HomeMy WebLinkAboutRes 09-62 - Intent to Amend EIP Report & Admin Guidelines �
CITY OF PALM DESERT
FINANCE DEPARTMENT
STAFF REPORT
REQUEST: ADOPT CITY COUNCIL RESOLUTION 09-�� DECLARING THE
INTENTION TO AMEND ENERGY INDEPENDENCE PROGRAM (EIP)
REPORT AND ADMINISTRATIVE GUIDELINES AND SETTING A
PUBLIC HEARING THEREON
SUBMITTED BY: Paul S. Gibson, Finance Director
DATE: December 10, 2009
CONTENTS: City Resolution No. 09-62
Recommendation
Waive further reading and adopt.
Backqround
On July 21, 2008, the Governor signed into law AB 811, which became effective immediately as
an emergency measure. The bill authorizes cities to establish a program to enter into
contractual assessment agreements with property owners to finance the installation of
distributed generation renewable energy sources or energy efficiency improvements that are
permanently fixed to real property. On August 28, 2008, the City Council established the City's
Energy Independence Program (EIP) pursuant to AB 811.
Prior to establishing such a program, AB 811 requires the City Council to adopt a resolution of
intention, which (i) declares the City Council's intention to establish such a financing program
under AB 811, (ii) sets the time and place of a public hearing, and (ii) directs an appropriate city
official to prepare a report pursuant to Section 5898.22 of the California Streets & Highways
Code.
On July 21, 2008, the City Council adopted Resolution No. 08-75 declaring its intent to establish
the Energy Independence Program ("EIP") pursuant to AB 811 and ordering a public hearing to
be held on August 28, 2008. In accordance with AB 811, the City Clerk provided notice of the
public hearing by publishing Resolution No. 08-75 once a week for two weeks in the Desert
Sun. On August 28, 2008, following the public hearing, the City Council approved Resolution
No. 08-89, which approved the City's Energy Independence Program Report and Administrative
Guidelines (the "EIP Report") prepared pursuant to Section 5898.22 of the California Streets &
Highways Code.
Similarly, prior to making changes to the EIP and the EIP Report, the City Council must also
adopt a resolution of intention, which (i) declares the City Council's intention to amend its EIP
program and report, (ii) sets the time and place of a public hearing, and (ii) directs an
appropriate city official to prepare an amended report pursuant to Section 5898.22 of the
California Streets & Highways Code.
G:\Finance\Niamh Ortega\Staff Reports\SR-Resolution of Intent to Amend EIP Report 121009.docx
Resolution No. 09-� - Intention to Amend EIP Report
Staff Report
December 10, 2009
Page2of3
The City Council has made amendments to the EIP Report once since its adoption. Earlier this
year, on May 21, 2009, the City Council adopted Resolution No. 09-34 declaring its intent to
amend the EIP Report and ordering a public hearing to be held on June 25, 2009. In
accordance with AB 811, the City Clerk provided notice of the public hearing by publishing
Resolution No. 09-34 once a week for two weeks in the Desert Sun. On June 25, 2009,
following the public hearing, the City Council approved Resolution No. 09-52, which approved
the certain amendments to the EIP Report, such as (i) requiring documentation of consent by a
preexisting lender for any Program loan that is $30,000 or more, (ii) establishing $100,000 as the
maximum amount of any Program loan, and (iii) requiring fifty percent of funds available for
Program loans to be reserved for energy efficiency upgrades and retrofits.
In furtherance of the financial strategy of the Program, City staff has consulted with respondents to
the City's "Request for Proposals — Energy Program Financing," dated February 2009 and also
with legal counsel as to amendments to the EIP and the EIP Report necessary to provide for
certain credit criteria and legal flexibility in order to secure third party financing for the EIP on
workable terms for the City.
The necessary amendments include the following general concepts:
(1) Clarify that City's right of access to project includes (a) once a year visual inspection to
verify improvement is still in place and (b) additional right to visit and inspect "for cause."
(2) Clarify that City's right to inspect property owner's books and records includes records
and documents relating to continued maintenance and repair of the improvement.
(3) Add annual certification from property owner as to improvement being in place and
functioning, any additions/changes to the improvement, changes in ownership of the property,
information of insurer providing property insurance, or certain listed material events affecting the
property or its owner.
(4) Add requirement that property owner provides evidence of property insurance covering
the improvement, prior to entering into loan agreement, and covenant to maintain insurance
during assessment repayment term.
(5) Revise interest rate offered as follows:
• Residential Properties—7.0% for term of 10 years or less; 8.5% for longer
• Commercial/Industrial —8.5% for term of 10 years or less; 10.0% for longer
(6) Require minimum value-to-lien ratio of 10 to 1, with ability for property owner to appeal
to City Manager to grant a lower value-to-lien ratio (no lower than 8 to 1 permitted) if sufficient
evidence is presented, in the City Manager's sole discretion. Value may be established by
assessed value or appraisal (cost of appraisal to be paid by property owner).
(7) Require that repayment term cannot exceed the reasonably expected useful life
expectancy of improvements (as determined by City policy), with ability for property owner to
appeal to City Manager to grant a longer repayment term (not to exceed 5 additional years) if
G:\Finance\Niamh Ortega\Staff Reports\SR-Resolution of Intent to Amend EIP Report 121009.docx
Resolution No. 09-�2 - Intention to Amend EIP Report
Staff Report
December 10, 2009
Page 3 of 3
sufficient evidence is presented, in the City Manager's sole discretion. Value may be
established by assessed value or appraisal (cost of appraisal to be paid by property owner).
For properties with multiple improvements, useful life expectancy is calculated on a weighted
basis (by value of improvement).
As ordered in the attached resolution, the Finance Director will work with staff to prepare
amendments to the EIP Report, and will place the EIP Report on file with the City Clerk to be
available for review prior to the January 14, 2010 public hearing.
The proposed amendments to the EIP Report will be reviewed by the Finance Committee for its
recommendation to the City Council prior to the January 14, 2010 City Council meeting.
Following the public hearing on January 14, 2010, the City Council will consider a resolution
approving the amendments to the EIP Report. Also on January 14, 2010, the City Council will
be asked to consider approval of bond financing to additionally fund the EIP, and related
actions.
Fiscal Impact:
There is no immediate fiscal impact as a result of this action. Staff anticipates that in the long
term, however, less funding will be required of the General Fund in order to support the Energy
Independence Program.
Sub � ted by: App�oval:
,
�G,�L�u^ ` � �ry �-
�j� e�.�._ _�
Paul S. Gibson, Director of Finance J, � M. Wohlmuth, City Manager
' fF
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G:\Finance\Niamh Ortega\Staff Reports\SR-Resolution of Intent to Amend EIP Report 121009.docx
RESOLUTION NO. 09-62
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF PALM DESERT DECLARING ITS INTENTON TO
AMEND ENERGY INDEPENDENCE PROGRAM REPORT
AND ADMINISTRATIVE GUIDELINES PREPARED
PURSUANT TO SECTION 5898.22 OF THE CALIFORNIA
STREETS AND HIGHWAYS CODE AND SETTING A
PUBLIC HEARING THEREON
WHEREAS, pursuant to Chapter 29 of Part 3 of Division 7 of the California
Streets and Highways Code (the "Act"), the City Council established its Energy
Independence Program (the "Program" or "EIP") to assist property owners with the cost
of installing distributed generation renewable energy sources or making energy efficient
improvements that are permanently fixed to their property; and
WHEREAS, in connection with the Program and as required by the Act, the
Director of the City's Office of Energy Management prepared a report (the "Report") in
accordance with Section 5898.22 of the Act; and
WHEREAS, the Report contains (a) a map showing the boundaries of the
territory within which the Program is proposed to be offered, (b) a draft application for
participation in the Program, (c) a draft contract (the "Contract") specifying the terms
and conditions that would be agreed to by a property owner and the City for
participation in the Program, (d) a statement of city policies concerning contractual
assessments inctuding: (1) identification of types of facilities, distributed generation
renewable energy sources, or energy efficiency improvements that may be financed
through the use of contractual assessments, (2) identification of a City official authorized
to enter into contractual assessments on behalf of the City, (3) a maximum aggregate
dollar amount of contractual assessments, (4) a method for setting requests from
property owners for financing through contractual assessments in priority order in the
event that requests appear likely to exceed the authorization amount, (e) a plan for
raising a capital amount required to pay for work performed pursuant to contractual
assessments, (fl a statement of or method for determining the interest rate and time
period during which contracting property owners would pay any assessment, (g) the
establishment of any reserve fund or funds, (h) the apportionment of all or any portion of
the costs incidental to financing, administration, and collection of the contractual
assessment program among the consenting property owners and the City, and (i) a
report on the results of the consultations with the County Auditor-Controller's office; and
WHEREAS, on August 28, 2008, the City Council approved the Report and
established the Program following a full and fair public hearing at which interested
persons were afforded the opportunity to object to, inquire about or provide evidence
with regard to the proposed Program or any of its particulars; and
t
Resolution No. 09b2
WHEREAS, on June 25, 2009, the City Council approved amendments to the
Report following a full and fair public hearing at which interested persons were afforded
the opportunity to object to, inquire about or provide evidence with regard to the
proposed amendments to the Program or any of its particulars, including without
limitation amendments (i) to require documentation of consent by a preexisting lender for
any Program loan that is $30,000 or more, (ii) to establish $100,000 as the maximum
amount of any Program loan, and (iii) to require fifty percent of funds available for Program
loans to be reserved for energy efficiency upgrades and retrofits; and
WHEREAS, in furtherance of the financial strategy of the Program, City staff has
consulted with respondents to the City's "Request for Proposals — Energy Program
Financing," dated February 2009 and also with legal counsel as to amendments to the
Program and the Report necessary to provide for certain credit criteria and legal flexibility
in order to secure third party financing for the EIP on workable terms for the City; and
WHEREAS, to facilitate the financial strategy of the Program, the City Council now
desires to further amend the Report (i) to clarify the City's right of access to the project, (ii)
to clarify the City's right to inspect property owners' books and records, (iii) to require
certain annual certification from property owners, (iv) to require that property owners
maintain property insurance covering the EIP improvement and provide evidence of such
insurance prior to entering into the EIP Contract, (v) to revise interest rates offered by the
EIP, (vi) to require a minimum value-to-lien ratio, (vii) to require a nexus between the
repayment term and the reasonably expected useful life expectancy of the EIP
improvements, and (viii) to make other changes that the Finance Director of the City or the
City Manager determines are necessary for implementation of financial strategy of the
Program, as set forth in the Report.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT
HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:
Section 1. The City Council hereby directs the Finance Director to prepare and
file at or before the time of the public hearing described in Section 2 hereof with the City
Council proposed amendments to the Report as described in the Recitals hereto.
Section 2. The City Council hereby calls a public hearing to be held on
January 14, 2010 at 4:00 p.m., or as soon thereafter as feasible, in the Council
Chambers, 73-510 Fred Waring Drive, Palm Desert, California, on the proposed
amendments to the Report. At the public hearing all interested persons may appear
and hear and be heard and object to or inquire about the proposed amendments to the
Report.
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Resolution No. 09- 62
Section 3. The City Clerk is hereby directed to provide notice of the public
hearing by publishing this Resolution once a week for two weeks, pursuant to Section
6066 of the California Government Code, in the Desert Sun and the first publication
shall not occur later than 20 days before the date of such hearing.
PASSED, APPROVED AND ADOPTED this 10th day of December 2010, by the
following vote to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Robert A. Spiegel, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
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