,231 was paid to Parsons for e�
and advanced preliminary engineering work and $9,090,882 was p�
Company for environmental work. The balance of $194,928 was p�
miscellaneous vendors for support costs related to the project.
It should be noted that the Centennial project has evolved over time.
project currently under construction and the Beltway Operational I
project to be bid later this year were both under the broader umk
Centennial Corridor project. Some of the prior year costs referenced
relate to the former definition of the broader project. Current year budc
future year estimates are now separated by current project definitions.
State Gas Tax Revenues
Transportation Development Fees
Utility Surcharge/Additional Franchise Fees
Total - Summary of Road Funds
Actual
2010-11
8,255,992
Actual
2011-12 '
9,257,404 7,�
6, 897,147 10,159, 883
4,493,024 4,633,602
16.
a
19,646,163 24,050,889 29,
These funds have been spent on either road maintenance or road constr�
would propose that over the next three years these funds be used for loc
requirements associated with the TRIP program projects. We implei
additional franchise and surcharge fees with PG&E in 2009, which mc
historic figures above. We recently added the local surcharge ,to tl
California Gas Company franchise agreement and this additional reven�
approximately $200,000 will begin being collected in 2014.
The final request was for a combined graph of each of the three func
providing a revenue history for the past 10 years. The requested chart is at
Attachments:
- Copy of requested information
- Council Referral Memo #461 - 24th Street
- Centennial Project cost worksheet
- Combined graph of three funding sources - 10 year history
cc: Virginia Gennaro
Budget and Finance Committee
24t" Street;
1) Expenses since July, 2013 to present.
2) Account for all of the $29.4 million in expenses reported in the July, 2013
report. State this in sections stating who was paid and for what service (please
be specific and start with Parsons).
3) Explain the future expenses of over $33 million. Break these down into
ROW (categorize each section; legal, eminent domain, etc.), destruction,
construction, and final design.
4) What is the cost of the landscaping, how and where is it being budgeted,
and what is the long term expense to maintain the landscaping.
Centennial Corridor;
1) Expenses to the present with a delineation of those expenses.
2) Current forecast of expected expenses (please be specific for each
category).
Funding sources;
1) provide a 3 year history of the Gas Tax Fund, Transportation Impact Fees,
and utility surcharge fund. Explain how each of these funds has been used in
the last 3 years.
2) How will these funds be used in the next 3 years.
3) on a graph please show the running average of each funding source over the
last 10 years. Please include a bar graph of each fund showing the total
income for each fund for the last 10 years. These graphs can be overlaid.
MEMORANDUM
TO: Alan Tandy, City Manager
FROM: Nelson K. Smith, Finance Director ��J
DATE: April 24, 2014
SUBJECT: Correction to Council Referral Item #461 - 24th Street Wideninc
A response memo was issued by my office on March 27, 2014 regarc
referral item #461 - 24th Street Widening project. During our preparation
30, 2014 Budget and Finance Committee meeting, we discovered ar
spreadsheet that was used in assembling the memo information. T
statement in the March 27 memo that read "Total project costs from star
currently estimated at $62,845,624". This figure is not correct.
Staff had previously reported to Council that the Engineers estimate for tr
project was $62,114,848. The engineers estimate has not changed and
$62,1 14,848 is the figure that should have been reported in the March 27 r
the other figures in the memo are correct and were not impacted by the
error. A corrected copy of the spreadsheet, which was attached to tr
memo is attached for your information.
My sincere apologies for any confusion this error may have caused.
Attachment
cc: Virginia Gennaro, City Attorney
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TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM
Alan Tandy, City Manager �
Nelson K. Smith, Finance Director �`�
March 27, 2014
Council Referral Item #461 - 24th Street Widening Project
REFERRAL - At the March 5, 2014 Council meeting Councilmember Maxweil requested
the Budget and Finance Committee discuss the costs related to borrowing for the 24th
Street widening project. Councilmember Maxwell wanted further details regarding
expenses incurred to date as well as more detailed cost estimates by project
component going forward.
RESPONSE - In response to a previous request for information staff had provided
Councilmember Maxwell with a summary overview of 24th Street costs and estimates
(Attachment 1). The format of this information was originally created in February 2013
for the purpose of explaining future borrowing needs of the City regarding various TRIP
projects.
Attached is an expanded spreadsheet (Attachment 2) that provides greater detail of
the summary overview numbers, providing more information regarding budgeted
figures and actual expenses as well as more detail regarding historical and future cost
estimates for each segment of the 24th street project (design/right of way/etc.)
Total project costs from start to finish are currently estimated at $62,845,624. We have
actually spent $10,796,296 in prior fiscal years and we have actually spent $534,881 in
the current fiscal year. We have b�dgeted $3,640,000 for design of the project and
we have budgeted approximately $13.8 million for right of way related costs. The right
of way cost estimate includes estimated costs for acquisition, demolition, relocation
assistance and administrative support services.
This information was originally prepared for discussion at the March 2014 Budget and
Finance Committee meeting, which has since been cancelled. Staff will be happy to
walk through the information and provide further explanation.
Attachments
- 1. Response to Council Inquiry - Feb. 2014
- 2. 24th Street - Project Cost Overview
cc: Virginia Gennaro, City Attorney
Response to question 2. from email from Councilmember Maxweil dated 2/3/14:
2. At the July 29th meeting we were given several overheads covering the estimated project
costs as weli as the Funding of several projects. The total overall costs were estimated at
$64,783,023 for the widening of 24th. The total Federal/state Funding was listed as
$32,894,630 and we had at that time spent $25,856,090 of that amount, leaving $7,038,540
remaining. The Local Funding needs were listed as $31,888,393 and we had spent $3,349,930,
teaving $28,538,463 left to complete the project. Could you update this info�mation in terms of
how much more of the Federal/State Funds we have used?
Answer:
The following table includes the latest information for the costs and expenses for the 24`" Street
Improvement Project. Please note that the estimated costs have been developed using Caltrans
and FHWA estimating practices and standards as required by the use of federal funds. Past
bidding history has confirmed the conservative nature of these construction estimates. in
addition, unit pricing is updated twice a year and validated by FHWA on an annual basis.
City of Bakersfield - 24th Street Improvement Project Cost Overview
Project to date Expenses/ Future Years Est. Costs Total Overal{ Estimated
Project Description Budget through lune 2014 FY 2014-15 and Beyond Costs - All Combined
Federal/State Funding
24th St Improvements $ 25,565,670
Local Funding Needs: (Includes County Funds)
24th St Improvements $ 3,749,178
Total P�oject Costs - All Combined
24th St Improvements $
29,314,848
$
�
�
7,328,959 $
25,471,Q41 $
32,800,000 $
32,894,629
29,220,219
62,114,848
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