06-18-10 BPU RPT 14 - Laserfiche WebLink

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RIVERSIDE PUBLIC UTILITIES F Board Memorandum BOARD OF PUBLIC UTILITIES DATE: June 18, 2010 ITEM NO: 14 SUBJECT: TEMPORARY USE OF ELECTRIC FUND RESERVES TO FUND E-HELP PRIOR TO BOND ISSUANCES ISSUE: Proposal for temporary use of $10 million of Electric Fund reserves to fund Energy High Efficiency Loan Program (E-HELP) prior to issuing bonds to replenish the reserve fund. RECOMMENDATION. That the Board of Public Utilities recommend that the City Council: 1. Approve establishing a $10 million Electric Fund reserve to provide initial funding for the E-HELP Sustainable Energy Financing District prior to issuing bonds to support the program and replenish use of the reserves, with direction to Public Utilities General Manager to suspend use of such reserve funds should legislation adversely impact repayment of such funds by the E-HELP participant; and. 2. Adopt the appropriate resolution for the reimbursement of such funds from a future bond issuance. BACKGROUND: On May 25, 2010, the City Council adopted a resolution for the formation of a Sustainable Energy Financing District and an ordinance to levy special taxes on parcels that annex into the Special Tax District established to provide special tax financing for the installation of energy efficiency improvements, including but not limited to solar installations, for residential and commercial customers under the E- HELP program. District formation is anticipated to be completed and the program cleared to commence on July 1, 2010. The new, Special Tax District would be citywide but would apply only to those property owners who chose to "opt-in" to the program in order to borrow money for the installation of these energy efficiency measures. Assembly Bill (AB) 811 is the enabling legislation that allows municipalities to form the voluntary financing districts by altering Chapter 29 of the Highways and Streets Code. Unlike AB 811, the E-HELP program amended the Riverside Municipal Code which is an option only available to a Charter City. An advantage of the Charter City finance model is that the City is senior to the mortgage lender in the event of default. By opting into the program, property owners authorize a special tax assessed on their property tax bills for up to 20 years as repayment of the loan. If the assessments are used to secure bond financing, any default by a property owner requires the City to foreclose on the property to cure the default. Robust participation in this program is anticipated, and ensuring adequate funding to avoid program interruption will be a key component of program success. Because customer participation and program success is impossible to predict, staff recommends using $10 million of Electric Fund reserves to finance initial participation after depletion of the Public Benefits funding.