Executive Director's Column:
Moving forward by looking backward: AB 811 can provide energy efficiencies and savings to existing development

Thanks to forward-thinking developers and local elected leaders, new buildings in western Riverside County are among the most energy efficient in California. As western Riverside County jurisdictions continue to take the lead in seeking ways to improve the region's sustainability in accommodating new growth, improving energy efficiency in existing homes and commercial buildings has presented a challenge. Fortunately, recently-enacted legislation provides a much-needed mechanism for improving energy efficiency in buildings that pre-date today's commitments to environmental responsibility.

A route to finance energy upgrades for older buildings

AB 811, signed into law by Governor Schwarzenegger in July 2008, allows local governments to offer low-interest loans to property owners for energy-efficiency projects and solar panels to homeowners and small businesses. Those who take advantage of the program would pay back the loans through assessments on property tax bills over a period of time (10 – 20 years); if they relocate, the outstanding loan balance would be assumed by the new property owner. Examples of upgrades include (but are not limited to) solar panels, dual-pane windows, doors, skylights, insulation, air conditioning units, and pool filtration systems (basically, any energy efficient improvement that would "stay" with the property). The benefits of this program extend to both property owners and local governments. AB 811 allows property owners to save money on utility bills and lower energy costs, allows utilities to meet their energy saving and renewable energy goals, and allows cities and counties to reduce greenhouse gases.

AB 811 began as a pilot project in the Cities of Berkeley and Palm Desert. After the success of the program, the City of Palm Desert, the Energy Coalition, Southern California Edison (SCE), and the California Public Utilities Commission (CPUC) partnered together to work with the Legislature to allow all local governments to adopt similar programs.

AB 811 can be implemented either through local efforts, similar to those underway in the Cities of Palm Desert, Berkeley, San Diego, and many others, or it can be approached from a regional perspective. The City of San Diego has taken steps to identify a financial backer for loans which will be approved for reimbursement over twenty years at a fixed interest rate. The City of Palm Desert is implementing this program as part of its goal to reduce energy use city-wide by 30%.

Steps for local implementation

Local governments must adopt a resolution/ordinance specifying an area for the project to be implemented: For example, cities and counties can target a specific area/ward or their entire jurisdiction. Local governments can examine areas that may benefit the most from such improvements or that would remove the most greenhouse gas emissions.

Local governments must also establish an implementation policy: Local governments should establish an energy savings goal and an energy efficiency program. Outreach materials should be distributed to property owners informing them of this energy efficiency program. Cities and counties work with property owners (residential, commercial, industrial, etc.) in determining which ways the property could benefit from energy efficiency improvements. The improvements listed in the bill language were purposely left very broad to include all types of energy efficiency projects as long as there is a reduction in energy consumption. Examples would include replacing air conditioners and water heaters, installing dual-pane windows, solar panels, insulation, etc. Upgrading appliances is not part of AB 811, as appliances are not considered to be attached to real property.

Local governments must have a plan for raising the capital: AB 811 allows local governments to establish flexible programs, including which properties are eligible, the loan size, interest rate and duration, and source of funds. For example, Palm Desert requires that a project cost a minimum of $5,000 and sets no maximum loan amount. Their interest rate is set for 7% and extends for as long as 20 years. Superior liens are placed on the property allowing local governments to provide loans despite personal credit. The loan is connected to the property in result of a sale. The law allows general fund tax dollars or municipal revenue bonds to be used to establish a credit pool to provide loans. Loans are repaid twice a year through property tax bills.

Will a regional approach work?

AB 811 might lend itself to a regional approach in order to create efficiencies and economies of scale among WRCOG's jurisdictions. WRCOG staff is researching a regional approach for an AB 811 program for WRCOG members. As part of this effort, WRCOG will review language needed to implement a regional approach, the amount of time needed to tailor outreach materials to different property owners, the time needed to implement potential energy survey/audits, and discuss partnerships with Southern California Edison, Southern California Gas Company, City Utilities, and include Western Municipal Water District and Eastern Municipal Water District to include water efficiency programs. If, in reviewing this information, WRCOG members view regional implementation as a viable approach, financial backing for the program would need to be identified. Under this approach, a uniform application process would be developed to allow residents and business entities to contact a single body that would facilitate the purchase and repayment of loans.

With many jurisdictions developing goals and strategies for curbing gases blamed for climate change, AB 811 provides a new tool for enticing owners of existing commercial and residential structures into reducing emissions via energy-efficient upgrades in a manner that requires no up-front expenditure. Whether implemented by local jurisdictions or under a regional program, one thing is certain - AB 811 provides an opportunity for going forward, by looking backward at existing development.