On November 6, 2012, California voters passed Proposition 39, an initiative that changes the existing corporate tax structure and promises to funnel resulting revenues toward energy efficient project financing. Prop. 39, known as the California Clean Energy Jobs Act, requires out-of-state corporations to pay income tax based on a percentage of California-based sales. Previously, such corporations could choose to base their tax liability on physical presence in the state rather than actual sales income, resulting in reduced income taxes for corporations with limited numbers of employees or facilities in California.
The details of how the funds will be disbursed have yet to be decided, but the topic is already being discussed in the state Legislature. In the first week of December, legislators introduced three bills focusing on the implementation of the Act: AB 29, a spot bill that would use a portion of the funds to create three revolving loan funds for the University of California, the California State University and the California Community Colleges for energy efficient retrofit projects and clean energy installations; AB 39, a bill similar to AB 29 for K-12 schools; and SB 39, which seeks to direct half of the Act’s revenues to retrofit schools and government buildings with energy savings and related “green” technology modifications.
In addition to the opportunities created by the Clean Energy Job Creation Fund, the California Energy Commission (“CEC”) is offering financing and technical assistance opportunities to school districts for energy efficiency and energy generation projects. Over $22 million in loan funds are available through the CEC’s Energy Conservation Assistance Account ("ECAA"). According to the CEC, loans will be offered at a low interest rate of 1 percent for these energy related projects; applications will be accepted on a first-come, first-served basis. While the loans are capped at $3 million per application, applicants may use the loans in conjunction with other funding, rebates, and incentives. Upon approval, loan funds are only disbursed on a reimbursement basis; a district must submit receipts and invoices for incurred expenses with proof of payment in order to receive funds. However, the loans present an excellent financing opportunity for districts because they provide a fixed rate, a relatively simple application, no credit approval, no collateral, no fees, and the repayment schedule is based on annual energy savings to be paid back within 15 years.
The CEC also announced the reopening of its Bright Schools Program, which provides technical assistance to California’s K-12 public schools to help them identify energy savings opportunities. The technical assistance can be used for existing schools or new school construction. Consultants can provide a wide range of assistance including conducting energy audits, identifying cost-effective energy-saving measures, assisting with contractor or architect selection, and providing design consultation for new or existing construction plans. The Bright Schools Program pays up to $20,000 in consultants’ costs, depending on the facility size and scope of the project. There is no final filing date for Bright Schools applications, but program funds are limited and applications are accepted on a first-come, first-served basis.
We encourage all districts considering energy efficiency upgrades, especially for existing older buildings, to take advantage of these new and renewed financial opportunities. As you are aware, funding from these programs gets used up rapidly.
For more information about energy efficiency financing and planning energy-related projects, please contact one of our six offices.
If you have any questions regarding this matter, please call one of our six offices.
F3 NewsFlash prepared by Paul Thompson, Kathleen McKee, Kelley Owens and Jim Traber.
Paul Thompson is a partner in the F3 Sacramento office.
Kathleen McKee is a partner in the F3 San Diego office.
Kelley Owens is an associate in the F3 San Diego office.
Jim Traber is an associate in the F3 Sacramento office.
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