HomeMy WebLinkAbout22803 RESOLUTION NO. 22803
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, APPROVING THE
FORMATION OF AN ASSESSMENT DISTRICT TO
FINANCE DISTRIBUTED GENERATION RENEWABLE
ENERGY SOURCES AND ENERGY AND WATER
EFFICIENCY IMPROVEMENTS FOR PROPERTY WITHIN
THE CITY PURSUANT TO CHAPTER 29 OF PART 3 OF
DIVISION 7 OF THE CALIFORNIA STREETS AND
HIGHWAYS CODE; CONFIRMING THE BOUNDARIES OF
THE ASSESSMENT DISTRICT AND THE LEVY OF
CONTRACTUAL ASSESSMENTS; AUTHORIZING
PARTICIPATION IN THE PACIFIC HOUSING & FINANCE
AGENCY'S PROPERTY ASSESSED CLEAN ENERGY
AND WATER EFFICIENCY PROGRAM; AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH.
WHEREAS, the City of Palm Springs (the "City") is a municipal corporation
organized and existing pursuant to the laws of the State of California; and
WHEREAS, the Pacific Housing & Finance Agency (the "PHFA") is a joint powers
financing agency and has established an energy and water efficiency assessment
financing program (the "Program") pursuant to Chapter 29 of Part 3 of Division 7 of the
California Streets and Highways Code ( the "Act"); and
WHEREAS, through its PACE — Property Assessed Clean Energy and Water
Efficiency Program, the PHFA facilitates loans to property owners within PHFA's
participating member jurisdictions for the financing of distributed generation renewable
energy sources and energy and water saving property improvements; and
WHEREAS, pursuant to the Act and the Program, PHFA requires its participating
member jurisdictions to form a contractual assessment district, and the PHFA will loan
participating property owners within the assessment district funds secured by an
assessment lien on the subject property; and
WHEREAS, the PHFA Program provides for the funding and administration of
the assessment district for its member jurisdictions; and
WHEREAS, the City is a member of PHFA and desires to take the steps
necessary for the creation of a contractual assessment district for the purposes
described in this Resolution; and
WHEREAS, on June 16, 2010, the City Council adopted its Resolution No. 22745
(the "Resolution of Intention"), declaring its intention to form an energy and water
Resolution No. 22803
Page 2
efficiency assessment district pursuant to the Act for the purpose of participating in the
Program to finance distributed generation renewable energy sources and energy and
water efficiency improvements within the geographical boundaries of the City; and
WHEREAS, the Resolution of Intention ordered the City's Authorized Officer to
prepare and file a report (the "Report") with the City Clerk in accordance with Section
5898.22 of the Act and the Director has filed the Report with the City Clerk; and
WHEREAS, the Resolution of Intention set the time and place for a hearing on
the proposed formation of the assessment district; and
WHEREAS, the Resolution of Intention described the proposed funding of the CA
PACE Program from the proceeds of bonds issued by the PHFA; and
WHEREAS, on September 8th, 2010, following notice duly given in accordance
with law, the City Council held 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 assessment district or any of its particulars, including the extent
of the area proposed to be included within the assessment district, the terms and
conditions of the draft contract (described below), or the proposed financing provisions;
and
WHEREAS, the Report contains (a) a map showing the boundaries of the
assessment district as the geographical boundaries of the City, (b) a draft application for
participation in the Program (the "Application"), (c) a draft contract (the "Contract")
specifying the terms and conditions upon which a property owner and the PHFA agree
to participation in the Program, (d) a statement of city policies concerning contractual
assessments including: (1) identification of types of facilities, distributed generation
renewable energy sources, or energy and water efficiency improvements that may be
financed through the use of contractual assessments (the "Authorized Equipment List"),
(2) identification of a City official to direct the Executive Director of PHFA to enter into
contractual assessments on behalf of the assessment district, (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 of contractual
assessments, (e) a plan for the issuance of bonds by the PHFA, (f) a statement of, or
method for, determining the interest rate and time period during which contracting
property owners would pay assessments, (g) the establishment of any reserve fund or
funds, (h) the apportionment of all or any portion of the costs incidental to financing,
administration of the assessment district between the assessment district and
contractual assessment property owners, and (i) a report on the results of the
consultations of the County Auditor-Controller's office; and
WHEREAS, the City Council, having considered all oral and written testimony,
desires to approve the formation of the energy and water efficiency assessment district
and participation in the Program.
Resolution No. 22803
Page 3
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY
RESOLVE AS FOLLOWS:
SECTION 1. The above recitals are all true and correct and are incorporated
herein by this reference.
SECTION 2. The City Council declares that the Report as filed is hereby
approved.
SECTION 3. The City Council hereby establishes the energy and water efficiency
assessment district (the "Assessment District") to be implemented as provided for by the
Program and related Report. The City Council hereby finds and determines that the
property within the area of the Assessment District will be benefited by the
improvements and activities funded by the assessments.
SECTION 1. The City Council hereby confirms the contractual assessments to
be levied within the parameters of the Program Report.
SECTION 5. The City Council hereby appoints and designates the Executive
Director of the PHFA to administer the Assessment District in connection with the
Program. The Executive Director of PHFA is hereby authorized and directed to file with
the City Treasurer and to revise, as appropriate, a list of the parcels for which the PHFA
and a property owner have entered into a contractual assessment agreement (each, a
"Assessment Financing Agreement") pursuant to the Program as and when such
Assessment Financing Agreement(s) are entered.
SECTION 6. Upon the execution of any Assessment Financing Agreement by all
parties thereto pursuant to the Program, the Executive Director of the PHFA is hereby
directed to cause to be recorded in the office of the Superintendent of Streets and in the
office of the County Recorder of the County of Riverside an assessment lien on the
subject property in the form as provided in the Program Report.
SECTION 7. The City Manager and City Clerk are hereby authorized and
directed to do all acts and things which may be required of them by this Resolution, or
which may be necessary or desirable in connection with the Assessment District and
carrying out the CA PACE Program and all matters incidental thereto, including without
limitation, to make clarifying changes to the Report and to modify as deemed necessary
by the Director of the PHFA or the City Manager, the Authorized Equipment List, the
draft Application and the draft Contract included therein.
Resolution No. 22803
Page 4
ADOPTED THIS 22ND DAY OF SEPTEMBER, 2010.
David H. Ready, anager
ATTEST:
mes Thompson, City Clerk
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. 22803 is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on the 22"d day of September,
2010, by the following vote:
AYES: Councilmember Foat, Councilmember Mills, Councilmember Weigel,
Mayor Pro Tern Hutcheson, and Mayor Pougnet.
NOES: None.
ABSENT: None.
ABSTAIN: None.
mes Thompson, City Clerk a/p.,
City of Palm Springs, California `�7
Attachment to Resolution 22803
CALIFORNIA PROPERTY ASSESSED CLEAN ENERGY
(CA PACE) REPORT
Pacific A PACIFIC HOUSING & FINANCE AGENCY PROGRAM
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District Program
Administered By:
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Contents
Contents ..........................................................................................................................0
Introduction......................................................................................................................1
Goals ...........................................................................................................................1
Background..................................................................................................................2
ProgramBenefits .........................................................................................................2
Program Administration................................................................................................3
Program Requirements....................................................................................................4
Eligible Property Owners.....I..................................................................................I.....4
EligibleProperties ................................................................................................... ...4
EligibleVendors ...........................................................................................................4
EligibleEquipment......................................................................................... ..........5
EligibleCosts ...............................................................................................................6
TheFinancial Strategy.....................................................................................................7
ProgramParameters........................................................................................................8
ProgramLimits...........................................................................................................8
Minimum Energy Amount............................................................................................8
Maximum Energy Amount...........................................................................................8
MaximumPortfolio........................................................................................................8
Duration........................................................................................................................8
InterestRate.................................................................................................................9
AdministrativeFees......................................................................................................9
Changesto Report.........................................................................................................10
Appendix A: Equipment List...........................................................................................11
Energy Efficient Equipment........................................................................................11
ENERGY STAR rated improvement (permanently affixed to the Property)................11
PoolEquipment..........................................................................................................12
Renewable Energy Generation / Solar Equipment..................................................12
Water And Conservation Measures............................................................................14
Appendix B: City of Palm Springs Boundary Map..........................................................19
AppendixC: Application.................................................................... .................20
Appendix D: Sample Agreement...................................................................................23
Appendix E: Summary of Process ................................................................................40
Appendix F: Disclosures................................................................. ................40
City of Palm Springs Supplemental Disclosure
July 6, 2010 Guidance Statement of Federal Housing Finance Agency (FHFA)
August 31, 2010 Instruction Letter of Fannie Mae
August 31, 2010 Instruction Letter of Freddie Mac
Appendix G: PACE Program Highlights.......................................................................540
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Introduction
This energy and water efficiency assessment district report ("Report") has been
prepared to be in compliance with AB 811, AB 474, and Section 5898.22 of the
California Streets and Highways Code in connection with the establishment of the City
of Palm Springs ("City") California Property Assessed Clean Energy (CA PACE)
("Program"). This is the guiding document for the Program and fulfills the requirements
that this report contain the following required documents:
A) A map showing the boundaries of the territory within which contractual
assessments are proposed. (See Appendix B.)
B) A draft contract between a property owner and the City specifying the terms and
conditions. (See Appendix D.)
C) City policies concerning contractual assessments which includes the following
1. types of improvements that can be financed.
2. designated City official authorized to enter into contractual assessments
on behalf of the City.
3. maximum aggregate dollar amount of contractual assessments.
4. method for setting requests in priority order in the event that requests will
likely exceed authorization amount.
D) A plan for raising money to pay for the work performed.
E) Riverside County Auditor/Controller fees.
The CA PACE Program described is designed to help the City of Palm Springs property
owners to implement water and energy efficiency measures which are necessary to
address the issue of global climate change. The Program helps Palm Springs property
owners save energy and money while doing right for the environment.
Goals
The Program seeks to provide multiple benefits to those property owners who are
desirous of the following:
•3 Reducing the amount of their utility bill and saving money
❖ Improving their residence or business
❖ Promoting energy conservation
❖ Stimulating the local economy
The City welcomes innovative energy solutions that will contribute to the goal of
reducing waste and promote energy and water conservation. The Program will assist
the City in achieving its energy and water conservation goals.
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Background
Assembly Bill 81land AB 474 were approved by the California Legislature and signed
into law by the Governor. Under these bills, the California Legislature has declared that
a public purpose will be served by a contractual assessment program that provides local
government with the authority to finance the installation of distributed generation
renewable energy sources - such as solar -- and energy efficiency improvements and
water savings equipment that are affixed to residential, commercial, industrial, or other
real property (collectively known as "energy and water improvements").
To make energy and water improvements more financially affordable and to promote
their installation, the law authorizes voluntary "property tax" assessments to finance the
cost of these improvements. The Program is only possible when a city forms an
assessment district and there is a property owner who decides to make energy and
water improvements to their property.
The City of Palm Springs CA PACE Program can provide assessment financing to
property owners within the City to finance the installation of energy and water
improvements pursuant to contractual assessment agreements. Property owners in the
City will repay the financing through an assessment levied against their property which
is payable in semi-annual installments over time on property tax bills.
Program Benefits
From the City's perspective, the program provides a local stimulus to the economy
through local energy conservation-related job creation. The City may also receive
benefit from:
❖ Sales tax revenues from energy and water improvement installations
❖ Permit fee revenues from business license permits, building permits, and
other permit revenue
❖ Cleaner communities
For property owners, the Program offers:
❖ A no-money-down means of financing energy and water improvements
❖ Fixed-rate assessment financing repaid and amortized over a 15 to 20
year period
(NTE 75% of the useful life of the improvements)
Financing without requiring a property appraisal,
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Higher property values derived from energy and water improvements
Program Administration
The Program will be administered by the Joint Powers Authority - Pacific Housing &
Finance Agency ("PHFA"), which is headed by the Executive Director of PHFA
("Director") and support staffed by Public Finance Solutions & Engineering ("PFSE")
professionals. PFSE staff will be responsible for:
•3 Working with the City and community outreach
❖ Assisting property owners in obtaining Program assessment financing
applications and materials
❖ Processing assessment financing applications
❖ Managing and tracking Program assessment financing
❖ Assisting in monitoring individual and collective energy conservation
The intent of these services is to provide a "turn-key" service for the City of Palm
Springs property owners who want to finance energy and water improvements.
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Program Requirements
Eligible Property Owners
All owners of improved real property are eligible for the Program. Property owners may
be individuals, associations, business entities, cooperatives, and virtually any owner
paying real property taxes. A property owner needs to be current in the payment of
property taxes and current on any mortgages on the parcel. Property owners are eligible
to make multiple applications for additional energy and water improvements. However
the minimum amount of any assessment financing request must be equal to or greater
than $5,000 and cannot exceed the assessed land value of the subject property without
specific written approval from the PHFA Executive Director.
Eligible Properties
Program Assessment Financing is available to all owners of improved real properties in
the City including, but not limited to, residential, commercial, and industrial properties.
Program Assessment Financing is not available for properties that do not pay property
taxes, such as governmental entities, churches and certain non-profit corporations.
Eligible Vendors
Program Assessment Financing is made to property owners whose equipment has
been installed and verified in accordance with the Program requirements. All licensed
(City and State) contractors in good standing are eligible to participate in providing
energy and water equipment installations to eligible property owners. The vendors
would need to simply:
1. Obtain / download a Vendor Application form located on the PHFA's website
www.cityenerqvsavings.com.
2. Once approved (usually within 48 hours), the vendor will be added to the Eligible
Vendors list and can start contracting with property owners in accordance with
their Assessment Financing Agreement located at Appendix D.
3. Per the Agreement, participating vendors would be responsible for installation of
the equipment on the property (after receiving approval from PHFA), and then
would be reimbursed from Municipal Bond Proceeds from the Pacific Housing &
Finance Agency within 90 days of the Agency verifying that the qualifying
equipment is permanently affixed to the property.
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Eligible Equipment
The Program affords property owners in the City of Palm Springs the opportunity to take
advantage of a wide range of energy-savings measures, consistent with the following
provisions:
1. The Program provides financing for energy and water improvements permanently
affixed to property.
2. Property owners choosing to voluntarily engage in broader retrofit projects - such
as home or business remodeling - will only be provided Program Assessment
Financing for that portion of the costs used to retrofit existing structures with
energy and water improvements. (This is discussed further in Eligible Costs.)
3. Program Assessment Financing is intended for retrofit activities to replace
outdated equipment and to install new equipment that takes energy off the grid.
However, Program Assessment Financing is also made available for purchasers
of new homes and businesses that wish to add energy and water efficiency
improvements after the property owner takes title to the property.
4. Program Assessment Financing is made available for the following types of
improvements:
Energy and water improvements that promote energy efficiency and saves
water. The Program supports a wide range of efficiency measures as
presented in Appendix A.
Solar Systems. Program Assessment Financing is available for a range of
solar systems, from photovoltaic to solar thermal.
Alternative / Custom Improvements. Upon review and approval by the
Director of the Pacific Housing & Finance Agency, Program Assessment
Financing is made available for emerging technologies for energy
improvements that provide new ways to save or generate energy and that will
be evaluated on a case-by-case basis.
5. Program Assessment Financing is also made available for combinations of
energy efficiency improvements such as bundling energy efficiency and
renewable energy measures. For instance, a property owner may choose to
replace both an aging and inefficient air conditioner, insulation, doors, windows
and install a solar system.
6. Program Assessment Financing is also made available to reimburse property
owners who have recently installed qualifying equipment within in the 6 months
prior to the City adopting the Program.
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Eligible Costs
Eligible costs of the energy and water improvements include the cost of equipment and
installation. Installation costs may include, but are not limited to, labor, drafting,
engineering, application fees, permit fees, processing fees, and inspection charges.
The installation of energy and water improvements can be completed by a qualified
contractor of the property owner's choice from the list of approved vendors published by
the Pacific Housing & Finance Agency. Property owners are encouraged to obtain
multiple bids from several vendors or contractors, since each transaction is between the
property owner and the vendor or contractor. Property owners must protect their own
interests and obtain the best price, service and warranties. The City of Palm Springs
and the Pacific Housing & Finance Agency are responsible for financing the energy and
water savings improvements while the property owner is totally responsible for his or
her purchase, service expectations and warranties.
Any contractor is eligible to become an approved vendor, as long as they are licensed in
good standing, insured, and agree to the Reimbursement Terms set forth in the
Contractor Reimbursement Agreement. Eligible costs do not include labor costs for
property owners who elect to do the work themselves.
In each case, the PHFA Director will determine whether the estimated equipment and
installation costs are reasonable. Pacific Housing & Finance Agency reserves the right
to evaluate market conditions and, at its discretion, require additional bids to determine
whether costs are reasonable. While the property owner s encouraged to select the
bidder of his or her choice from the list of approved vendors, the amount available from
the Program Assessment Financing may be limited to an amount deemed reasonable
by the Pacific Housing & Finance Agency (as set forth in this report). In addition, the
City Manager, City Staff and/or the City of Palm Springs City Council reserve the right to
approve Program Assessment Financing.
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The Financial Strategy
The City intends to work with the Pacific Housing & Finance Agency in the issuance of
taxable municipal bonds to reimburse approved energy vendors and contractors of
energy and water efficiency projects. As the program administrator, Public Finance
Solutions & Engineering (PFSE) will be placing the charges on each participating
property owner's tax bill each year the Program Assessment Financing is outstanding
for repayment.
Any contractor is eligible to become an approved vendor, as long as they are licensed in
good standing, insured and agree to the Reimbursement Agreement terms with the
Pacific Housing & Finance Agency. The approved vendors will contractually agree to
provide and install the energy equipment on an "approved order" basis whereby the
property owner completes the application process and once approved, the energy
vendor installs the equipment. After successful verification the vendor is reimbursed
within 90 days through the issuance of taxable municipal bonds. Bond issuance
proceeds will be deposited within the Bank Trustee's Energy Fund for vendor
reimbursement.
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Program Parameters
Program Limits
Minimum Energy Amount
The minimum size for. Program Assessment Financing is $5,000.
Maximum Energy Amount
The maximum amounts are set for the following property types:
Residential Properties
Minimum Amount $5,000.00
Maximum Amount: Nat-To-Exceed Assessed Land Value
Commercial and Other Property Types
Minimum Amount: $5,000.00 (Five thousand dollars)
No Maximum Amount -----however, Program Assessment Financing in excess of
$80,000 require the Executive Director approval.
In any event the maximum amount can not exceed the Assessed Land Value of the
Property without PHFA Director and underwriter of the taxable municipal bonds
approval.
Maximum Portfolio
The maximum principal amount of the Program Assessment Financing to property
owners under the Program is $95 million. This represents the total amount of financing
available to all participating cities and counties that are members of the Pacific Housing
& Finance Agency, including the City of Palm Springs.
The maximum principal amount of the Program Assessment Financing can be
increased through PHFA resolution and PHFA Board Approval.
Duration
Program Assessment Financing is made available for up to three fourths of the
estimated life of the improvements. Hence, the term of the financing is based on the life
expectancy of the improvements installed.
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Interest Rate
Program Assessment Financing will be made for property owners at an annual interest
rate that is determined by market conditions and is secured by the property owner at the
time the application is approved. In any event, the law does not allow the interest rate
to exceed 12%. The Pacific Housing & Finance Agency will market the taxable
municipal bonds at the then prevailing market for such bonds. Upon successfully
marketing the bonds, the program interest rate for Program Assessment Financing will
be established. After the property owner affirms that the improvements have been
installed as set forth in the vendor or contractor's contract and after inspection of the
improvements, the funding of the Program Assessment Financing will be concluded
upon bond closing. Program Assessment Financing that is entered into at different
times will have different interest rates depending on bond market conditions and
successful marketing of the bonds.
Administrative Fees
Administrative Fees are recovered by the "spread" between bond rates and the
Program Assessment Financing issuance rate. Other than the two fees below, the
property owners will not be billed for any additional charges or assessments.
Two forms of costs will be the responsibility of the property owner:
1. Title costs - including title verification - will be borne by the property owner but
reimbursable through the program. This cost to the property owner is
approximately $395 per Program Assessment Financing Application. For
commercial property owners, an additional $.02 per square foot is added to the
application fee to cover the costs of a commercial energy evaluation on the
property.
2. Assessment collection costs will appear as a line item on property taxes not to
exceed $40 per property per year- and will be paid by property owners. The $40
per year may escalate 2% per year for County Fee Increases.
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Changes to Report
The Pacific Housing & Finance Executive Director may make changes to this Report
that is reasonably determined to be necessary to clarify its provisions.
Pacific Housing & Finance Director may modify from time to time the Equipment List,
the Application / Contract and terms of the Application attached hereto as Appendix A,
together with Appendix C and Appendix D, respectively, as deemed necessary.
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Appendix A: Equipment List
The Program is offered for a number of equipment types, including water and electrical
efficiency measures, solar systems, and other innovative, energy-saving custom
measures. In each case, the use of rebates and tax credits to prepay a portion of the
outstanding assessment financing is at the discretion of property owner.
Energy Efficient Equipment
The Program provides services and s for a wide range of Energy Star-rated efficiency
measures which property owners can get rebates (and tax incentives) as well as
Program Assessment Financing. Energy efficiency equipment that is Energy Star rated
must meet the Energy Star minimum efficiency levels.
The City of Palm Springs anticipates that Energy Star requirements will "ratchet up" to
greater efficiency levels over time. Energy Star will also become more inclusive of
technologies over time. Thus the Program will evolve with Energy Star and the market
for energy-efficient technologies.
The following Energy Star measures - among others - are eligible:
Attic and wall insulation
Light fixtures (no bulb-only retrofits)
•3 Reflective roofs and coatings (Metal and Asphalt)
Windows, doors, and skylights (including sliding glass doors, garage doors,
storm doors and storm windows)
❖ HVAC: Central Air Conditioners, Air Source Heat Pumps, Furnaces and Boilers
Water Heaters: Gas, Oil, & Propane Water Heaters, Electric Heat Pump Water
Heaters
❖ Biomass Stoves
❖ Geothermal Heat Pumps
❖ Solar Panels
❖ Solar Water Heaters
❖ Small Wind Energy Systems
ENERGY STAR rated improvement (permanently affixed to the Property)
ENERGY STAR is a joint program of the U.S. Environmental Protection Agency and the
U.S. Department of Energy to assist consumers in protecting the environment while
saving money through energy efficient products and practices. Products can earn the
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ENERGY STAR label by meeting the energy efficiency requirements set forth in
ENERGY STAR product specifications.
Products that have earned the ENERGY STAR label automatically qualify for the
Program if they are permanently affixed. Examples of ENERGY STAR products that
would qualify:
• Insulation and Air Sealing: windows and reflective insulation.
• Roofing Materials: roof coatings for solar reflectance
• Doors and Skylights
• Heating and Cooling: Air conditioners, furnaces, and boilers
• Plumbing: Water heaters which include solar and tankless.
Repairs and or construction required for the installation of the improvements do not
qualify for financing. If there are repairs that must be done prior, during, or after the
improvements, the property owner will have to bear those costs. For example, if dry rot
was discovered during the installation of ENERGY STAR windows, the cost of the
windows and their installation would only be covered, not the repair of the dry rot.
Pool Equipment
❖ Pool circulating pumps (must be Variable Flow and/or Multi-speed with
controllers)
•3 Natural gas pool heaters (must have a thermal efficiency of 84% or greater)
Renewable Energy Generation / Solar Equipment
Solar Panels or Photovoltaic (PV) Systems are solar cells that capture the heat from the
sun and convert it directly into electricity. PV Systems that meet applicable fire and
electrical code requirements are available for Program funding. Program Assessment
Financing will be available for photovoltaic equipment and installers listed by the
California Energy Commission. Solar thermal equipment must be rated by the Solar
Rating Certification Council (SRCC). As with efficiency measures, the property owner
maintains the discretion as to whether to prepay a portion of the gross with any solar
rebates and tax credits.
Eligible solar equipment includes:
(1) Solar thermal systems (hot water)
(2) Solar thermal systems for pool heating
(3) Photovoltaic systems (electricity)
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(a) Battery back-up systems will be allowed
(b) Funding for off-grid systems will be allowed
(c) PV systems can be sized to accommodate plug-in electric vehicles
(d) Plug in stations
(4) Emerging technologies —following the Custom Measures Track
(a) Nano/thin film photovoltaic
(b) High intensity (parabolic solar panels)
(5) Battery back-up systems will be allowed
(6) Funding for off-grid systems will be allowed
(7) PV systems can be sized to accommodate plug-in electric vehicles
The City of Palm Springs encourages innovation in saving energy to meet its energy
savings goals. Other alternative energy savings equipment will only be funded for
Program Assessment Financing if sufficient proof of energy savings is provided to the
Office of Energy Management that the measure will reduce usage by 20%. The Pacific
Housing & Finance Executive Director reserves the right to defer funding until he deems
the evidence sufficient to verify this performance requirement.
The following types of measures - among others - will be considered for Program
Assessment Financing through the:
Building Energy Management controls
•3 HVAC Duct zoning control systems
❖ Irrigation pumps and controls
Lighting controls
❖ Motors and controls
•3 Natural gas fbel cells
4- Water heating equipment
a. Tank-style
b. Tankless
c. Central water heating system
Water Conservation Equipment
❖ High efficiency toilets
•:+ Low flow shower heads
❖ Bathroom sink aerators
❖ Hot water delivery options
o Hot water recirculation systems and on-demand hot water systems
o Whol house maniforld system or core plumbing systems
o Demand initiation or instantaneous hot water heaters
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Demand initiated water softeners
• Hot water pipe insulation
• Evapotransportation irrigation systems or smart irrigation controllers
❖ Permanently installed rainwater cisterns
❖ Matched precipitation rate sprinkler heads
• High efficiency outdoor irrigation
•;• Pre-rinse spray valves
❖ Waterless urinals or low flow urinals
❖ Bathroom sink aerators
• Industrial process water use reduction
Recycled water source
❖ Deionization
❖ Filter upgrades
❖ Cooling condensate reuse
Foundation drain water
❖ Cooling tower conductivity controllers
❖ High efficiency outdor irrigation
•;• smart irrigation systems / controllers
Water And Conservation Measures
A. Residential Indoor Water Conservation Measures.
(1) High efficiency toilets (average flush volume of 1.28 gallons or less)
(2) Showerheads (1.75 gpm)
(3) Bathroom aerators (1.5 gpm)
(4) Hot water delivery options, as defined by the Energy Star "Volumetric Hot
Water Savings Guidelines"
(a) Hot water recirculation systems use a hot water circulating pump to
pump hot water from the water heater, through the hot water piping, and
on back to the water heater through an additional length of pipe that runs
from the furthest fixture back to the water heater.
(b) Demand initiated hot water systems use a recirculation pump to rapidly
pull hot water from a water heater while simultaneously sending cooled-off
water from the hot water lines back to the water heater to be reheated.
(c) Whole house manifold systems consist of a manifold (trunk line)
connected to the water heater from which individual pipes (twigs) are
connected to each water fixture.
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(d) Core plumbing systems are hot water distribution systems where water
volumes in the pipes are reduced by a combination of smaller pipe
diameters and shorter pipe runs due to a centrally located water heater.
(5) Demand initiated water softeners, Energy Star rated
(6) Demand initiated or instantaneous hot water heaters (7) Hot water pipe
insulation (minimum of R4)
B. Residential and Commercial Outdoor Water Conservation Measures.
(1) A weather-based irrigation controller, or Smart irrigation controller with a rain
shut off device, uses weather data and site information such as plant type and
sprinkler system output to adjust watering times and frequency. This provides
more efficient watering, reduces water run-off and improves the health of your
landscape.
(2) Permanently installed rainwater cisterns.
(3) Drip irrigation systems in gardens, planters and beds. Drip irrigation can save
up to 70% in water usage due to more efficient delivery.
(4) Matched precipitation sprinklers so that all spray patterns and radius deliver
water evenly over the landscape area.
(5) Custom Measure: Replace turf grass with native or low water use plants.
Project must include soil amendment, mulch, drip irrigation and /or matched
precipitation sprinklers and a Smart irrigation controller.
C. Commercial Water Conservation Measures.
(1) All applicable water conservation measures listed for "residential"
(2) Pre-rinse spray valves (1.2gpm)
(3) Urinals (pint)
(4) Waterless urinals
(5) Bathroom aerators (0.5 gpm)
D. Commercial Custom Measures.
(1) Industrial process water use reduction
(2) Recycled water source
(3) Deionization
(4) Filter upgrades
(5) Cooling condensate reuse (6) Foundation drain water
(7) Cooling tower conductivity controllers
E. Residential and Commercial Recycled Water Use
(1) Outdoor irrigation
ENERGY EFFICIENCY MEASURES
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Except the HVAC equipment as noted below, efficiency measures must meet the
performance criteria stated in the list of Eligible Improvements or the Energy Star
minimum efficiency levels. For all packaged and central air conditioning systems funded
in this Program, the minimum efficiency levels shall be as required by the current
minimum requirements set forth in List of Eligible Improvements. All other proposed
efficiency measures will be considered in the Custom Measure Track. It is anticipated
that Energy Star requirements will "ratchet up" to greater efficiency levels over time.
Energy Star will also become more inclusive of technologies over time. Thus, the CA
PACE Program will evolve with Energy Star and the market for energy-efficient
technologies.
(1) Geothermal exchange heat pumps
(a) Minimum efficiencies
(i) Ground source exchange open loop system 17.8 EER or higher
(ii) Ground source exchange closed loop system 15.5 EER or
higher
(2) Home EV charging installations (3) HVAC Systems
(a) Minimum efficiencies
(i) Split systems with 14 SEER and 12 EER or higher rating
(ii) Natural gas furnaces of 90 AFUE or higher
(iii) Package systems with 14 SEER and 11 EER or higher rating
(b) Home energy management control systems
(c)Whole house fan systems
(d) Duct insulation, meeting Energy Star guideline
(e) Duct sealing
(4) Evaporative Coolers
(a) Cooler must have a separate ducting system from air conditioning and
heating ducting system
(b) Maximum 5 gallons/ton-hour cooling
(5) Natural gas storage water heater, EF of 0.67 or higher and Energy Star listed
(6) Tankless water heater, EF of 0.82 or higher and Energy Star listed
(7) Solar water heater systems, rated by Solar Rating Certification Council
(8) Cool roof system as defined by the 2005 California Building Energy Efficiency
Standards (also called the California Energy Code). Roofing replacement eligible
under this program shall be:
(a) Tested and rated through the Cool Roof Rating Council (CRRC);
(b) Be labeled for its initial reflectance and initial emittance as determined
in the CRRC tests and be labeled that the product meets Title 24, Section
118(i);
(c) Achieve at least a 0.75 initial emittance and 0.70 initial reflectance or, if
the initial emittance is less than 0.75, have an initial reflectance of at least [0.70 +
{0.34 x (0.75 — initial emittance)}];*and. if applied as a liquid coating in the field,
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be applied at a minimum dry mil thickness of 20 mils* across the entire roof
surface and meet performance requirements. (9) Reflective roofs and coatings
(10) Attic and wall insulation, minimum R value 30 and Energy Star listed
(11) Reflective insulation or radiant barriers
(12) Attic fans
(13) Windows and glass doors, U value of 0.40 or less and solar heat gain
coefficient of 0.40 or less
(14) Window filming, in compliance with the NFRC glazing attachment ratings for
solar heat a gain and visible transmittance
(15) Weather-stripping, following Energy Star guidelines
(16) Home sealing, following Energy Star guidelines
(17) Skylights, U Value of 0.60 or less and solar heat gain coefficient of 0.40 or
less
(18) Solar tubes
(19) Additional building openings to provide addition natural light, windows and
doors must meet the Energy Star rating U value of 0.40 or less
(20) Lighting, Energy Star listed (no bulb only retrofits)
(21) Pool equipment (a) Pool circulating pumps (must be variable flow and/or
multi-speed with controllers)
B. Residential Energy Efficiency Custom Measures.
(1) Passive solar (heating/cooling)
C. Commercial Energy Efficiency Measures.
(1) Heating, ventilating and air conditioning systems ("HVAC")
(a) Minimum efficiencies
(i) Split systems with 14 SEER or 12 EER
(ii) Package systems with 13 SEER or 11 EER
(2) Geothermal exchange heat pumps
(a) Minimum efficiencies
(i) Ground source exchange open loop system 17.8 EER or higher
(ii) Ground source exchange closed loop system 15.5 EER or
higher
(3) High efficiency electric hand dryer
(4) All applicable energy efficiency measures listed in "Residential" section
D. Commercial Energy Efficiency Custom Measures.
(1) Building energy management systems,
(2) Lighting control systems, which shall include occupancy sensors and other
energy saving measures
(3) HVAC duct zoning control systems
(4) Motors and controls (processing or manufacturing equipment)
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(5) Customer electric vehicle plug-in station
ALTERNATIVE ENERGY EFFICIENCY MEASURES
The Alternative Energy Efficiency Measures is a process by which PHFA Staff can
evaluate and fund projects that are not "off the shelf' improvements listed in the eligible
Water Conservation, Energy Efficiency or Renewable Energy Generation Measures.
These custom projects may involve large scale industrial or commercial energy
efficiency improvement projects, such as process or industrial mechanical systems,
renewable energy sources and energy generation, other than the solar system
(photovoltaic), such as geothermal, and potentially fuel cells, as well as more complex
and cutting edge energy management solutions and emerging technologies. The
following types of measures — among others —will be considered for funding through the
Alternative Energy Efficiency Measures Track:
A. Energy Efficiency Alternative Measures.
(1) Alternative energy generation (other than photovoltaic)
(2) Building energy management controls
(3) HVAC duct zoning control systems
(4) Irrigation pumps and controls
(5) Lighting controls
(6) Industrial and process equipment motors and controls
As these "Custom Measures" become Energy Star rated they will be
included in the List of Eligible Improvements.
B. Energy Generation Alternative Measures.
(1) Fuel Cells
(2) Natural gas
(3) Hydrogen fuel
(4) Other fuel sources (emerging technologies)
(5) Co-generation (heat and energy)
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Appendix B: City of Palm Springs Boundary Map
The boundary of the Assessment District shall be the same as the City of Palm Springs
City Boundaries, and the Complete City Boundary Map is on file with the Office of the
City Engineer, City of Palm Springs and is incorporated herein by reference.
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Appendix C: Application
INSTRUCTIONS
Applying for Program Assessment Financing is simple by completing these easy
steps:
STEP ACTIVITY ACTION
Sll ,MIT CA PACE Obtain an applicatitih from PFSE by calling (877) 577-7373
Alpl_IATION or download it directly at cityenergysavings.com.
SCHEDULE & After your application has been reviewed, Connor Energy
COMPLETE AN will contact you to schedule your Energy Evaluation to be
2 ENERGY performed (at no additional cost to residential property
EVALUATION owners. Commercial/Industrial will be charged at 0.02 per
square foot).
FINALIZE Once ,the energy evaluation is performed, you can select
ESSMENT the energy improvements to be installed from the approved
3. A vendors llist a'f bity0nergysavings.com (If the vendor you
AIING want' i riot ;listed pl:as have them contact PFSE to be
APPLICATION ap'pebv'ed and added).
After receiving the proposed installation contract and final
Assessment Financing amount request, PFSE will process
RECORD LIEN AND the application for final approval and recordation. Property
4. AUTHORIZE owner will need to agree to final interest rate and notarize
INSTALLATION the assessment lien. Once approval is granted, PFSE
records the assessment lien on the property, and
authorizes the vendor to install improvements.
ASSESSMENT The annual amount of the Assessment Financing is repaid ',
5. FINANCING through assessments on property owners tax bill over the
REPAYMENT specified number of years.
6 ENJOY YOUR Enjoy your savings while helping the environment.
IMPROVEMENTS
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STEP 1 — Obtain and Complete an application for Program Assessment
Financing from PFSE or download it at www.cityenergysavings.com.
Mail the completed application for Program Assessment Financing to:
Public Finance Solutions & Engineering
C/O City of Palm Springs — CA PACE Program
7670 Opportunity Rd, Suite 250
San Diego, CA 92111
Along with the completed application, be sure to include:
1) A Check in the Amount of $395.00 (Commercial/Industrial
Properties add $.02 per square foot) payable to:
Public Finance Solutions & Engineering
Please complete and sign the attached Application Form and include all requested
attachments. Please type or print neatly in blue or black ink. All applications are
processed on a first-come, first-served basis, upon receipt, until otherwise directed
by the PHFA Director. Incomplete and/or incorrect applications cannot be
processed. Resubmitted applications.are processed on a first-come, first-served
basis upon the new receipt date. If the program is temporarily unavailable or not
currently processing applications, an approved applicant will be placed on a waiting
list. Keep a copy of all home improvement contracts, energy installation agreements
completed, application and all documents submitted.
For questions regarding the status of your Application contact the Program
Administrator, Public Finance Solutions & Engineering:
TOLL FREE: (877) 577-PFSE (7373)
STEP 2 — Schedule and Complete Energy Evaluation. You will be contacted
by Connor Energy and / or PFSE to schedule your Energy Evaluation. For
residential properties, the evaluation is complementary. This step is required for all
applicants.
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STEP 3 - Select a vendor from the approved vendor list. Property owners are
encouraged to obtain multiple bids from vendors and contractors to assure obtaining
improvements that are guaranteed and priced to the satisfaction of the parcel owner.
Only vendors from this list will qualify for Program Assessment Financing. If the
vendor you want is not listed, have the vendor contact PFSE at (877) 577-PFSE
(7373). It takes about 48 hours to approve a new vendor. Input the Vendor
information on the form, but DO NOT PAY or MAKE ANY PAYMENTS TO THE
VENDOR. Program Assessment Financing when complete will directly
reimburse vendors for equipment installed in accordance with Program guidelines.
Once you have determined the equipment you would like to have installed, forward a
copy of the equipment bid or purchase agreement from the vendor to PFSE.
For information on home improvement contracts or the status of your contractor's
license visit www.cslb.ca.govor call the Contractor's State License Board at 1-800-
32 1-CSLB.
STEP 4 — After the Assessment Financing and vendor contracts have been
approved. PFSE will forward to Property Owner the final Assessment Financing
agreements, assessment lien (needs to be notarized), the interest rate of the
Assessment Financing and any final disclosures. The property owner will be
required to return all documents for final recordation. After the lien has been
recorded against the property, the contractor will be authorized to install the
requested improvements.
STEP 5 — After the improvements are installed, the property owner simply
needs to make the timely payments on their property tax bills.
STEP 6 — Enjoy the improvements and the savings!
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Appendix D: Sample Agreement
AGREEMENT
PHFA CA PACE PROGRAM FOR THE CITY OF PALM SPRINGS ,
(A PROGRAM OF THE PACIFIC HOUSING & FINANCE AGENCY)
This Agreement ("Agreement") is made and entered into as of this day of
, 20 , by and between the PACIFIC HOUSING & FINANCE
AUTHORITY, a California joint powers authority ("Agency")
and ("Borrower").
RECITALS
A. The City of Palm Springs is a participant in the Agency's California Property
Assessed Clean Energy Program (the "Program") pursuant to which the City has
authorized the Agency to extend to property owners the opportunity to finance the
acquisition and installation on their property certain qualifying renewable energy
systems and energy efficient equipment. The purpose and method of administration of
the assessments under the Program are described in the CA PACE Program Report
adopted by the City Council on September 8, 2010, as it may be amended from time to
time (the "Report').
B. The Program is authorized by Chapter 29 of Part 3 of Division 7 of the California
Streets and Highways Code (the "Act").
C. The Borrower has submitted to the Agency that certain CA PACE Program
Assessment Financing Application dated , 20_ , a copy of which is attached
hereto as Exhibit "A and incorporated herein by this reference (the "Application"). The
Application describes, among other things, the renewable energy system and/or energy
efficient equipment which is to be financed with the proceeds of the described herein,
and to be constructed on or installed in the property of Borrower described in Exhibit "B"
attached hereto and incorporated herein by this reference (the "Property'), and the
Agency has approved the Application as provided in the Report.
D. The Borrower wishes to participate in the Program by executing this Agreement with
the Agency and using the proceeds of the made by the Agency to the Borrower
hereunder to finance the acquisition and [construction] [installation] on the Property of
the [renewable energy system] [energy efficiency equipment] described in the
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Application (the "Equipment"). The Equipment and its construction on or installation in
the Property is collectively referred to herein as the "Work".
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Agreement
(a) Subject to the conditions set forth herein. The Agency agrees to extend assessment
financing ("financing") to Borrower in the amount of up to Dollars
($ ) (the " Amount"). Notwithstanding anything to the contrary contained
herein, the Amount shall not in any event exceed the actual cost of the Work. The
Borrower shall be solely responsible for the payment of all cost of the Work which
exceeds the Amount and Borrower agrees in any event to complete the Work and to
fund all costs associated with such completion which may be in excess of the Amount.
This Agreement, together with the Application, the Report and the documents and
instruments attached to or referenced in this Agreement and the Application are
collectively referred to herein as the "Documents."
(b) The term of the Assessment Financing and this Agreement shall be
( ) years from the date that the proceeds of the are first disbursed to the
Borrower.
(c) Interest shall accrue on the unpaid principal balance of the Amount from the date
first disbursed to Borrower at the simple interest rate of 8.5 percent (8.5%) per annum.
Interest shall be computed on the basis of a three hundred sixty (360) day year. If a law
which applies to the and which sets maximum interest rates or charges is interpreted
by a court of competent jurisdiction in a manner as would cause the interest or other
charges collected or to be collected in connection with the to exceed the limits
permitted by such laws, then: (i) any such interest or charge shall be reduced by the
amount necessary to reduce the interest or charge to the permitted limit; and (ii) any
sums already collected which exceed permitted limits will be refunded by the Agency.
The Agency may choose to make the refund by reducing the outstanding principal
amount of the or by making a direct payment to the Borrower.
(d) The Borrower promises to pay to the Agency, without deduction or offset, the
Amount and the interest accrued thereon as provided herein. The repayment of the
Amount and interest accrued thereon shall be repaid by the Borrower to the Agency by
the payment of an assessment levied against the Property pursuant to Section 5898.30
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of the California Streets and Highway Code (the "Assessment"). In addition to the
Assessment, the Borrower promises to pay to the Agency, without deduction or offset,
an annual assessment levied against the Property to pay costs incurred by the Agency
which result from the administration and collection of the Assessment or from the
administration or registration of any associated bonds or reserve or other related funds
(the "Annual Administrative Assessment"). The Annual Administrative Assessment shall
not exceed Forty Dollars ($40) per year, with annual increases to the $40 maximum of
no more than 2% per year. The Assessment and the Annual Administrative
Assessment, and the interest and-any penalties thereon, if not timely paid, shall
constitute a lien on the Property until they are paid. The installments of the
Assessment and the Annual Administrative Assessment (including principal and
interest) shall be collected on the property tax bill pertaining to the Property, and shall
be subject to the same penalties, remedies, and lien priorities as for property taxes in
the event of non-payment. The Borrower hereby expressly consents to the levy of the
Assessment and the Annual Administrative Assessment and the imposition of the lien
on the Property as described herein and in the Act.
(e) The amount of assessment installments that will be placed on the Property each
year is set forth in Exhibit "C" attached hereto and incorporated herein by this reference.
(f) The Assessment may be prepaid, in whole or in part, at any time upon the payment
of a premium in an amount equal to two percent (2%) of the amount of the Assessment
to be prepaid. Prepayment costs may also include trustee fees, bond interest, and
other related charges.
2. Use of Proceeds
All proceeds of the shall be used by Borrower for the sole purpose of paying for the
reasonable costs and expenses of the Work on the Property, and in connection
therewith the Borrower shall comply with all requirements set forth herein, in the
Application and in the Report.
3. Disbursement Procedures
(a) Notwithstanding anything to the contrary contained herein, the Agency shall have no
obligation to disburse the Amount to the Vendor and/or Property Owner hereunder
unless and until each of the following conditions are satisfied, or any such condition is
expressly waived by the Director:
(i) The receipt by the Director of a written certification from Borrower, and the
contractor(s), if any, that performed the Work, stating that the Work for which
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disbursement is requested is complete, and the actual cost of such Work. PHFA has
selected Connor Energy to perform such certification.
(ii) An inspection of the Work by the PHFA, and a determination by the Director
that the Work has been completed in full compliance with the requirements of the
Documents.
(iii) The receipt by the Director of such other documents and instruments as the
Director may require, including but not limited to, if applicable, the sworn statements of
contractor(s) and releases or waivers of lien, all in compliance with the requirements of
applicable law.
(iv) Borrower has, as appropriate, executed and delivered to Director the
Documents and such other documents or instruments pertaining to the or the Work as
the Director may require.
(v) As of the date of disbursement of the Amount, the Director shall have
determined that the representations of the Borrower contained in the Documents are
true and correct, and no Default (as defined in Section 12 below) shall have occurred
and be continuing.
(vi) No stop payment or mechanic's lien notice pertaining to the Work has been
served upon the Agency and remains in effect as of the date of disbursement of the
Amount.
(vii) The Agency shall have performed a title verification (the "Title Check") and
shall be in form and substance acceptable to the Director.
(b) Borrower will, within ten days (10) days of presentation by the Director, execute any
and all documents or instruments required by the Documents in connection with the
disbursement of the Amount.
4. Reports
Borrower agrees, upon the request of Director, to promptly deliver to the Director, or, if
appropriate, cause its contractor(s) to promptly deliver to Director, a written status report
regarding the Work.
5. Representations and Warranties of Borrower
Borrower promises that each representation and warranty set forth below is true,
accurate and complete as of the date of this Agreement, and the date of disbursement
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of the Amount. The disbursement of the Amount shall be deemed to be a reaffirmation
by the Borrower of each and every representation and warranty made by Borrower in
this Agreement.
(a) Formation: Authority. If Borrower is anything other than a natural person, it
has complied with all laws and regulations concerning its organization, existence and
the transaction of its business, and is in good standing in each state in which it conducts
its business. Borrower is the owner of the Property and is authorized to execute, deliver
and perform its obligations under the Documents, and all other documents and
instruments delivered by Borrower to the Agency in connection therewith.
This Agreement and the Application have been duly executed and delivered by
Borrower and are valid and binding upon and enforceable against the Borrower in
accordance with their terms, and no consent or approval of any third party, which has
not been previously obtained by the Borrower, is required for the Borrower's execution
thereof or the performance of its obligations contained therein.
(b) Compliance with Law. Neither Borrower nor the Property is in violation of, and
the terms and provisions of the Documents do not conflict with, any regulation or
ordinance, any order of any court or governmental entity, or any building restrictions or
governmental requirements affecting Borrower or the Property.
(c) No Violation. The terms and provisions of the Documents, the execution and
delivery of the Documents by Borrower, and the performance by Borrower of its
obligations contained therein, will not and do not conflict with or result
in a breach of or a default under any of the terms or provisions of any other agreement,
contract, covenant or security instrument by which the Borrower or the Property is
bound.
(d) Other Information. If Borrower is comprised of the trustees of a trust, the
foregoing representations shall also pertain to the trustor(s) of the trust. All reports,
documents, instruments, information and forms of evidence which have been delivered
to Agency concerning the are accurate, correct and sufficiently complete to give
Agency true and accurate knowledge of their subject matter.
(e) Lawsuits. There are no lawsuits, tax claims, actions, proceedings,
investigations or other disputes pending or threatened against Borrower which may
impair Borrower's ability to perform its obligations hereunder.
(f) Borrower Not a "Foreign Person". Borrower is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended from
time to time.
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(g) No Event of Default. There is no event which is, or with notice or lapse of time
or both would be, a Default under this Agreement.
(h) Accuracy of Declarations. The declarations of the Borrower contained in the
Application are accurate, complete and true.
6. Borrower's Covenants
Borrower promises to keep each of the following covenants:
(a) Completion of Work and Maintenance of Equipment. Borrower shall, or shall
cause its contractor to, promptly commence construction of the Work, and diligently
continue such Work to completion, in a good and workmanlike manner and in
accordance with sound construction and installation practices. Borrower shall maintain
the Equipment in good condition and repair.
(b) Compliance with Law and Agreements. In commencing and completing the
Work, Borrower shall comply with all existing and future laws, regulations, orders,
building restrictions and requirements of, and all agreements with and commitments to,
all governmental, judicial and legal authorities having jurisdiction over the Property or
the Work, and with all recorded instruments, agreements, and covenants and
restrictions affecting the Property.
(c) Permits. Licenses and Approvals. Borrower shall properly obtain, comply with
and keep in effect all permits, licenses and approvals which are required to be obtained
from any governmental authority in order to commence and complete the Work.
Borrower, upon the request of the Director, shall promptly deliver copies of all such
permits, licenses and approvals to the Director.
(d) Site Visits. Borrower grants Agency, its agents and representatives the right
to enter and visit the Property at any reasonable time, after giving reasonable notice to
Borrower, for the purposes of observing the Work. Agency will make reasonable efforts
during any site visit to avoid interfering with Borrower's use of the Property. Borrower
shall also allow Agency to examine and copy records and other documents of Borrower
which relate to the Work. Agency is under no duty to visit the Property, or observe any
aspects of the Work, or examine any records, and Agency shall not incur any obligation
or liability by reason of not making any such visit or examination. Any site visit,
observation or examination by Agency shall be solely for the purposes of protecting
Agency's rights under the Documents.
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(e) Protection Against Lien Claims. Borrower shall promptly pay or otherwise
discharge any claims and liens for labor done and materials and services furnished to
the Property in connection with the Work. Borrower shall have the right to contest in
good faith any claim or lien, provided that it does so diligently and without delay in
completing the Work.
(0 Insurance. Borrower shall provide, maintain and keep in force at all times until
the Work is completed, builder's all risk property damage insurance on the Property,
with a policy limit equal to the full replacement cost of the Work.
(g) Notices. Borrower shall promptly notify Agency in writing of any Default under
this Agreement, or any event which, with notice or lapse of time or both, would
constitute a Default hereunder.
7. Mechanic's Lien and Stop Notices
In the event of the filing of a stop notice or the recording of a mechanic's lien pursuant to
applicable law of the State of California and relating to the Work, Director may
summarily refuse to make any disbursement of the Amount, and in the event Borrower
fails to furnish Director a bond causing such notice or lien to be released within ten (10)
days of notice from Director to do so, such failure shall at the option of Agency
constitute a Default under the terms of this Agreement. Borrower shall promptly deliver
to Director copies of all such notices or liens.
9. Indemnification
(a) Borrower shall indemnify, defend, protect, and hold harmless the Agency and
any and all agents, employees, attorneys, and representatives of the Agency including
Pacific Housing & Finance Agency personnel, Public Finance Solutions & Engineering,
and Connor Energy (collectively, the "Agency Parties"), from and against all losses,
liabilities, claims, damages(including consequential damages), penalties, fines,
forfeitures, costs and expenses (including all reasonable out-of-pocket litigation costs
and reasonable attorney's fees) and any demands of any nature whatsoever related
directly or indirectly to, or arising out of or in connection with, (i) the Documents, (ii) the
disbursement of the Amount, (iii) the Work, (iv) the Equipment, (v) any breach or
Default by Borrower under the Documents, (vi) the Assessment and the Annual
Administrative Assessment, or (vii) any other fact, circumstance or event related to
Agency's extension of the to Borrower or Borrower's performance of its obligations
under the Documents (collectively, the "Liabilities"), regardless of whether such
Liabilities shall accrue or are discovered before or after the disbursement of the
Amount.
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(b) The indemnity obligations described in this Section 9 shall survive the
disbursement of the Amount, the repayment of the , the transfer or sale of the Property
by the Borrower, and the termination of this Agreement.
9. Wavier of Claims
For and in consideration of the Agency's execution and delivery of this Agreement,
Borrower, for itself and for its successors-in-interest to the Property and for any one
claiming by, through, or under the Borrower , hereby waives the right to recover from
and fully and irrevocably releases the Agency Parties from any and all claims,
obligations, liabilities, causes of action, or damages, including attorneys' fees and court
Costs, that Borrower may now have or hereafter acquire against any of the Agency
Parties and accruing from or related to (i) the Documents, (ii) the disbursement of the
Amount, (iii) the performance of the Work, (iv) the Equipment, (v) any damage to or
diminution in value of the Property that may result from the Work, (vi) any personal
injury or death that may result from the Work, (vi) the selection of manufacturer(s),
dealer(s), supplier(s), contractor(s) and/or installer(s), and their action or inaction with
respect to the Work or the Equipment, (vii) the merchantability and fitness for any
particular purpose, use or application of the Equipment, (vii) the amount of energy
savings resulting from the Work and the Equipment, (ix) the workmanship of any third
parties, and (x) any other matter with respect to the Program. This release includes
claims, obligations, liabilities, causes of action, and damages of which Borrower is not
presently aware or which Borrower does not suspect to exist which, if known by
Borrower, would materially affect Borrower's release of the Agency Parties.
BORROWER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR
WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ("SECTION
1542"), WHICH IS SET FORTH BELOW:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." BY
INITIALING BELOW, BORROWER HEREBY WAIVES THE PROVISIONS OF
SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE
SUBJECT OF THE FOREGOING WAIVERS AND RELEASES.
Borrower's Initials
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The waivers and releases by Borrower contained in this Section 9 shall survive the
disbursement of the amount, the repayment of the , the transfer or sale of the Property
by the Borrower, and the termination of this Agreement.
10. Further Assurances
The Borrower shall execute any further documents or instruments consistent with the
terms of this Agreement, including documents and instruments in recordable form, as
Agency shall from time to time find necessary or appropriate to effectuate its purposes
in entering into this Agreement and making the .
11. Events of Default
(a) Subject to the further provisions of this Section 11, the failure of any
representation or warranty of the Borrower contained herein to be correct in all material
respects, or the failure or delay by Borrower to perform any of its obligations under the
terms or provisions of the Documents, shall constitute a default hereunder ("Default").
The Borrower must immediately commence to cure, correct, or remedy such failure or
delay and shall complete such cure, correction or remedy with reasonable diligence, but
in any event, within the time set forth in Sections 11(c) and (d) below, as applicable.
(b) The Agency shall give written notice of default to Borrower, specifying the
default complained of by the Agency. Delay in giving such notice shall not constitute a
waiver of any default nor shall it change the time of default.
The Assessment and the Annual Administrative Assessment, and the
interest and-any penalties thereon, if not timely paid, shall constitute a lien on the
Property until they are paid.
(c) If a monetary event of default occurs, prior to exercising any remedies under
the Documents or the Act, Agency shall give Borrower written notice of such default.
Borrower shall have a period of thirty (30) days after such notice is given within which to
cure the default prior to exercise of remedies by Agency.
(d) If a non-monetary event of default occurs, prior to exercising any remedies
under the Documents or the Act, Agency shall give Borrower notice of such default. If
the default is reasonably capable of being cured within thirty (30) days, Borrower shall
have such period to effect a cure prior to exercise of remedies by Agency under the
Documents or the Act. If the default is such that it is reasonably capable of being cured,
but not within such thirty (30) day period, and Borrower (i) initiates corrective action
within such thirty (30) day period, and (ii) diligently, continually, and in good faith works
to effect a cure as soon as possible, then Borrower shall have such additional time as is
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reasonably necessary to cure the default prior to exercise of any remedies by Agency.
However, in no event shall Agency be precluded from exercising remedies if its security
becomes or is about to become materially jeopardized by any failure to cure a default,
or if the default is not cured within one hundred and twenty (120) days after the first
notice of default is given.
(e) If any Default occurs, then, upon the election of Agency, (i) if there has been
no disbursement of the Amount, this Agreement shall terminate and, except as
otherwise expressly provided herein, the parties have no further obligations or rights
hereunder, or (ii) if the Amount has been disbursed in whole or in part, Agency may
terminate its obligations to make any further disbursement of the Amount and exercise
any or all of the rights and remedies available to it under applicable law, at equity or as
otherwise provided herein.
(f) Any and all costs and expenses incurred by the Agency in pursuing its
remedies hereunder shall be additional indebtedness of the Borrower to the Agency
hereunder, and shall be secured as provided in the Act.
(g) Except as otherwise expressly stated in this Agreement, the rights and
remedies of the Agency are cumulative, and the exercise of one or more of such rights
or remedies shall not preclude the exercise by the Agency, at the same time or different
times, of any other rights or remedies for the same Default or any other Default. No
failure or delay by Agency in asserting any of its rights and remedies as to any Default
shall operate as a waiver of any Default or of any such rights or remedies, or deprive
the Agency of its rights to institute and maintain any actions or proceedings which it may
deem necessary to protect, assert or enforce any such rights or remedies.
(h) Performance of the covenants and conditions imposed upon Borrower
hereunder with respect to the commencement and completion of the Work shall be
excused while and to the extent that, Borrower is prevented from complying therewith
by war, riots, strikes, lockouts, action of the elements, accidents, or acts of God beyond
the reasonable control of the Borrower; provided, however, that such event is not
caused by the fault, negligence or misconduct of Borrower; and provided, further, as
soon as the cause or event preventing compliance is removed or ceases to exist the
obligations shall be restored to full force and effect and Borrower shall immediately
resume compliance therewith and performance thereof.
12. Compliance with Local, State and Federal Laws
Borrower shall perform the Work, or cause the Work to be performed, in conformity with
all applicable laws, including all applicable federal, state and local occupation, safety
and health laws, rules, regulations and standards. Borrower agrees to indemnify, defend
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and hold the Agency Parties harmless from and against any cost, expense, claim,
charge or liability relating to or arising directly or indirectly from any breach by or failure
of Borrower or its contractor(s) or agents to comply with such laws, rules or regulations.
The indemnification obligations described in this Section 12 shall survive the
disbursement of the Amount, the repayment of the , and the termination of this
Agreement.
13. Severability
Each and every provision of this Agreement is, and shall be construed to be, a separate
and independent covenant and agreement. If any term or provision of this Agreement or
the application thereof shall to any extent be held to be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to
circumstances other than those to which it is invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall be valid and shall
be enforced to the extent permitted by law.
14. Notices
All notices and demands shall be given in writing by certified mail, postage prepaid, and
return receipt requested, or by personal delivery (by recognized courier service or
otherwise). Notices shall be considered given upon the earlier of (a) personal delivery or
(b) two (2) business days following deposit in the United States mail, postage prepaid,
certified or registered, return receipt requested. Notices shall be addressed as provided
below for the respective party; provided that if any party gives notice in writing of a
change of name or address, notices to such party shall thereafter be given as
demanded in that notice:
To Agency:
PACIFIC HOUSING & FINANCE AGENCY
1621 W 25th STREET, STE 111
SAN PEDRO, CA 90732
And
PUBLIC FINANCE SOLUTIONS & ENGINEERING
7670 OPPORTUNITY ROAD, SUITE 250
SAN DIEGO, CA 92111
To Borrower:
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15. Attorneys' Fees and Costs
In the event that any action is instituted to enforce payment or performance under this
Agreement, the parties agree that the non-prevailing party shall be responsible for and
shall pay all costs and all attorneys' fees incurred by the prevailing party in enforcing
this Agreement.
16. No Waiver
No disbursement of the Amount shall constitute a waiver of any conditions to the
Agency's obligation to make further disbursements nor, in the event Borrower is unable
to satisfy any such conditions, shall any such waiver have the effect of precluding the
Agency from thereafter declaring such inability to constitute a Default under this
Agreement. No disbursement of the Amount based upon inadequate or incorrect
information shall constitute a waiver of the right of Agency to receive a refund thereof
from Borrower.
17. Governing Law
This Agreement shall be governed by the laws of the State of California. Any legal
action brought under this Agreement must be instituted in the Superior Court of the
County of Riverside, State of California, or in an appropriate municipal court in that
County or in the United States District Court for the Central District of California.
18. Amendment of Agreement
No modification, rescission, waiver, release or amendment of any provision of this
Agreement shall be made except by a written agreement executed by the Borrower and
Agency.
19. Agency May Assign: Role of the Agency
Agency, at its option, may (i) assign any or all of its rights and obligations under the and
this Agreement, and (ii) pledge and assign its right to receive the Assessment, the
Annual Administrative Assessment, and the repayment of the and any other payments
due to the Agency hereunder, without obtaining the consent of the Borrower.
20. Borrower Assignment Prohibited
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In no event shall Borrower assign or transfer any portion of this Agreement or
Borrower's rights or obligations under the Agreement without the prior express written
consent of Agency, which consent may be granted or withheld in the sole and absolute
discretion of the Agency.
21. Relationship of Borrower and Agency
The relationship of Borrower and Agency pursuant to this Agreement is that of debtor
and creditor and shall not be or be construed to be a joint venture, equity venture,
partnership, or other relationship.
22. General
Time is of the essence of this Agreement and of each and every provision hereof. This
Agreement, together with the other Documents, constitutes the entire agreement
between the parties hereto, and there shall be no other agreement regarding the subject
matter thereof unless signed in writing by the part to be charged. If there is more than
one "Borrower," the obligations hereunder of all Borrowers shall be joint and several.
23. Counterparts
This Agreement may be executed in several counterparts, each of which shall be
deemed an original, and all of such counterparts together shall constitute one and the
same instrument.
24. Special Termination
Notwithstanding anything to the contrary contained herein, this Agreement shall
terminate and be of no further force or effect If the Borrower has submitted to the
Director a notice of its decision to cancel this transaction on or prior to the date and time
described in the [Notice of Right to Terminate] which was delivered to the Borrower
upon its execution of this Agreement
IN WITNESS WHEREOF, Borrower and Agency have entered into this Agreement as of
the date and year first above written.
Borrower: Agency:
PACIFIC HOUSING & FINANCE AGENCY
a California Joints Powers Authority
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Date of Execution by Borrower: By:
Name:
Title:
ATTEST:
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EXHIBIT "A"
[ATTACH COPY OF EXECUTED AND APPROVED APPLICATION]
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EXHIBIT "B"
DESCRIPTION OF THE PROPERTY
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EXHIBIT "C"
SCHEDULE OF ASSESSMENT INSTALLMENTS
Maximum Annual
Year Principal Interest Administrative Assessment Total
[To be provided]
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Appendix E: Summary of Process
Definition / Role of Key Participants:
JPA Agency: Pacific Housing and Finance Agency (PHFA). PHFA is the Joint Powers
Authority (JPA) sponsoring the CA PACE Program in which Member Agencies may
participate in. Mr. Dave Elder is the Executive Director for the JPA Agency.
Member Agency: Any Agency or Public Agency that is a member of the Pacific Housing
and Finance Agency (PHFA) Joint Powers Authority. For a complete list of current Member
Agencies please visit our website at www.Aaencvenerqysavings.com.
Bond Underwriter: The municipal bond underwriter, Chilton & Associates, will use its best
efforts for issuing municipal bonds to finance approved property owner energy efficiency s
for participating Member Agencies. The bond underwriter will market the bonds at the
market given then existing bond market conditions. It is possible, if economic situations that
arose in late 2008 and the first half of 2009 were to reappear, that there would be no market
for the Pacific Housing & Finance Agency Energy Improvement Bonds.
Bond Counsel: The municipal bond counsel, Timothy Sabo of Lewis, Brisbois, Bisgaard &
Smith, LLP, is responsible for rending a legal opinion on the municipal bonds issued.
Program Administrator: Public Finance Solutions & Engineering (PFSE) is the program
administrator for the JPA Agency responsible for program administration including property
owner questions, debt administration (including tax roll billing) and Member Agency support.
Energy Verification Agent: Connor Energy is the Energy Verification Agent for the JPA
Agency. The Energy Verification Agent is responsible for two main functions:
1) Qualifying contractors and vendors to participate in the program;
2) Certify that the energy equipment has been properly and securely installed at the
property location.
STEP 1: Defining the Energy and Water Efficiency Improvements
The first step in the process is defining the type of energy efficiency improvements or water
savings equipment to be installed. Property owners can work directly with any approved
contractor (all licensed and insured contractors are eligible to become an approved
contractor) to determine the scope of a project. Property owners should schedule meetings
with approved contractors to discuss proposed Energy and Water Improvements
guarantees and warranties and to get assistance with planning for those Improvements. It is
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encouraged that property owners solicit multiple bids for the work the property owner
desires to have completed.
Most approved contractors will provide property owners with an optional, no-cost, on-site
energy survey (including a no-cost solar site check) to assist property owners in determining
their most effective means for CA PACE Program participation.
Lastly, the property owner obtains an approved contractor's bid or determines the cost of
the equipment construction, and/or installation.
STEP 2: Completing the Program Assessment Financing Application
The property owner may contact the Program Administrator:
Public Finance Solutions & Engineering (PFSE)
7670 Opportunity Rd. Suite 250
San Diego, CA 92111
Call Toll Free: (877) 577-PFSE (7373)
Or download forms at: www.Aqencyenerqysavings.com
Or visit their Agency's local office to request a Program Assessment Financing Application
form (the "Application"). The Program Administrator's staff will provide an Application by
hard copy, e-mail, facsimile, U.S. Mail or web link as requested by the property owner.
Applications and instructions are also available on the web site
(www.Agencyenergysavi ngs.com).
The property owner submits the Application together with its required attachments to the
Program Administrator. The Program Administrator determines whether each Application is
complete and acceptable per Program Administrator guidelines. Incomplete Applications will
not be accepted.
Applications will be processed on first-come, first-served basis.
The complete application submittal shall include:
1) Completed application and requested attachments;
Application Fee Check payable to PFSE for application processing. The
application fee is fully refundable if the application is incomplete.
Application Review
During the Application Review process the Program Administrator verifies that:
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1. The application is complete and accurate;
2. The property owner(s) owns the subject property;
3. The subject property is developed and located in the boundaries of the Member Agency's
defined Program Boundaries;
4. The subject property is not exempt from ad valorem property taxes;
5. The property owner(s) is/are current in the payment of ad valorem property taxes for the
subject property;
6. The property owner(s) has/have declared that the subject property is/are not currently
involved in a bankruptcy proceeding or foreclosure process;
7. The proposed Energy Efficiency Improvements and costs are eligible to be financed
under the Program. If the proposed Energy Efficiency Improvements are part of a project
that includes new construction (e.g., a room addition), the costs of the work have been
properly allocated between retrofitting and new construction;
8. The cost estimate(s) appear to be reasonable;
9. The proposed contractor(s) is/are licensed by the State of California and is/are in good
standing with the Contractors State Licensing Board;
10. The proposed contractor(s) has a current Agency Business License;
11. The requested amount is equal to or greater than $5,000; and
12. CA PACE Program financing is available upon the successful sale of the bonds by the
Pacific Housing & Finance Agency.
Within 15 business days of receipt of an application, the Program Administrator notifies the
property owner if the application is incomplete, or denied.
Incomplete. An application shall be deemed incomplete if it is missing any
information or attachments the property owner is required to provide. Incomplete
applications may be resubmitted. The Program Administrator will process resubmitted
applications on a first-come, first-served basis based upon the new receipt date.
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Denied. An application shall be deemed denied if the Program Administrator cannot
verify any of the items in steps (1) through (12). A property owner may request a written
statement of specific reasons for the denial within 60 business days of the date of
notification of denial. In such case, the Program Administrator will provide such a statement
to the property owner. Denied applications may be resubmitted. The Program Administrator
will process resubmitted applications on a first-come, first-served basis based upon the new
receipt date.
If an application is denied because the cost estimate(s) is/are not deemed reasonable by
the Program Administrator and/or JPA Executive Director, a resubmitted application must
be accompanied by additional documentation of cost estimates as determined in the
Program Administrator and/or JPA Executive Director's discretion, including, but not limited
to, cost estimates provided by one or more additional contractors.
The property owner will not be required to select the low bid; however, the Program
Administrator and/or JPA Executive Director may limit the maximum amount to an amount
deemed reasonable by the Program Administrator and/or JPA Executive Director.
With respect to an application to finance a renewable energy system(s) other than solar
(such as wind or geothermal) or a custom energy efficiency measure(s) (such as a
combined heat and power system cogeneration system), or to finance an emerging
technology, the Program Administrator and/or JPA Executive Director reserves the right to
require the appropriate energy studies showing the energy savings and/or energy
generation capabilities of the proposed project.
STEP 3: Enter into a Contract
Sometime after an Application has been approved, the Program Administrator on behalf of
the Pacific housing & Finance Authority will enter into a contractual assessment agreement
(the " Contract") with the property owner. This will assure the property owner that the
Program Assessment Financing has been approved and that funds will be reserved for the
property owner's approved project if there is a Pacific Housing & Finance Agency bond sale.
Failure of the property owner to execute a Contract within such 10-day period will require
the Application to be resubmitted. The Program Administrator will process resubmitted
applications on a first-come, first-served basis based upon the new receipt date.
Upon execution of a Contract, the Agency records an assessment lien against the subject
property in the Agency offices and the County Recorder's office. The Approval number is
then provided to the Program approved Contractor to commence the installation of the
energy efficiency improvements as specified in the Contract.
STEP 4: Installation of Improvements
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Property owner enters into a contractual arrangement directly with a contractor for energy
and water efficiency improvements unless the property owner is self-installing the
Improvements. All work is subject to the Member Agency's Building Department permitting
and inspections and all other applicable federal state and local laws and regulations. All
work must be completed within 180 days of execution of the Contract.
Progress Payments are not permitted under the Program. However, if the maximum
amount is $20,000 or greater, the property owner may request in writing that the JPA
Executive Director approve a progress payment prior to the completion of the work. The
JPA Executive Director's decision to make a progress payment shall be based on Program
funding availability. Any such decision shall be final.
STEP 5: Final Inspections
Once the Property owner notifies the Program Administrator that all work has been
completed the Program Administrator shall direct the Energy Verification Agent to inspect
the completed work within seven (7) business days of receipt of notification that work is
completed.
Based on satisfactory project completion, the Program Administrator shall direct that bond
proceeds be disbursed to the approved Contractor according to the terms of the Contractor
Installation Agreement with the Energy Verification Agent upon the successful sale of
bonds. Within 90 days after all required paperwork has been received, and all
improvements verified, the Contractor shall be paid in accordance with the Contractor
Installation Agreement.
STEP 6: Annual Payment of Property Taxes
The property owner shall be responsible for the CA PACE Program Assessment Financing
payment included in their annual Property Tax Bill, and shall be collected with and in the
same manner as Property Taxes. The Program Administrator staff annually sends a
database of assessment installments to the County Assessor for collection of the
assessment on the property tax roll.
At any time, the property owner can request a payoff quote at no-charge to pre-pay the CA
PACE assessment lien on the property. Such payoff calculation includes the principal
balance, any bond redemption premiums, interest amounts due, and any administrative
charges if applicable.
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Appendix F: Disclosures
SUPPLEMENTAL DISCLOSURE REGARDING ASSESSMENT FINANCING
FHFA STATEMENT
The City of Palm Springs wishes to inform you of actions taken by the Federal
Housing Finance Agency (FHFA) on July 6, 2010 and Fannie Mae and Freddie Mac
on August 31, 2010, stating that participation in energy assessment programs such as
the California Property Assessed Clean Energy Program (CA PACE) may be in
violation of your mortgage documents.
Such actions by FHFA, Fannie Mae, and Freddie Mac, and some of their implications
for residential property owners participating in the CA PACE Program, are described
in this Supplemental Disclosure. This Supplemental Disclosure provides additional
information for property owners to evaluate in making their informed decision as to the
financing available under a PACE Program
Fannie Mae and Freddie Mac are government sponsored enterprises that purchase a
large segment of single family home mortgages from lenders. On July 6, 2010, the
Federal Housing Finance Agency (FHFA), the federal regulatory agency that oversees
Fannie Mae and Freddie Mac, issued a guidance statement to Fannie Mae and
Freddie Mac. FHFA's statement highlights the provisions in mortgages or deeds of
trust used in connection with Fannie Mae's and Freddie Mac's programs prohibiting a
property owner from incurring a senior lien on the property (such as a CA PACE
assessment) without the consent of the mortgage lender.
In FHFA's view, lenders participating in Fannie Mae and Freddie Mac programs
should treat energy improvement assessments (such as a contractual assessment
levied under the CA PACE Program) differently than assessments levied in connection
with traditional assessment districts. The City of Palm Springs disagrees with this
viewpoint and is working to modify this position. Commencing July 6, 2010, FHFA's
statement directs Fannie Mae and Freddie Mac to enforce the provisions in their
mortgages or deeds of trust prohibiting a property owner from incurring a senior lien
on the property (such as a CA PACE assessment lien) without the consent of the
mortgage lender.
To implement FHFA's July 6, 2010 directives, on August 31, 2010, Fannie Mae and
Freddie Mac issued instruction letters to lenders and servicers of mortgages or deeds
of trust that may be sold to Fannie Mae and Freddie Mac. These letters state that
Fannie Mae and Freddie Mac will not purchase from lenders mortgages or deeds of
trusts for properties with a senior energy assessment lien (such as a CA PACE
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assessment lien). In other words, if your lender wishes to sell or has sold your
mortgage or deed of trust to Fannie Mae or Freddie Mac, your lender has been
instructed by Fannie Mae and Freddie Mac to withhold consent to energy assessment
financing under a program such as the CA PACE Program.
Additionally, in their August 31, 2010 letters, Fannie Mae and Freddie Mac prescribe
new restrictions and regulations on mortgage refinancing options for mortgages or
deeds of trust sold by a lender to Fannie Mae or Freddie Mac with EIP financing
obtained before July 6, 2010.
FOR PROPERTIES WITH MORTGAGES OR DEEDS OF TRUST REGULATED BY
FHFA, ENTERING INTO A CA PACE PROGRAM LOAN AGREEMENT ON OR
AFTER JULY 6, 2010 WITHOUT THE CONSENT OF THE OWNER'S EXISTING
LENDER(S) WILL LIKELY CONSTITUTE AN EVENT OF DEFAULT UNDER THE
EXISTING SECURITY INSTRUMENT (MORTGAGE OR DEED OF TRUST).
DEFAULTING .UNDER SUCH SECURITY INSTRUMENT COULD HAVE SERIOUS
CONSEQUENCES TO THE PROPERTY OWNER, WHICH COULD INCLUDE (1)
ACCELERATION OF THE REPAYMENT OBLIGATIONS DUE UNDER SUCH
SECURITY INSTRUMENT, (II) UNWILLINGNESS OF THE LENDER TO PERMIT
REFINANCING OF THE EXISTING MORTGAGE LOAN UNLESS THE OWNER
FIRST REPAYS THE ENTIRE AMOUNT OF THE CA PACE ENERGY
ASSESSMENT, OR (III) UNWILLINGNESS OF THE LENDER TO PERMIT SALE OR
TRANSFER OF THE PROPERTY UNLESS THE OWNER FIRST REPAYS THE
ENTIRE AMOUNT OF THE CA PACE ENERGY ASSESSMENT.
Before proceeding with your CA PACE Program Application, you should carefully review
any agreement(s) or security instrument(s) (such as mortgages or deeds of trust) which
affect your property or to which you are a party, and contact your lender if you have any
concerns.
A property owner must declare under penalty of perjury in the CA PACE Program
Application that (i) the owner has the authority, without the consent of any third party
which has not been previously obtained, to execute and deliver the loan agreement, the
Application, and the various documents and instruments referenced therein; and (ii) that
executing the loan agreement, receiving the loan proceeds, and consenting to the
assessment levied against the property owner's property will not constitute a default
under any other agreement or security instrument which affects the property owner's
property or to which the property owner is a party.
If you have any questions regarding any agreements or security instruments which
affect your property or to which you are a party, or regarding your authority to execute
the CA PACE Program Application or enter into a loan agreement with the City without
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the prior consent of your existing lender(s), the City strongly encourages you to consult
with your own legal counsel and/or your lender(s). City Staff will not provide property
owners with advice regarding existing agreements or security instruments.
If you still wish to participate in the CA PACE Program, please sign and date this
Supplemental Disclosure Statement.
ACKNOWLEDGEMENT OF RECEIPT
I have received a copy of this Notice. I have received a copy of this Notice.
Property Owner Signature: Property Owner Signature:
Printed Name: Printed Name:
Date: Date:
Attachments: July 6, 2010 Guidance Statement of Federal Housing Finance Agency
(FHFA)
August 31, 2010 Instruction Letter of Fannie Mae
August 31, 2010 Instruction Letter of Freddie Mac
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FEDERAL HOUSING FIN.ANCE AGENCY
YIII A'
STATEMENT
For Immediate Release Contact: Corinne RusseM (^o2*)414-6921.
July 6, 2oio Stefanie M (202)414-0370
FHFA Statement on Certain Energy
Retrofit Loan Progra ins
After careful review and over a year of working with federal and state government agencies,the
Federal Housing Finance Agency(FHF.L)has determined that certain energy retrofit lending
programs present significant safety and soundness concerns that must be addressed by Fannie
Mae,Freddie Mac and the Federal Howe Loam Banks. Specifically,programs denominated as
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 these
programs,such loans acquire a priority lien over existing mortgages,though certain states have
chosen not to adopt such priority positions for their loans.
First liens established by PACE loans are unlike routine tax assessments and parse unusual and.
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.
FHF"A urged state and local governments to reconsider these programs and continues to call for
a pause in such programs so concerns can be addressed. First liens for such loans represent a
key alteration,of traditional mortgage lending practice. They present significant risk to lenders
and secondary market entities,may Ater valuations for mortgage-backed securities and are not
essential for successful programs to spur energy conservation.
lisle the fit lien position offered in.most PACE programs minimizes credit risk for investors
funding the programs,it alters traditional lending priorities. Underwriting for PACE programs
results in collateral-based lending rather than lending based upon ability-to-pay,the absence of
Truth.-in-Lending Act and other consumer protections,and uncertainty as to whether the home
improvements actually produce meaningful reductions in energy consumption.
Efforts are,just underway to develop underwriting and consumer protection standards as well
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 leading priorities,the absence of robust
urnden citing standards to protect homeowners and the lack of energy retrofit standards to
assist homeowners, appraisers, inspectors and lenders determine the value of retrofit products
combine to raise safety and soundness concerns.
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I:'`m.:cllc.n[c.. Jmcgricy. Rvwhl .
Can May 5, 2010,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 wvhere 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 beyondthe experimental stage. Those
lender letters remain in effect.
Today, FHFA is directing Fannie Mae,Freddie Mae and the Federal Home Loan Banks to
undertake the following prudential actions:
i. For any homeowner who obtained a P.A,CE,or PACF like loan with a priority first lien
prior to this date, FHFA is directing Fannie Mae and Freddie Mae to waive
their Uniform Security Instrument prohibitioias 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 bran
amount available to borrowers in PACE jurisdictions;
-Ensuring,that loan covenants require approval/consent for any PAGE loan;
"Tightening borrower debt-to-income ratios to account for additional obligations
associated with possible future PAGE 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.
3. The Federal Home Loan Bans 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 affects 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
wvorldng 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..
* 0
The Federal Housing Fi►ranceAgetwy regalates Fannie ltfae,Freddie 3lac and the 1.2 Federal Horne Loan Banks.
These goner n anent-sp rasored enterprises provide More than$5.9 trdhon in fundingfor the U.S.Mortgage Tnarketg
Ca J2L°I fi n Ca nci a!'ruds titu tions.
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PVSI.IC.FINANCE SOLUTIONS
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1'•%4'CI'ti.i'sKC- aX'16C(„flCa'. I�L'kYl IYF.
Announcement EEL-2010-12 August 31, 2010
Options for iBorrowers with a PACE Loan
n July 6, 2010, the Federal Housing Finance Agency (FHFA) issued a .statement regarding
Property Assessed Clean Energy (PACE) loan programs. PACE loans are made by localities to
finance residential energy improvements and are generally repaid through the homeowner`s real
estate tax bill'. In its July S statement„ FHFA advised that PACE programs that provide for
automatic lien priority over mortgage loans pose safety and soundness risk to mortgage
investors.
The purpose of this Announcement is to issue additional lender requirements to address these
risks, and to issue special instructions regarding Fannie Mae borrowers who obtained PACE
loans prior to .July 6, 20,10. The Selling Garde will be updated to incorporate these policy
changes at a future date.
uirements for PACE tons r�ri gin prior two July 6, 2010
Fannie Mae is implementing specific requirements for lenders: regarding rrowers who
obtained PACE towns prior to July 6, 201D, These requirements are intended to address safety
and soundness concerns caused by PACE loans originated prior to the issuance of statements
by FHFA and other banking regulators.
Fannie Mae is waiving the uniform security instrument prohibition against. PACE loans with lien
priority for whole loans purchased before ,July 6., 2010 and: for foams in an MBS pool with an
issue date on or before July 1, 2010.
Additionally, the following requirements apply to borrowers with loans that are [awned or
securitized by Fannie Mae who seek to refinance and who obtained a PACE loan prior to July 6,
2010, To mitigate the risk posed by PACE obligations that take lien priority over the mortgage,
Fannie Mae is requiring that borrowers with sufficient equity pay off the existing PACE obligation
as a condition to obtaining a new mortgage loan. If a lender determines that,a 'borrower does
not have sufficient equity to pay off the existing PACE obligation, the lender may underwrite the
loan as described in the second bullet below. This "waterfall" approach is designed to mitigate
Fannie Mae's exposure, while avoiding borrower hardship-
Lender must first attempt to qualify the borrower for either a cash-out or limited cash-out
refinance option, with the PACE loan being paid off as part of the refinance. The prohibition
against using the proceeds of a limited cash-out refinance to pay off a loan not used to
purchase the properry will not apply. (See the Selling Guide, 132-l_2-f12, Limited Cash-Out
Refinance Transactions,for structure and eligibility requirements_)
• If the borrower is unable to qualify+for a cash-out or limited cash-out refinance with sufficient
proceeds to pay off the PACE loan, the lender may underwrite the loan as a limited cash-
out refinance, DU Refi Plus , or Refi Plus' loan„ ,as applicable, with the PACE loan
remaining in place. In these cases., it will not be necessary to include the PACE loan in the
calculation of the combined loan-to-value ratio, however the PACE loan payment must be
included in the monthly housing:expense calculation.
Announcement SEL-2010-1.2 Page 1'.
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fi,xceflence, hilegrity. Results.
Note: The PACE loan must be included on the Uniform Residential Loan Application (Form
1003) as an installment debt with the balance ,and payment reflected. It the PACE loan will not
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 which
the PACE loan is being paid off with mortgage proceeds,, these transactions must be manually
underwritten-
Requilremonts for,PACE loans originated on or after July 6, 2010
Fannie Mae will not purchase mortgage loans secured by properties with an outstanding PACE
obligation unless the terms of the PACE program do not permit,priority over first mortgage liens-
Lenders are responsible for monitoring state and local law to determine whether a jurisdiction
has a PACE program that provides for lien prority_
Fannie Mae supports the need for programs to help homeowners fund energy efficiency
improvements, and believes it may be accomplished without altering the lien status of first.
mortgages- In the event that PACE or similar programs with automatic lien priority proliferate,
Fannie Mae will consider further limitations as necessary to address safety and soundness
concerns posed by PACE programs, in line with the ,July 6 FHFA statement. These restrictt3ns
may include tightening borrower debt-to-income ratios or learn-to-value ratios in jurisdictions
offering such programs.
Effective Date
This Announcement is effective immediately.
Lenders who have questions about this Announcement should contact their Customer Account
Team.
John S- Forlines
Vice President.
Single-Family Chief Risk Officer
Announcement EL-2010-12 Page 2
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f.xe:�-1SenGr.. dnle.g6ty°. Resi,hsn
�F,Wfe(Ue
Mac
We make home possible,, Bulletin
NITNiBER: 2I1 -20
TO- Freddie Mac.Sellers and dicers August 31,2010
SUBJECT. MORTGAGES SECURED BY PROPERTIES WITH AN OUTSTANDING
PROPERTY ASSESSED CLEAN ENERGY(PACE)OBLIGATION
;5t7agla-Fa m,dy SallerlServicer Guide(Ciuide")Bulletin provides guidance to our Seller cers
regarding Freddie Mac's purchase of Mortgages secured by properties with a Property Assessed dean
Energy(PACE)or PACE-like obligation.
BACKGROUND
In our Industry Letter dated May 5. 2010,First Lien Iiaarrgc s a d'.g`herD,EfficientLoans.Freddie Mac
reminded Sell /Servicers that an energy-related lien may not be senior to any Mortgage delivered to
Freddie Mac.We also indicated that we would provide additional guidance regarding our requirements on.
energy retrofit lending programs in the future;should they prove beyond the experimental stage.
On July fi,2t11Q,the:Federal Housing Finarice Agency(FBFA).issued a Statement on Certain Energy
Retrofit Loan programs, such as PACE programs C"the FHFA Statement''.The FHFA Statement advised
that First Liens offered by most PACE programs,"rose unusual and difficult risk management challenges
for lenders.senicers and mortgage securities investors,"and change customary lending priorities.
The FHFA Statement further provides,that First Lim created by PACE grogram raise safety and
soundness concerns-Other regulators share;these.concerns.For example,a Bulletin issued July 6,2010 by
the Office of the Comptroller of the Currency(OCC 201 -25)states_ :"This lien infringenient raises
significant safety and soundness concerns that mortgage lenders and investors must consider-"
Freddie Mac supports the goal of encouraging responsible financing of energy efficient and renewable
energy home improveinents.and we believe this goal may be achieved without altering the lien priority
status of first Mortgages or other undenkTiting requirements. To the extent necessary to mitigate greater
risks associated with PACE and PAGE-like programs.Freddie Mac will take additional actions. 'These
actions could include adjusting loan-to-value and debt-to-income ratios for Mortgages secured by
properties located in jurisdictions that permit such programs.
REQUIREMENTS
The requirements of this Bulletin apply to PACE obligations that provide for First Lien priority.
Mortgages secured by properties subject to FACE obligations that provide for First Lien priority
Freddie lilac will not purchase Mortgages secured by properties subject to PACE obligations that provide
for First Lien priority. Sellcr/Servicers are re ponsible.for monitoring Mate and local laws to determine
whether a jurisdicticiu has a PACE program that provides for First Lien priority.
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Excellence. I n tegri tp. Ites i.J t5.
Mortgages secured by properties subject to PACE obligations originated before July 6, 2010 that
provide for First Lien priority
For Mortgages with Freddie lilac Settlement Dates before July;-6,2010 that are secured byproperties
subject to PACE obligations originated before July 6,2010 that provide for First Lien priority,
Freddie Mac will waive the Uniform Security Instrument requirement that these obligations be
subordinate to the First Lien. Otherwise, our requirements regarding Mortgages secured by properties
:subject to PACE obligations that provide for First Lien priority remain unchanged.
Refinance of Mortgages secured by properties subject to PACE obligations originated before
July 6, 2010 that provide for First.Lien priority
To mitigate the risk posed by PACE obligations that provide for First Lien priority over the Mortgage,we
are implementing additional requirements with respect to the refinance of Mortgages with.Freddie Mac.
Settlement Dates before July fir.2010 that are secured by properties subject to PACE.obligations
originated before July 6.'2010 that provide for First Lien priority
For such Mortgages(except when refinanced under Freddie Mac's Relief Refinance Mortgages
sm
offering as described below),Freddie Mac will require that Borrowers who have sufficient equity pay oft"
the existing PACE obligation in Rill as a condition to obtaining a new Mortgagee.In addition, Sellers must
qualify the Borrower using the steps below that are designed to.inifigate Freddie Mac's exposure and
„iinini�e Borrower hardship-
■ Sellers nitast first attempt to refinance the Mortgage either as:
ca A cash-out refinance Mortgage under the requir=ients of Guide Section'24.6.Requirein ent5 far
Cash-Ovt ofmance Mortgages, or
❑ A "no cash-out"refinance Mortgage under the requirements of Guide motion`4.5,Requirmients
frar "no,cases-our"r efinanct,Mortgages,except that pay-off of the PACE obligation win be.
permitted in the same iminner that secondary financing that is used in its entirety to purchase the
subject property may be paid oft'
Proceeds from the ca sh-out refinance Mortgage or the"no cash-out' refinance Mortgage must be.
used to pay off the.PACE.obligation in full_
• If the Mortgage does not mee the requirements for a cash-out refinance Mortgage or a"no cash-out '
refinance Mortgage, as described above,,with sufficient proceeds to pay off the PACE obligation in
frail,the Seller may their underwrite the Mortgage tinder Freddie Mac's Relief Refinance Mortgage sm
—Open Access offering under the requirements of Guide Chapter B24,Freddie Mire ReliefReflinance
ortgag .s --OpenAccess,txith the PACE obligation remaining in place.In underwriting under
such offering,it will not be necessary to include the PACE obligation in the calculation of the total
loan-to-value ratio-,however,the PACE obligation must be included in the monthly debt paymew-to-
income ratio..
For Relief Re once Mortgages s-Open Access,when.the PACE obligation remains in place,in
addition to complying With the specill deliVely requirements provided in Chapter B2.1, the Seller
must deliver special characteristics code"H2&"
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PUBLIC FINANCE SOLUTIONS
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Fxed once, Integrity. Results.
GUIDE REVISIONS
Applicable Guide sections will be updated in a future Bulletin to reflect these changes-
CONCLUSION
If you have any questions,please contact your Freddie Mae representative or call(800)FREDDIE.
Sincerely,
Patricia J.McChm
Vice President
Offdmp Maw gment
Appendix G: CA PACE Program Highlights
M1 •
California Property Assessed
Clean Energy Program
PACE PROGRAM HIGHLIGHTS
Program Benefits for Property Owners:
• No money down, no credit check, provides for easy assessment
financing for energy saving equipment
• Provides a low, fixed-rate
Program Benefits for the City of Palm Springs:
• Create and stimulate the local economy through job growth
• Provides a facility to retrofit thousands of homes and business properties,
improving the community and increasing values
• No costs to join or have the City of Palm Springs participate
Property Owner Requirements:
• Current on Property Taxes.
• Maximum Financing not to exceed Assessed Land Value
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Excellence. Integrity. RL'SIIl I5.
• No Negative Equity Financing
• Application fee of $395 for residential. Add $.02 per square foot for commercial
properties.
Terms of Financing:
• Length of financing: Lesser of useful life of equipment or 20 years, j
whichever is less.
• Financing Rate: Taxable Bond Rate + 1 .5%
Eligible Property Owners:
• No Bankruptcy.
• Property Ownership. Property owners may be individuals, associations, business
entities, cooperatives, and virtually any owner paying real property taxes.
• Current on Payments. A property owner needs to be current in the payment of
property taxes and current on any mortgages on the parcel.
Program Administrator:
Public Finance Solutions & Engineering
www.PFS-Engineering.com
PUBLIC F'INANCIC SOLD IONS
`"""""'"`7670 Opportunity Road, Ste 250, San Diego CA 92111 °
E±xcnllnnar.InAcgzly.ftnulan.
TEL: (877) 577-PFSE (7373)
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