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VALIDitY IT Data Consultants provided  You entered: http://bill number: Sb 1130 introduced bill text introduced by senator DE lean February 21, 2012 an act to add division 16.3 (commencing with section 26200) to the public resources code, relating to energy, and making an appropriation therefor. legislative counsel's digest Sb 1130, as introduced, De lean. energy: energy assessment: commercial buildings: financing. existing law requires the California alternative energy and advanced transportation financing authority to establish programs to provide financial assistance to participating parties to purchase alternative source energy and to develop renewable energy projects. existing law authorizes the authority to issue revenue bonds secured by revenues generated by a project to provide financing for those purposes. this bill would enact the commercial building energy retrofit financing act of 2012 and would require the authority to establish the commercial building energy retrofit financing program to provide financial assistance, through the issuance of revenue bonds, to owners of eligible buildings for implementing energy efficiency retrofit measures for the buildings. the bill would provide that the bonds are secured by the recording of an energy remittance repayment agreement, as defined, on the deed of the building for which the energy efficiency retrofits are performed. the bill would require the state board of equalization to collect installment payments from owners of eligible buildings whose applications have been approved by the authority. this bill would authorize the authority and the state board of equalization to assess a fee to reimburse them for the administrative costs incurred in implementing the program. this bill would require the authority to meet, on a semiannual basis, for the purpose of issuing the revenue bonds to generate moneys sufficient to finance energy efficiency retrofit measures specified on applications that have been approved prior to the meeting. this bill would establish the commercial building energy retrofit debt servicing fund, the loan loss reserve account, the administration account, and the collection administration account within the fund. the bill would require the state board of equalization to deposit the installment payment received from the owners of eligible buildings into the fund and the fees collected by the authority and the state board of equalization into the specified accounts. the bill would continuously appropriate the moneys in the fund and the accounts to repay the principal and interest on the bonds, and to cover the administrative costs incurred by the authority and the state board of equalization, thereby making an appropriation. vote: majority. appropriation: yes. fiscal committee: yes. state-mandated local program: no. the people of the state of California do enact as follows: section 1. division 16.3 (commencing with section 26200) is added to the public resources code, to read: division 16.3. commercial building assessment financing chapter 1. general provisions and definitions 26200. this act shall be known, and may be cited, as the commercial building energy retrofit financing act of 2012. 26201. the purpose of this division is to establish sustainable financing to enable private commercial building owners to invest in clean energy improvements, to incentive private equity managers to invest in clean energy improvements, to stimulate the state economy by directly creating jobs for contractors and other persons who complete new energy improvements, and to reinforce the leadership role of the state in the new energy economy, thereby attracting energy manufacturing facilities and related jobs to the state. 26202. the legislature finds and declares all of the following: (a) commercial buildings represent a huge opportunity to significantly increase energy efficiency and reduce greenhouse gas emissions. to do this, we need to address the design, construction, and operation of these buildings. (b) the lack of accessible and affordable financing for energy efficiencies results in energy-inefficient buildings that are estimated to consume up to 50 percent more energy than required to achieve the same level of comfort. energy use in the building sector accounts for approximately 20 percent of global emissions of carbon dioxide, or 10 billion tons, annually. (c) it is possible to retrofit the California commercial building stock to use, on average, at least 50 percent less energy by 2050 through the wide adoption of deep energy retrofits that save more energy and increase profits for building owners. (d) investment in building performance upgrades is an intelligent business decision. building performance upgrades lower operating costs, improve occupant comfort, hedge against utility price increases, demonstrate commitment to tenant well-being, reduce exposure to regulation, help the environment, and ultimately boost property values. (e) it is in the best interest of the state and its citizens to enable and encourage the owners of eligible commercial property to invest in new energy improvements, including energy efficiency improvements and renewable energy improvements, by enacting this division to establish, develop, finance, implement, and administer a new energy improvement program that provides for both energy efficiency improvements and renewable energy improvements and to assist those owners who choose to participate in the program to complete new energy improvements to their properties because of the following: (1) new energy improvements, including energy efficiency improvements and renewable energy improvements, can provide positive cash flow as the costs of the improvements are spread out over a long enough time that the owners' utility bill cost savings exceed amount of the liens recorded on the eligible buildings to pay for the improvements. (2) many owners of eligible commercial buildings are unable to fund a new energy improvement because the owners do not have sufficient liquid assets to directly fund the improvement or are unable or unwilling to incur the negative net cashflow likely to result if the owner uses a typical existing loan program to fund the improvement. (f) reduction in the amount of emissions of greenhouse gases and environmental pollutants resulting from increased efficiencies and the resulting decreased use of traditional nonrenewable fuels will improve air quality and may help to mitigate climate change. (g) the commercial building owners who participate in the program established pursuant to this division to assist them in completing new energy improvements, including energy efficiency improvements and renewable energy improvements, to the property shall do so voluntarily, and liens recorded on the commercial buildings in the program shall not constitute a tax within the meaning of article xiii c of the California constitution. 26203. unless the context otherwise requires, for the purposes of this division, the following terms have the following meanings: (a) "alternative sources of energy" or "alternative energy sources" means energy from co generation technology, the conservation of energy, or energy from solar, biomass, wind, geothermal, or any other source of energy, the efficient use of which will reduce the use of conventional energy fuels. (b) "authority" means the California alternative energy and advanced transportation financing authority established pursuant to section 26004, and any board, commission, department, or officer succeeding to the functions of the authority, or to which the powers conferred upon the authority by this division shall be given. (c) "commercial building energy retrofit bond" means a bond issued pursuant to section 26242 that is secured by an energy remittance repayment agreement on property entered into voluntarily to finance the installation of renewable energy sources, or energy or water efficiency improvements. (d) "conventional energy fuel" means any of the following: (1) a fuel derived from petroleum deposits, including, but not limited to, oil, heating oil, gasoline, and fuel oil. (2) natural gas, including liquified natural gas. (3) nuclear fissionable materials. (e) "eligible building" means a commercial or industrial building located within the boundaries of the state. (f) "energy efficiency improvement" means one or more installations or modifications to eligible property that are designed to reduce the energy consumption of the building and includes, but is not limited to, the following: (1) insulation in walls, roofs, floors, and foundations and in heating and cooling distribution systems. (2) storm windows and doors, multiglazed windows and doors, heat-absorbing or heat-reflective glazed and coated window and door systems, additional glazing, reductions in glass area, and other window and door system modifications that reduce energy consumption. (3) automatic energy control systems. (4) heating, ventilating, or air conditioning and distribution system modifications or replacements. (5) caulking and weatherstripping. (6) replacement or modification of lighting fixtures to increase the energy efficiency of the system. (7) energy recovery systems. (8) day lighting systems. (9) a modification, installation, or remodeling approved as a utility cost-savings measure by the state energy resources conservation and development commission. (g) "energy remittance repayment agreement" means a contractual agreement between an eligible building owner and the authority, secured by a lien recorded on an eligible building specially benefited by a new energy improvement for which the authority will make reimbursement or a direct payment to the party financing the energy improvements, and "contractual energy remittance" means that reimbursement or direct payment. the amount to be repaid pursuant to the energy remittance repayment agreement shall include the costs necessary to finance the energy efficiency improvements less any rebates, grants, and other direct financial assistance received by the owner pursuant to other law and a loan loss reserve fee that is ____ percent of the financing costs to insure against nonperformance of the loan and other losses of the program. (h) "energy efficiency specialist" means an individual or business certified by the state energy resources conservation and development commission, the public utilities commission, an investor-owned utility, or a municipally owned utility to analyze, evaluate, or install clean energy improvements for eligible property. (i) "financial assistance" means either of the following: (1) loans, loan loss reserves, interest rate reductions, secondary loan purchase, insurance, guarantees or other credit enhancements or liquidity facilities, contributions of money, property, labor, or other items of value, or any combination thereof, as determined by, and approved by a resolution of, the authority. (2) other types of assistance the authority determines is appropriate. (j) "loan balance" means the outstanding principal balance of loans secured by a mortgage or deed of trust with a first or second lien on eligible property. (k) "participating party" means a person, or an entity or group of entities, engaged in business or operations in the state, whether organized for profit or not for profit, that applies for financial assistance from the authority for the purpose of implementing a project in a manner prescribed by the authority. (l) "portfolio" means an aggregation of approved applications. (m) "program" means the commercial building energy retrofit financing program established by the authority in accordance with section 26212. (n) "project" means a building, improvement to the land or building, rehabilitation, work, property, or structure, real or personal, stationary or mobile, including, but not limited to, machinery and equipment, that utilizes alternative sources of energy. (o) "qualified applicant" means a person or business entity who does all of the following: (1) owns an eligible building that has a ratio of loan balance to its actual value of _____ or less at the time the person's program application is approved, as shown in the records of the county assessor, unless the holder of the deed of trust or mortgage recorded against the eligible property that has priority over all other deeds of trust or mortgages recorded against the eligible property has consented in writing to the recording of an energy remittance repayment agreement pursuant to this division against the eligible property. (2) timely submits to the authority a complete application, which notes the existence of any first priority mortgage or deed of trust on the eligible property and the identity of the holder of the mortgage or deed of trust, to join the program and consents to the levying of a special assessment on the property pursuant to this division. (3) meets any standard of credit worthiness that the authority may establish. (p) "renewable energy" means heat, processed heat, space heating, water heating, steam, space cooling, refrigeration, mechanical energy, electricity, or energy in any form convertible to these uses, whether produced or conserved, that does not expend or use conventional energy fuels, and that uses any of the following electrical generation technologies: (1) biomass. (2) solar thermal. (3) photovoltaic. (4) wind. (5) geothermal. (q) "renewable energy improvement" means one or more fixtures, products, systems, or devices, or an interacting group of fixtures, products, systems, or devices, that directly benefit an eligible property or that are installed on the user side of an electric meter of an eligible property and that produce energy from renewable resources, including, but not limited to, photovoltaic, solar thermal, small wind, low-impact hydroelectric, biomass, or geothermal systems such as ground source heat pumps, as may be approved by the state energy resources conservation and development commission. chapter 2. commercial building energy retrofit financing program 26210. the purpose of the commercial building energy retrofit financing program is to help provide the special benefits of alternative energy and energy efficiency improvements to owners of eligible property who voluntarily participate in the program by establishing, developing, financing, and administering a program to assist those owners in completing new energy improvements. 26211. the authority shall have and exercise all rights and powers necessary or incidental to or implied from the specific powers granted to the authority by this division and division 16. those specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes and intent of this division. 26212. the authority shall establish, develop, finance, and administer the commercial building energy retrofit financing program. the program shall be designed to provide financial assistance for an owner of an eligible building to use one or more energy efficiency specialists to retrofit the property with one or more alternative energy sources or renewable energy improvements by applying to the authority for inclusion of the owner's energy project in a portfolio that will be financed through the use of the revenue bonds issued pursuant to this division. these bonds shall be secured by revenues generated through energy remittance repayment agreements recorded on the buildings benefited by the projects in the portfolio. the program shall provide financial assistance for energy efficiency improvements on terms such that the total energy and water cost savings realized by the property owner, and any successor or successors to the property owner, during the useful life of the improvements, as determined by an analysis required pursuant to subdivision (i) of section 26218, are expected to exceed the total costs incurred by the owner pursuant to the program. 26213. to receive financial assistance pursuant to this division, a qualified applicant shall contractually agree to the recording of an energy remittance repayment agreement on the eligible building that is being retrofitted. 26214. the authority shall establish an application process for the program that allows an owner of an eligible building to become a qualified applicant by submitting an application to the authority and that may include one or more deadlines for filing the application. the authority may charge an application fee to reimburse the authority for the costs incurred in reviewing the application. 26215. the authority shall establish underwriting guidelines that consider an applicant's qualification, and other appropriate factors, including, but not limited to, credit reports and loan-to-value ratios, consistent with good and customary lending practices, necessary for the authority to obtain a bond rating for bonds issued pursuant to chapter 3 (commencing with section 26240) for a successful bond sale. 26216. the authority shall disclose to an owner of a commercial building all fees imposed pursuant to this division, including the loan loss reserve fee and the interest rate charged, prior to the submitting of an application. 26217. (a) an owner of an eligible building who wishes to undertake an energy efficiency project may submit to the authority an application to participate in the program. (b) the submission of an application is deemed to be a voluntary agreement by the owner for the authority to record the energy remittance repayment agreement on the deed of the eligible building upon the approval of the application. (c) the application form developed by the authority shall include a statement in no less than 12-point type stating the following: submission of this application constitutes the voluntary consent of the applicant for the recordation of the energy remittance repayment agreement on the deed of the eligible building. upon the approval by the authority of the application and the recordation of the energy remittance repayment agreement, a lien in the amount specified in the energy remittance repayment agreement shall be secured by the building. 26218. the owner of an eligible building shall include all of the following information in the application: (a) the name, business address, and e-mail address of the owners of the eligible building. (b) the names of all entities that hold a secured lien on the eligible building and their contact information. (c) the total dollar amount of liens that have been recorded on the eligible building. (d) an appraisal of the value of the eligible building. (e) a detailed description of the energy efficiency improvements being funded. (f) the name of the financial institution providing financing for the energy efficiency improvements. (g) the structure of the loan financing the energy efficiency improvements. (h) information that the authority requires to verify that the owner will complete the energy efficiency improvement. (i) an analysis performed by an energy efficiency specialist to quantify the costs of the energy efficiency improvements, and total energy and water cost savings realized by the owner, or his or her successor, during the useful life of, and estimated carbon impacts of, the energy efficiency improvements, including an annual cash flow analysis. (j) other information deemed necessary by the authority. 26219. in addition to the information required under section 26218, an applicant shall provide in the application a detailed description of the property and a detailed description of the transactional activities associated with the retrofits, including all transactional costs and other information deemed necessary by the authority. 26219.5. (a) the costs of the energy efficiency improvements shall not exceed 10 percent of the estimated value of the commercial building. (b) at the time of submission of the application, the total amount of liens recorded on the building shall not exceed 85 percent of the estimated value of the building. (c) for energy efficiency improvements that exceed five hundred thousand dollars ($500,000), the contractor installing the improvements or the property owner shall obtain a guarantee on the energy and water cost savings as quantified by the analysis required pursuant to subdivision (i) of section 26218 by obtaining a security in the full amount of the cost savings. the security shall be in any of the following forms, which shall be further specified in regulation: (1) energy savings insurance issued by an a.m. best "a" or better rated carrier. (2) investment grade guarantee. (3) energy efficiency bond. (4) letter of credit or cash collateral. 26220. (a) upon the mutual agreement of the applicant and the authority, the authority shall establish a schedule for the repayment required by the energy remittance repayment agreement, including the interest charged. (b) each repayment installment shall become due and owing 30 days after the prior installment, with the first installment due and owing within 30 days of the recording of the energy remittance repayment agreement. the state board of equalization shall collect the repayment installments that become due and owing. (c) (1) the period for repayment of the energy remittance repayment agreement shall not exceed the expected useful life of the energy efficiency improvements or 20 years, whichever is shorter. (2) the calculated expected useful life of the energy efficiency improvements shall be consistent with methodologies approved by the state energy resources conservation and development commission for performing those calculations. (d) upon the failure of the applicant to pay any installment toward the repayment of the energy remittance repayment agreement when the installment becomes due and owing pursuant to the schedule for repayment, the authority or the state board of equalization may do either of the following: (1) assess a penalty on the delinquent payment that is a percentage of the delinquent payment. (2) declare the entire outstanding energy remittance repayment agreement balance, including any interest due, penalties assessed, and costs of collection incurred, immediately due and owing and foreclose on the energy remittance repayment agreement. (e) within __ days of a default, the state board of equalization shall provide to the authority and applicant a notice of default and provide the applicant with __ days to cure the default. (f) (1) if the applicant fails to cure the default, the authority shall notify the tax collector of the county in which the eligible building is located and the eligible building shall be sold in accordance with part 6 (commencing with section 3351) of division 1 of the revenue and taxation code. (2) revenue generated from the sale of the eligible building shall be distributed to satisfy liens on the eligible building in accordance with the priority of the liens as provided by law. (g) an applicant that is not in default may pay the entire unpaid balance of the energy remittance repayment agreement plus any interest accruing to the maturity of the next installment payment without prepayment penalty. (h) upon the full repayment of the balance of the energy remittance repayment agreement, and interest and penalties that had accrued, the state board of equalization shall notify the authority of that repayment. within ____ days of the receipt of the notice, the authority shall record with the county in which the eligible building is located a release of the energy remittance repayment agreement. 26221. (a) prior to approving an application for inclusion into a loan portfolio and the redecoration of the energy remittance repayment agreement, or a modification of an approved application, the authority shall conduct a public hearing on the application or modification. (b) the authority shall post a notice of the hearing on the authority's internet web site and provide the notice, in writing, to all lien holders of the eligible building no later than 30 days prior to the hearing. (c) the notice shall specify all of the following: (1) the name of the applicant. (2) the address of the eligible building. (3) the amount required to be repaid by the energy remittance repayment agreement proposed to be recorded on the eligible building. (4) the date and place of the public hearing. (5) the schedule for repayment of the contractual energy remittance and associated costs as agreed upon between the applicant and the authority. (6) the interest rate assessed pursuant to the energy remittance repayment agreement. (7) a detailed description of the proposed modification, if applicable. (d) the notice shall inform the lien-holder that any complaints or objections to either the approval of the application and the redecoration of the energy remittance repayment agreement on the eligible building or the modification of an approved application shall be submitted, in writing, to the authority prior to the hearing. 26222. at the public hearing, the authority shall consider and resolve all complaints and objections made. 26223. in evaluating the eligibility of an applicant, the authority shall consider all of the following: (a) whether loan recipients are legal owners of the underlying property. (b) whether loan recipients are current on any outstanding mortgage and property tax payments. (c) whether loan recipients are in default or in bankruptcy proceedings. (d) whether retrofits financed by the program follow applicable standards of energy efficiency retrofit work, including any guidelines adopted by the state energy resources conservation and development commission. 26224. (a) the authority shall approve an application through the adoption of a resolution approving the application and authorizing the recording of the energy remittance repayment agreement on the deed of the eligible building. (b) the resolution shall specify the amount required to be paid to the authority pursuant to the energy remittance repayment agreement, the schedule of repayment, and the interest rate charged. (c) the authority shall approve the modification of an approved application through the adoption of a resolution. 26225. (a) the energy remittance repayment agreement shall be subordinate to any and all secured liens recorded against the deed of the eligible building at the time of recording of the energy remittance repayment agreement. (b) except as otherwise required by law, the energy remittance repayment agreement shall be superior in priority to all subsequent liens recorded on the deed of the eligible building. (c) the sale of the eligible building to enforce the payment of general ad valor em taxes shall not extinguish the energy remittance repayment agreement recorded on the eligible building. (d) notwithstanding any other law, in the event of a foreclosure of the building, the energy remittance repayment agreement shall not be extinguished, unless the outstanding balance of the energy remittance repayment agreement, including the interest accrued and all penalties and fees assessed prior to the foreclosure, is fully paid through the foreclosure proceeding. 26226. (a) within 30 days of the adoption of a resolution approving the application and authorizing the reconsecration of the energy remittance repayment agreement or the approval of the modification to an approved application, a lien-holder that has submitted a complaint or objection may file an action or proceeding challenging the adoption of the resolution with the superior court with jurisdiction over the eligible building. (b) the owner of the eligible building shall be named as the real party in interest in an action or proceeding filed pursuant to subdivision (a). 26227. (a) thirty days after the adoption of the resolution or the date of a final, nonappearance judgment if an action or proceeding is filed pursuant to section 26226, the authority shall forward the resolution to the state board of equalization and shall record with the county in which the eligible building is located the energy remittance repayment agreement on the deed of the eligible building. (b) upon the recording of the energy remittance repayment agreement, the authority shall include the approved application in a portfolio. 26228. (a) the state board of equalization shall deposit into the commercial building energy retrofit debt servicing fund established pursuant to section 26250 any moneys, including repayment installments and penalties, received pursuant to this division. (b) the state board of equalization may charge a fee on the owner of eligible buildings to cover its costs in implementing this division. 26229. (a) a local government that has issued revenue bonds pursuant to a program providing financial assistance to commercial and residential buildings owners undertaking an energy efficiency retrofit on the buildings may apply to the authority for participation in the program. (b) upon the approval of an application submitted by the local government and the issuance of the commercial building energy retrofit bond for the portfolio in which that application is located, the authority shall purchase all those outstanding revenue bonds issued by the local government. (c) upon the purchase of the revenue bonds issued by the local government by the authority, the authority succeeds to all rights conferred upon the bondholder by those revenue bonds and the local government shall remit revenue that is used to secure those revenue bonds to the state board of equalization. 26230. to administer the program, the authority shall do all of the following: (a) market the program to owners of eligible property, encourage those owners to obtain the special benefits of completing new energy improvements to their property by providing more attractive and accessible means of funding the completion of new energy improvements, and accept and process program applications from any such owners who are qualified applicants. (b) establish those standards, guidelines, and procedures, including, but not limited to, standards of credit worthiness for qualification of program applicants, that are necessary to ensure the financial stability of the program and otherwise prevent fraud and abuse. (c) collaborate with the state energy resources conservation and development commission to establish qualifications for the certification of contractors to construct or install energy efficiency improvements. (d) contract with a party, public or private, to do any of the following: (1) ensure that appropriate steps are taken to monitor the quality of energy efficiency improvements financed pursuant to this division and measure the total energy savings achieved by the program. (2) monitor the total number of program participants. (3) determine the total amount paid to and financial institutions pursuant to the program. (4) calculate the number of jobs created by the program, the number of defaults by program participants, and the total losses from the defaults, and calculate the total dollar amount of bonds issued by the authority to reimburse program participants. (e) develop a model energy aligned lease provision that modifies, upon the agreement between the owner and tenants of an eligible building, a commercial lease agreement allowing the owners to recover the costs of the energy efficiency improvements that result in operational savings based on the useful life of the retrofit while protecting tenants from under performance of the energy efficiency improvements. (f) develop a request for proposal to contract with one or more financial institutions to secure a short-term, revolving credit facility (warehouse line of credit) for the purpose of creating an interim financing mechanism for the loans that would be aggregated for the purposes of issuance of a revenue bond pursuant to section 26242. the warehouse line of credit shall be drawn by the authority, based on adherence to predetermined underwriting criteria and standards of credit-worthiness established by the authority, to fund either of the following: (1) origination of direct loans to qualified applicants. (2) purchase or acquisition of secondary market loans from financial institutions. (g) to facilitate the management of the program and the use of the warehouse line of credit, the authority shall develop a request for proposal to contract with an outside program administrator that will work with the authority and private financial institutions in identifying the appropriate underwriting criteria, loan processing procedures, loan servicing and monitoring guidelines, and bond financing parameters. 26231. no later than June 30, 2014, and no later than june 30 of every fifth year thereafter, the state auditor shall conduct, or cause to be conducted, a performance audit of the program. the state auditor shall prepare a report and recommendations on each audit conducted and present the report and recommendations to the president pro temp ore of the senate and the speaker of the assembly. chapter 3. commercial building energy retrofit bond 26240. the authority may incur indebtedness and issue and renew negotiable bonds, notes, debentures, or other securities of any kind or class. all indebtedness, however evidenced, shall be payable solely from moneys received pursuant to this division and the proceeds of its negotiable bonds, notes, debentures, or other securities and shall not exceed the sum of ____ dollars ($____). 26241. the legislature may, by statute, authorize the authority to issue bonds, as defined in section 26242, in excess of the amount provided in section 26240. 26242. (a) on a semiannual basis, the authority shall conduct a meeting for the purposes of issuing, by the adoption of a resolution, negotiable bonds, notes, debenture, or other securities (collectively called "bonds") for the purposes of generating sufficient moneys to fund the approved applications in the portfolio at the time of the meeting or to repay an outstanding balance of a qualified applicant on whose behalf the authority has provided funds through the warehouse line of credit pursuant to subdivision (f) of section 26230. in anticipation of the sale of bonds as authorized by section 26240, or as may be authorized pursuant to section 26241, the authority may issue negotiable bond anticipation notes and may renew the notes from time to time. the bond anticipation notes may be paid from the proceeds of sale of the bonds of the authority in anticipation of which they were issued. notes and agreements relating to the notes and bond anticipation notes (collectively called "notes" ) and the resolution or resolutions authorizing the notes may contain any provisions, conditions, or limitations that a bond, agreement relating to the bond, and bond resolution of the authority may contain. however, a note or renewal of the note shall mature at a time not exceeding two years from the date of issue of the original note. (b) except as may otherwise be expressly provided by the authority, every issue of its bonds, notes, or other obligations shall be general obligations of the authority payable from revenues or moneys received pursuant to this division, subject only to any agreements with the holders of particular bonds, notes, or other obligations pledging any particular revenues or moneys and subject to any agreements with any participating party. notwithstanding that the bonds, notes, or other obligations may be payable from a special fund, they are for all purposes negotiable instruments, subject only to the provisions of the bonds, notes, or other obligations for registration. (c) subject to the limitations in sections 26240 and 26241, the bonds may be issued as serial bonds or as term bonds, or the authority, in its discretion, may issue bonds of both types. the bonds shall be authorized by resolution of the authority and shall bear the date or dates, mature at the time or times, not exceeding __ years from their respective dates, bear interest at the rate or rates, be payable at the time or times, be in the denominations, be in the form, either coupon or registered, carry the registration privileges, be executed in a manner, be payable in lawful money of the united states of America at a place or places, and be subject to terms of redemption, as the resolution or resolutions may provide. the bonds or notes shall be sold by the treasurer within 60 days of receipt of a certified copy of the authority's resolution authorizing the sale of the bonds. however, the authority, at its discretion, may adopt a resolution extending the 60-day period. the sales may be a public or private sale, and for the price or prices and on the terms and conditions, as the authority shall determine after giving due consideration to the recommendations of any participating party to be assisted from the proceeds of the bonds or notes. pending preparation of the definitive bonds, the treasurer may issue interim receipts, certificates, or temporary bonds that shall be exchanged for the definitive bonds. the treasurer may sell bonds, notes, or other evidence of indebtedness at a price below their par value. however, the discount on a security sold pursuant to this section shall not exceed 6 percent of the par value. (d) a resolution or resolutions authorizing bonds or an issue of bonds may contain provisions that shall be a part of the contract with the holders of the bonds to be authorized, as to all of the following: (1) pledging the moneys collected pursuant to this division from the portfolio of approved applications that are funded by the bonds, to secure the payment of the bonds or of any particular issue of bonds, subject to the agreements with bondholders as may then exist. (2) the setting aside of reserves or sinking funds, and the regulation and disposition of the reserves or sinking funds. (3) limitations on the right of the authority or its agent to restrict and regulate the use of the project or projects to be financed out of the proceeds of the bonds or any particular issue of bonds. (4) limitations on the purpose to which the proceeds of sale of an issue of bonds then or thereafter to be issued may be applied and pledging those proceeds to secure the payment of the bonds or the issue of the bonds. (5) limitations on the issuance of additional bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding bonds. (6) the procedure, if any, by which the terms of a contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to the amendment or abrogation, and the manner in which that consent may be given. (7) limitations on expenditures for operating, administrative, or other expenses of the authority. (8) defining the acts or omissions to act that constitute a default in the duties of the authority to holders of its obligations and providing the rights and remedies of the holders in the event of a default. (e) neither the members of the authority nor a person executing the bonds or notes shall be liable personally on the bonds or notes or be subject to personal liability or accountability by reason of the issuance of the bond or note. (f) the authority shall have power out of any funds available for these purposes to purchase its bonds or notes. the authority may hold, pledge, cancel, or resell those bonds, subject to and in accordance with agreements with bondholders. 26243. in the discretion of the authority, any bonds issued under the provisions of this division may be secured by a trust agreement by and between the authority and a corporate trustee or trustees, which may be the treasurer or any trust company or bank having the powers of a trust company within or without the state. such trust agreement or the resolution providing for the issuance of such bonds may pledge or assign the revenues to be received pursuant to this division, to be financed out of the proceeds of such bonds. such trust agreement or resolution providing for the issuance of such bonds may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including particularly such provisions as have herein above been specifically authorized to be included in any resolution or resolutions of the authority authorizing bonds thereof. any bank or trust company doing business under the laws of this state which may act as depositary of the proceeds of bonds or of revenues or other moneys may furnish such indemnifying bonds or pledge such securities as may be required by the authority. any such trust agreement may set forth the rights and remedies of the bondholders and of the trustee or trustees, and may restrict the individual right of action by bondholders. in addition to the foregoing, any such trust agreement or resolution may contain such other provisions as the authority may deem reasonable and proper for the security of the bondholders. notwithstanding any other law, the treasurer shall not be deemed to have a conflict of interest by reason of acting as trustee pursuant to this division. 26244. bonds issued under the provisions of this division shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, other than the authority, or a pledge of the faith and credit of the state or of any such political subdivision, other than the authority, but shall be payable solely from the funds herein provided therefor. all such bonds shall contain on the face thereof a statement to the following effect: "neither the faith and credit nor the taxing power of the state of california is pledged to the payment of the principal of or interest on this bond." the issuance of bonds under the provisions of this division shall not directly or indirectly or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment. nothing contained in this section shall prevent or be construed to prevent the authority from pledging its full faith and credit to the payment of bonds or issue of bonds authorized pursuant to this division. 26245. (a) the authority is hereby authorized to provide for the issuance of bonds of the authority for the purpose of refunding any bonds, notes, or other securities of the authority then outstanding, including the payment of any redemption premium thereon and any interest accrued or to accrue to the earliest or subsequent date of redemption, purchase, or maturity of such bonds. (b) the proceeds of any such bonds issued for the purpose of refunding outstanding bonds, notes, or other securities may, in the discretion of the authority, be applied to the purchase or retirement at maturity or redemption of such outstanding bonds either on their earliest or any subsequent redemption date or upon the purchase or retirement at the maturity thereof and may, pending such application, be placed in escrow to be applied to such purchase or retirement at maturity or redemption on such date as may be determined by the authority. (c) pending such use, any such es crowed proceeds may be invested and reinvested by the treasurer in obligations of, or guaranteed by, the united states of America, or in certificates of deposit or time deposits secured by obligations of, or guaranteed by, the united states of America, maturing at such time or times as shall be appropriate to ensure the prompt payment, as to principal, interest, and redemption premium, if any, of the outstanding bonds to be so refunded. the interest, income, and profits, if any, earned or realized on any such investment may also be applied to the payment of the outstanding bonds to be so refunded. after the terms of the escrow have been fully satisfied and carried out, any balance of such proceeds and interest, income, and profits, if any, earned or realized on the investments thereof may be returned to the authority for use by it in any lawful manner. (d) all such bonds shall be subject to the provisions of this division in the same manner and to the same extent as other bonds issued pursuant to this division. 26246. bonds issued by the authority are legal investments for all trust funds, the funds of all insurance companies, banks, both commercial and savings, trust companies, savings and loan associations, and investment companies, for executors, administrators, trustees, and other fiduciaries, for state school funds, and for any funds which may be invested in county, municipal, or school district bonds, and such bonds are securities which may properly and legally be deposited with, and received by, any state or municipal officer or agency or political subdivision of the state for any purpose for which the deposit of bonds or obligations of the state, is now, or may hereafter be, authorized by law, including deposits to secure public funds if, and only to the extent that, evidence of indebtedness or debt securities of the participating party receiving financing through the issuance of such bonds qualify or are eligible for such purposes and uses. 26247. the state hereby pledges and agrees with the holders of the bonds and with an applicant of an approved application that the state will not limit, alter, restrict, or impair the rights vested in the authority or the rights or obligations of a person or entity with which the authority contracts to fulfill the terms of an agreement made pursuant to this division. the state further agrees that it will not in any way impair the rights or remedies of the holder of the bonds until the bonds have been paid or until adequate provision for payment has been made. the authority may include this provision and undertaking for the authority in its bonds. 26248. no liability shall be incurred by the authority beyond the extent to which moneys have been provided under this division; except that for the purposes of meeting the necessary expenses of initial organization and operation until such date as the authority derives revenues or proceeds from bonds or notes as provided under this division, the authority may borrow money as needed for such expenses from the state energy resources conservation and development special account in the general fund in the state treasury. such borrowed moneys shall be repaid with interest within a reasonable time after the authority receives revenues or proceeds from bonds or notes as provided under this division. 26249. (a) bonds issued pursuant to this division shall be exempt from all taxation and assessment imposed pursuant to state law. (b) no later than February 1, 2013, the authority shall apply to the united states department of the treasury under the energy tax incentive act of 2005 (title xiii of public law 109-58) for the authority to issue tax advantage bonds under the federal clean renewable energy bonds program or any other applicable programs. chapter 4. commercial building energy retrofit debt servicing fund 26250. (a) the commercial building energy retrofit debt servicing fund is hereby established in the treasury. notwithstanding section 13340 of the government code, the moneys in the fund are hereby continuously appropriated to the treasurer without regard to fiscal year for the purposes of paying the principal and interest on bonds issued by the authority pursuant to section 26242 and defraying any direct and indirect costs incurred by the treasurer in executing duties required by this division. (b) all interest and income derived from the deposit and investment of moneys in the fund shall be credited to the fund, and all unexpanded and unencumbered moneys in the fund at the end of any fiscal year shall remain in the fund. 26250.5. (a) the loan loss reserve account is hereby established in the commercial building energy retrofit debt servicing fund. the state board of equalization shall deposit the portion of the contractual energy remittance that is the loan loss reserve fee into the account. notwithstanding section 13340 of the government code, the moneys in the account are hereby continuously appropriated to the treasurer without regard to fiscal year for the purposes of paying outstanding balances due under an energy remittance repayment agreement on a building that has been foreclosed upon if the proceeds generated from the foreclosure proceedings are insufficient to pay any past due payments past due under the energy remittance repayment agreement, including accrued interest, penalties, and fees. (b) all interest and income derived from the deposit and investment of moneys in the account shall be credited to the account, and all unexpanded and unencumbered moneys in the account at the end of any fiscal year shall remain in the account. 26251. the administration account is hereby established in the commercial building energy retrofit debt servicing fund. the authority shall deposit into the account any fees collected pursuant to section 26214. notwithstanding section 13340 of the government code, moneys in the account shall be continuously appropriated to the authority for the costs of implementing this division. 26252. the collection administration account is hereby established in the commercial building energy retrofit debt servicing fund. the state board of equalization shall deposit into the account fees collected pursuant to subdivision (b) of section 26228. notwithstanding section 13340 of the government code, moneys in the account shall be continuously appropriated to the state board of equalization for the costs of implementing this division.

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