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Home My WebLink AboutStaff ReportCITY OF NATIONAL CITY, CALIFORNIA COUNCIL AGENDA STATEMENT MEETING DATE: August 19, 2014 AGENDA ITEM NO. ITEM TITLE: Resolutions of the City Council of the City of National City authorizing the City of National City to opt into three Property Assessed Clean Energy (PACE) Programs to enable property owners in the City to access financing for energy and water conserving improvements through a voluntary contractual assessment program. A. HERO Program — Resolution of the City Council of the City of National City, 1) consenting to the inclusion of properties within the City in the California HERO Program, 2) approving an amendment to the Joint Powers Agreement of the Western Riverside Council of Governments adding the City as an Associate Member and providing for the indemnification of the City, and 3) authorizing the Mayor to execute the amendment. B. CaliforniaFirst Program — Resolution of the City Council of the City of National City, 1) authorizing the City to join the CaliforniaFIRST Program, and 2) authorizing the Mayor to execute an Indemnification and Insurance Agreement between the City and Renewable Funding, LLC, which is the administrator of the CaliforniaFIRST Program. C. Figtree PACE Program — Resolution of the City Council of the City of National City approving the Associate Membership by the City in the California Enterprise Development Authority and authorizing the Mayor to execute the Associate Membership Agreement; and Resolution of the City Council of the City of National City, 1) consenting to the inclusion of properties within the City in the Figtree PACE Program, and 2) authorizing the Mayor to execute an Indemnification Agreement between the City and Figtree Company, Inc. which is the administrator of the Figtree PACE Program. PREPARED BY: Raymond Pe PHONE: 336-4421 EXPLANATION: PACE allows a property owner to access capital for energy and water retrofits and repay it as an assessment on their property tax bill. PACE is attached to the property itself; it is not considered a debt of the property owner. As title to the property transfers upon sale, so does the PACE assessment. PACE enables property owners to borrow funds for terms that match the useful life of the retrofit, typically 10 to 20 years. Therefore, a PACE funded retrofit can often be designed such that the annual energy and water cost savings covers the annual assessment payments. In this manner, a property owner can make their building more efficient without any cash outlay or diminishina their ability to borrow for their primary business needs. DEPARTMENT: Planning Division APPROVED BY: FINANCIAL STATEMENT: APPROVED: ACCOUNT NO. Not Applicable APPROVED: MIS ENVIRONMENTAL REVIEW: This activity is not a project as defined in Section 15378 of the California Code of Regulations and, therefore, no further action is required under the California Environmental Quality Act. ORDINANCE: INTRODUCTION: FINAL ADOPTION: Finance STAFF RECOMMENDATION: Adopt resolutions to opt into three Property Assessed Clean Energy (PACE) Financing Programs. BOARD / COMMISSION RECOMMENDATION: Not Applicable.) ATTACHMENTS: 1. Background Report Attachment 1 BACKGROUND REPORT PACE allows a property owner to access capital for energy and water retrofits and repay it as an assessment on their property tax bill. PACE is attached to the property itself; it is not considered a debt of the property owner. As the property transfers upon sale, so does the PACE assessment. PACE enables property owners to borrow funds for terms that match the useful life of the retrofit, typically 10 to 20 years. Therefore, a PACE funded retrofit can often be designed such that the annual energy and water cost savings covers the annual assessment payments. In this manner, a property owner can make their building more efficient without any cash outlay or diminishing their ability to borrow for their primary business needs. PACE's reliance on the special tax assessment system means that local government must take affirmative steps to establish one or more PACE programs before it is available to property owners within the jurisdiction. Jurisdictions must create their own PACE district or join an existing program run by other jurisdictions or a Special District, generally a joint powers authority (JPA). Building retrofits produce a number of benefits that do not generate payback for the private property owner, but nonetheless carry significant public benefit: • Reduce carbon emissions, • Save natural resources, • Reduce grid dependence, • Stimulate local economies by generating green jobs, • Increase property values, • Enhance building safety. In 2012, the City of National City approved a Climate Action Plan (CAP) aimed at bringing National City's carbon emissions to 15 percent below 2005 levels by 2020. The CAP specifies five measures to mitigate emissions from existing buildings including measure A1.a.4: "Adopt an energy financing program to encourage energy efficiency retrofits in existing buildings." The proposed resolutions would make multiple PACE financing options available to National City property owners who choose to participate. Jurisdictions have the option of creating their own PACE program or joining an existing program run by a Joint Powers Authority (JPA). There are three such JPA programs available statewide. All of the other jurisdictions in San Diego County have all joined at least one JPA PACE program and most have opted into multiple programs. Creating National City's own PACE program would require significant resources to setup and operate and could leave the City exposed to greater liability. The three JPA-run PACE programs allow National City to make PACE available while requiring virtually no City staff time to administer the programs. The JPAs are responsible for all set up, operational, and administrative functions. The City can optionally employ resources to support enhanced program marketing and outreach as 1 determined by the City. The table below summarizes the three JPA PACE programs: CaliforniaFIRST Figtree PACE HERO Program JPA: CSCDA CEDA WRCOG PACE Provider / Administrator: Renewable Funding Figtree Financing Renovate America; Samas Capital (commercial) Jurisdictions Participating: 183 58 158 Transactions Completed: 2 / $260,000 2 / $2,500,000 12,941 / $245,000,000 Transactions Pending: 94 / $64,000,000 15 / *not available 25,943 / $1,040,000,000 Process to Join a JPA-run PACE Program There are four general steps to make a JPA-run program available to property owners. 1. Membership — The City must first become a member of the JPA if it is not already. 2. Opt -Into Program — A resolution is required to authorize the JPA to operate the program in the city. 3. Indemnification — The City must agree to provisions that limit its liability. 4. Judicial Validation — Judicial validations must be completed prior to launch. Each of the three programs differ in how they proceed with these four steps. This is a result of a few factors, including: whether the City is already a member of the JPA, how the JPA is structured, and how these PACE programs evolved over time. The specific agreements and resolutions required for each PACE program are described below under the heading for each program. All three PACE programs practice judicial validation before any transactions are completed in a jurisdiction. Judicial validation is a tool to decrease legal risk by filing a court action requesting a judge review the legal foundation of a matter. In the case of two JPA-run PACE programs, CaliforniaFIRST and Figtree PACE, statewide validations have already been completed that cover National City. For the HERO program, validations are filed in batches as new jurisdictions join. If approved by this Council, WRCOG is expected to file a judicial validation covering National City at the end of September. HERO program representatives estimate that the validation will be complete by January, at which time the program will go live. 2 HERO PACE Program The Western Riverside Council of Governments (WRCOG) is a regional association of local governments in Western Riverside County formed in 1991 to coordinate regional and inter -agency issues. The JPA launched the HERO program in December 2011 for residential properties and in December 2012 for commercial properties. The program is administered by Renovate America for residential properties and by Samas Capital for commercial properties. Renovate America is based in the City of San Diego. Residential HERO was the first residential PACE program to launch following the Federal Housing and Finance Administration's (FHFA) July 2010 statement citing concerns about PACE's impact on the mortgage market. After the program experienced rapid uptake, approving thousands of applications and funding tens of millions of dollars in its first year, WRCOG amended its JPA agreement, opening Associate Membership to jurisdictions statewide to participate in their PACE program. As the program has expanded to new jurisdiction, Renovate America has continued to report rapid uptake, which they attribute to their simplified product offering, software and service alignment with contractor's business models. HERO program representatives report that as a result of the program, many thousands of green jobs have been created as participating contractors have seen their businesses grow. Long- term funding is raised by packaging PACE loans into securities and selling them. In April 2014, Deutsche Bank sold the first securities constructed for $103 million in residential PACE loans from Renovate America's HERO program. To make the HERO program available within National City, a single resolution is required to authorize the program. The resolution includes an attached agreement between WRCOG and National City, where National City would agree to terms of Associate Membership under an Amendment to the WRCOG JPA Agreement. Indemnification provisions are included in the agreement. Council would need to authorize the Mayor to execute this agreement. CaliforniaFIRST PACE Program The California Statewide Communities Development Authority (CSCDA) was created in 1988 to provide California's local governments with an effective tool for the timely financing of community -based public benefit projects. National City and more than 500 cities, counties and special districts in the state are Program Participants to CSCDA — which serves as their conduit issuer and provides access to an efficient mechanism to finance locally -approved projects. CSCDA contracts with Renewable Funding to offer the CaliforniaFIRST PACE program. Renewable Funding began accepting applications for the CaliforniaFIRST commercial PACE program in July 2012. The commercial program opened funding to any qualifying lender that the property owner chooses; the property owner is responsible for negotiating and comparing terms. Little outreach and marketing is provided locally. CaliforniaFIRST has not yet fully funded any commercial projects in 3 San Diego County as of mid -June 2014, although they reported there were transactions in the final stages. On the residential side, Renewable Funding is rolling out a program for homeowners and expects to offer it countywide to all contractors by mid -September 2014. To participate in CaliforniaFIRST, as National City is already a member of CSCDA, a single resolution is required which authorizes CSCDA to operate the program within the City. Council authorization is also requested for the Mayor to sign the indemnification agreement between National City and Renewable Funding. Figtree PACE Program The California Association For Local Economic Development (CALED) established the California Enterprise Development Authority JPA (CEDA) to address gaps in economic development financing. Specifically, CEDA's goal is to issue industrial development bonds (IDBs) for small- to medium-sized California manufacturers. IDBs are a powerful incentive for business expansion and location. CEDA also issues 501(c)3 Non -Profit bonds and has recently seen success in refinancing existing debt for non-profit businesses such as private schools, community centers, and health clinics. CEDA contracted with Figtree Financing to offer PACE programs to member jurisdictions. Figtree is based in the City of San Diego and focuses primarily on commercial properties. Figtree was the first firm to successfully combine multiple pre - approved commercial PACE projects into a pooled bond. They also offer customized owner -arranged financing similar to CaliforniaFIRST, and in early 2014 they raised a pool of funding out of which they are now able to fund projects as they qualify, branded as "OnDemand PACE Financing." Figtree aims to launch a broad PACE financing product for homeowners in 2015. Their financing is currently available to residential properties with no mortgages or with loans that do not meet FHFA lending criteria (jumbo loans). In order to make the Figtree PACE program available in National City, Council will need to approve two resolutions and authorize two agreements. One resolution is required for Associate Membership in CEDA, along with signature of the Associate Member Agreement. Another resolutions is required to join the Figtree PACE program. Finally, staff requests Council's authorization for the Mayor to execute an indemnification agreement between Figtree Company and National City. Issues with PACE's Senior Lien Status PACE assessments, like other special assessments and property taxes, have senior lien priority over mortgages in the event of foreclosure. The federal regulators that oversee commercial and residential mortgages have expressed concern over how the first lien status of PACE affects the position of mortgage holders and suggested that they take corrective measures. Commercial and residential PACE programs address these risks by undergoing judicial validations and instituting certain program rules. Commercial PACE programs, including the three JPA programs before Council, address this by requiring that property owners communicate with their mortgage 4 holders with the details of the PACE lien to be placed on their property. The residential HERO program addresses these issues by providing disclosures designed to inform property owners of potential risk, including having to pay off the balance of their PACE assessment, and even having their mortgage accelerated. In Sonoma County, homeowners have sometimes been required to pay off their PACE assessment upon sale or refinance; however, HERO reports that none of their borrowers have been required to do so. Regarding mortgage acceleration, this measure has never been enforced. California government officials are actively communicating with FHFA and taking additional steps to address their concerns. In 2014, California established a PACE Loss Reserve Fund to compensate mortgage holders for any losses associated with a PACE lien in the event of foreclosure. The reserve pool is guaranteed up to $10 million on a first -come, first -served basis. The FHFA acknowledged the program in 2014 but stated they have not changed their position. In California, over 170 jurisdictions have decided that the benefits of residential PACE outweigh the risks and have opted to create their own program or join an existing program. Recommendation Staff recommends that Council take the following actions: 1. Approve a resolution seeking inclusion in the California HERO Program and an amendment to the WRCOG Joint Powers Agreement establishing National City as an Associate Member. 2. Authorize the Mayor to execute the JPA Amendment with WRCOG, establishing National City as an Associate Member. 3. Approve a resolution authorizing CEDA, through Figtree Energy Financing, to offer their program and levy assessments within the City of National City. 4. Approve a resolution to join the CEDA JPA as an Associate Member. 5. Authorize the Mayor to execute the Indemnification Agreement with Figtree Company. 6. Authorize the Mayor to execute the Associate Membership Agreement with CEDA. 7. Approve a resolution authorizing the CSCDA JPA to offer the California FIRST program and levy assessments within the City of National City. 8. Authorize the Mayor to execute the Indemnification Agreement with Renewable Funding. This action would make available the three JPA-run PACE programs to property 5 owners within National City, namely, CaliforniaFIRST, Figtree PACE, and the HERO Program. Doing so will make PACE financing available to property owners in National City in order to facilitate water and energy saving building retrofits. Opting into existing JPA- run PACE programs rather than establishing a new standalone program requires fewer resources, makes PACE available more quickly, reduces program risk, and puts less of a participation burden on contractors, property owners and banks. Giving property owners (and contractors) multiple PACE options allows each to decide which program is best for their individual needs. This will help foster an innovative and competitive market for PACE financing services. As additional PACE program options become available, staff recommends that National City enable property owners to access those programs, provided they meet the following basic requirements: • There is minimal cost to National City. • There is minimal ongoing administrative burden to National City. • Participation does not inordinately expose National City to risk. • Participation does not inordinately expose National City property owners to risk. Fiscal Impact There will be no direct impact on the General Fund of the City. Staff time associated with consideration and adoption of this action is reimbursable via SDG&E's Emerging Cities Grant. Additional staff time is absorbable. Minimal staff time is anticipated to assist with the implementation of the programs and track their progress. Additional staff time would be needed to bring future PACE program options before Council for consideration. Attachments 1. PACE Policy Memo. 2. HERO California Residential Handbook, December 17, 2012. 3. Resolution Number 4-13, Resolution of the Western Riverside Council of Governments Declaring its Intention to Finance Distributed Generation Renewable Energy Sources, Energy and Water Efficiency Improvements and Electric Vehicle Charging Infrastructure Through the Use of Voluntary Contractual Assessments Pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code and Setting a Public Hearing Thereon (California HERO Program). 4. Amendment to the Joint Powers Agreement Adding the City of National City as an Associate Member of the Western Riverside Council of Governments to Permit the Provision of Property Assessed Clean Energy (PACE) Program Services within National City. 6 5. CaliforniaFIRST Program Report, County of San Diego (as of March 8, 2010). 6. California Statewide Communities Development Authority Resolution 10R-7, Resolution Declaring Intention to Finance Installation of Distributed Generation Renewable Energy Sources, Energy Efficiency and Water Efficiency Improvements, County of San Diego. 7. Indemnification and Insurance Agreement between the City of National City and Renewable Funding, LLC, the administrator of the CaliforniaFIRST Program. 8. Figtree PACE Program Report, Revised: June 4, 2014, minus the Boundary Maps of the Participating Agencies in Exhibits A-1 through A-47. 9. Resolution No. 13-39, Resolution California Enterprise Development Authority Declaring Intention to Finance Installation of Distributed Generation Renewable Energy Sources, Energy Efficiency and Water Efficiency Improvements in the County of San Diego. 10 Associate Membership Agreement between the California Enterprise Development Authority and the City of National City adding the City of National City as an Associate Member. 11.Indemnification Agreement between the City of National City and Figtree Company, Inc., the administrator of the Figtree PACE Program. 8 ATTACHMENT 1 9 POLICY MEMO Prepared for City of National City, CA ENABLING PROPERTY ASSESSED CLEAN ENERGY (PACE) FINANCING DULY 2014 LESAR•DEVI:L`-� CONSULTANTS Prepared for City of National City by: LeSar Development Consultants Eric Engelman, Energy Policy Consultant 619-800-3405 eric.engelman@gmail.com www.LeSarDevelopment.com 10 Policy Memo: Enabling PACE Financing in National City Acknowledgements Funded by San Diego Gas and Electric's Emerging Cities program Written by Eric Engelman, with contributions from the California Center for Sustainable Energy About LeSar Development Consultants LeSar Development Consultants (LDC) provides a full range of consulting services primarily to clients involved in creating physically and economically sustainable communities. Founded in zoos by Jennifer LeSar, LDC is certified by the State of California as a woman -owned, small business corporation and has three offices in San Diego, Los Angeles, and Sacramento. To learn more about LDC, please visit www.lesardevelopment.com. LESAR• DEVELOPMENT CONSULTANTS Copyright © 2014 by LeSar Development Consultants. All rights reserved. This policy memo or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of LeSar Development Consultants. LeSar Development Consultants I July 2014 I Page 2 of 16 11 Policy Memo: Enabling PACE Financing in National City From an organizational standpoint, this memo is divided into four sections: 1. Overview and Recommendation, page 3. 2. Legal Considerations, page 5. 3. Policy Options and Approaches, page 9. 4. Recommended Framework for National City, page 14. 1. Overview and Recommendation In 2012, the City of National City approved a Climate Action Plan (CAP) aimed at bringing National City's carbon emissions tois percent below zoos levels by 2020. According to the plan, in zoos, residential energy use from the city's 14,75o dwelling units accounted for 6.4 percent of community -wide emissions, and energy use from the city's 8,158,18o square feet of commercial and industrial buildings accounted for 25.2 percent. The CAP specifies five measures to mitigate emissions from existing buildings including: A1.a.4 Adopt an energy financing program to encourage energy efficiency retrofits in existing buildings. Retrofit financing is a critical strategic policy objective. As buildings age and technology develops, energy inefficiency accumulates, resulting in unnecessary emissions and excessive utility expenses. Correcting this inefficiency results in lower utility costs and emissions, but requires property owners to undertake a large upfront investment. Many property owners do not have access to the capital or financing they need to undertake such an investment. As a result, energy inefficiency often persists in the building sector. Building retrofits also produce a number of public benefits that do not generate payback for the private property owner. Therefore, supporting building retrofits becomes a policy consideration for governments. Besides reducing carbon emissions, retrofits also: • Save natural resources, • Reduce grid dependence, • Stimulate local economies by generating green jobs, • Increase property values, • Enhance building safety. Enabling retrofit financing solutions is one opportunity for government to promote building retrofits. Property Assessed Clean Energy (PACE) financing is designed to widely extend access to retrofit financing, and is often the only alternative available to property owners. PACE also offers unique benefits that are well suited to retrofit financing. PACE allows a property owner to access capital for energy and water retrofits and repay it as an assessment on their property tax bill. PACE is attached to the property itself; it is not considered a debt of the property owner. As the property transfers upon sale, so does the PACE assessment. By utilizing the special assessment system as a collection mechanism, PACE is associated with low repayment risk. This in turn enables property owners to borrow funds for terms that match the useful life of the retrofit, typically 10 to 20 years. Therefore, a PACE funded retrofit can often be designed such that the annual energy and water cost savings covers the annual assessment payments. In this manner, a property owner can make their LeSar Development Consultants I July 2014 I Page 3 of 16 12 Policy Memo: Enabling PACE Financing in National City building more efficient without any cash outlay or diminishing their ability to borrow for their primary business needs. PACE's reliance on the special tax assessment system means that local government must take affirmative steps to establish one or more PACE programs before it is available to property owners within the jurisdiction. To take advantage of PACE, jurisdictions must create their own PACE district or join an existing program run by other jurisdictions or a Special District, generally a joint powers authority (JPA). Recommendation After careful analysis, we believe PACE financing offers significant benefits for National City, given its stated policy goals. Therefore, we recommend that National City consider opting into the three JPA-run PACE programs within the state: 1. CaliforniaFIRST, 2. OnDemand PACE, 3. The Home Energy Renovation Opportunity (HERO) Program. Opting into existing JPA-run PACE programs rather than establishing a new standalone program from scratch requires far fewer resources, makes PACE available sooner, reduces program risk, and puts less of a participation burden on contractors, property owners and banks. LeSarDevelopmentConsultants I July 2014 I Page 4 of 16 13 Policy Memo: Enabling PACE Financing in National City 2. Legal Considerations While the authors of this report are not attorneys, and none of the information contained in this report should be construed as legal advice, no comprehensive discussion of PACE would be complete without acknowledging its associated legal uncertainties, of which all property owners and jurisdictions should be aware. It is recommended that National City obtain advice from a qualified attorney regarding all potential risks and considerations associated with PACE financing before it decides to enter into one or more PACE programs. Liability and Risk to Jurisdiction Jurisdictions are commonly concerned about any legal exposure they might undertake extending from uncertainties surrounding the PACE district setup process or first -lien status of PACE. Certain PACE program designs are inherently riskier than others in how they deal with the first -lien issue. Some jurisdictions have taken certain steps in an attempt to insulate themselves from these risks. First, they have negotiated with PACE providers to indemnify the jurisdiction against any actions in connection with the PACE program. Second, by opting into an existing JPA-run program, jurisdictions have added a layer of protection they would not otherwise have had if they set up an independent program and district locally. Regarding the risk of non-payment, the three statewide PACE programs and most third -party administered programs are designed so that jurisdictions are not responsible for covering unpaid PACE assessments.' Commercial Property Sector The federal Office of the Comptroller of the Currency (OCC) regulates commercial mortgage lenders. In a July 6, 2010 Bulletin, OCC offered guidance to lenders that they may want to secure additional collateral in cases where their loan position has been subordinated by a PACE lien2. Commercial PACE programs responded to the Bulletin by requiring that property owners contact their mortgage holders with the details of the PACE lien to be placed on their property. This gives the mortgage holders the opportunity to consider the implications of the new lien and oppose it if they choose. There are variations of this approach depending on the PACE program. Some require that existing title -secured lenders give their consent before a PACE transaction may proceed. Others require the lenders to simply affirm that they received the information (called "affirmative acknowledgement"). Whether they decline or accept the new lien, this two-way communication has helped prevent pushback from OCC and the lenders they regulate. The most liberal approaches simply require the property owner to notify the lender and allow them to proceed regardless of whether they receive a response. Residential Property Sector In the Unites States, approximately half of existing residential mortgages and 90 percent of new mortgages are held by Government Sponsored Enterprises (GSEs) regulated by the Federal Housing Finance Agency (FHFA). These include the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan 1 National City should consult with an attorney as to jurisdictions' obligations resulting from unpaid PACE assessments. 2 See OCC Bulletin 2010-25 LeSar Development Consultants July 2014 I Page 5 of 16 14 Policy Memo: Enabling PACE Financing in National City Mortgage Corporation (Freddie Mac). In National City, approximately 75 percent of residential properties have a mortgage.' As PACE programs developed between 2008 and 2010, FHFA expressed concerns about the senior status of PACE liens in relation to the existing mortgage. In the event of a forced sale due to a default, the PACE lien holder would be paid before the mortgage holder as with any other property taxes or assessments due.4 The FHFA argued that PACE was different from other assessments because property owners enter into PACE obligations at the discretion of the individual property owner and the improvements are made to private property. PACE proponents contested that only the overdue portion of the PACE lien would need to be paid, not the entire balance. In a July 6, 2010 Statement (Statement) directed towards GSEs, FHFA recommended a series of steps lenders and mortgage holders should take to protect their interests. The recommended actions affect both individual homeowners and the jurisdiction as a whole. With the passage of time and the growth of PACE, the hardest hitting of these recommended actions are viewed by many PACE experts as over -reactions by FHFA at the height of the mortgage market meltdown. Though the more severe recommended actions have never been taken, FHFA has not officially retracted its policy. As a result, they remain relevant in the PACE policymaking process. Risks to Individual Homeowners FHFA recommended that GSEs should not purchase any new mortgages or refinance properties that have a PACE lien attached. There has been inconsistent application of this recommendation and many homeowners who have PACE liens have been able to sell or refinance their property without any repercussions while others have had the new mortgage lender request that they pay off the remaining balance of their PACE lien. If the latter occurs, the homeowner has the option of paying off the lien or discontinuing the sale or refinance. For example, —5 percent of the participants in Sonoma County's PACE program sold or refinanced their property after assuming a PACE lien. Mortgage holders allowed 20 percent of those homeowners selling their home and 6o percent of homeowners refinancing their home to proceed without paying off the lien. FH FA also indicated that if a homeowner acquired a PACE lien that was senior to the mortgage, it could be considered an act of default and cause the balance of the mortgage to become due immediately.' This is the most serious risk to homeowners but lenders have yet to proceed with this action either because of the previously listed intermediate steps they can take, or because they do not have a strong case for viewing it as an act of default. Also, subsequent GSE and FHFA communications have notably omitted reference to mortgage acceleration as a potential risk -mitigation measure. PACE program administrators address the risks to individual homeowners by providing disclosures to program participants that list the FHFA issues in detail. They also may include a recommendation that homeowners inform their current mortgage holder of the PACE lien. Requiring mortgage lender consent or affirmative acknowledgement is not considered practical based on the rapid timelines of residential projects. Program administrators for both HERO Financing and Sonoma County's PACE program have found that a 3 According to www.City-Data.com. This does not distinguish whether the mortgage is held by a GSE. 4 It is important to note that FHFA does not distinguish between AB811 and SB555 programs since both give PACE primary lien status 5 Despite the fact that mortgage covenants traditionally acknowledge, categorically, the seniority of property taxes and special assessments, the FHFA in 2010 questioned the legitimacy of treating a PACE lien as a special assessment, questioning the public good such loans provide. LcSar Oceclopmcnt Consultants July 2014 I Page 6 of 16 15 Policy Memo: Enabling PACE Financing in National City large majority of homeowners read and acknowledge the risks and choose to proceed as planned. Risks to all Homeowners in a Jurisdiction In the Statement, FHFA recommended that GSEs and their lenders consider changing the underwriting standards throughout the entire jurisdiction where PACE is available. This included adjusting loan -to -value ratios to reflect the maximum permissible PACE loan amount and tightening debt -to -income ratio requirements. In fact, no underwriting requirements have changed. If this "red -lining" of a jurisdiction did occur, it could potentially impact the local housing market and economy. For that reason, it is considered unlikely that GSEs would take such action. Again, references to this action have been notably absent in subsequent FHFA and GSE communications. If at some future point the GSEs or FHFA decide to implement this action, one would expect they would do so after specific criteria and deadlines are established that allow the hundreds of jurisdictions that would be affected to correct course and avoid making it more difficult for many millions of people to buy homes. Additional Considerations Regarding FHFA Uncertainty In California, over 17o jurisdictions have decided that the benefits of residential PACE outweigh the risks and have opted to create their own program or join an existing program. California government officials are actively communicating with FHFA and taking additional steps to address their concerns. To mitigate the risk of potential losses to GSEs, California made a $io Million PACE Loss Reserve Fund available in March 2014. PACE program administrators have access to this pool of money to compensate mortgage holders for any losses associated with a PACE lien. The reserve pool is guaranteed up to $io million on a first -come, first - served basis. Although Reserve Fund officials express optimism that the state would allocate more funding if the pool were ever exhausted, access to the Loss Reserve is not guaranteed once the Si() million cap has been reached. Since release of the FHFA's Statement, numerous agencies have asked for clarification or special consideration, but FHFA has not changed its position. This includes a recent response to Governor Brown as part of an ongoing dialogue regarding the PACE Loss Reserve. Although FHFA expressed appreciation for the effort put forth by Governor Brown's office, it responded that it still does not alleviate their primary concern that the mortgage is placed in a secondary position by PACE loans. If GSEs ultimately take any of the threatened actions, jurisdictions have several options after creating or joining a PACE program. National City may suspend its program or end its participation in a program. Program administrators can change the eligible properties list to only include homes without mortgages and homes with mortgages that are not held by GSEs (e.g. non -conforming mortgages such as a jumbo loan). Another potentially mitigating factor to consider is the 9th Circuit of Appeals decision in Rust v Johnson in 1979 (597 F.2d 174). The decision brings into question whether a jurisdiction would be able to collect assessments or taxes (e.g. PACE lien) if they harm GSEs. Rust v Johnson may effectively put PACE liens in a secondary position and alleviate FHFA's primary concern. It may also inhibit their ability to red -line an entire territory that enabled PACE. LcSar Dcv clopmcnt C'onsuILants July 2014 Page 7 of 16 16 Policy Memo: Enabling PACE Financing in National City Legislative Foundation and District Creation National City has the option of creating its own PACE district using one of two pieces of enabling legislation or joining an existing program run by another jurisdiction or a Special District, generally a JPA. The main benefit of establishing a unique local PACE option is the ability to design the program to address local issues (e.g. local hiring — more on that in Section 4). The main risk to the City is exposure if any legal issues arise out of the local PACE program, particularly around the validity of the district creation and assessment processes. Establishing a local program also comes with significant additional setup costs and staff time. Using a PACE provider to administrator a local PACE program mitigates risk to a jurisdiction because the third party administration contract typically includes an indemnification clause removing the City's liability. Several cities and counties opted early on to administer their own program and assume the legal risks, however several of those jurisdictions are subsequently transferring administrative duties to a third party.6 California has two different statutory frameworks that can be used to create PACE financing programs: 1. California Assembly Bill 811 (passed July 20o8). AB 811 Streamlined and clarified the process by which cities and counties can establish a geographic area, within which property owners can voluntarily undertake contractual assessments to finance energy improvements affixed to their real property. AB 811 and AB 474 amend the Improvement Act of 1911. AB 474 expanded AB8ii to include water efficiency, and requires local governments to notify the local utility providers when PACE programs are created. 2. California Senate Bill 555 (passed October 2009). Authorizes an alternative process to create a Community Facilities District under the Mello -Roos Act of 1982, and expands eligible improvements to include energy and water efficiency to public as well as private facilities. SB 555 prohibits using financing in connection with initial construction of a privately owned residential building, unless undertaken by its intended owner or occupant. SB 279 Expands AB81i to allow all jurisdictions to setup Mello -Roos community facilities districts, not just charter cities. Judicial Validation Although district financing is well -established in case law, PACE is a new variation that has not been extensively tested in courts. Therefore it is common for PACE providers to seek judicial validation before a program launches locally. A successful validation reduces program risk to the satisfaction of the PACE provider, investors, participating jurisdictions, and the JPA (where applicable). California law permits local agencies to bring action in court to challenge whether the jurisdiction has the authority to impose its PACE assessment or tax. Local counsel and PACE bond investors can use the results as an unqualified opinion on the validity of the financing mechanism! A third party administrator generally covers the cost of validation, but if National City chooses to administer its own program, it would be responsible for the expense. With regards to JPA-run programs, the CaliforniaFIRST and OnDemand PACE programs have already completed statewide validations, so National City would be covered. For the HERO program, judicial validations are filed in batches every few months as new cities and counties join the program. If National City joins this program, a judicial validation will be filed on National City's behalf in the subsequent batch.8 6 Including San Francisco and Los Angeles County. 7 See http:JJresidential.sonomacountyenergy.orgilower.php?url=bond_ validation for additional information on the judicial validation process and sample documents. 8 The next round of validations are expected to be filed in October and completed in early 2o15. LeSar Development Consultants I July 2014 I Page 8 of 16 17 Policy Memo: Enabling PACE Financing in National City 3. Policy Options and Approaches The first PACE programs to be established in California between 2008 and 2010 (e.g. City of Palm Desert, County of Sonoma) were administered by the local jurisdiction itself and used public funds to extend loans. Since then, a few private firms (PACE providers) have developed more or less turnkey PACE programs that they offer to local jurisdictions. Typically these services are offered at no charge to the jurisdiction in exchange for the right to market PACE loans. This approach allows jurisdictions to take a less active role, enabling these private firms to market and administrator a PACE financing solution which is funded through private capital sources. PACE providers also tend to coordinate and fund much of the legal setup process required to create a PACE program, which can be extensive. Jurisdictions can procure and contract directly with private PACE providers or opt into a JPA that has an existing contractual relationship with one or more PACE providers. The opt -in approach has several advantages. It often means a jurisdiction is able to bring a PACE program online quicker and with less staff resources. Also the economies of scale of offering a program that is also available in many other jurisdictions is thought to be advantageous for program uptake, as it reduces participation barriers for financiers, contractors and property owners who operate in multiple jurisdictions. The advantages of creating a standalone program for a jurisdiction include the ability to customize program rules and branding and a greater sense of local ownership. Tablet Statewide JPA-run PACE Programs Program Name CaliforniaFIRST OnDemand PACE HERO Program JPA / Jurisdiction CSCDA CEDA WRCOG PACE Provider / Administrator Renewable Funding Figtree Financing Renovate America (residential) Samas Capital (commercial) Number of Participating CA Jurisdictions 183 58 158 PACE is still very new to the market and programs differ in a number of dimensions including: contractor requirements, project eligibility requirements, minimum and maximum financing amounts, payback terms and interest rates and fees. They also differ in how the financing is handled. For example, some PACE programs have pre -arranged financing from a single source at fixed terms. Other PACE programs leave it to the property owner or contractor to choose and negotiate with a lender. PACE programs also differ in their LcSar Dceclopmcnt Consultants July 2014 Page 9 of 16 18 Policy Memo: Enabling PACE Financing in National City approach to marketing. A dominant model has not yet emerged, and as the market matures we may see even more variety, as specialized products are developed to meet more specific needs. Many jurisdictions are choosing to opt into multiple PACE programs rather than just one. Under this philosophy, the objective is to maximize property owner choice and inter -program competition, allowing market forces to determine the "best" approach. A potential drawback to the multi -provider approach is that choice can add complexity for property owners and contractors. Policy Approaches in San Diego County All jurisdictions within San Diego County (except National City) have one or more PACE programs online or have opted into at least one program. The majority of local jurisdictions have selected the multiple -provider approach. Of 19 jurisdictions, 15 cities and the County have created or opted into more than one PACE program. Table 2: PACE Policy Approaches in San Diego County Jurisdictions Jurisdiction San Diego County Opt into Single Program Opt into Multiple Programs CaIFIRST/ HERO Establish Custom Program Carlsbad CaIFIRST / HERO Chula Vista CalFIRST Ygrene Coronado CalFIRST / HERO Del Mar CalFIRST El Cajon CaIFIRST / HERO Encinitas CaIFIRST/ HERO Escondido CaIFIRST / HERO Imperial Beach HERO / OnDemand La Mesa CaIFIRST/ HERO Lemon Grove CalFIRST / HERO Oceanside CaIFIRST / HERO Poway CaIFIRST San Diego (City of) HERO / OnDemand/ CalFIRST San Marcos HERO / OnDemand Santee CalFIRST Solana Beach CalFIRST /HERO Vista HERO / OnDemand National City TBD TBD TBD Total 3 15 1 PACE Provider Overview CaliforniaFIRST — California Statewide Communities Development Authority (CSCDA) chose Renewable Funding to offer a PACE program among its 500+ member jurisdictions. The program, branded CaliforniaFIRST, was originally scheduled to launch both a residential and commercial program in the fall of LeSar Development Consultants I July 2014 1 Page 10 of 16 19 Policy Memo: Enabling PACE Financing in National City 2010, but FHFA's Statement to the GSEs caused significant delay. Renewable Funding revamped and launched the CaliforniaFIRST commercial PACE program in February 2012 and began accepting applications for project funding in July 2012. The revised commercial program opened funding to any qualifying lender that the property owner chooses; the property owner is responsible for negotiating and comparing terms. As such, each application is a customized, project -financed transaction. Little outreach and marketing is provided locally. Applications are contractor or property -owner driven. CaliforniaFIRST commercial was approved by the San Diego City Council in September 2012, but did not receive its first application until April 2013. This application has not yet reached the final approval stage. (CaliforniaFIRST has not yet fully funded any commercial projects in San Diego County as of mid -June 2014.) Renewable Funding points out that this apparently slow uptake is due to the lengthy sales cycle for commercial PACE (from 9 months to 2 years), when compared to the residential retrofit market. The commercial PACE programs (Figtree, Samas and CaliforniaFIRST) all are starting to see their first project funding occur this year (the various commercial PACE programs in the State started in 2012 and later). On the residential side, Renewable Funding is rolling out the "beta phase" of its residential program during summer 2014, initially in the Bay Area, and then in Los Angeles and San Diego County in late July. Renewable Funding expects to open the residential program countywide to all contractors by mid -September 2014. The program will automatically come available in jurisdictions that are currently participating in the commercial program, with the exception of the City of San Diego, which reserved the right to review a residential program. It is unclear what local support will occur in San Diego County. Renewable Funding recently hired a local program representative who is expected to start some type of outreach within San Diego County in the upcoming months, and a marketing agreement is rumored with the Electric and Gas Industries Association (EGIA). Specifics on how financing will be handled are not known at this time. HERO Program — Western Riverside Council of Governments (WRCOG) is a JPA formed to assist participating jurisdictions with financing. The HERO program launched in December 2011 for residential properties and in December 2012 for commercial properties. The program is administered by Renovate America for residential properties and by Samas Capital for commercial properties. Renovate America is based in the City of San Diego. The residential component of the HERO program was the first residential PACE program launch subsequent to FHFA's Statement and was widely viewed as a test to see whether the GSEs would immediately take action. No blanket action was taken, and the program experienced rapid uptake, approving thousands of applications and funding tens of millions of dollars in its first year in Western Riverside County. As a result WRCOG opened Associate Membership to jurisdictions statewide to participate in the HERO program. As jurisdictions around the state rapidly began opting into HERO in 2013 and program participation continued robust growth, other PACE providers such as Figtree and Renewable Funding began preparations for launching residential programs. Long-term funding is raised by packaging PACE loans into securities and selling them. In April 2014, Deutsche Bank sold the first securities constructed for $103 million in residential PACE loans from Renovate America's HERO program. LeSar Development Consultants I July 2014 I Page 11 of 16 20 Policy Memo: Enabling PACE Financing in National City Figtree OnDemand — The California Enterprise Development Authority (CEDA), a JPA of the California Association of Local Economic Development (CALED), is a nonprofit that works in partnership with cities and counties in the State of California. CEDA has contracted with the Figtree Financing company to offer PACE programs to member jurisdictions. Figtree's OnDemand PACE financing is available via an assessment district established by CEDA and currently counts 35 participating city members and 21 county members. Figtree is based in the City of San Diego. Figtree was the first firm to successfully package multiple pre -approved commercial projects into a pooled bond. They also offer customized owner -arranged financing similar to CaliforniaFIRST. And as of March 2014, they have raised a pool of funding out of which they are now able to fund projects as they qualify. The residential program is anticipated to launch in 2015 as Figtree plans to proceed conservatively based upon FH FA actions. Their financing is currently available to residential properties with no mortgages or with loans that do not meet FHFA lending criteria (jumbo loans). Ygrene Energy Fund — Ygrene is a privately funded and administered residential and commercial PACE provider that implements local programs in partnership directly with individual counties and cities. Ygrene's programs to date have been based off of SB 555 amended Mello -Roos districts rather than AB 811. Ygrene uses a variety of private funding sources to supply interim and long-term capital. In California, Ygrene administers districts in Chula Vista, Sacramento and Yolo County. It also has one in a multi -county area in Florida. These locally branded programs are offered at no charge to the local government, but there are upfront expenses, including: staff time for district formation process, legal expenses for the judicial validation, and ongoing program administration costs. These costs are borne by the local jurisdiction, and recouped via fees as the program does volume. Ygrene manages the ongoing operations and program administration, but key tasks are still required by city/county staff during the life of the program. Ygrene has negotiated to reimburse for some upfront time and incurred expenses during the formation of the PACE district, but reimbursement is on a contract -by -contract basis. As a customized program, Ygrene targets large urban cities with populations of 250,00o residents or more. Initially established at a 500,00o minimum in 2013, Ygrene lowered the population requirement to 250,000, in order to compete for the Clean Energy Chula Vista program. Comparison of Program Performance The table below shows program activity for the three statewide JPA-run PACE programs. Three commercial programs available to jurisdictions statewide have been online for two to three years. Uptake is clearly slow as only a few transactions have closed to date statewide, and there have been no closings within the County to date. Both CaliforniaFIRST and OnDemand PACE report that their first transactions in San Diego County will close soon. LeSar Development Consultants I July 2014 I Page 12 of 16 21 Policy Memo: Enabling PACE Financing in National City Table 3: JPA- Program Na Countywide o -- - - e CalFirst On Demand PACE HERO Participating Jurisdictions 184 58 158 Pro•ram Launch Date Feb. 2012 Dec. 2011 Dec. 2012 Applications Received — Quantity 94 15 * Applications Received — $ Volume $64 MM * * Completed Transactions — Quantity 2 2 * Completed Transactions — $ Volume $260 K $2.5 MM * Participating Jurisdictions Program Launch Date Applications Received — Quantity Applications Received — $ Volume Completed Transactions — Quantity Completed Transactions — $ Volume 14 Feb. 2012 2 $8.4 MM 0 0 12 Jul 201 2 $250 K 0 0 13 Dec. 2012 * * * * * declined to provide The residential PACE situation is quite different. The HERO program is the only active program and some 12,931 transactions have closed statewide for a total of $245 million since launch in December 2011. More than $1 billion in applications have been approved. In San Diego County, HERO came online in six cities in February 2014. Already, some 709 project applications have been approved for $48 million in funding. And more than zoo have closed in this short time, representing $4.9 million in completed transactions. Both CaliforniaFIRST and OnDemand PACE are preparing to launch residential programs, too. Table 4: JPA-run Programs — Statewide Residential Uptake **program not yet online Program Na Countywide e CalFirst OnDemand PACE HERO Participating Jurisdictions 183 58 158 Program Launch Date Jul 201 est. 201 Dec. 2011 Applications Received — Quantity ** ** 25,943 Applications Received — $ Volume ** ** $1,04o MM Completed Transactions —Quantity ** ** 12,941 Completed Transactions — $ Volume ** ** $245 MM Participating Jurisdictions 13 12 13 Program Launch Date est. Sept 2o14 est. 2015 Feb. 2o14 Applications Received — Quantity ** ** o• Applications Received — $ Volume ** ** $48 MM Completed Transactions —Quantity ** ** 209 Completed Transactions — $ Volume ** ** $4.88 MM 9 Lemon Grove, Carlsbad, Vista, Oceanside, San Marcos, Solano Beach. The other six cities in the county that have approved HERO are awaiting judicial validation. LeSar Development Consultants I July 2014 1 Page 13 of 16 22 Policy Memo: Enabling PACE Financing in National City 4. Recommended Framework for National City At present, it is recommended that National City consider opting into the three JPA-run PACE programs within the state: 1. CaliforniaFIRST, 2. OnDemand PACE, 3. The HERO Program. National City's policy goals call for energy and water retrofits across building sectors, and making PACE financing available to those sectors is recommended. Opting into existing JPA-run PACE programs rather than establishing a new standalone program from scratch requires far fewer resources, makes PACE available more quickly, reduces program risk, and puts less of a participation burden on contractors, property owners and banks. Giving property owners (and contractors) multiple PACE options allows each to decide which program is best for their individual needs. This will help create a thriving, competitive market for PACE financing services, and the market will adapt more rapidly to meet the varying needs of diverse property owners. So far, among JPA-run PACE programs, results vary widely. No program in the commercial sector has yet had significant uptake in the marketplace although early results show some programs have been incrementally more successful than others. It is difficult to assess how much of this underwhelming uptake is due to the lengthy commercial sales cycle and how much is due to more fundamental shortcomings in program design and marketing. Competition is strong in the commercial sector and private capital is flowing to help PACEproviders adapt and hone their offerings. In the residential sector, the HERO program continues to demonstrate rapid uptake and growth, while other JPA-run programs are in the pre -launch stage. Residential HERO's results appear to be reliably achieved. The six San Diego County jurisdictions where the HERO program has been online for five months are each already seeing millions of dollars in approved residential applications. Meanwhile, Figtree and California FIRST have yet to launch broad sector residential programs. As additional PACE program options become available, it is recommended that National City enable property owners to access those programs, provided they meet the following basic requirements: • There is no cost to National City. • There is no ongoing administrative burden to National City. • Participation does not inordinately expose National City to risk. • Participation does not inordinately expose National City property owners to risk. The residential HERO program, relative to the three commercial programs, takes the most progressive approach in dealing with the issues raised by the FH FA. When other jurisdictions refrained from bringing online residential PACE programs after 2010 for fear of FHFA reprisal, WRCOG and its constituent jurisdictions forged ahead with residential PACE in 2012. The FHFA and GSEs did not take the severe measures they once threatened. Developments since then have made it far less risky for other jurisdictions to follow. Additionally, the rapid uptake of the residential HERO model has eclipsed all other PACE programs, convincingly demonstrating that the benefits to participating jurisdictions outweigh the risks. LeSar Development Consultants July 2014 I Page 14 of 16 23 Policy Memo: Enabling PACE Financing in National City Departmental Ownership of PACE For many cities, there is a need to assign primary responsibility for the city's PACE programs to a single organizational unit. Anecdotally, it appears this responsibility most commonly resides with the Community Development division, although there is considerable variation between cities. For National City, the best choice is the organizational unit best suited to supporting the development of a thriving PACE and building retrofit market. Although there will be no explicit role for National City in the management and operations of PACE programs if the city opts into one or more JPA-run programs, there are still important functions the City should consider. These include: LeSar Development Consultants I July 2014 I Page 15 of 16 24 Policy Memo: Enabling PACE Financing in National City • Assuring that available PACE programs are integrated and cross -promoted with other City programs as appropriate, and leveraged to meet City policy goals, • Receiving community feedback regarding any marketing abuses related to PACE programs, and if necessary, taking action to correct them or discontinue the City's participation in an abusive program, • Considering the adoption of new PACE programs that meet City goals, • Exploring partnerships and initiatives to extend the reach of PACE to under -served segments of the community. Opting into a JPA-run PACE Program Opting into a JPA-run PACE program usually requires that Council approve two resolutions, which can be heard in the same session. One resolution is typically required to join the JPA (if National City is not already a member). Another resolution serves firstly to affirm that there are public benefits stemming from energy and water improvements to private property,1° and secondly to delegate authorities to the JPA needed to operate the PACE program on the jurisdiction's behalf." The table below lists the specific resolutions National City must adopt to opt into the three statewide JPA programs. Additionally, there are specific noticing requirements that must be followed in advance of the hearing where City Council considers such resolutions. Table 5: Required Opt -in Resolutions Program HERO OnDemand PACE California FIRST Resolutions Required for Membership in JPA 1. Associate Member Resolution 2. Associate Member Agreement 1. Associate Member Resolution 2. Associate Member Agreement None; National City is already a member Resolutions Required to Join PACE Program 1. Program resolution 1. Resolution of consent 1. Resolution to join program 10 This affirmation by City Council is a required step under AB 8-n. t7 Such as the authorities to place and collect assessments. LeSar Development Consultants I July 2o14 I Page 16 of 16 25 ATTACHMENT 2 26 heroM CAL'FnRN'A Residential Handbook December 17t", 2012 A low cost financing program for homes in your community 27 •hero Residential ProgramTM Handbook CALFFORNlA Table of Contents 1 Program Introduction 1 1.1 Program Overview 1 1.2 Handbook Structure 1 1.3 Other Terms and Disclaimers 1 2 Program Contact Information 2 2.1 Program Website 2 2.2 Program Offices Error! Bookmark not defined. 2.3 Program Call Center 2 2.4 Program Contact Information and Other Useful Resources 2 3 Future Program Changes 3 4 Program Eligibility Requirements 4 4.1 Eligible Properties 4 4.2 Eligible Property Owners 5 4.3 Eligible Products 5 4.4 Eligible Costs 6 4.5 Eligible Contractors 7 4.6 Eligible Assessment Amounts 7 4.7 Eligible Assessment Term(s) 7 4.8 Eligible Rebate Programs and Tax Credits 7 4.9 Eligible Number of Assessments 8 5 Program Requirements 8 5.1 Contractor Registration 8 5.2 Self -Install Agreement 8 5.3 Building Permits and Inspection 9 5.4 Fraudulent Activity 9 5.5 Required Documents 9 6 Financial Terms 9 6.1 Costs to Apply 9 6.2 Assessment Costs 9 6.3 Annual Repayments 10 6.4 Prepayments 10 7 Program Process 11 7.1 Process Overview 11 7.2 Step 1: Apply 11 7.3 Step 2: Obtain Product Approval 13 7.4 Step 3: Sign Financing Documents 14 7.5 Step 4: Install Eligible Products 15 7.6 Step 5: Payment Issued 15 7.7 Record Lien on Property and Issue Payment 16 7.8 Add Assessment to Property Taxes 16 8 Dispute Resolution 17 9 Additional Requirements and Terms 17 10 Appendices 18 Appendix A: Glossary of Terms 18 Appendix B: Additional Requirements and Terms 22 Appendix C: Program Forms and Documents 25 Appendix D: Eligible Products List • 26 28 !hero CALIfORNIA Residential ProgramTm Handbook Program Introduction 1.1 Program Overview In 2008 and 2009, the State of California approved legislation authorizing cities and counties to establish voluntary programs to pay for energy efficiency, water efficiency, and renewable energy products which are permanently attached to property ("Eligible Products"). The California HERO Program (the "HERO Program" or "Program") was created to enable cities and counties to provide homeowners and businesses with financing to pay for energy efficiency, water efficiency, and renewable energy products and their installation. The HERO Program hag already helped thousands of residents reduce their utility bills, improve their property values, and lower their emissions. Once a city or county has signed up, homeowners may borrow money through the HERO Program. Homeowners repay the financing through their property tax bill. Participation in the Program is completely voluntary. Property owners agree to repay the amount financed over a 5-, 10-, 15- or 20-year period. To see it your city or county is a participating HERO community, enter your zip code at www.herofinancing.com. If your city has not yet signed up, we recommend you contact one of your local elected officials and ask them to contact us so you can obtain HERO Financing. 1.2 Handbook Structure The purpose of the handbook is to help property owners apply for and receive financing for renewable energy systems and energy and water efficiency products. The handbook is divided into nine sections plus appendices, which will take the reader through the process necessary to complete and fund the Eligible Products. Section 1: Program Introduction provides a brief overview of Program basics; Section 2: Program Contact Information; Section 3: Future Program Changes to the Handbook; Section 4: Program Eligibility describes eligibility requirements for residential properties, property owners, and Eligible Products; Section 5: Program Requirements outlines the requirements for Program participation; Section 6: Financial Terms outlines the cost of the Program; Section 7: Program Process provides a detailed description of the Program process; Section 8: Dispute Resolution provides summary of steps to take if an applicant wishes to dispute decisions by the Program; Section 9: Additional Requirements and Terms provides information about additional Program requirements and terms; and Appendices: Appendices provide important forms, definitions and Eligible Products List, which are required by the Program. For purposes of the handbook, all references to "days" are in calendar days, unless otherwise specified. 1.3 Other Terms and Disclaimers All applicants must (and interested parties such as contractors should) read the Additional Terms and Requirements in the Appendices. This section outlines many of the legal issues associated with the Program, including the responsibilities and obligations of both participating property owners and Program staff. 1 29 Ahem- CALIFORNIA Residential ProgramTM Handbook 2 Program Contact information 2.1 Program Website The Program website provides a variety of useful information, including information on how the Program works, Eligible Products, available rebates and tax credits, a list of contractors who have registered with the Program and attended the Program orientation, and Program news and events. In addition, residential property owners will be able to apply online and contractors will be able to register online. Frequently Asked Questions, the Eligible Products List, and certain other documents will also be available for download. The Program website address is www.herofinancinq.com. 2.2 Program CaII Center Property owners and contractors may call (877) 747-4889 to ask questions about the residential financing Program or request a copy of the application by mail or email. Program Call Center hours are 8 am to 9 pm, Monday through Friday, and 10 am to 6 pm on Saturdays. Please see the Program website at www.herofinancinq.com for recent updates about the call center operation times, phone number and other relevant information. 2.3 Program Contact Information and Other Useful Resources General questions about the Program can be answered by visiting the Program website at www.herofinancinq.com, calling the Program's toll free number at (877) 747-4889, or clicking "Chat Now" at the top of any HERO Program webpage. Program Contacts WRCOG (the "Agent") Phone Number(s): Address: (951) 955-7985 (800) 350-4645 Renovate America, Inc. Program Call Center Number: (877) 747-4889 Program Fax Number: (858) 385-0379 Program Email: questionst herofinancinq.com Contractor Email: contractoriftherofinancing.com Building Performance Institute Riverside County Administrative Center Annex 4080 Lemon Street, 3rd Floor, MS 1032 Riverside, CA 92501-3609 16935 West Bemardo Drive, #150 San Diego, CA 92127 Other Useful Information BPI is a national standards development and credentialing organization for residential energy efficiency retrofit work — providing training through a network of training affiliate organizations, individual certifications, company accreditations and quality assurance programs. www.bpi.org (877) 274-1274 30 2 •hero CALIFORNIA Residential ProgramTM Handbook CaICERTS California Building Performance Contractors Association California Solar Initiative (Go Solar California) Contractors State License Board DSIRE Energy Star Federal Tax Credits State and Local Rebates Title 241lot Line CaICERTS is an approved Califomia Energy Commission (CEC) Home Energy Rating System (HERS) Provider. CaICERTS, Inc. is a private organization that provides service, support, training and certification to HERS raters. CBPCA is a non-profit 501c-6 trade association that develops, trains and promotes whole house energy -efficient retrofitting for contractors and professionals in the building performance industry. RPI and HERS training and certification are available. The California Solar Initiative (CSI) is the solar rebate program for California consumers that are customers of the investor -owned utilities, including Southern California Edison (SCE). The Contractors State License Board (CSLB) protects consumers by licensing and regulating Califomia's construction industry. DSIRE is a comprehensive source of Information on state, federal, local, and utility incentives and policies that support renewable energy and energy efficiency. Energy Star is a government -backed program helping businesses and individuals protect the environment through superior energy efficiency. Energy Star provides energy efficiency standards, qualified and labeled energy efficiency products and recommended installation methods, among other things. Information page about federal tax credits available for energy efficiency and renewable energy improvements. See your local utility company information above. See also, Energy Upgrade California to search for rebates by zip code. The Title 24 Hotline is provided by the Califomia Energy Commission and is intended to help contractors and others int rpret end understand the ales in Califomia's Title 24 regulations for new construction of and retrofitiiry of residential and commercial buildings. httos://www.calcerts.com/ (877) 437-7787 htto://th ecbpca . orof (510) 433-5042 litto://www.GoSolarCallfornia.ca.00v (866) 584-7436 (technical) Solar PV— SC Edison (800) 799-4177 (general) Solar PV — SC Edison (800) 799-4177 Solar Thermal — SC Edison (800) Gas-2000 Solar Thermal — SoCalGas www.cslb.ca.gov CLSB License Check check Contractor's License Status 1 (800) 321-CSLB (2752) www.dslreusa.org www.eneraystar.aov Energy Star Hotline for specific questions about specific products (888) 782-7937 www.eneraysavers.gov/financial/70010.html See local utility company information above. See also Energy Upgrade Califomia, https://en ergyu pq rad eca . o ra/county/riverside/overview (800) 736-4777 SC Edison EJC Program (800) 427-2200 SoCalGas EUC Program www.enemv.ca.coviefficiencv/hotline.htini (800) 772-3300 Mon. Fri. 8AM —12 PM, ' 7M --- 4:30 PM 3 Future Program Changes The Agent reserves the right to change the Program and its terms at any time; however, any such change will not affect a property owner's existing obligation to pay the contractual assessment agreed to in an executed Assessment Contract. A property owner's participation in the Program will be subject to this Handbook and other documents signed as part of the Program. If any provisions of this Handbook are determined to be unlawful, void, or for any reason 3 31 •hero CALI FORNIA Residential ProgramTM Handbook unenforceable, then that provision shall be deemed severable from the Handbook and shall not affect the validity and enforceability of any remaining provisions. 4 Program Eligibility Requirements Potential property applicants should carefully review this section in order to determine whether they are eligible for the Program before submitting an application. 4.1 Eligible Properties To be eligible, the property must pay property taxes. Residential properties are generally eligible, with the following limitations as set forth below: 4.1.1 No "New Construction" Only improved properties will qualify for Program financing. New construction is not eligible, unless ownership has been transferred from the developer to the property owner. "New construction" includes new homes under construction and additions to existing structures. 4.1.2 Mobile Homes, Manufactured Homes, Condominiums, and HOA's Mobile homes and manufactured homes are eligible if the homes are permanently attached to the real property, and if the mobile/manufactured home owner(s) also own the underlying land and pay real property taxes (not DMV fees). Condominiums are eligible, but may be restricted as to the Eligible Products that may be installed depending on the rules of the condominium association as well as the physical design of the unit. Condominium owners who are approved for Program financing will be required at the time they request specific Eligible Product approval, to provide written authorization by the condominium association's management stating that the property owner is allowed to install the requested Eligible Products. Single family homes that are subject to HOA restrictions may also be required to provide written documentation that any solar systems, cool roofs, windows and doors, or other improvements restricted by the HOA, meet the HOA guidelines or requirements. 4.1.3 Property Must Be Located in a HERO Community All financed properties must be located in a city or county that has signed up to be a HERO Community. To see if your city or county is a participating HERO community, enter your zip code at www.herofinancinq.com. If your city has not yet signed up, we recommend you contact one of your local elected officials and ask them to contact us so you can obtain HERO Financing. 4.1.4 Maximum Assessment to Value Amount Mortgage -related debt on the property must not exceed 90% of the value of the property. The amount to be financed under the Program may not exceed 15% of the value of the property. The combined amount to be financed under the Program plus the mortgage related debt must not exceed 100% of the value of the property. 4.1.5 Liens on Property In addition, the property must not have any federal or state income tax liens, judgment liens, mechanic's liens, or similar involuntary liens on the property. Prohibited liens do not include community facility district assessments or 4 32 •hero CALIFORNIA Residential ProgramTM Handbook other financing district liens placed on all properties in that particular financing district. Any non -mortgage -related debt will be subject to review. The property also cannot currently be an asset in a bankruptcy proceeding. 4.2 Eligible Property Owners In addition to the property eligibility requirements, residential property owners must meet specific criteria in order to be eligible to participate in the Program. The eligibility criteria for residential property owners are set forth below. 4.2.1 Property Owners: 1. Applicant(s) must be the property owner(s) of record; 2. Property owner(s) must be current on their property taxes for the prior twelve (12) months; 3. Property owners must be current on all property debt at the time of application and cannot have had more than one 30 day mortgage late payment over the previous 12 months; 4. Property owner(s) have not declared bankruptcy in the past seven (7) years and the property is not currently an asset in a bankruptcy proceeding; provided, however, that if the bankruptcy is more than two years old, and if Property owner has no additional derogatory credit, the Property owner may be approved; and 5. All property owners must sign all required documentation, including but not limited to the application, the Completion Certificate and the Assessment Contract with all other required Financing Documents. 4.2.2 Trust Ownership of the Property If the subject property is owned by a Trust, the property is eligible for Program participation if adequate documentation of the Trust and the applicants' authority under the Trust is provided with the application. All Trustees must sign all Program documents, including the Assessment Contract. 4.2.3 Business Entity Ownership of the Property If the subject property is owned by a business entity, the property is eligible for Program participation if adequate documentation of the business entity and the applicants' authorization to act on behalf of the entity is provided with the application, such as a corporate resolution authorizing named officers to apply and sign the Assessment Contract and other Program required documents on behalf of the corporation. 4.3 Eligible Products The Program offers financing for various energy efficiency, renewable energy, and water efficiency products ("Eligible Products"). 4.3.1 Eligible Products Must Be Permanently Fixed, New Products Only permanently fixed, new Eligible Products ia1-1 be financed by the Program financing. Remanufactured, refurbished, slightly used, or new equipment transferred from a previous location are not eligible. Previously installed products are not eligible for Program financing. Also, products that are not permanently fixed are ineligible, including appliances, light bulbs and other non -fixtures. 4.3.2 Proposed Products Must Meet Minimum Eligibility Requirements There are minimum efficiency and/or other requirements for each Eligible Product. A complete list of Eligible Products with minimum efficiency and other specifications for residential properties is available on the Program 5 33 Ohera CALI FORN IA Residential ProgramTM Handbook website www.herofinancing.com. Property owners should confirm with their contractor(s) that only bids with at least the minimum specifications set forth in the Eligible Products List will be acceptable for Program financing. Before installing Products, contractors or property owners are required to obtain approval of proposed Eligible Products, which they can do by calling the Program (see Section 7.5.1). When calling in, contractors or property owners will need to have all details such as manufacturer, model number, and other typical identification information readily available in order to complete eligibility approval in a timely manner. Before calling the Program to get approval, contractors or property owners may also explore both Eligible Products and eligible models using the "Product Look Up" function of the Program website(www.herofinancina.com/EligibleProducts). 4.3.3 New Products and Custom Projects May Be Eligible Property owners who would like to install a product that is not on the Eligible Product List can fill out and submit a New Product Request Form. This form is typically filled out by the contractor. The new product will review the request and determine if the product meets necessary energy efficiency and performance attributes. A decision is made to either add the new product to the Eligible Product List, not approve the new product, or consider it a custom project. A custom project is defined to be a one-time requirement whereby the circumstances are such that the project (product included) passes the Energy and/or Water efficiency scrutiny in the specific case that is being requested. It would not be feasible or necessarily be applied to other homes such that it should be considered a new product or placed in the Eligible Product List. The Program reserves the right to approve or disapprove of new products and custom projects. 4.3.4 Solar Systems Must Meet CSI Requirements All solar PV and solar thermal systems must use California Solar Initiative (CSI) eligible equipment and must be installed according to CSI requirements. The Program recommends that energy efficiency measures be completed prior to installing solar PV systems, as reducing a property's energy demands may also reduce the recommended size of the renewable energy system. Additionally, the Program will not finance any structural alteration of the roof, the building, or the property related to the installation of a solar system. 4.4 Eligible Costs Eligible costs under the Program include both the cost of the equipment and the installation costs. Installation costs may include, but are not limited to, energy/water audit costs, appraisals, labor, design, drafting, engineering, permit fees, and inspection charges. The installation may be completed by a licensed contractor of the property owner's choice who is registered with the Program or by a property owner who signs a Self -Install Agreement. A property owner's own labor costs are not eligible costs for property owners who choose to self -install. For property owners who elect to complete their Program retrofits at the same time as a larger remodeling project, financing is only available for the retrofitting of the existing structure with retrofit Eligible Products. Repairs to the existing building's envelope, systems, and/or infrastructure are not eligible except where they are caused by the installation of the Eligible Product. If a property owner is planning to finance Eligible Products included in a larger remodeling project, they should first contact Program Representatives to determine what costs will be eligible for financing. The cost of installing the Eligible Products must be reasonable and accomplished within industry cost guidelines. The Program shall have the right to refuse to advance any portion of a Completion Certificate that exceeds such guidelines, and/or to request additional documentation or other information to determine the reasonableness of any Completion Certificate. 6 34 •hero CA.I FOIYNIA Residential ProgramTM Handbook 4.5 Eligible Contractors Only contractors who have registered with the Program may complete Program -financed installation work, unless the property owner chooses to do the work him or herself and signs a Self -Install Agreement. Contractors may register with the Program if they have an active license with the California Contractors State License Board ("CSLB"), including meeting the CSLB's bonding and workers compensation insurance requirements and agree to all Program terms and conditions. !n addition, contractors may only install Eligible Products for which they have the appropriate CSLB license. All Solar PV and solar thermal systems must be installed by a CSI registered installer holding the correct contractor's license. Property owners independently choose which contractors will work on the installation of their Eligible Products. `r° he Agent, Renovate America, Inc., and the Program do not endorse contractors who register with the Program, any other person involved with the installed products, or the design of the products, or warrant the economic value, energy savings, satety, durability or reliability of the Eligible Products. A current listing of contractors registered for the Program who have also attended the Program orientation can be found on the Program website(www.herofinancinq.com/FindContractors). If an Eligible Product is self -installed, financing will not be available for the property owner's labor and property owner(s) must first sign a Self -Install Agreement before beginning the project. 4.6 Eligible Assessment Amounts The minimum assessment amount is $5,000. The maximum assessment amount !s 15% of the value of the property not to exceed a combined mortgage and assessment contract amount of 100% of the value of the property or not to exceed $200,000. For residential properties, the value of the property will be the market value based on an automated valuation model ("AVM") value provided by a third party independent vendor. If an AVM value is not available for a particular property, the Program will use the assessed value unless the property owner can provide a recent appraisal. In addition, if you disagree with the AVM value, you may choose to pay for an appraisal from a licensed appraiser and the Program will review the appraisal and determine whether it may be used for eligibility calculations. 4.7 Eligible Assessment Term(s) Assessment Contracts may include financing with a 5-, 10-, 15- or 20-year term, but the financing term may not exceed the "useful life" of the installed Eligible Product. A listing of Eligible Products and useful life can be found in Appendix D. The Program reserves the right to approve a different assessment term than requested based on the useful life of the Eligible Product(s) to be installed. 4.8 Eligible Rebate Programs and Tax Credits For energy efficiency, renewable energy, and water efficiency Eligible Products, various federal tax credits, state and local rebates, and incentive programs exist. Not all Eligible Products eligible under the Program will qualify for federal tax credits and/or state or local utility rebates. For example, some of the federal tax credit specifications require a higher energy efficiency standard than those required by the Program. For information on rebates and tax credits, please visit the rebates pages listed in Section 2.4 above, including Energy Upgrade Caiifornia at https:iienergyupgradeca.org/county/riverside/overview, which allows a zip code search for a comprehensive list of different types of rebates available in the area. Other resources include a "Rebate Locator" on the Energy Star website (http://www.energystar.g_ov) and a "Rebate Finder" on the WaterSense website(http://www.epa.gov/WaterSense/). 35 •hero CALIFORNIA Residential ProgramTM Handbook 4.8.1 Deductions from Financing Amount All available up front federal, state, or utility rebates that are assignable to the contractor must be deducted from the assessment amount at the time of financing. Performance -based incentives which are paid over time, such as the CSI PBI rebate, will not be deducted. State or federal tax credits and rebates that are not assignable to the contractor will also not be deducted from the assessment amount, but property owners may wish to consider these additional benefits in determining the amount of their financing request. 4.8.2 Solar Rebates and Program Participation Property owners who plan to install solar photovoltaic ("solar PV") or solar thermal water heating systems must be eligible for and participate in the appropriate California Solar Initiative ("CSI") rebate program, unless rebates are not available or the property is currently not connected to the utility grid (solar PV only). Most solar installers can assist property owners with applying for these rebates. 4.9 Eligible Number of Assessments A property owner may apply for another assessment under the Program for the same property or an additional property(s), as long as all assessments under the Program for a particular property owner still meet all Program guidelines as to maximum assessment limits. 5 Program Requirements 5.1 Contractor Registration All contractors who install Program -financed Eligible Products must register with the Program. Any contractor who is licensed by the State of California and is in good standing with the Contractors State License Board ("CSLB"), including meeting all applicable bonding and insurance requirements, and who meets any fraud check requirements, is eligible to register with the Program. Contractors must also agree to abide by all Program terms and conditions, including: • Pulling permits as required by the local building department; • Obtaining approval of proposed Eligible Products in advance by calling the Program or completing the Custom Product Application process; • Installing Eligible Products that meet the required eligibility specifications; and ▪ Only installing Eligible Products for which he/she has the correct contractor's license; Contractors who also attend a Program orientation will be listed on the Program website. The Program, the Agent, and Renovate America, Inc. do not endorse contractors who register with the Program or any other person involved with the installed products, the design of the products, or warrant the economic value, energy savings, safety, durability or reliability of the Products. 5.2 Self -Install Agreement For property owners who choose to self -install Program -financed Eligible Products, those property owners will need to sign a Self -Install Agreement where they agree to follow the Program requirements, including: 36 •hero CALIFORNIA Residential Program' Handbook • Pulling permits as required by the local building department; • Obtaining approval of proposed Eligible Products in advance by calling the Program or by completing the Custom Product Application process; and ▪ Only installing Eligible Products that meet the required eligibility specifications. 5.3 Building Permits and Inspection Property owners are responsible for obtaining any required building permits for Eligible Products. If permits are required, the pulled permit documentation must he submitted with the Completion Certificate. Property owners should speak with their contractors to determine if their Eligible Products will require a permit and/or inspection. Program staff may also schedule an on -site validation visit to confirm that the approved Eligible Product was fully and permanently installed before approving a submitted Completion Certificate. 5.4 Fraudulent Activity Any misrepresentations made to the Program in the application, the contractor's bid or any other document at any time during the Program is likely to cause the property owner and/or the contractor to be terminated from the Program and may result in legal action. For example, this may result in a refused application, a notification that any installed Eligible Products will be at the expense of the property owners, or a legal proceeding, civil or criminal, to recover any fraudulently obtained funds. 5.5 Required Documents Required documents must be submitted at different steps in the Program process. For a list of required documents which must be submitted and when they need to be submitted, please see Section 7, Program Process. 6 Financial Terms 6A Costs to Apply There are no costs to apply for HERO Financing. 6.2 Assessment Costs Below are the costs to utilize Program financing for the installation of Eligible Products on your property. 6.2.1 Program Financing Fee A Program Financing Fee is a onetime fee of 6.25% added to the balance of the assessment at the time of closing which covers the costs of administering the Program. The amount of the Program Financing Fee is identified on the Program website and in the Financing Documents. 6.2.2 Interest Rate 37 9 •heroes CAI. EOHNiA Residential ProgramTM Handbook The interest rate for the assessment will be based on market rates. The final interest rate will be set at the time the Financing Documents are issued and sent to the property owners. The current estimated interest rate(s) will be available on the Program website, with the actual interest rate identified in the Financing Documents. 6.2.3 Interest Before First Payment Based on the closing date of your assessment, payments on your assessment may not begin until the following year's tax statement. This is the amount of interest that is added to the assessment amount for the period between your closing date and the date of your first assessment payment. The amount of interest for your assessment will be included on your Financing Documents. 6.2.4 Recording Fees Property owners will need to pay for any and all fees their respective County charges to record the assessment lien documents and related notices. These fees are added to the assessment amount. The total County recording fee amount will be listed on the Assessment Contract. 6.2.5 Annual Assessment Administrative Fee Additionally, each year, an annual assessment administrative fee will be added to the assessment lien amount on property tax bills. This fee covers the annual costs to place the lien on your property tax bill and manage the tax payments. The annual assessment administrative fee will be identified in the Financing Documents. 6.3 Annual Repayments Property owners will repay principal and interest over 5, 10, 15, or 20 years, depending on their approved term. Payment will be billed and paid through a separate line item on the property owner's property tax bill. As with other property taxes, the assessment payment is due in one or two installments each year. The payment schedule will be attached to the Assessment Contract that property owners sign, which sets forth the annual amounts due during the assessment term. Failure to repay the assessment lien will result in interest and penalties and may result in foreclosure, as with other property tax payments. 6.4 Prepayments Property owners may choose to prepay their assessment lien in full or in increments of $5,000 at any time. However, if you do prepay the assessment lien, you will need to pay (i) the principal amount of the assessment to be prepaid (the "Assessment Prepayment Amount"), (ii) a prepayment premium computed as set forth below, (iii) interest on the Assessment Prepayment Amount to the earlier of March 2 or September 2 occurring at least 90 days following the date the prepayment is made and (iv) a processing fee of up to $500. The prepayment premium is determined as follows: Year 1: Year 2: Year 3: Year 4: Year 5: Years 6-20: 5% of Assessment Prepayment Amount 4% of Assessment Prepayment Amount 3% of Assessment Prepayment Amount 3% of Assessment Prepayment Amount 3% of Assessment Prepayment Amount No penalty. In order to prepay, the property owner will need to contact the Program to initiate the prepayment process. If the assessment is to be repaid in full, this will include a calculation of the principal, interest and prepayment costs. 10 38 •hero CALIFORNIA Residential ProgramTM Handbook 7 Program Process The Program Process section describes the entire process for residential property owners, contractors, and Program Representatives from before the project begins, though all steps of the financing process. 7.1 Process Overview The chart below shows the`steps for the completion of a residential project financed through the Program: T. LTJ1 7.2 Step 1: Apply Apply Property owner submits appkcation online, through a contractor, or by hard copy. Product Approval Contractor or property owner calls HERO Program Representative with specific product details before instating products. Sign Financing Documents Property owner is emailed Financing Documents, which they sign and return. Install Eligible Products Payment Issued The contractor and property owner must sign and submit a Completion Certificate. Payment is then issued. 7.2.1 Application Each property owner wi!! need to complete an application and pay the application fee, if applicable. Property owners have the option of si_chmitting the application: 1. online: 2. fax: 3. email: 4. mail or in person: www.herofinancing.com (858) 385-0379, questions@herofinancing.com, HERO Program, 16935 West Bernardo Drive, Suite 150, San Diego, CA 92127, or through a contractor registered with the Program. Submission of an application does not guarantee that a property owner will be approved for financing. Also, if a property owner proceeds with installation of any Eligible Products prior to receiving approval, the property owner risks becoming ineligible for Program financing. Furthermore, if a property owner is approved for financing but then installs products that are not eligible, that project will not be funded. 11 39 •hero CAL]FORNIA Residential ProgramTM Handbook By submitting an application, property owners are specifically authorizing and agreeing that the Program staff has permission to obtain a credit report for each property owner and any other informational reports needed to verify bankruptcy and current property debt, obtain a property valuation, verify the property owners' declarations regarding title to the property and current and historical property tax status, and complete any other necessary record checks to verify information in the application or confirm eligibility for the Program. 7.2.1.1 Secure Online Application A secure online application for the Program is available on the Program website (www.herofinancinq.com). The online application is a step-by-step process where each applicant provides personal and property information. Applicants who receive an "approved" response to their application may then obtain approval of the proposed Eligible Products by calling the Program at (877) 747-4889 (see Section 7.5.1 for details). Applicants who receive a "conditionally approved" or "in review" message regarding their application will be contacted by a Program Representative once the application has been reviewed, but may also correspond with the Program either by email at questions(c�herofinancinq.com or through the call center at (877) 747-4889. Applicants will also receive notification emails regarding their application status. 7.2.1.2 Hard Copy Application In addition to the online application, a hard copy application is also available for property owners to fill out. The applicant may obtain the hard copy application by downloading it from the Program website, calling Program Representatives at (877) 747-4889, emailing Program representatives at questions@herofinancing.com. Program information and documents are available through these same methods. Once completed, a property owner may submit a hard copy application by mail, e-mail, facsimile, or in person to the contact information stated above. 7.2.1.3 Contractor Cal! In Contractors who have registered with the Program may call in an application to the Program and receive approval over the phone. Contractors and the property owner must fill out the hard copy application, provide that information over the phone, and then fax, email or mail a signed version of the application copy emailed by the Program to the property owner. As with the online application, calling in and then faxing or emailing the signed application allows quick processing and official notification of financing eligibility. 7.2.2 Application Results Applicants will receive official notification of the status of their applications immediately if applying through the online system or through the contractor call in method (with a confirming email). If applying through a hard copy application, the Program will notify applicants of the application status determination by email or mail once the application is processed. There are four possible application review results: Approved. An application will be approved if Program staff has verified all of the items listed in the Eligibility Requirements for properties and property owners. An "approved" applicant will receive an Approval Letter with instructions about the next steps for obtaining Program approval of Eligible Products, signing Financing Documents, installation of Eligible Products, and submitting the Completion Certificate. An "approved" applicant must comply with all Program requirements for these items, or will not be approved for funding at a later date. Conditionally Approved. An application will be conditionally approved if all the submitted information meets the underwriting eligibility requirements, but, based on certain information that was encountered during processing, additional information or documentation is required. If the property owner complies with the listed additional conditions, the application will then be approved. Examples of "conditions" that might be required are trust documents for property in a trust's name or corporate authorization 12 40 •hero CALIFORNIA Residential ProgramTM Handbook documentation when the property is owned by a corporation. It is within the Program staff's discretion to request specific types of documentation depending on the issues with the application. In Review. An application will be reviewed if the Program staff and/or the automated underwriting system is unable to connect the property with the property owner using the information that was submitted by the applicant or any issues arise during verification of eligibility requirements. "In review" applicants will be notified by email or mail of the issues that need to be resolved before the application can move forward. If the applicant has any questions, he or she can always call the Program to speak with a Program representative at (877) 747-4889. Denied, An application will be denied if Program staff determines the applicants or the property do not meet the eligibility requirements. A property owner will be notified in writing by mail of the specific reason(s) why his or her application was denied. If the property owner believes there has been an error based on the stated reasons in the declination letter and is unable to resolve it quickiy by contacting Program staff, the property owner must follow the steps set forth in Section 8, Dispute Resolution, in order to formally contest the Program's decision. 7.3 Step 2: Obtain Product Approval Property owners must obtain approval of all Eligible Products to be installed PRIOR to installation. 7.3.1 Scope of Project - Obtain Quote Property owners must determine which Eligible Product(s) they wish to finance through the Program. Property owners can work directly with an energy/water auditor and/or contractors to determine the scope of their project. Funding is only available for products listed on the Eligible Products List and Custom Products, if approved by the Program. Contractors or self -installing property owners may explore what products and models are eligible by using the "Product Look Up" function of the Program website at www.herofinancing.com/EligibleProducts. It is highly recommended that property owners perform a comprehensive energy/water audit on their property before considering any Eligible Products. A comprehensive audit applies building science principles from data collected on the subject property utilizing sophisticated diagnostic equipment including a blower door, duct blaster, and digital infrared camera to precisely detect the cause and measure the effects of building performance related problems. To find an energy auditor, contact the California Building Performance Contractors Association (CBPCA), Building Performance Institute (BPI), CaICERTS, or RESNET. Some energy auditors also provide home performance contracting work and specialize in energy efficiency products. As some homes may not have proper solar exposure or the structural framework to support the weight of a system, property owners who are considering the installment of a solar PV or solar thermal system are encouraged to contact one or more qualified solar system installers for a free solar site evaluation. Also, property owners should register and then compiete the rebate process for their solar PV projects with CSI, or the appropriate local utility, when available. Please note that structural work to support a solar system is not eligible for financing even if the system itself is eligible. 7.3.2 Eligible Product Look Up Prior to submitting an application, contractors and property owners may do preliminary research whether a product is eligible in two ways: download and review the current Eligible Products List from the Program website or use the "Product Look Up" function of the Program website (www.herofinancinq.com/EligibleProducts) to 13 41 hero CALIFORNIA Residential Program' Handbook explore eligibility of particular products in advance. While the Eligible Products List provides the required specifications, the "Product Look Up" page allows users to look for specific models. However, property owners may not purchase or install Eligible Products until they have received an email from the Program with an attached Completion Certificate, listing the approved Eligible Products (including the particular model and its cost) for all of the items they plan to install. 7.3.3 Contact Call Center for Product Approval Contractors or property owners will need to call the Program at (877) 747-4880 to obtain approval of specific Eligible Products and installation costs before Financing Documents are emailed to the property owner and Eligible Products are installed. The installation cost provided by the contractor or property owner is a "Not to Exceed" amount and the final invoiced amount of the project may not exceed this amount. This process should be followed for each Eligible Product included in the project. If a different Eligible Product or model needs to be installed, the contractor or property owner must contact the Program representatives again and repeat the process outlined above. To help determine which Eligible Products to install, the current Eligible Products List and the minimum specifications and/or installation requirements for each Eligible Product is available on the Program website (www.herofinancing.com/EligibleProducts). In addition, contractors and property owners may use the "Product Look Up" function of the Program website (www.herofinancing.com/EligibleProducts) to explore eligibility of particular model numbers or product requirements in advance. 7.3.4 New Products or Custom Projects If a property owner wishes to finance a product that is not listed on the Eligible Products List, he or she must complete the New Product Request Form. The property owner and contractor will need to provide the following: (a) the product/project they wish to install; (b) the cost to install; (c) the basis for eligibility (energy savings, water savings, or renewable energy production); and (d) the product they are removing. During review, Program Representatives may request additional documentation or additional contractor(s)' bid(s) for proposed products/project for any reason, including if the Program determines that the submitted bid(s) appear to be unreasonable as to cost or scope. The Program reserves the right to deny any New Product or Custom Project. Reasons for denial may include any of the following: if it appears that the proposed product is not cost effective, is too experimental or unreliable, the claimed energy or water savings or renewable energy generation product is not clearly supported, the costs do not appear to be in conformance with industry standards, or installation of the product may violate local laws or regulations. The Program will provide a written explanation for any denial of a New Product Request Form. 7.4 Step 3: Sign Financing Documents After products are approved, Program Representatives will email property owners their Financing Documents, which must be signed and received by the Program at 16935 West Bernardo Drive, Suite 150, San Diego, CA 92127 by the date stated on the signature page of the Assessment Contract: 1. Signed Assessment Contract with exhibits thereto; 2. Signed Application; and 3. Acknowledged Right to Cancel. 14 42 !hero CALI FORN1A Residential ProgramTM Handbook The due date on the signature page of the Assessment Contract will generally be ten (10) calendar days from the date of issuance of the Financing Documents. This means that the original, executed Financing Documents must be received by the Program by the close of business on the stated due date. If all property owner(s) for a particular property fail to sign and submit Financing Documents by the required date, new Financing Documents will need to be issued with a new interest rate. Repeated delays requiring repeated reissuance of Financing Documents, however, may result in a cancellation of approval or processing fee charges for Program financing. I he property owner will also receive an email, which informs the property owner and contractor of the next steps. Included with the I-inancing Documents will be the Completion Certification, which will list the approved Eligible Products. 7.5 Step 4: Install Eligible Product(s) Installation may only be completed by a contractor who has registered with the Program or by a self -installing property owner. Eligible contractors may register with the Program if they have met all the requirements and sign an agreement to comply with all Program terms and conditions. Property owners who are self -installing must notify the Program when they call in for Eligible Product approval that they are self -installing and must submit a signed Self -Install Agreement with the Completion Certificate. See Section 4, Eligibility Requirements. All Eligible Product installations, inspections or validations, and submission of the Completion Certificate and required attachments must be completed within the date indicated on the Completion Certificate. Applicants who are completing larger projects and/or who believe they need more time may contact the Program to come to an agreement on an appropriate completion period. If the approval period expires without the Program agreeing to an extension in writing, the property owner may be required to sign new Financing Documents. The Program, the Agent, and Renovate America, Inc. do not endorse contractors who register with the Program or any other person involved with the installed products, the design of the products, or warrant the economic value, energy savings, safety, durability or reliability of the products. 7.5.1 Building Permit Requirements Property owners are responsible for obtaining building permits and completing inspections, including final inspection sign -off, by the appropriate City or County Building Department. Property owners are also responsible for ensuring that their Eligible Products have met all other applicable federal, state and local laws and regulations, including Title 24. Property owners should speak with their contractors to determine if their Eligible Products require a building permit and/or inspection and what requirements must be met. i he Program has the right to schedule an on -site validation visit once the Completion Certificate is submitted for any installed, Program financed Eligible Products (see Section 7.8 below). 7.6 Step 5: Payment Issued 7.6.1 Submit Completion Certificate Once installation is complete, the property owner must submit an executed Completion Certificate and all required attachments to the Program for approval. To do so, the following conditions must be met: (1) all installed Eligible Products or Custom Products have been specifically approved by the Program in advance of installation and listed in one or more Completion Certificate(s); (2) all Eligible Products or Custom Products to be financed have 15 43 •hero CA4IFORNIA Residential Progrann' Handbook been completed and installed in compliance with Program rules; and, (3) property owner(s) are submitting a complete Completion Certificate within the financing period set forth in the application approval letter. The Completion Certificate must be submitted with signatures from the contractor and property owners with the following documents: 1. A final invoice from all contractor(s) or product invoice(s) if self -installed; 2. If required by the jurisdiction, a pullled permit from the appropriate city or county building department for all permitted Eligible Products or Custom Products; 3. If a solar PV or solar thermal system was installed, a copy of the CSI Rebate Reservation form, including the CSI Reservation number; 4. Specific Eligible Product Attachments: a) Window, door, skylight or window film — must attach peel off NFRC labels with Energy Star efficiency information (one for each financed window, door, etc.); c) Duct Sealing — must attach HERS Report; d) Airsealing — must attach blower door test results; and 5. Signed Self -Install Agreement, if property owner self -installed any Eligible Products without using a contractor registered with the Program. A current list of the required attachments for the Completion Certificate will be provided on the Program website (www.herofinancinq.com/HEROFinancing/HowltWorks) and on the Completion Certificate Instructions page that a property owner receives with their Completion Certificate. Completion Certificates and required attachments may be submitted to the Program by facsimile, email, mail or hand delivery. If an on -site validation visit is required before approval or the Completion Certificate is incomplete, Program Representatives will notify the property owner by email or mail of the next steps. 7.6.2 Right to Validate Products by Agent The Program reserves the right to perform independent on -site validation(s) of any Eligible Products financed by the Program even if permit inspections have already been completed. If a validation visit is required, Program staff will schedule any such on -site validation visit with the property owner once a Completion Certificate has been submitted. 7.7 Record Lien on Property and Issue Payment After receiving the executed Completion Certificate, the Program will record the assessment lien documents with the County of Riverside, issue bonds and issue payment. Payment will be issued to the contractor(s) listed in the Completion Certificate(s) and signed by the property owner, unless the property owner self -installed. 7.8 Add Assessment to Property Taxes For all property owners who sign Financing Documents, the Program will submit to the County a tax roll that identifies the tax lien and the assessment due. This assessment payment will appear as a separate line item on a property owner's annual property tax bills for the term of the financing. 7.8.1 Assessment Payments on Property Tax Bill Property owners who apply to the Program must be able to pay the agreed -upon assessment regardless of a change in personal financial circumstances, the condition of the property, or the condition of the newly installed 16 44 •hero CALIFORNIA Residential Program Handbook Eligible Products. As with other property taxes, failure to pay the assessment will result in penalties, interest, and, eventually, foreclosure of the property by the Agent or the County Tax Collector. Recordation of the assessment lien on the property will establish a continuing annual lien. As with other property taxes, the property owner may pay the entire annual amount on the date the first installment is due OR he or she may pay in two installments on the dates such installments are due. If the property owner wishes to sell the property, under California law, property taxes typically stay with the property when it is sold and the same is true with assessments. Under the HERO Program, when a property owner sells or refinances their property, the Agent and the County will permit their assessment to stay with the property; however, the seller's lender or the buyer's lender may require that the seller pay off the remaining outstanding balance of their HERO Program Assessment. Accordingly, depending upon the requirements of the lenders, the seller may be able to transfer the remaining balance to the new owner (or in the case of a refinancing allow it to remain with the property), or the seller may need to pay the unpaid balance ai the Lime of transfer or refinance. Property owners should consult with their lenders at the time of refinance or sale of the property to determine whether their Program assessment will need to be paid in full. In addition, by law, property owners must provide notice of the assessment to the buyer prior to sale of the property. If a property owner uses an impound account to pay his or her taxes, he or she can contact his or her lender to increase monthly impound payments by an amount equal to the total annual assessment divided by twelve (12) months. The contractual assessment amounts and any associated ongoing fees will be based on the installation costs, Program financing fees, ongoing support fees and the effective interest rate of the Program. Amounts will be specified in the Financing Documents in the Schedule of Assessment Payments attached to the Assessment Contract. 8 Dispute Resolution The parties who have signed an Assessment Contract for the Program shall attempt in good faith to promptly resolve any dispute arising out of or relating to any Assessment Contract under the Program by negotiations between the Agent or his or her designated representative and the Property Owner. Either party must give the other party or parties written notice (sent by certified mail) of any dispute. Within thirty (30) calendar days after delivery of the notice, the Agent and the Property Owner shall meet at a mutually acceptable time and place, and shall attempt to resolve the dispute. If the matter has not been resolved within thirty (30) calendar days of the first meeting, any party may pursue other remedies, including mediation. All negotiations and any mediation conducted pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations, to which Section 1152.5 of the California Evidence Code shall apply, and Section 1152.5 is incorporated herein by reference. Each party is required to continue to perform its obligations under the Assessment Contract pending final resolution of any dispute arising out of or relating to the Assessment Contract. Property Owners who wish to dispute decision(s) made by the Agent, but who have not signed a formal Assessment Contract, shall use a similar process. Written notice must be sent by certified mail to Western Riverside Council of Governments at 4080 Lemon Street, 3rd Floor, MS1032, Riverside, CA 92501-3609. The notice must identify the issue(s) for resolution, the circumstances that surround the issue(s), the section in the Handbook that the issue(s) pertain(s) to, and a timeline of events. Within thirty (30) calendar days after delivery of the notice, the Agent with the Property Owner, and shall attempt to resolve the dispute. The Agent shall render a written decision in 30 calendar days and send that decision to the Property Owner. The decision of the Agent is final. 9 Additional Requirements and Terms Additional requirements and terms for the Program are set forth in Appendix B to this Handbook. All Program applicants, borrowers, and contractors are subject to these additional terms as applicable. 17 45 •hero CALI FORNIA Residential ProgramTM Handbook 10 Appendices Appendix A: Glossary of Terms Annual Fuel Utilization Efficiency (AFUE): AFUE is the standard measurement of efficiency for gas and oil- fired furnaces. Given in percentages, this number tells you how much of your fuel is used to heat your home and how much fuel is wasted. The higher the AFUE rating, the greater the efficiency. Assembly Bill 811: Approved in July 2008 by the California legislature, authorizes cities and counties to establish voluntary contractual assessment programs to fund an array of conservation and renewable energy projects proposed by property owners. Assembly Bill 474: Approved in October 2009 by the California legislature, expands provisions to authorize the legislative body of any public agency, as defined, to determine that it would be in the public interest to designate an area within which authorized city officials and free and willing property owners may enter into contractual assessments to finance the installation of eligible water conservation Products that are permanently fixed to real property. British Thermal Units (Btu): The amount of heat required to raise the temperature of one (1) pound of water one (1) degree Fahrenheit. Building Performance Institute (BPI): BPI is a national standards development and credentialing organization for residential energy efficiency retrofit work — providing training through a network of training affiliate organizations, individual certifications, company accreditations and quality assurance programs. BPI certifications include building analysts (for energy audits) as well as building envelope professionals (envelope or manufactured housing) and mechanical professionals (heating or cooling). Building Permits: Formal approval of building plans by the designated government agency as meeting the requirements of prescribed codes. It is an authorization to proceed with the construction or reconfiguration of a specific structure at a particular site, in accordance with the approved drawings and specifications. California Solar Initiative (CSI): The California Solar Initiative is part of the Go Solar California campaign and builds on 10 years of state solar rebates offered to customers in California's investor -owned utility territories: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). The California Solar Initiative is overseen by the California Public Utilities Commission. California Title 24: California Code of Regulations (CCR), Title 24, also known as the California Building Standards Code, is a compilation of three types of building standards from three different origins: • Building standards that have been adopted by state agencies without change from building standards contained in national model codes; • Building standards that have been adopted and adapted from the national model code standards to meet California conditions; • Building standards, authorized by the California legislature, that constitute extensive additions not covered by the model codes that have been adopted to address particular California concerns. California Title 20: Title 20, a California law intended to drive down electrical energy consumption in the state, is having a noticeable impact on manufacturers, importers and retailers who produce or sell portable lamps. Coefficient of Performance (COP): The COP is the basic parameter used to report efficiency of refrigerant based systems. Commercial: Commercial entities are defined as all non-residential properties and include apartment buildings with five units or more and industrial properties. 18 46 •hero CALIFORNIA Residential ProgramTM Handbook Contractor: A person or business entity who contracts to erect buildings, or portions of buildings, or systems within buildings. Cool Roof: A cool roof reflects and emits the sun's heat back to the sky instead of transferring it to the building below. "Coolness" is measured by two properties, solar reflectance and thermal emittance. Both properties are measured from zero (0) to one (1) and the higher the value, the "cooler" the roof Cool Roof Rating Council (CRRC): The CRRC is an independent, non-profit organization that maintains a third - party rating system for radiative properties of roof surfacing materials. CSLB: The California State Licensing Board is the state entity in California that licenses and regulates all contractors. You may check a contractor's license status, as well as their bonding and workers compensation information at any time on the CSLB website. Custom Products: Energy or water conservation products that require special approval to be financed through the WRCOG HERO Program because the products are not included on the approved Eligible Products List. Custom Products should save energy or water or produce renewable energy for a reasonable cost. Energy Audit: An evaluation of energy consumption, as in s home or business, to determine ways in which energy can be conserved. Energy Efficiency Ratio (EER): EER is a measure of how efficiently a cooling system will operate when the outdoor temperature is at a specific level (95of). The higher the EER, the more efficient the system. Eligible Products: All Eligible Products listed in Appendix D. Energy Star: EnergyStar is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy helping us all save money and protect the environment through energy efficient products and practices. Expected Performance -Based Buy -Down (EPBB): Systems smaller than 30kw in capacity can receive a one- time, up -front incentive based on expected performance, and calculated by equipment ratings and installation factors (geographic location, tilt and shading). EPBB payments are provided on a $ per watt basis. Systems eligible for EPBB can choose to opt -in to the PBI system. Evapotranspiration (ET): ET is a term used to describe the sum of evaporation and plant transpiration from the Earth's land surface to atmosphere. Heat Seasonal Performance Factor (HSPF): HSFP is the most commonly used measure of a heat purnps heating efficiency. The higher the HSPF, the more efficient the heat pump. Home Energy Rating System (HERS): Based on the home's plans, the Home Energy Rater uses an energy efficiency software package to perform an energy analysis of the home's design. This analysis yields a projected, pre -construction HERS Index. Upon completion of the plan review, the rater will work with the builder to identify the energy efficiency Eligible Products needed to ensure the house will meet ENERGY STAR performance guidelines. The rater then conducts nncite incpeetinns, typically including a blower door test (to test the leakiness of the house) and a duct test (to test the leakiness of the ducts). Results of these tests, along with inputs derived from the plan review, are used to generate the HERS Index score forthL ... Ind7l.VIG IVl 111G IIVIIIG. Improved Property: Improved property is land with one or more structures on it. It is the opposite of vacant or unimproved property. Only approved products on Improved Property are financeable through the WRCOG HERO Program. Interconnection Agreement: A legal document authorizing the flow of electricity between the facilities of two electric systems. Under the CSI Program, eligible renewable energy systems must be permanently interconnected and operating in parallel to the electrical distribution grid of the utility serving the customer's 19 47 •hero- CALIFORNIA Residential ProgramTM Handbook electrical load. Portable systems are not eligible. Proof of interconnection and parallel operation is required prior to receiving an incentive payment. Investor -Owned Utility (IOU): For purposes of the Program, this refers to Southern California Edison Company. Kilowatt (kW): A unit of electrical power equal to 1,000 watts, which constitutes the basic unit of electrical demand. The watt is a metric measurement of power (not energy) and is the rate (not the duration over which) electricity is used. 1,000 kw is equal to 1 megawatt (MW). Kilowatt Hour (kWh): The use of 1,000 watts of electricity for one full hour. Unlike kw, kwh is a measure of energy, not power, and is the unit on which the price of electrical energy is based. Electricity rates are most commonly expressed in cents per kilowatt hour. Market Value: Highest estimated price that a buyer would pay and a seller would accept for an item in an open and competitive market. Megawatt (mW): Unit of electrical power equal to one million watts; also equals 1,000 kw. Net Operating Income (NOI): Net operating income is rental income of a property after operating expenses. These expenses would include all operating expenses, including maintenance, janitorial, supplies, insurance, accounting, management, etc. Participating Jurisdictions: The initial participating jurisdictions are the Cities of Banning, Calimesa, Canyon Lake, Corona, Eastvale, Hemet, Jurupa Valley, Lake Elsinore, Menifee, Moreno Valley, Murrieta, Norco, Perris, Riverside, San Jacinto, Temecula, Wildomar, and the western unincorporated portion of the County of Riverside. Other member agencies of WRCOG may elect to participate in the future. Program: The WRCOG Energy Efficiency and Water Conservation Program for Western Riverside County. Agent: The WRCOG Executive Director and/or his designee are designated as the Agent and are authorized to enter into contractual assessments. Real Property: A property in Western Riverside County that is subject to a real property tax. Performance based incentive (PBI): Solar installations over 30 kw must take the PBI. Any sized system can elect to take PBI. The PBI pays out an incentive, based on actual kwh production, over a period of five years. PBI payments are provided on a $ per kilowatt-hour basis. Renewable Energy: Electricity supplied by energy sources that are naturally and continually replenished, such as wind, solar power, geothermal, small hydropower, and various forms of biomass. Residential: Single family home, fewer than four (4) residential units. R-Value: R-Value is a measure of thermal resistance used in the building and construction industry, usually for insulation. The higher the R-Value, the greater the insulation qualities of the product. Seasonal Energy Efficiency Ratio (SEER): SEER is most commonly used to measure the efficiency of central air conditioners and air source heat pumps. SEER measures how efficiently a cooling system will operate over an entire season. The higher the SEER, the more efficient the system. Solar Heat Gain Coefficient (SHGC): SHGC measures how well a product blocks heat by sunlight. SHGC is expressed as a number between 0 and 1. The lower the SHGC, the less solar heat is transmitted into the building. Solar Rating and Certification Corporation (SRCC): The SRCC currently administers a certification, rating, and labeling program for solar collectors and a similar program for complete solar water heating systems. 20 48 hero CALIFORN{A Residential ProgramTM Handbook Water Audit: Water Audit is a qualitative and quantitative analysis of water consumption to identify means of reducing, reusing and recycling of water. WaterSense: WaterSense is a partnership program sponsored by the U.S. Environmental Protection Agency (EPA) with the goal of protecting the future of the US's water supply. By promoting and enhancing the market for water efficient products and services, WaterSense makes every drop count by leveraging relationships with key utility, manufacturer and retail partners across the U.S. Western Riverside Council of Governments ("WRCOG"): Is a joint powers authority representing the 17 cities, the Riverside County Board of Supervisors, and the Eastern and Western Municipal Water Districts. WRCOG is serving as the Agent to facilitate funding tor property owners in participating jurisdictions that meet the project approval and financing criteria provided herein. 21 49 •heron CALIFORNIA Residential ProgramTM Handbook Appendix B: Additional Requirements and Terms In addition to the Program eligibility criteria and requirements described above in the Handbook, the following additional terms are required of property owners who participate in the Program. Property Owner Agrees to All Program Terms By execution of the Assessment Contract documents, each executing property owner certifies that they have read, understood and agreed to the terms of the Program as outlined in the Program Handbook in addition to the terms of the Assessment Contract. Property owner also thereby certifies that the property owner(s), the property, and the products meet all Program eligibility requirements. Authority to Install Products By execution of the assessment contract documents, each property owner represents that he or she has the authority to install the approved products on the property named in the Assessment Contract documents. No Endorsement by Agent The property owner(s) agree that they understand that the Agent's review of the proposed products and authorization for Program funding shall not be construed as confirming or endorsing the qualifications of the property owner(s), the contractors, or any other person involved with the products; endorsing the design of the products; or as warranting the economic value, energy savings, safety, durability or reliability of the products. Property Owner Is Responsible for Products, Permits and Inspections The property owner is solely responsible for all products installed on his or her property, including the selection of any contractor(s), energy auditor(s), or equipment, including manufacturers. Any performance related issues are the responsibility of the property owner and the property owner's contractor(s). Neither the Agent nor its Agents are responsible for the performance of the products. Completion of all city and county permitting and inspections are the responsibility of the property owner. Program May Inspect Products The Program reserves the right to inspect any and all products financed by the Program at any time during installation or when a Completion Certificate is submitted to ensure compliance with the Program. Dispute Resolution The parties to any Assessment Contract under the Program shall attempt in good faith to resolve any dispute arising out of or relating to it promptly by negotiations between the Agent and an authorized representative of the property owner. Defaults on Assessment Payments After written notification, defaults in payment of assessments will result in the initiation of foreclosure proceedings on the December 1st following such default. Rebates and Tax Credits Federal, state, or local laws or rebate programs may change at any time. Therefore, the Program is not liable for any loss of or change in a rebate or tax credit. Property owners should consult with their tax advisors and/or accountants as to the applicability of any federal tax credits to their personal tax situation. Tax Deductibility of Contractual Assessment 50 22 •hero. CALIFORNIA Residential ProgramTM Handbook Please confer with your tax advisor as to whether he or she recommends deducting any part of your contractual assessment on your tax return. Program Database All information obtained from property owners through the Program will be used only for purposes of the Program, CSI or other utility rebate programs, energy savings tracking, and federal or state grant program funds tracking and surveys. Prepayments Early pre -payment of the assessment may result in pre -payment penalties as set forth le the Aeeeee,ilent Contract. Releases and Indemnification By submitting a Program application, property owner thereby acknowledges that the Agent has formed the Contractual Assessment District, with the acknowledgement of the local city/county officials, solely for the purpose of assisting the property owners in the city or county where their home is located with the financing of approved products and that the Agent, its member agencies and Program staff have no responsibility of any kind for, and shall have no liability arising out of, the installation, operation, financing, refinancing or maintenance of the products. Property owner agrees that property owner and his or her successors in interest to the fee simple title in the subject property shall be solely responsible for the installation, operation, financing, refinancing or maintenance of the products_ Participation in the Program does not in any way obligate the Agent, its member agencies, participating cities/counties, or its Agents to guarantee or ensure the performance of any products. Property owner thereby acknowledges that the subject property will be responsible for payment of the contractual assessment regardless of whether the products are property installed or operate as expected. Property owner also agrees to release, defend, indemnify, and hold harmless the Agent, its member agencies, participating cities/counties, and Program staff, including their officers, directors, employees and agents, from and against any claims, actions, demands, costs, damages or lawsuits, including the payment of attorney fees and cost of court, arising out of or in any way connected with his or her participation in this Program, including, without limitation, the installation, maintenance or repair of the products or compliance with any applicable federal, state or local laws. Disclosure of Participant Information By submitting a Program application, property owner agrees that the Agent may disclose his or her personal information to Program staff, and that the Agent and Program staff may disclose that information to third parties when such disclosure is essential to the conduct of the Agent's or its member agencies' business or to provide services to property owner, including, but not limited to, where such disclosure is necessary to (i) comply with the law, legal process or our regulators, (ii) enable the Agent or the Program staff or consultants to provide services to property owner and to otherwise perform their duties, and (iii) obtain and provide credit reporting information. in order to receive tunding tor this Program and to enable communication regarding the State of California's rebate program, property owner consents to the release of his or her name and contact information to the California Solar initiative or the utility solar rebate program operated by the iocai utility. Property owner further agrees to the release of his or her name and contact information and the subject prop i y's utility usage data for 12 months before installation of the improvements and up to 24 months after installation of the improvements from the local utility company to the Agent, Program staff, its grantors, and its designated contractors for the purpose of conducting surveys and evaluating the Program and its impact. In addition, property owner understands that the Agent is a public agency which, in certain circumstances, may have an obligation to release information under the California Public Records Act or pursuant to court order Financing Disclosure Requirements Required financing disclosure notices and forms are attached to this Handbook in Appendix E. 23 51 •hero CALIFORNIA Residential ProgramTM Handbook Renewable Energy Certificates and other Green Attributes For those property owners who install solar PV or non-PV electricity generating systems, Renewable Energy Certificates ("RECs") and all related green attributes will be assigned to the Program for the length of the financing term. RECs can only be registered and tracked for properties with monitoring systems. Contractor Marketing Guidelines The Agent has provided Contractor Trademark and Logo Usage Guidelines for any third party wishing to reference the Program in that third party's marketing materials. These guidelines should be strictly adhered to or such third party will risk being excluded from participating in the Program in the most severe instances. 24 52 !hero CALIfORNIA Residential ProgramTM Handbook Appendix C: Program Forms and Documents Program Handbook http:/lwrcoQ.herofinancinq.com/Content/Documents/WRCOG HEROProoramHandbook.pdf HERO Financing Residential Application http://wrcoc. herofinancinq.com/Content/Documents/HEROFinancinq ResidentialHardCopvAonlication.odf Contractor Particlpation Terms and Conditions http://wroco.herofinancina.com/Content/Documents/WRCOG HEROProgramContractorParticipationTermsAndCon ditions.pdf Custom Product Application http:/lwrcoo. herofinancinq.com/Content/Docu ments/HEROFinancingCustom ProductApplication.pdf Sample Completion Certificate http://wrcog.herofinancing.com/Content/Documents/HEROFinancingCom pletionCertificate(Sam ple).pdf Sample Financing Documents http://wrcog. herofinancina.com/ContendDocuments/HEROFinancinQFinancingDocuments(Sample).pdf Privacy Policy http://oaweb.herofinancing.com/PrivacyPolicv.asox 53 25 Ahem- CALIFORNIA Residential ProgramTM Handbook Appendix D: Eligible Products List Energy Efficiency Products Product Eligibility Specifications Max. Term Air Sealing and Weatherization Contractors should follow the Building Performance Institute ("BPI") standards, Energy Star guidelines and/or ASHRAE 62.2-7 2007 Ventilation Standards for air sealing and weatherization. It is mandatory that air sealing levels are measured by a blower door test before and after improvements are made. A copy of the blower door test results (CFM50) before and after improvements are Installed must be included with the Completion Certificate. Mechanical ventilation should be installed if natural ventilation is below the minimum levels specified In ASHRAE 62.2-7 2007 Ventilation Standards. 10 years Insulation Attic Energy Star labeled and R-30 minimum required in open attic; cathedral ceilings will vary. 20 years Wall Energy Star labeled and R-19 minimum, or fill wall cavity (e.g., for 2x4, R-13 will fill wall cavity) 20 years Floor (over unconditioned space) Energy Star labeled and R-19 minimum 20 years Perimeter (foundation) R-10 minimum 20 years Ducts (in unconditioned space) R-6 minimum 20 years Reflective insulation and Radiant Barriers Foil type radiant barriers are recommended. Ventilation and moisture control requirements should be considered. 20 years Cool Roof System 1. Roofing products including liquid coatings must comply with all mandatory measures of the current California Title 24. The roofing products manufacturer must have its roofing product listed in the CRRC's Rated Product Directory (see http://www.coolroofs.org) OR, for steep sloped roofs only, be an approved Above - 20 years Sheathing Ventilation (ASV) metal roofing product whose manufacturer has provided sufficient evidence of energy savings equivalent to the minimum solar reflectance and thermal emissivity requirements set forth below. 2. Roofing products must at a minimum meet the following solar reflectance and thermal emissivity requirements. In the case of liquid roofing products, the overall final roof assembly or surface, with the product applied, must meet these requirements: steep sloped applications Initial' Aged" minimum solar reflectance 0.25 0.2 minimum thermal emittance 0.75 0.75 low sloped applications initial" Aged" minimum solar reflectance 0.65 0.5 minimum thermal emittance 0.75 0.75 3. Any project involving roofing may be subject to additional code compliance requirements such as those prescribed by the California Building Code, or Title 24 for additions and alterations. The project stakeholder is fully and solely responsible to meet any such additional requirements. *Initial" is the score for that product when it is newly installed. °Aged" is the score for that product after it has been installed on the roof for three years. Space Heating, Ventilation, and Air Conditioning (HVAC) Programmable Thermostat Shipped with a default energy saving program that is capable of maintaining two separate programs (to address the different comfort needs of weekdays and weekends) and four temperature settings or more for each day. 15 years Duct Sealing A HERS test is required for duct replacement or repair. A copy of the CF6R Form will be required as part of the Completion Certificate. Total CFM leakage should be less than 6%. Contractors should follow Energy Star guidelines. 20 years Boller On Energy Star Qualified list ( a 85% AFUE). 20 years High Efficiency Fumace On Energy Star Qualified list: Natural Gas or Propane (? 90% AFUE). 15 years Whole House Fan Must be included on the Southern Califomia Edison Qualifying Product List. 20 years 26 54 �!herc CALIFORNIA Residential ProgramTM Handbook Attic Fan Fan must have controls (thermostat). Fan opening must be properly insulated and sealed in winter. Solar -powered fans are allowed. 15 years Ceiling Fan Must be on Energy Star Qualified list. 10 years Other Ventilating Fans On Energy Star Qualified list 10 years Minimum Efficacy (in Airflow(cfm) wntctaetot Pe f mute Range Hoods - up to cfm (max) 2.8 Bathroom and Utility Room Fans -10 to 89 cfm 1.4 Bathroom and Utility Room Fans - 90 to 500 cfm (max) 2.8 In -Line (singie-port & multi -port) tans 2.8 Air Source Heat Pumps On Energy Star Qualified and AHRI lists: = Split systems: a 3.2 HSPF, a12 EER and = 14.5 SEER • Packaged systems: a 8 HSPF, all EER and a 14 SEER The AHRI Number for the system must be provided to ensure the system meets Energy Star and AHRI minimum values. 15 years Ground Source Heat Pumps On Energy Star Qualified list As of January 1, 2011: 15 years • Closed Loop (water to air): a 16.1 EER and a 3.5 COP • Open Loop (water to alr): z 18.2 EER and a 3.8 COP • Closed Loop (water to water): a 15.1 EER and a 3.0 COP • Open Loop (water to water): a 19.1 EER and a 3.4 COP • DGX (Direct Expansion): a 18.0 EER and a 3.6 COP As of January 1.2012: • Closed Loop (water to air): a 17.1 EER and a 3.6 COP • Open Loop (water to air): a 21.1 EER and a 4.1 COP • Closed Loop (water to water): a 16.1 EER and a 3.1 COP • Open Loop (water to water): a 20.1 EER and a 3.5 COP • DGX (Direct Expansion): a 16.0 EER and a 3.6 COP Radiant Heating and Cooling (floor, wall, and ceiling) Radiant systems must bepowered bya qualified heat pump q (electric or gas fired, or ground -source), efficient gas boiler, or solar system (not by electric resistance). 15 years Central Air Conditioner On Energy Star Qualified and AHRI lists: • Split systems: a12 EER and a14.5 SEER • Packaged systems: all EER and a14 SEER Replacement of existing system only. No new cooling systems. The AHRI Number for the system must be provided to ensure the system meets Energy Star and AHRI minimum values. 15 years Evaporative Cooler Must be included on the Southern California Edison Qualified Product list. Must be permanently installed through the wall or on the roof. Window installed evaporative cooiers are not eligible. Must have separate ducting system -Independent of the air conditioning and heating duct system. Can be single stage or two stage system that 1. Has UL recognized electrical components; 2. Comes with a water quality management system that provides positive removal of sump water on a regular interval (a bleed system is not allowed); 3. Have a single duct or multi ducted distribution system; 1.. Have either: (a) A multi -function manual control switch, which offers high and low fan speed, pump on or off and the unit control of on or off; or (b) A thermostat specitically designed for evaporative coolers, which automatically control the unit operation based on the indoor temperature, fan speed, and pump operation. The automatic thermostat must be mounted remotely from the cooler. Pressure relief dampers are required. 10 years ECM Motor The ECM (Electronically Commutated Motor) or frictionless fan motor may not be financed for longer than the remaining useful Ilfe of the forced air unit In which It Is Installed in. 10 years Water Heating Gas Condensing Water fleeter On Energy Star Qualified list or a 0.8 EF 10 years Natural Gas Storage Water Heater On Energy Star Qualified list (a 0.67 EF) 10 years 27 55 •hero CAL1 FORMA Residential ProgramTM Handbook Tankless (Demand) Water Heater On Energy Star Qualified list ( a 0.82 EF) 20 years Electric Heat Pump Water Heater On Energy Star Qualified list (a 2.0 EF) 15 years Windows, Skylights, and Doors Exterior Windows Energy Star labeled (s 0.35 U Factor and <_ 0.30 SHGC) Replacement windows only; no newly created windows. A copy of the NFRC label will be required with the Completion Certificate. 20 years Doors Energy Star labeled: • Opaque 50.21 U Factor and no required rating for SHGC, 5 4-lite 50.27 U-Factor and 50.30 SHGC • > F-lite 5.32 U-Factor and 50.30 SHGC A copy of the NFRC label will be required with the Completion Certificate. 20 years Skylights Energy Star labeled (U Factor s 0.57 and SHGC 5 0.30) Replacement skylights only, no new skylights. A copy of the NFRC label will be required with the Completion Certificate. 20 years Window Film Spectrally selective window films. a70% visible light transmission recommended. Must provide NFRC label or product sheet with the Completion Certificate. 10 years Pool Equipment High Efficiency Pool Circulating Pump and Motor Must be Included on the Southern California Edison Qualified Product list. Replace existing pool pump and motor with energy -efficient variable -speed pool pump on a single family residence pool. It is recommended that pump motor be premium rated efficiency (NEMA). May include add on of efficient pool filter which does not use backwashing. Proof of efficiency/no backwashing must be provided. 10 years Natural Gas Pool Heater On Palm Desert Set to Save Qualifying Product List (Thermal efficiency a 84%) 10 years Lighting Measures Indoor Fixtures On Energy Star Qualified list. Must be permanently Installed. 10 years 28 56 hero CAL OUJA Residential Program'-m Handbook Renewable Energy Systems P Product Eligibility Specifications Max. Term Solar Photovoltaic (PV) System must be installed by a contractor registered with the Califomia Solar initiative Program who has the correct contractor's license to install solar systems. System cwner must utilize equipment that has been approved by the California Solar Initiative rebate program. Systems must be grid -connected unless the property is not connected to the grid. Please see the Program Handbook for more information. 20 years Solar Thermal Water Heating Indoor Water Heating: The system (OG 200) must be certified by the Solar Rating and Certification Corporation (SRCC). Auxiliary tank must be residential -class. SF ? 0.5 Pool Heating: The collectors (OG 100) must be certified by the SRCC_ 15 years Small Wind Turbines Equipment must be Ilstcd on California Energy Commission's List of Eligible Small Wind Turbines. 20 years Water Efficiency Products Product Eligibility Specifications Max. Term] Indoor High Efficiency Toilets WaterSense qualified (s 1.28 gpf) 20 years Urinals WaterSense qualified ( s .5 gpf) 20 years Hot Water Delivery Systems {that save hot water) Hot water delivery options as defined by the Energy Star "Volumetric Hot Water Savings Guidelines:" (a) Dedicated recirculating Line —This method of re -circulating hot water requires specially designed plumbing where the hot water pipe from your water heater is plumbed to each fixture in a loop fashion, and then continues back to the water heater through a third line (return line). A small pump re -circulates the hot water in a continuing loop, only shutting off with a timer or thermostat. (b) Whole house manifold systems —Whole house manifold systems, also called parallel pipe or home run systems, use small diameter, flexible pipes that run directly to each individual fixture from a central manifold located near the water heater. The manifold may be either plastic or metal, and the piping consists of flexible plastic piping such as PEX, which Is a high- temperature, flexible polymer pipe. For example, bathroom sinks and showers would be on their own hot water line from the water heater. (c) Demand initiated recirculating systems —The user initiates demand -initiated recirculating systems by pushing a button or via a motion sensor located near the hot-water fixture. Pumps are used to send cold water in the pipes back to the water heater through a dedicated retum line or the cold water line and pull hot water from the water heater to where It Is needed. When the pump is operating, a sensor measures a change of temperature and turns the pump off when the desired temperature change is met. (d) Core plumbing systems —A core plumbing system is a system that has a central plumbing core, where the kitchen, the bathrooms, and the laundry room are in close proximity end the water heater Is centrally located beneath the central plumbing core. The system Is designed to minimize the total volume of pipe by limiting run lengths and designing the system in a tree -like structure with trunks, branches, and twigs, where longer pipe lengths have a much smaller pipe diameter. Please see http://www.EnergyStar.govlla/partnerslbldrslenders_raters/ downloadsNolumetric Hot Water Savings_Guidelines._pdf for more information. 15 years Outdoor Weather Based Irrigation Control Systems Must be on the SoCal Water Smart rebate list. A weather -based irrigation system (also called a Smart irrigation or "Evapotranspiration (ET)' controller or system) with a rain shut off device that uses weather data and/or site intonnation such as piant type and sprinkler system output to adjust watering times and frequency. Please see http:llwww.epa.gov/watersenselproductslcontroltech.html for more iiiforh ativa. i 0 years Rotating Sprinkler Nozzles Must be on the SoCal Water Smart rebate fist. Product also called "rotary nozzles and bodies." Replaces regular sprinkler nozzles and bodies with rotary versions that reduce water usage up to 20%. Should also have matched precipitation capability so that all spray patterns and radius deliver water evenly over the landscape area. i0 years Drip Irrigation Drip irrigation systems in gardens, planters and beds. 10 years Rainwater Catchment Must be permanently installed. Storage system to be sized to hold all water from a 1' rainfall event (or 0.62 gallons per sq foot of total roof area used for capture). 20 years Gray Water Systems The system must meet Chapter 16A of the California Plumbing Code. Gray water re -use system to be used for irrigation or indoor use. Can be collected from clothes washer, showers, faucets or other sources. Single fixture systems are not eligible. Only permitted systems are eligible. 15 years 29 57 !hero CALIFORNIA Residential Program' Handbook 58 30 ATTACHMENT 3 59 a Western River- ide Council of governments Cauny of Riverside • City of Banning • City of Cahmese • City of Canyon Lake • Cry of Corona • City of Eastvale • City oh Hemet • City of jurupa Valley City of Lake Elsinore • City of Menifee • City of Moreno Valley • City of Murrieto • City of Norco • City of Perris • City of Riverside • City of San Jacinto City of Temecula • City of Wildomor • Eastern Municipal Water District • Western Municipal Water District - RESOLUTION NUMBER 04-13 RESOLUTION OF THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS DECLARING ITS INTENTION TO FINANCE DISTRIBUTED GENERATION RENEWABLE ENERGY SOURCES, ENERGY AND WATER EFFICIENCY IMPROVEMENTS AND ELECTRIC VEHICLE CHARGING INFRASTRUCTURE THROUGH THE USE OF VOLUNTARY CONTRACTUAL ASSESSMENTS PURSUANT TO CHAPTER 29 OF PART 3 OF DIVISION 7 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE AND SETTING A PUBLIC Q,EARING TIIE oEON (California HERO Program) WHEREAS, pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (the "Act), the Joint Powers Agreement of the Western Riverside Council of Governments (WRCOG).originally made and entered into April 1,1991 (the "Joint Powers Agreement"), as further amended to date, and the amendments to Joint Powers Agreement entered into as cf the effective date of this resolution adding certain counties and cities throughout the State of California as Associate Members of WRCOG to permit the provision of property assessed clean energy ("PACE") services within the jurisdictions of such Associate Members, WRCOG proposes to establish a voluntary contractual assessment program to be known as the "California HERO Program" (the "Program") to assist property owners within the jurisdictional boundaries of such Associate Members with the cost of installing distributed generation renewable energy sources, energy or water efficient improvements and electric vehicle charging infrastructure that are permanently fixed to their properties ("Authorized Improvements"); and WHEREAS, in the opinion of this Executive Committee, properties located within in the Associate Members would be benefited by including such properties in the Program. NOW, THEREFORE, BE IT RESOLVED by the Executive Committee of the Western Riverside Council of Governments as follows: Section 1, Findings. The Executive Committee hereby finds and declares all of the following: A. Aii of the above recitals are true and correct; 3. Energy conservation efforts, including the promotion of energy efficiency improvements to residential, commercial, industrial, agricultural or :.ther r cal property, can reduce energy consumption, energy bills, and maximize existing energy production and transmission facilities; C. Energy efficiency improvements also include improvements that promote water efficiency. The California Energy Commission prepared a staff report in November 2005 regarding Californias water -energy relationship. Such report states: "As California continues to struggle with its many critical energy supply and 4080 Lemon Street, 3rd Floor Annex, M51032 • Riverside, CA 92501-3609 • (951) 955-7985 • Fax (951 ) 787-7991 • www,wrcog,cog.ca.us 60 Infrastructure challenges, the state must identify and address the points of highest stress. At the top of this list is California's water -energy relationship; water -related energy use consumes 19 percent of the states electricity, 30 percent of its natural gas, and 88 billion gallons of diesel fuel every year— and this demand is growing ..., [A] major portion of the solution is closer coordination between the water and energy sectors... The state can meet energy and demand reduction goals.. by simply recognizing the value of the energy saved for each unit of water saved; The direct relationship between water use and energy use means that improvements to residential, commercial, industrial, agricultural or other real property which promote water efficiency also result in energy efficiency; D. Water conservation efforts, includina the promotion of water efficiency improvements to residential, commercial, industrial, agricultural or other real property, are necessary to address the issue of chronic water shortages in California; E. The upfront cost of making residential, commercial, industrial, agricultural or other real property more energy or water efficient prevents many property owners from making those improvements and, in an effort to make those improvements more affordable and to promote the installation of those improvements, the Legislature has authorized an alternative procedure pursuant to Chapter 29 for authorizing voluntary contractual assessments to finance the cost of Authorized Improvements; F. A public purpose will be served by the establishment by WRCOG of a voluntary contractual assessment program whereby WRCOG is authorized to finance the installation of Authorized Improvements that are permanently fixed to residential commercial, industrial, agricultural or other real property located in the jurisdictional territory of Associate Members of WRCOG; G. Property located in the jurisdictional territory of Associate Members of WRCOG will benefit from inclusion in the Program; and including such property in the Program will serve the public purpose of promoting energy and water conservation efforts and addressing the issue of global climate change; Section 2. Determination of Public Interest. The Executive Committee hereby determines that it would be convenient, advantageous and in the public interest to designate an area within the jurisdictional boundaries of each city and county which is an Associate Member of WRCOG as of the effective date of this resolution identified in Exhibit A hereto and incorporated herein by this reference, which may encompass the entirety of such Associate Member or a lesser portion, as areas within which authorized WRCOG officials and property owners may enter into voluntary contractual assessments pursuant to Chapter 29 to finance the installation of Authorized Improvements that are permanently fixed to real property pursuant to Chapter 29 (the 'Program Boundaries"). Section 3. Determination to Establish a Single, Comprehensive Program. The Executive Committee hereby declares that while the Authorized Improvements are of such a character that they directly and specially benefit property in the Associate Member jurisdictions within WRCOG and that the purposes sought to be accomplished by establishing a program to finance the installation of such improvements can best be accomplished by a single, comprehensive program available to Associate Members throughout the State of California rather than by separate programs administered by each Associate Member. Therefore, WRCOG proposes to make voluntary contractual assessment financing available to the owners of property located in the Program Boundaries to finance the installation of Authorized 61 Improvements that are permanently fixed to real property. Section 4. Identification of the Authorized Improvements. The Executive Director of WRCOG (the "Executive Director") shall prepare or direct the preparation of a list of the Authorized Improvements that may be financed through the Program, as part of the report required in Section 8 of this Resolution, and shall update such list from time to time, as the Executive Director deerns necessary. Section 5. Identification of the Boundaries. The area within which voluntary contractual assessments may be entered into pursuant to Chapter 29 is all land within the Proaram Boundaries. Section 6. Proposed Arrangements for Financing. The proposed arrangements for financing the Program are briefly described as follows: WRCOG may issue bonds, notes, receive lines of credit, and enter into other financing instruments or relationships pursuant to Chapter 29, the principal and interest of which would be repaid by voluntary contractual assessments. Alternatively or in the interim, WRCOG, may enter into agreements with other public entities to advance or grant funds to WRCOG to finance Authorized improvements and/or to implement and administer the Program. Such advances, if subject to reimbursement, shall be repaid through voluntary contractual assessments and WRCOG may sell bonds or other forms of indebtedness to reimburse such advances. The proposed financing arrangements may include the lease -purchase of public facilities pursuant to a lease or other contractual arrangement with a public financing authority or non profit entity or other financing elements as may be determined necessary or useful to the financing of the voluntary contractual assessment program. WRCOG may enter into a relationship with an underwriter or financial institution that would allow sequential issuance of a series of bonds, each bond being issued as the need arose to finance work to be repaid through voluntary contractual assessments. The interest rate of each bond may be determined by an appropriate index, but shall be fixed at the time each bond is issued. In the event improvement bonds will be issued pursuant to the Improvement Bond Act of 1915 to represent voluntary contractual assessments, all of the following will apply to the extent not in conflict with Chapter 29: (a) Notice is hereby given that serial bonds or term bonds or both to represent unpaid assessments, and to bear interest at the rate of not to exceed 12 percent per year, or such other amount authorized by law, payable semiannually, shall be issued hereunder in one or more series in the manner provided by the Division 10 (to the extent not in conflict with Chapter 29), and the last installment c.-Jf bonds shaii mature a maximum of 39 years from the second day of September next 0,,^^tea—ling 12 months. from their date. (b) WRCOG hereby determines and declares that WRCOG snail not obligate itself to advance available funds from WRCOG treasury nor shall any Associate Member be obligated to advance available funds from its treasury to cure any deficiency which may occur in the bond redemption fund. (c) WRCOG hereby determines that the principal amount of bonds maturing or becoming subject to mandatory prior redemption each year shall be other than an amount equal to an even annual proportion of the aaaregate principal amount 62 of the bonds, and the amount of principal maturing or becoming subject to mandatory prior redemption in each year plus the amount of interest payable in that year shall be an aggregate amount that is substantially equal each year, except for the moneys falling due on the first maturity or mandatory prior redemption date of the bonds which shall be adjusted to reflect the amount of interest earned from the date when the bonds bear interest to the date when the first interest is payable on the bonds. (d) With respect to the procedures for the collection of assessments and the advance retirement of bonds, WRCOG proposes to proceed under the provisions of Part 11.1 of Division 10 (commencing with Section 8760 of the California Streets and Highways Code). (e) Such bonds may by refunded under Division 11.5 of the California Streetc and Highways Code or other applicable laws permitting the refunding of the bonds, upon the conditions specified by and at the determination of WRCOG. The Executive Director, upon consultation with bond counsel, is authorized to provide for the issuance of bonds payable from voluntary contractual assessments. In connection with the issuance of bonds payable from voluntary contractual assessments, WRCOG expects to obligate itself, through a covenant with the owners of the bonds, to exercise its foreclosure rights with respect to delinquent contractual assessment installments under circumstances to be specified in such covenant. WRCOG shall determine the creditworthiness of a property owner to participate in the financing of Authorized Improvements based upon criteria to be developed by the Executive Director in consultation with WRCOG's financing team. Section 8. Preparation of Report. The Executive Committee hereby directs the Executive Director to prepare, or direct the preparation of, and file with the Executive Committee a report pursuant to Section 5898.22 of the California Streets and Highways Code at or before the time of the public hearing described in Section 9 hereof (the "Report). The Report shall contain all of the following: (a) A map showing the boundaries of the territory within which voluntary contractual assessments are proposed to be offered. (b) A draft contract specifying the terms and conditions that would be agreed to by the owner of property within the Program Boundaries and WRCOG. (c) A statement of WRCOG policies concerning voluntary contractual assessments including all of the following: (i) Identification of types of Authorized Improvements that may be financed through the use of voluntary contractual assessments; (ii) identification or 'WRCOG officiai authorized to enter into voluntary_ contractual assessments on behalf of WRCOG, (iii) A maximum aggregate dollar amount of voluntary contractual assessments; (iv) A method for setting requests from property owners for financing through voluntary contractual assessments in priority order in the event that requests 63 appear likely to exceed the authorization amount; and (v) A brief description of criteria for determining the underwriting requirements and safeguards that will be used to ensure that the total annual property tax and assessments on property proposed to be subject to a voluntary contractual assessment under the Program will not exceed five percent (5%) of such property's market value, as determined at the time of approval for the contractual assessment of the owner of such property. (d) A plan for raising a capital amount required to pay for work peroried pursuant to voluntary contractual assessments. The plan may include amounts to be advanced by WRCOG through funds available to from any source. The plan may include the sale of a bond or bonds or other financing relationship pursuant to Section 5898.28 of the California Streets and Highways Coda. The plan shall include a statement of or method for determining the interest rate and time period during which contracting property owners would pay any assessment. The plan shall provide for any reserve fund or funds. The plan shall provide for the apportionment of all or any portion of the costs incidental to financing, administration, and collection of the voluntary contractual assessment program among the consenting property owners and WRCOG, (e) A report of the results of consultations with the Auditor -Controller of any county within the Program Boundaries concerning the additional fees, if any, that will be charged to WRCOG for incorporating the proposed voluntary contractual assessments into the assessments of the general taxes of the Associate Members located within such county on real property and a plan for financing the payment of those fees. Section 9. Public Hearing. Pursuant to Chapter 29, the Executive Committee hereby orders that a public hearing to be held before the Executive Committee in the First Floor Board Chambers, County of Riverside Administrative Center, 4080 Lemon Street, Riverside, California, on June 3, 2013, on the proposed Report and the Program. At the public hearing all interested persons may appear and hear and be heard and object to or inquire about the proposed Program or any of its particulars. Section 10. Notice of Public Hearing. The Secretary of the Executive Committee is hereby directed to provide notice of the public hearing by publishing this Resolution once a week for two weeks, pursuant to Section 6066 of the California Government Code, and the first publication shall occur not later than 20 days before the date of such hearing in a newspaper of general circulation published within the jurisdiction of each Associated Member or, if there is no such newspaper of general circulation published within the jurisdiction of an Associated Member, then in a newspaper of general circulation published nearest thereto. Section 11. The Voluntary Contractual Assessments. The voluntary contractual assessments levied purcua; t to Chapter 29, and the interest and any penalties thereon, shall onnstitute a lien against the lots and parcels of and en which they are made, until they are paid. The voiuntary contractual assessments shall be collected in the same manner and at the same time as the general taxes of WRCOG on real property are payable and shall be subject to the same penalties, remedies and lien priorities in the event of delinquency and default. As a cumulative remedy, if any voluntary contractual assessment or installment thereof, or of any interest thereon, together with any penalties, costs, fees and other accrued charges are not paid when due, the Executive Committee may order that the same be collected by an action brought in superior court to foreclose the lien thereof as provided in Division 10 of the California Streets and Highways Code. 64 Section 12. Consultations with the County Auditor -Controllers. The Executive Committee hereby directs the Executive Director to determine and discuss in the Report what additional fees, if any, will be charged, annually, by the Auditor Controller's office of any county within the Program Boundaries for incorporating the proposed voluntary contractual assessments on the tax roll. Section 13. Preparation of Current Roll of Assessments. Pursuant to Section 5898.24(c)(1) of the California Streets & Highways Code, the Executive Committee hereby designates the Executive Director, or his or her designee, as the responsible official for annually preparing or causing the preparation of the current roil of voluntary assessment obligations by assessor's parcel number on property subject to a voluntary contractual assessment. Section 14. Responses to Inquiries. Pursuant to Section 5898.24(c)(2) of the California Streets and Highways Code, the Executive Committee hereby appoints the Executive Director, or his or her designee, to establish procedures to promptly respond to inquiries concerning current or future estimated liability for a voluntary contractual assessment. Section 15. Effective Date of Resolution. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED at a meeting of the Executive Committee of the Western Riverside Council of Governments held this 6th day of May 2013. Jim ' att, Chair W' VOG Executi Committee Approved as tt form: Stev W� OG.egalCo ick Bishop, Secretary WRCOG Executive Committee AYES: aJ NOES: r ABSENT: ABSTAIN: 0 65 EXHIBIT A LIST OF ASSOCIATED MEMBERS The following counties and cities are Associate Members of WRCOG as of the date of the adoption of the foregoing resolution: 1. City of San Marcos, San Diego County 2. Temple City, Los Anieles County 3. City of Vista, San Diego County 20323 000101650094.2 66 ATTACHMENT 4 67 AMENDMENT TO THE JOINT POWERS AGREEMENT ADDING THE CITY OF NATIONAL CITY AS AN ASSOCIATE MEMBER OF THE WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS TO PERMIT THE PROVISION OF PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM SERVICES WITHIN NATIONAL CITY This Amendment to the Joint Powers Agreement ("WA Amendment") is made and entered into on the 19th day of August, 2014, by the City of National City (the "City") and the Western Riverside Council of Governments (the "Authority") (collectively the "Parties"). WHEREAS, the Authority is a joint exercise of powers authority established pursuant to Chapter 5 of Division 7, Title 1 of the California Government Code (Section 6500 and following) (the "Joint Exercise of Powers Act") and the Joint Power Agreement entered into on April 1, 1991, as amended from time to time (the "Authority JPA"); and WHEREAS, Chapter 29 of the Improvement Act of 1911, Division 7 of the California Streets and Highways Code ("Chapter 29"), authorizes cities, counties, and cities and counties to establish voluntary contractual assessment programs, commonly referred to as a Property Assessed Clean Energy ("PACE") program, to fund certain renewable energy sources, energy and water efficiency improvements, and electric vehicle charging infrastructure (the "Improvements") that are permanently fixed to residential, commercial, industrial, agricultural or other real property; and WHEREAS, the Authority established a PACE program known as the "California HERO Program" pursuant to Chapter 29 as now enacted or as such legislation may be amended hereafter, which will authorize the implementation of a PACE financing program for cities and counties throughout the state; and WHEREAS, the City desires to allow owners of property within its jurisdiction to participate in the California HERO Program and to allow the Authority to conduct proceedings under Chapter 29 to finance Improvements to be installed on such properties; and WHEREAS, this JPA Amendment will permit the City to become an Associate Member of the Authority and to participate in California HERO Program for the purpose of facilitating the implementation of such program within the jurisdiction of the City; and WHEREAS, pursuant to the Joint Exercise of Powers Act, the Parties are approving this JPA Agreement to allow for the provision of PACE services, including the operation of a PACE financing program, within the incorporated territory of the City; and WHEREAS, the JPA Amendment sets forth the rights, obligations and duties of the City and the Authority with respect to the implementation of the California HERO Program within the incorporated territory of the City. 68 MUTUAL UNDERSTANDINGS NOW, THEREFORE, for, and in consideration of, the mutual covenants and conditions hereinafter stated, the Parties hereto agree as follows: A. JPA Amendment. 1. The Authority JPA. The City agrees to the terms and conditions of the Authority JPA, attached. 2. Associate Membership. By adoption of this JPA Amendment, the City shall become an Associate Member of the Authority on the terms and conditions set forth herein and the Authority JPA and consistent with the requirements of the Joint Exercise of Powers Act. The rights and obligations of the City as an Associate Member are limited solely to those terms and conditions expressly set forth in this JPA Amendment for the purposes of implementing the California HERO Program within the incorporated territory of the City. Except as expressly provided for by the this JPA Amendment, the City shall not have any rights otherwise granted to the Authority's Regular Members by the Authority JPA, including but not limited to, the right to vote on matters before the Executive Committee or the General Assembly, the right to amend or vote on amendments to the Authority JPA, and the right to sit on committees or boards established under the Authority JPA or by action of the Executive Committee or the General Assembly, including, without limitation, the General Assembly and the Executive Committee. The City shall not be considered a member for purposes of Section 9.1 of the Authority JPA. 3. Rights of the Authority. This JPA Amendment shall not be interpreted as limiting or restricting the rights of Authority under the Authority JPA. Nothing in this JPA Amendment is intended to alter or modify the Authority Transportation Uniform Mitigation Fee (TUMF) Program, the PACE Program administered by the Authority within the jurisdictions of its Regular Members, or any other programs administered now or in the future by the Authority, all as currently structured or subsequently amended. 4. Rights of the City. This JPA Amendment shall be not interpreted as limiting or restricting the rights of the City to establish parameters or limitations upon the HERO Program as it is conducted within the City's jurisdiction. B. Implementation of California HERO Program within City Jurisdiction. 1. Boundaries of the California HERO Program within City Jurisdiction. The City shall determine and notify the Authority of the boundaries of the incorporated territory within the City's jurisdiction tor. within contractual +. b + 1 �.::i.7.xiaii.v.i which ylJil6LRb4�.iCLl CLJiIGiJyl�iGnL.y lYtU.y be cn�crc� into under the Californialll HERO Program (the "Program Boundaries"), which boundaries may include the entire incorporated territory of the City or a lesser portion thereof, upon approval by the City Council. 2. Determination of Eligible Improvements. The Authority shall determine the types of distributed generation renewable energy sources, energy efficiency or water conservation improvements, electric vehicle charging infrastructure or such other improvements as may be authorized pursuant to Chapter 29 (the "Eligible Improvements") that will be eligible to be financed under the California HERO Program. August 2014 2 Amendment to Western Riverside Council of Governments JPA Agreement adding City of National City as Associate Member 69 3. Establishment of California HERO Program. The Authority will undertake such proceedings pursuant to Chapter 29 as shall be legally necessary to enable the Authority to make contractual financing of Eligible Improvements available to eligible property owners within the Program Boundaries. 4. Financing the Installation of Eligible Improvements. The Authority shall develop and implement a plan for the financing of the purchase and installation of the Eligible Improvements under the California HERO Program. 5. Ongoing Administration. The .Authority shall be responsible for the ongoing administration of the California HERO Program, including but not limited to producing education plans to raise public awareness of the California HERO Program, soliciting, reviewing and approving applications from residential and commercial property owners participating in the California HERO Program, establishing contracts for residential, commercial, and other property owners participating in such program, establishing and collecting assessments due under the California HERO Program, adopting and implementing any rules or regulations for the California HERO Program, and providing reports as required by Chapter 29. The City will not be responsible for the conduct of any proceedings required to be taken under Chapter 29; the levy or collection of assessments or any required remedial action in the case of delinquencies in such assessment payments; or the issuance, sale, or administration of any bonds issued in connection with the California HERO Program. 6. Phased Implementation. The Parties recognize and agree that implementation of the California HERO Program as a whole can and may be phased as additional other cities and counties execute similar agreements. The City entering into this JPA Amendment will obtain the benefits of and incur the obligations imposed by this JPA Amendment in its jurisdictional area, irrespective of whether cities or counties enter into similar agreements. C. Miscellaneous Provisions. 1. Withdrawal. The City may withdraw approval for conduct of the HERO Program within the jurisdictional limits of the City upon thirty (30) written notice to the Authority without liability to the Authority or any affiliated entity. The Authority may withdraw from this JPA Amendment upon six (6) months written notice to the other party; provided, however, there is no outstanding indebtedness of the Authority within the City. The provisions of Section 6.2 of the Authority JPA shall not apply to the City under this JPA Amendment. The City's withdrawal shall not affect the validity of any voluntary assessment contracts (a) entered prior to the date of such withdrawal er (b) entered ;Tito after the such w tlYrlrawai so long as the applications ;Tito YYl YVa date of JKVll Y 1Y11Y1LK YY for such voluntary assessment contracts were submitted to and approved by the Authority prior to the date of the City's notice of withdrawal. 2. Indemnification and Liability. The Authority shall defend, indemnify and hold the City and its directors, officials, officers, employees, and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liabilities, losses, damages or injuries of any kind, in law or equity, to property or persons, including wrongful death, arising out of or in connection with the California HERO Program administered under this JPA Amendment, August 2014 3 Amendment to Western Riverside Council of Governments JPA Agreement adding City of National City as Associate Member 70 including without limitation, the payment of expert witness fees and attorney's fees and other related costs and expenses, but excluding payment of consequential damages, provided that the Authority shall not be required to defend or indemnify the City and its directors, officials, officers, employees; and agents for the City's sole negligence or willful misconduct. Without limiting the foregoing, Section 5.2 of the Authority JPA shall not apply to this JPA Amendment. In no event shall any of the Authority's Regular Members or their officials, officers or employees be held directly liable for any damages or liability resulting out of this JPA Amendment. {. Environmental Review. The Authority shall be the lead agency under the California Environmental Quality Act for any environmental review that may be required in implementing or administering the California HERO Program under this JPA Amendment. 4. Cooperative Effort. The City shall cooperate with the Authority by providing information and other assistance in order for the Authority to meet its obligations hereunder. The City recognizes that one of its responsibilities related to the California HERO Program will include any permitting or inspection requirements as established by the City. The City's cooperation shall not be interpreted to require any approvals without appropriate review or that any discretionary authority of the City be exercised other than as provided by law. 5. Notice. Any and all communications and/or notices in connection with this JPA Amendment shall be either hand -delivered or sent by United States first class mail, postage prepaid, and addressed as follows: AUTHORITY: CITY: Executive Director Western Riverside Council of Governments 4080 Lemon Street, 3rd Floor. MS1032 Riverside, CA 92501-3609 Director of Housing, Grants, and Asset Management City of National City 1243 National City Boulevard National City, CA 91950-4301 6. Entire Agreement. This JPA Amendment, together with the Authority JPA, constitutes the entire agreement among tho Parties pertaining to the subject matter hereof. T:' s " JPA Amendment supersedes any and ail other agreements, either oral or in writing, among the Parties with respect to the subject matter hereof, and contains all of the covenants and agreements among them with respect to said matters, and each Party acknowledges that no representation, inducement, promise of agreement, oral or otherwise, has been made by the other Party or anyone acting on behalf of the other Party that is not embodied herein. August 2014 4 Amendment to Western Riverside Council of Governments IPA Agreement adding City of National City as Associate Member 71 7. Successors and Assigns. This JPA Amendment and each of its covenants and conditions shall be binding on and shall inure to the benefit of the Parties and their respective successors and assigns. A Party may only assign or transfer its rights and obligations under this JPA Amendment with prior written approval of the other Party, which approval shall not be unreasonably withheld. 8. Attorney's Fees. If any action at law or equity, including any action for declaratory relief is brought to enforce or interpret the provisions of this Agreement, each Party to the litigation shall bear its own attorney's fees and costs. 9. Governing Law. This JPA Amendment shall be governed by and construed in accordance with the iaws of the State of California, as applicable. 10. No Third Party Beneficiaries. This JPA Amendment shall not create any right or interest in the public, or any member thereof, as a third party beneficiary hereof, nor shall it authorize anyone not a Party to this JPA Amendment to maintain a suit for personal injuries or property damages under the provisions of this JPA Amendment. The duties, obligations, and responsibilities of the Parties to this JPA Amendment with respect to third party beneficiaries shall remain as imposed under existing state and federal law. 11. Severability. In the event one or more of the provisions contained in this JPA Amendment is held invalid, illegal, or unenforceable by any court of competent jurisdiction, such portion shall be deemed severed from this JPA Amendment and the remaining parts of this JPA Amendment shall remain in full force and effect as though such invalid, illegal, or unenforceable portion had never been a part of this JPA Amendment. 12. Headings. The paragraph headings used in this JPA Amendment are for the convenience of the Parties and are not intended to be used as an aid to interpretation. 13. Amendment. This JPA Amendment may be modified or amended by the Parties at any time. Such modifications or amendments must be mutually agreed upon and executed in writing by both Parties. Verbal modifications or amendments to this JPA Amendment shall be of no effect. 14. Effective Date. This JPA Amendment shall become effective upon the execution thereof by the Parties hereto. IN WI"!'NSS WHEREOF, the Parties hereto have caused this JPA Amendment to be executed and attested by their officers thereunto duly authorized as of the date first above written. [Signature Page to Follow J August 2014 5 Amendment to Western Riverside Council of Governments JPA Agreement adding City of National City as Associate Member 72 WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS By: Date: Executive Committee Chair Western Riverside Council of Government CITY OF NATIONAL CITY By: Date: August 19, 2014 Ron Morrison, Mayor ATTEST: Michael R. Dalla, City Clerk APPROVED AS TO FORM: Claudia Gacitua Silva City Attorney August 2014 6 Amendment to Western Riverside Council of Governments JPA Agreement adding City of National City as Associate Member 73 ATTACHMENT 5 74 C kr1s11,7: T Fr,:o L eg CaliforniaFlRST Program Report County of San Diego (as of March 8, 2010) 75 Table of Contents 1. Introduction 3 1.1 California Communities 3 1.2 Purpose of the CalifomiaFIRST Program _ .. 3 1.3 Assessment Financing; Contractual Assessments ..3 1.4 Purpose of this Program Report 4 1,5 Program Administration and Underwriting 4 2. Program Requirements . .. 4 2.1 Authorized Improvements ..:.........:... 4 2.2 Loading. Order Process 5 2.3 Property Eligibility Criteria 5 2.4 Eligible Contractors . 6 2 5 Quality Assurance.... ... 6 3. Financing of the CaliforniaF1RST Program 6 3,1 Minimum and Maximum Financing Amounts 6 3.2 Financing Structure 7 3_3 Overview of Application and Financing Process ._ 7 3:4 Initial Application, Application Fee; Approval or Denial 8 3 5 Funding Reservation and Installation 8 3.6 Funding Request and Disbursement_.........,. 8 3 7 Costs of Issuance and Administrative Costs_ ..................................................„.................,9 3 8 Amounts that can be Financed 9 3.9 Payment Terms .....:.....„ 10 3.10 Transfer or Resale of Property 10 4. Consumer Protection . 10 6. Duration 10 6. Public Agency Official 13 7. Changes to the Report 11 8. Program Handbook 11. 9. Appendices and Exhibits 11 76 ' . introduction This CaiiforniaHRST Program Report (this `Program Report" outlines the basic design and financing structure of a properly assessed municipal financing program called CalifomiaF1RST (the "CaliforniaFIRST Program') for the County of San Diego (the 'County"). 1.1 California Communities The California Statewioe Communities Development Authority ("California Communities') is a statewide joint powers authority sponsored by the California State Association of Counties and the League of CalWomia' Cities. California Communities` mission Is to provide local governments access to low-cost financing for projects that provide a tangible public benefit, contribute to social and economic growth, and improve the overall quality ofiite in local communities, 1.2 Purpose of the CaliforniaFIRST Program California Communities is offering the Califomiaf1RST program on a statewide basis, Including within the County, to encourage installation of distributed generation renewable energy sources and energy efficiency and water efficiency Improvements within the existing building stock California Communities will facilitate a statewide bond pool, which will allow property owners to access competitive interest rates offered by the public bond markets. With the. passage of AB 32, the State of California (the "Slate') set ambiliious goals for reducing carbon emissions and building alternative energy use. The California Public Utilities Commission has .set a goal of retrofitting over 13 million residences in the State to be at least 30% more energy efficient. Many California cities and counties have also set their own greenhouse gas reduction targets Similarly, water conservation efforts, including the prornotion of water -related improvements to residential, commercial, industrial, or other real property, are necessary to address the issue of chronic water shortages in the State. Property owners can help to achieve greenhouse gas reductions and reduce water use and, at the same lime, save money by investing in distributed generation renewable energy sources, energy efficiency, andtor water efficiency improvements. Yet.most people still resist making these improvements: The number one barrier is the large upfront cost Utilities sell power and water to their customers as a simple pay-as-you-go service. Homes and businesses can be converted to clean energy and reduce water use quickly, but many believe that it can happen only if paying for distributed generation renewable energy sources, energy efficiency improverneiris and water efficiency'Improvements is more like paying a utility bill. The CaltforniaFtRST Program can make this happen. 1.3 Assessment Financing;. Contractual Assessments The CaliforniaFIRST Program uses a tool that is widely used by local agencies in California to finance public benefit projects. land-securedfinancing. State law has long provided cities and counties with the power to Issue bonds and levy assessments on the County property tax bill to finance public projects such as sewers, parks, and the undergrounding of utilities. Chapter 29 of the Improvement Act of 1911, commencing with Section SW& fQ ofthe Streets & Highways Cooe of the State ("Chapter 291, authorizes the. levy of "contractual assessments: to finance the installation of distributed generation rer ewebte energy sources.and energy efficiency and water efficiency improvements to be permanently affixed to residential, commercial; .indlistriai, agriculturill, or other real +party. A "contractual assessment° is an assessment that is levied by contract pursuant to Chapter 29, Fvrthe CaiifomraPIRST Program, the. assessment contract wdl be an `Agreement to Pay Assessment and Finance Improvements' in. substantially the form attached to this Program Report as Exhibit A (the 'Assessment Contract"). The Assessent Contract will 00 executed by each participating property owner and California Communities. 3 77 Under the CaliforniaFIRST Program, a contractual assessment hen is placed on each participating property in an amount necessary to (r) finance the installation of authorized renewable energy, energy efficiency and water efficiency improvements over a 5-20 year penod of Time, depending upon the useful life of the financed Improvements, (il) pay for costs of issuing bonds (including a reserve fund), and (ni) pay the costs of administering the CalifomiaFlRST Program. The contractual assessment installments are collected on the County property tax bill. if the owner sells the property, the contractual assessment obligation remains an obligation of the property. California Communities will issue bonds secured by the contractual assessment installments to fund the costs of the program Under the CaliforniaFIRST program, If a property owner fails to pay the annual contractual assessment installments, California Communities is obligated to strip the delinquent installments off the property tax bill and commence judicial proceedings to foreclose the lien of the delinquent installments. This is an expedited procedure that can result in the public sale of the property in less than a year. All property owners need to consult their private lenders to determine that the execution of the Assessment Contract will not violate their deed of trust The CaltfomiaFIRST Program is completely voluntary and property taxes for properties in the County that do not choose to participate are completely unaffected by the CallforniaFIRST Program. Individual contractual assessments are not effected by other properties participating in the program. 1.4 Purpose of thin Program Report This Program Report constitutes the report required pursuant to Section 5898.22 of Chapter 29 for the CalifomiaFIRST Program in the County The CalifomlaFIRST Program will be offered throughout the entire County as .shown on the boundary map attached as Exhibit B. If a property is located in a crty's incorporated territory within the County, a property may participate in the CaltfomiaFIRST Program only after the city has adopted a resolution authorizing California Communities to offer the CalifomiaFIRST Program within its boundaries. 1.5 Program. Administration and Underwriting California Communities has hired a third -party administrator to administer the CaliforniaFIRST Program in the County, initially Renewable Funding. The administrator will review applications and provide marketing and customer service through a website, email, and a toll -free phone number California Communities will work with a bond underwriter, Initially Royal Bank of Canada Capital Markets, to underwrite bonds sold in the public marketplace. 2. Program Requirements This Program Report identifies the CaliforniaFIRST Program requirements relating to the types of improvements that can be financed under the CaliforniaFIRST Program (including the required "loading order'), eligible properties and financing parameters. 2.1 Authorized Improvements The CalifomiaFiRST Program offers financing of the installation of those distributed generation renewable energy sources and energy efficiency and water efficiency improvements listed on Exhibit C (the "Initial Authorized Improvements) that will be permanently fixed to property. Until further notice, water efficiency measures are ineligible for financing within the CaliforniaFIRST Program. California Communities will update the list of Authorized Improvements authorized for installation from time to time and publish the updated list in the Program Handbook. Property owners are responsible for the Authorized Improvements installed on their property Property owners must address performance and other system -related issues directly with the contractor according to the terms of the contract between the property owner and the contractor The CaliforniaFIRST Program is a financing program only. Neither California Communities nor its employees or agents are responsible for the 4 78 Authorized Improvements or their performance.. 2.2 Loading Order Process The .CaiiforniaFIRST Program will implement certain loading order" requirements in order to comply with all State and federal requirements for the installation of energy efficiency measures. These.requirements generally mandate installation of the most cost-effective improvements first:. The CaiiforniaFIRST Program requirements relating to loading order may be amended to remain compliant and consistent with loading Order requirements for the State and federal grant and rebate programs. Details for current loading order requirements are outh'nedin the Program Handbook. 2.3 Property Eligibility Criteria In order to receive financing from the CalifomiaFIRST Program, the property to be assessed, and its owners, must rneet•the following basic requirements. Details on the c nteria are provided in the Program Handbook. Property Requirements a. location. The property to be improved with the Authorized Improvements (the 'subject property") must be located within the boundaries of the CatiforniaFIRST Program. If a property is located in a citys incorporated territory within the County, a property may participate in the CalifomiaFIRST Program only after the city has adopted a resolution authorising California Comrriunities to offer the CahfomiaFIRST Program within its boundaries. b. Use. The subject property.may be used for residential, commercial, agricultural, or other real property purposes. c. Lender Notification. The contractual assessment levied pursuant to an Assessment Contract will constftute a senior lien on the related property, which means pre-existing private liens, such as mortgages, will be subordinate to the contractual assessment lien. Therefore, notice to, and in some cases consent from, mortgage holders will be required. d. Taxes. The property owners must be • current in the payment of all obligations secured by the subject property, Including property taxes, assessments and tax hens, within the time Period specified in the Program Handbook. e. Foreclosure. There must be no notices of default or foreclosure filed against the subject property within the time period specified in the Program Handbook, f. Involuntary Liens. The property must not be subject to involuntary liens, defaults or judgments in excess of amount identified in the Program Handbook. g. Value Ratios. i. The "private loan to value ratio" must be compliant with the terms defined in the Program Handbook. in some chtunistancesi the priirate loan to value rube requirement may be waived with the consent of a property's existing tenders. II. The "public debt to value ratio" must be compliant with the terms defined in the Program Handbook. Property Owner Requirements a. Owners. Ail owners of the fee simple title to the subject properly must sign the CaliforriiaFlRST Program Documents and consent to the contractual assessment. b. Dapkruptcy,. All property owner(s) must oert that they have not declared bankruptcy within the given time period indicated in the Program Handbook. c. Surveys. Ali properly owners(s) mtistagree.to participate in surveys and CailiforniaFIRST Program evaluations directed by California Communities. in addition, property owners will 5 79 be required to sign a waiver allowingthe CalifomiaFIRST Program to collect utility usage data as appropriate to comply with State and federal reporting standards. d Additional information. The CalifomiaFIRST Program involves issuance of bonds by California Communities, and, therefore, it is important that property owners pay their contractual assessment installments and other property -related obligations in full on a timely basis. Therefore, California Communities reserves the nghtto request additional information regarding the property owners' ability to pay such amounts. Project Requirements a. Loading Order. All participating properties will be required to meet local, State and federal program requirements and guidelines, including those descnbed in "Loading Order Process" in Section 2.2. Audits California Communities reserves the right to waive or require an energy efficiency audit for all improvements seeking financing. See the 'Loading Order in Section 2.2 and the Program Handbook for more details on energy audit requirements Rebate Programs. Property owners will be required to participate in appropriate State incentive and rebate programs. d. Additional Criteria. Additional critena may be applied, including net operating income requirements and/or cost-effectiveness for non-residential properties. 2.4 Eligible Contractors Contractor eligibility is being standardized throughout the country, and the CalifomiaFIRST Program will comply with applicable State and federal laws, as well as eligibility requirements of State and federal grant and rebate programs. Details on current requirements for Eligible Contractors are outlined in the Program Handbook 2.5 Quality Assurance Quality assurance protocols serve to prevent improper or low -quality installation of energy and water improvements and protect against fraud and abuse in the CalifomiaFIRST Program. The CalifomiaFIRST Program will institute a quality assurance protocol in compliance with State and federal grant and rebate program requirements Ail quality assurance and quality control procedures are subject to review and adjustment based on applicable State and federal standards. Details on the current quality assurance procedures are outlined in the Program Handbook. Despite the presence of these protocols and procedures, the responsibility for the successful operation of any improvements is that of the property owner and its contractor, and not of California Communities or its agents or employees, 3. Financing of the CaiitorniaFlRST Program 3.1 Minimum and Maximum Financing Amounts Maximum Financing Amount for the CaliforniaFIRST Program. The maximum aggregate dollar amount of the principal component of contractual assessments to be levied under the CalifomiaFIRST Program for the County is $1 billion, subject to increase if there is sufficient demand. Minimum Financing Amount for each Property. The minimum installation cost that can be financed for a 6 80 single. property Is $5,000. Maximum Financings Amount for each Property. The maximum installation cost that can be financed for a single property Is dependent on the type of property, as indicated below Residential Properties. Residentialprapertles. are eEgibie for financing up to the lesser of a percentage (including overlapping public debt as identified in the Program Handbook) of the assessed and market value of the property or a fixed dollar amount as identified In the Program Handbook. For this purpose, residential properties indude detached single-family homes, duplexes, triplexes, faurpiexes,. townhouses, twin homes., and multi -family and tenancy -in -common. properties with up to four units.. Non-residential Properties. Non-residential properties are eligible for financing up to a percentage (including overlapping public debt as identified in the Program Handbook) of the assessed and marketvalue of the property: For this purpose, non-residential properties consist of drarnrnerdal, 'industtrtai, agricultural, large multi -family (five or more units), community facilities, and'non-prat-owned properties. Exceofrons. California +Communities reserves the right to finance the installation of Authorized improvements in a greater amount than described above w pith the prior written approval of the existing lenders on the subject. property: 3.2 Financing Structure California Communities will finance the installation of Authorized Improvements using three different financing structures at the County level, as described in Exhibit D-Bond Structure". In order to provide the lowest possible interest rates through credit diversification, California Communities will issue bonds to the public bond market on a statewide basis and purchase bonds issued for each county s. CalitomiaFIRST program. 3.3 Overview of Application and Financing Process Applications from property owners for financing will be considered on a first -come —fit -served Mere. If a request from a property owner for financing would cause the CaliforniaFIRST Program to. exceed the authorized amount, then ttie last property.that caused the.authorization amount to be exceeded will be. ineligible for financing. AII. applidabons receive a time stamp in order to allow for firstcome-first-sewed pnonty. The following paragraphs outline. the Caltfo niaFIRST Program's residentialfinancing process. Non- residential projects will folk* a similar process; but may differ slightly on a case -by -case basis depending on the size and scope of the project Education: Properly owners visit the dedicated website to team aboutthe program, financing terms and other details, and find approved nontrnetars and Irrinn trennents. Properly owners must determine that they will meet the eligibility requirements. Application. Property owners apply on-line for a funding reservation fiom the CaliforniaFIRST Program and pay a non-refundable application fee, Applications must include a proposed project and contractor bid. Property owners must agree to the californiaFlRST Program Terms as part of the application. Review and Approval. California Communities performs title work to cxonfirm ownership: steeens for unpaid taxes or other delinquent propertybased debt, applies loan -to -value metrics, and evaluates the proposed project Callfernla Communities will approve an.application only after confirming' rming tl atthie.proper y meets the underwriting criteria, loading order process. and other CalifomiaFIRST Program requirements. Reservation: if California Communifies.ap proves an appiic ation. it will notify a property owner of its funding reservation: The property ownerhas a .specific petted of time 10 install the Authorized: knelt Varmints and 10 request funding when the property has. met all the applicable requirements for funding. See "Funding Reservation and Installation" in Section 3.5. Details of the procedureare available In the Program Handbook. Installation. A qualified contractor must complete the installation of Authorized Improvements on the 81 property See "Authorized Improvements" in Sedion 2.1 and "Eligible Contractors" in Section 2.4. Repayment. The property owner will be expected to pay the contractual assessment installments in the amounts and at the times specified in the Assessment Contract. In general, the contractual assessments will be due at the same time as property taxes. 3.4 Initial Application; Application Fee; Approval or Denial Initial Application_ All property owners interested in applying to the Program must submit an on-line or paper application along with the other application documents described in the Program Handbook. Application Fee The property owner must pay a non-refundable application fee when he/she submits an application. If the application is approved but the property owner does not meet the funding requirements or decides not to utilize the CaliforniaFlRST Program funding, the fee will not be refunded. Approval or Denial. Based on the eligibility requirements listed in the Program Handbook, California Communities will approve or deny a residential and non-residential application within the specific time penods identified in the Program Handbook. The applicant will be notified of approval or denial via email. See "Consumer Protection Laws" In Section 4 3,5 Funding Reservation and Installation A property owner will be notified of a funding reservation via email. The installation must occur during the reservation penod, as described below Funding Reservation; Reservation Period. If California Communities approves the application, the funding reservation will be effective for the period of time identified in the Program Handbook. This period of time is referred to as the "reservation period." The property owner must have a qualified contractor complete installation of the Authorized Improvements on the subject property and submita compliant funding request (see "Funding Request" In Section 3.6) within the applicable reservation period. ffthe property owner fails to have a qualified contractor complete the installation of Authonzed improvements on the subject property and submit a compliant funding request dunng the reservation period, the funding reservation will expire. Expiration An applicant may request to extend the reservation period prior to its expiration_ However, an additional fee will be required, as described in the Program Handbook If the reservation expires, the applicant may reapply but there is no guarantee that a reservation will be available. Cancellation An applicant may cancel a funding reservation during the reservation period, but will forfeit the application fee and will not be eligible for funding under that reservation. The applicant may reapply but will not be guaranteed funding availability and will need to pay another application fee, 3.6 Funding Request and Disbursement Funding Request. After a qualified contractor has completed installation of the Authorized Improvements on the subject property, the property owner must submit Project Verification Documents, as described In the Program Handbook. The Final Program Documents (described in the Program Handbook) will then be provided to the property owner by California Communities. The property ownertnust then sign and submit the funding request and Final Program Documents to California Communities within the period of time specified in the Program Handbook. Funding Expiration; Cancellation. Details on funding expiration and cancellation are provided In the Program Handbook. Disbursement California Communities will approve the issuance of a check to the property owner (or the contractor, if the property owner instructs California Communities to pay the contractor directly) after it has received all required documentation from the applicant, and alter it has confirmed compliance with the eligtiiity requirements. 8 82 3.7 Costs of issuance and Administrative Costs The costs of issuing bonds and administering the CafifomlaFIRST Program will be financed through participant application fees and a cost of issuance component of the contractual assessment installments. California Communities costs* [I added an apostrophe here] of establishing the CalifomiaFIRST Program and the costs of -the cities and counties joining the CaiffomlaFIRST Program will be paid through city/county set-up fees. Appilicatio n fees.. Application fees for residential property owners are not expected to exceed $350. Non- residential application fa= will vary depending on the, size and scope of the project, as detailed in the Program Handbook. Quality Assurance Fee- In certain instances identified in the Program Handbook, an additional fee will be' charged for supplemental quality assurance on residential projects, this amount is not expected to exceed $100. County Collection Fee. The fee charged by the County to record the statutory notices in the real property records will be included in the pnndpal amount of each property's contractual assessment. Staff has been wonting with the auditor/controller for each participating County. The fees for levying the contractual assessments are expected to range from 0.25% to 2% of the annual contractual assessment installment. The fens w1H be added to the annual contractual assessment installment paid by each participating property owner California Communities will reserve in the assessment contract the nght to Increase the annual contractual assessment installment paid by property owners if a County increases the fee it charges California Communities. Costs of Issuance. The costs of issuing the bonds and the initial administrative costs include (i).legal costs for bond and disclosure counsel, (s) underwriting costs, (ii) issuer costs of California Communities, and (iv) other incidental costs of issuing the bonds. These costs are built into the principal component of the contractual assessment. The costs of issuance included in the principal component are expected to be no more than 6.25% of the financed amount On -going administrative fees. On -going administrative fees— which include preparation of the assessment installment bills, continuing disclosure reports, monitoring project funds, tracking delinquencies, and fees charged by the County for the collection of the contractual assessment installments on the County property tax bill will be included in the administrative expense component of the contractual assessment .installments andare not expected to result in an increase to the aggregate interest rate reflected in the. contractual assessment installments of more than 1 %, although California Communities has reserved the ability to .pass through to property owners increased expenses imposed on it by the County. 3.8 Amounts that can be Financed Financing Cost in order to receive funding, property owners will agree to pay annual assessment installments in an amount equal to (i) the appropriate installment of the principal amount of the contractual assessment (ii) interest on the unpaid pnncipal amount of the contractual assessment, (in) on -going administrative expenses. 1, Principal Amount. The principal amount of the contractual assessment will be composed afire following item: Eligible Costs. The californiaFtRST prmgrern may finance the costs of installing Authorized Improvements and energy-efic$ency as ;avatar-effic ency audit costs: All Iocsl and state rebates must be deducted from the financed amount prior to approval: The arnountof the federal Investment Tax Credit (ITC) that the property :may be eligible to receive does not need to be deducted fromthe financed amount. b. Deposit to a Debt Service Reserve Fund. California Communities may require property owners to finance a deposit to a. debt sernoe reserve fund; the reserve fund would be. used to pay debt service on the bonds in the event of contractual assessment installment delinquencies. The deposit to a debt service reserve fund will typically be equal to 83 approximately 10% of the principal component of the contractual assessment. Subject to the requirements of California Communities' bond documents, amounts in the debt service reserve fund will be available to pay the final year's contractual assessment installments for a property_ c. Caoitafized Interest. Because the County has established a deadline for placing the contractual assessments on the County property tax bill, the principal component of the contractual assessment may also include the first tax year's installments if the deadline cannot be met. d. Costs of Issuancelnd Administrative Costs. Initial administrative costs and the costs of issuing any bonds are built into the principal component of the contractual assessment amount The costs to be Included In the principal component are expected to be no more than 625% of the financed amount See Costs of Issuance of Administrative Costs in Section 3 7 2. Interest Rate. The rate of interest an the amount of funding received will be a fixed interest rate The rate will be fixed at the time of safe for each senes of bonds. Participants can check the applicable rate of interest on the CaliforniaFIRST Program website for each series of bonds that have been issued. Market conditions will determine the interest rate on bonds issued to finance the CalifomiaFIRST Program. 3. On -going Program Administrative Fees. See "Costs of Issuance and Administrative Costs' in Section 3.7. Ongoing administrative costs are reflected in the administrative component of the annual contractual assessment installments. 3.9 Payment Terms Payment of the CaliforniaFIRST contractual annual assessment installments is made through the addition of a line item on the property tax bill. Payment terms range from five to twenty years, depending on the expected life of the installed improvement. Contractual assessments may be prepaid in full or in part at any time, subject to a prepayment penalty The prepayment penalty will be identified in the Assessment Contract. 3.10 Transfer or Resale of Property The contractual assessment obligation remains an obligation of the subject property at the sale of the subject property Successor property owners will receive disclosure of the contractual assessment as a result of the two statutory notices recorded in the real property records: the "Notice of Assessment" and the `Payment of Contractual Assessment Required." In addition, sellers of property are obligated by California law to disclose the contractual assessment obligations to prospective purchasers. 4. Consumer Protection The CalifomiaFIRST Program is subject to certain State and federal laws designed to protect consumers. Among other things, these laws require California Communities to disclose information to property owners and, only during the three-day period following execution of the Assessment Contract, guarantee a property owner the nght to rescind the Assessment Contract without penalty (including the return of the application fee). California Communities will comply with all applicable State and federal laws in connection with the CalifomiaFIRST Program 5. Duration The CalifomiaFIRST Program will continue as long as there is sufficient demand. 10 84 6. Public Agency Official California Communities will, from time to time, authorize certain representatives to execute Assessment Contracts on its behalf; the current authorized representative is. Name: Daniel B, Harrison Title: Administrative Director Phone: 016) 858-8267 Email: dhaarrisontfeCcacities.org l400 K Street, Suite 400 Sacramento. CA 9.5814 Address: l . 7. Changes to the Report California Communities may make changes to this Report and the other CalifomleF1RST Program documents from time to time in its absolute discretion. No such changes will affect the amounts payable by e property owner under an existing Assessment Contract. 8. Program Handbook California Communities has prepared a Program Handbook to communicate CalilorniaFIRST Program details to property owners and ether interested parties. The Program Handbook wiu be amended from time to time to reflect the details of the CalifomieFIRST Program. 9. Appendices and Exhibits Exhibit A: Form Assessment Contract — Agreement to Pay Assessment and Finance Improvements Exhibit B: CalifomiaFtRST Program Boundary Map Exhibit C: CalifomiaFIRST Program Initial Authorized Improvements Exhibit D: Bond Structure 11 85 Exhibit A- Form Assessment Contract — Agreement to Pay Assessment and Finance Improvements 86 AGREEMENT TO PAY ASSESSMENT AND FINANCE IMPROVEMENTS CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY CALIFORNIAFIRST (COUNTY OF I This AGREEMENT TO PAY. ASSESSMENT AND FINANCE IMPROVEMENTS (this "Agreement) is made .and entered into as of this day of , 20,,,,_, by and between the California Statewide Communities Development Authority, a joint exercise of powers authority (the "Authority"), and the record owner(s) (the "Property Owner') of the fee tide to the real property identified on Exhibit A (the "Property"). RECITALS WHEREAS, the Authority is a joint exercise of powers authority the members of which include numerous cities and counties in .the State of California; and WHEREAS, the Authority has established the CaiifomiaFtRST program (the "CaiiforniiaFIRST Program') to allow the financing of certain renewable energy, energy efficiency and water efficiency improvements that are permanently fixed to real property (the "Authorized improvements") through the levy of contractual assessments pursuant to Chapter 29 of Division 7 of the Streets & Highways Code ("Chapter 29') and the issuance of improvement bonds under the Improvement Bond Act of 1915 (Streets and Highways Code Sections 8500 and following) (the "1915 Act") upon the security of the unpaid contractual assessments, and WHEREAS, Chapter 29 provides that assessments may be levied under its provisions only with the free and willing consent of the owner of each lot or parcel on which an assessment is levied at the time the assessment is levied pursuant to a contract between the property owner and the public agency; and WHEREAS, the Authority has conducted the proceedings required by Chapter 29 with respect to the territory within the boundaries of the County of (the "County"); and WHEREAS, the Property is located in the boundaries of [the City of (the "City")][the County], and the [City/County] has consented to (i) owners of property within its jurisdiction (the "Participating .Property Owners") participating in the CaliforniaFIRST Program end (II) the Authority conducting assssanant proceedings under Chapter 29 and issuing bonds under the 1915 Act to .finance the Authorized Improvements; and. WHEREAS, pursuant to Chapter29, the Authority and the Property Owner wish to enter into a contract pursuant to which the Property Owner would agree to pay an assessment in: order to finance the installation on the Property of the Authorized Improvements described in Exhibit B (the Intprovernental and the Authority would agree to provide financing, all on the terms set forth in this Agreement; NOW, THEREFORE, in consideration of the foregoing and the material covenants hereinafter contained, the Property Qwner and the Authority formally covenant, agree and bind 1 87 themselves and their successors and assigns as fellows: AGREEMENT Section.1. Purpose. The Property Owner and the Authority are entering into this Agreement for the purpose of financing the installation of the Improvements identified on Exhibit 13 on the Property. The Authority will not finance installation of Improvements other than those listed on Exhibit B. Section 2. The Property. This Agreement relates to the real property identified on Exhibit A. The Property Owner has supplied to the Authority current evidence of its ownership of fee title to the Property and possesses all legal authority necessary to execute this Agreement• on behalf of the Property Owner Section 3. Agreement to Pay Assessment; Prepayment: Non -Completion Assessment. (a) Payment of Initial Assessment, The Property Owner hereby freely and willingly agrees. to pay the initial assessment set forth on Exhibit C (the "initial Assessment"). The Authority will not provide financing in an. amount in excess of the initial Assessment Except as otherwise set forth in this Agreement, the I.nitial,Assessment will be paid in the installments set forth in Exhibit C There are two schedules set forth in. Exhibit C. if the Authority issues a bond to finance installation of the Improvements on the Property before the County's deadline for placing the first year's installments of the initial Assessment on the County's property tax roll, then the first year's installments will be billed on the Property Owner's .property tax bill. Schedule. 1 shows the amount of the Initial Assessment and the Initial Assessment installments payable in this circumstance. If the Authority issues a bond to finance installation of the Improvements on the Property after the County's deadline for placing the first year's installments of the Initial Assessment on the County's property tax roll, then the first year's initial Assessment installments will be financed and will be included in the amount of the Initial Assessment. Schedule 2 shows the amount of the Initial Assessment and the Initial Assessment installments payable in this circumstance. Interest will accrue on the Initial Assessment at the interest rate set forth on Exhibit A beginning on the date on which the Authority issues bonds to finance the installation of the Improvements. (b) .Payment of Non -Completion Assessment. The Property Owner hereby freely and willingly agrees to pay the additional assessment (the "Non -Completion Assessment") identified on Exhibit A in the event that the Property Owner fails to install the Improvements in compliance with the CaiifomiaFIRST Program rules or otherwise fails to meet the conditions established by the Authority for financing through the CalfomiaFIRST Program. The Property Owner acknowledges that the purpose of the Non -Completion Assessment is to provide for redemption of any bonds issued by the Authority to finance installation of the Improvements on the Property, and to pay any costs incurred by the Authority in order to release the lien of the Assessment on the Property, The Property Owner further acknowledges that the Non- Completion Assessment will be levied in full by the Authority as set forth in Section 5898.30 of Chapter 29 in the first fiscal year in which the Authority is able to cause the Non -Completion 88 Assessment to be placed on the County property tax roll. (c) Administrative Expenses. The Property Owner hereby acknowledges that, pursuant to the 1915 Act, including Sections 8682(b) and 8682.1(a), the Authority may add amounts to an annual installment of the Initial Assessment in order to pay for the costs of collecting the Assessment (the°Additional Administrative Assessment", together with the Initial Assessment and the Non -Completion Assessment, the "Assessment"). (d) Prepayment of the Assessment. The Assessment may be prepaid, in whole or in part: at any time upon the payment of (a) the whole or a portion of the unpaid principal component of the Assessment, (b) the accrued but unpaid interest component of the whole or applicable portion of the unpaid principal component of the Assessment through the prepayment date, (c) a prepayment premium in the amount set forth on Exhibit A and (d) the reasonable costs of the. Authority related to such prepayment. (d) Absolute Obligation. The Properly Owner hereby agrees that the Assessment will not be subject to reduction, .offset or credit of any kind in the event that the bonds secured thereby are refunded or for any other reason. Section 4. Collection of Assessment: Lien. The Assessment, and the interest and penalties thereon as a result of a delinquency in the payment of any installment of the Assessment, shall constitute a lien against the Property until they are paid and shall be collected and shall have the lien priority as set forth in Chapter 29. The Property Owner acknowledges that if any Assessment installment is not paid when due, the Authority has the right to have the delinquent installment and its associated penalties and interest stripped off the secured property tax roll and immediately enforced through a judicial foreclosure action that could result in a sale of the .Property for the payment of the delinquent installments, associated penalties and interest, and all costs of suit, including attorneys' fees. The Property Owner acknowledges that, if bonds are sold to finance the Improvements,. the Authority may obligate itself, through a covenant with the owners of the bonds, to exercise its foreclosure rights with respect to delinquent Assessment installments under specified circumstances Section 5. Financing of the Improvements. (a). Agreement to Finance Improvements. The Authority hereby agrees to use the Assessment to finance the Imptiavements, including the payment of the Authoritys reasonable costs of administering the CatifomiaFIRST Program, subject to: the Property Owner's compliance with the conditions for such financing established by the Authority. [Agreement may provide for multiple disbursements for non-residential property] (b) Assessment installments. The Property Owner agrees.to the issuance of bonds by the Authority to finance the installation of the improvements. The interest rate used to •caicuiate the initial Assessment instailments set forth on Exhibit C is identified on Exhibit A. if the Authority .determines in its reasonable discretion that the Initial Assessment installments may be reduced because the applicable interest rate on the bonds issued to finance installation of the Improvements is lower than the interest rate spedified in Exhibit A, or if the cost of the Improvements, as shown in a final invoice provided to the Authority by the. Property Owner, is Tess than the amount shown on Exhibit B, then, concurrently with the disbursement of funds to the Property Owner, the Authority may provide the Property Owner with a schedule of annual 3 89 Initial Assessment installments that provides for annual 'installments that are less than those set forth in the attached Exhibit C. . Section 6. Term; Agreement Runs with the Lands Su ivision. (a) Except as otherwise set forth in this Agreement, this Agreement shall expire upon the final payment or prepayment of the Assessment (b) This Agreement establishes rights and obligations that are for the benefit of the Property and, therefore, such rights and obligations run with the land pursuant to Civil Code Section 1462. (c) In the event the Property is subdivided while the Assessment remains unpaid, the Assessment will be assigned to the newly -created parcel on which the Improvements are located. If the improvements no longer exist, the Assessment will be assigned to each of the newly -created parcels on. a per -acre basis, unless the Authority, in its sole discretion, determines that the Assessment should be allocated in an alternate manner. Section 7. Recordation of Documents. The Property Owner hereby authorizes and directs the Authority to cause to be recorded in the office of the County Recorder the various notices and other documents required by Chapter 29 and other applicable laws to be recorded against the Property. Section 8. Notice,. To the extent required by applicable law, the Property Owner hereby agrees to provide written notice to any subsequent purchaser of the Property of the obligation to pay the Assessment pursuant to this Agreement. Section 9 Waivers, Acknowledgment and Agreement. Because this Agreement reflects the Property Owner's free and willing consent to pay the Assessment following a noticed public hearing, the Property Owner hereby waives any otherwise applicable requirements of Article XIIID of the California Constitution or any other provision of California law for art engineer's report, notice, public hearing,. protest or ballot. The Property Owner hereby waives its right to repeat the Assessment by initiative or any other action, or to file any lawsuit or other proceeding to. challenge the Assessment or any aspect. of the proceedings of the Authority undertaken in connection with the CaliforniaFIRST Program, The Property Owner .hereby agreesthat the Property Owner and its successors in interest to fee title in the Property shall be solely responsible for the installation, operation and. maintenance of the Improvements. The Property Owner hereby acknowledges that the Property will be responsible for payment of the Assessment regardless of whether the improvements are properly installed, operated or maintained as expected. The Property Owner hereby agrees that the Authority is entering into this Agreement soletyfor the purpose of assisting the Property Owner with the financing of the installation of the Improvements, and that the Authority and [the City/County] have no responsibility of any kind for, and shall have no liability arising out of, the installation, operation, financing, refinancing or maintenance of the Improvements. Based upon the foregoing, the Property Owner hereby waives the right to recover from and fully and irrevocably releases the Authority, the [City/County] and any and ail agents, employees, attorneys, representatives and successors and assigns of the Authority and the [City/Co:unty] from any and ail.losses, liabilities, claims, damages (including consequential damages), penalties, fines, forfeitures, costs and expenses 4 90 (including aii reasonable out-of-pocket litigation costs and reasonable attorney's fees), relating to the subject matter of this Agreement that the Property Owner may now have or hereafter acquire against the Authority, the [City/County] and any and all agents; employees, attorneys, representatives and successors and assigns of the Authority or the [City/County). To the extent that the foregoing waivers: and .agreements are subject to Section 1542 of the California Civil Code or similar provisions of other applicable law, it is the intention of the Property Owner that the foregoing waivers and agreements will be effective as a bar to any and 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), of whatever character, nature and kind, known or unknown, suspected or unsuspected, and Property Owner agrees to waive any and all rights and benefits conferred upon the Property Owner by the previsions of Section 1542 of the Califon -tie Civil Code or similar provisions of applicable law. Section 1542 reads as follows: "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, the Property Owner agrees to waive the provisions of Section 1542 in connection with the :matters that are the subject of the foregoing waivers and releases. Property Owner's Initials: The waivers, releases and agreements set forth in this Section 9 shall survive termination of this Agreement. Section 10. Indemnification. The Property Owner agrees to indemnify, defend, protect, and hold harmless the Authority, the [City/County] and any and all agents, employees, attorneys, representatives and successors. and assigns of the Authority or the [City/County], 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 Property Owner's participation in the CalifomiaFIRST Prograrri, (li) the. Assessment, (iii) the lmprovernents, or (iv) any other fact,..circumstance or event related to the subject matter of this Agreement, regardless of whether such losses, liabilities, claims, damages (including .consequential damages), penalties, fines, forfeitures, costs and expenses (including ail reasonable out-of-pocket Fitigation costs and reasonable attorney's fees). accrue before or after the date -of this Agreement. The provisions .of this Section 10 shall survive the termination of this Agreement. Section 11. Riohit tc inspect Property. The Property Owner hereby grants the Authority, its agents and representatives the right to enter at any reasonable time, upon reasonable notice, to inspect the Improvements. The. Property Owner further hereby grants the Authority, its agents and representatives the right to examine and copy any documentation relating to the Improvements. Section 12. Carbon Credits. The Property Owner hereby agrees that any carbon 5 91 credits attributable to the Improvements shall be owned by the Authority. Section 13. CaliforniaFlRST Application. The Property Owner hereby represents and warrants to the Authority that the information set fora in the CaliforniaFIRST Program Application submitted to the Authority in connection with its request for financing is true and correct as of the date hereof, and that the representations set forth in the CaiifomiaFIRST Program Application with respect to the Property and the Property Owner are true and correct as of the date hereof as if made on the date hereof. Section 14. Amendment. Except as set forth in Section 5(b), this Agreement may be modified only by the written agreement of the Authority and the Property Owner Section 15. Binding Effect: Assignment. This Agreement inures to the benefit of and is binding upon the Authority, the Property Owner and their respective successors and assigns. The Authority has the nght to assign any or all of its rights and obligations under this Agreement without the consent of the Property Owner. The obligation to pay the Assessment set forth in this Agreement is an obligation of the Property and no agreement or action tithe Property Owner will be competent to impair in any way the Authority's rights, including, but not limited to, the right to pursue judicial foreclosure of the Assessment lien or the right to enforce the collection of the Assessment or any installment thereof against the Property. Section 18. Exhibits. The Exhibits to this Agreement are incorporated into this Agreement by this reference as if set forth in their entirety in this Agreement. Section 17. Severability. if any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision of this Agreement. Section 18. Corrective .instruments. The Authority and the Property Owner agree that they will, from time.to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required in order to carry out out the expressed intention of this Agreemen#. Section 19- Governing Law:. Venue. This Agreement is governed by and construed in accordance with 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 Sacramento, State of California;.provided, however, actions to foreclose delinquent installments of the Assessment will be instituted in the superior court of the County or as otherwise provided by law. Section 20. Counterparts. This Agreement may be executed in several -counterparts, each of which is an original and all of which constitutes one and the same instrument. 6 92 IN WITNESS WHEREOF, the Authority and the Property Owner have caused this Agreement to be executed in their respective names by their duly authorized representatives, all as of the date first above written, CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Its: The following are the authorized signatories of the Property Owner. Name: Name: BY: By: Its: Its- Name: Name: By: By: Its: its: 7 93 EXHIBIT A Agreement Number: Property Owner. Property (APN/Legal Description): Prepayment Premium: Interest Rate Used to Calculate Initial Assessment Installments - Non -Completion Assessment: The Non -Completion Assessment may include (i) an amount necessary to redeem the attributable portion of any Bonds issued to finance installation of the Improvements on the Property, including but not limited to a prepayment premium in an amount equal to % of the Initial Assessment identified on Exhibit C and (ii) an amount necessary to pay the Authority's costs related to the release of the hen of the Initial Assessment on the Property. Reserve Fund Deposit: $ . The Authority will fund a deposit to a debt service reserve fund for bonds issued by the Authority to finance installation of the Improvements on the Property. The reserve fund deposit will be in an amount equal to Flo of the Initial Assessment A-1 94 EXHIBIT B IMPROVEMENTS The improvements are described on the attached documentation. EXHIBIT C SCHEDULEI INITIAL ASSESSMENT INSTALLMENTS (assumes the first year's installments are capitalized, it will be necessary to capitalize the first year's installments if the Authority issues bonds to finance the Installation of Improvements on the Property after the County's deadline for placing the first year's installments on the property tax roll) Fiscal Year Principal (a)* Interest (b)*. Administrative Expenses (c) ** Total (a). + (b) + (c) Total Initial Assessment: $ Assumes bonds are issued by the Authority to finance installation of the Improvements 30 days after the date of the application for contractual assessment financing submitted with respect to the Property. Subject to increase pursuant to Section 3(c) of the Agreement. C-1 96 SCHEDULE 2 INITIAL ASSESSMENT INSTALLMENTS (assumes the first year's installments are not capitalized) Fiscal Year Principal (a) Interest (b)* Administraitive Expenses•(+)** Total (a) + (b) + (c) Total Initial Assessment: $ Assumes bonds are issued by the Authority to finance installation of the Improvements 30 days after the date of the application for contractual assessment financing submitted with respect to the Property. Subject to increase pursuant to Section 3(c) of the Agreement. 97 [Attach notary pages] 98 Exhibit B: GalifomiaF!RST Program Boundary Map 99 LIMBO QBOINOnRYOFaAN DSPOOCOUNTY .ANDBOLOWO YOFCALPCRNIARRRPROGRAM Tummy' Mori roc RoulomoisorTRc CAU RIONNP NIPT PROGRAM; POINTY Off All MOO. IMO OP CMMGRNF.IURNIAMT TOCNA910F CIW MOS OPION OH$ P To@iTOOn iNIBNAa1YiAODE Of MEAMOS ORCApPORIOATNE COIMIW NOPTTO WWfORNNR3ATflW@! OPOOOOMRc1 OULD MqT AUTHO RY HAS AET9arIEATANrnY10ULDBE COIMeI1.To WUrrAologo. WIN Pl4tIC MT01,00 TO ORgONATO 711[AREA send of roc YOINN MAP Y110101 YM hM AOTNONE Lo PUlY O AOR NCY PIIOPPRTYGIIahcq PIAYOIFERINTO TNc 111f04.1AO0M Cf OpridOIMEB LEl/ERAT1op RENONACC ENEMY AOUOGE11001ININOYORI4TEN ■ NrNAENCYRT.ROVIUM ITNATARBPPRLIME110Y P OIEo TOR[A PP:0MM WWILLDAN.. Financial Services CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY BOUNDARIES OF CALIFORNIAFIRST PROGRAM =MYOr $AN DEGO STATE OF CAUFORNtA woos MKLTi AF1 111010a, aovndldo T I�IIP/Y 4 *711''11111.111011:- as" ter.. 1pa EA:14M Vila M+RtP Exhibit C initial CaliforniaFIRST Authorized Improvements fupbrY Alt Sealing and Ventilation tv1- asurv'a Air Filtration cD +J Air Sealing Air Barriers Bathroom fan --1 Ceiling fan CrawlspaaeSealing Duct Sealing Whole House fan Insulation Roof Attic Duct Floor Hot WeterSystem Wall Space Heating and Cooling Cogeneration furnace Demand Recirculation Pump Duct Replacement Ducted Heat Pump Evaporative coolers E1diaust Fan Geothermal Heat Pump Heat Reco+ery Ventilation System High Effldesicy Air Conditioner High Elide/icy Furnace Radiant Barrier Installation Solar Space Heating Thermostat Installation Weatheritatton WaterHeating High:Eftdeney HetWaterBoller HighEffiriencyWater-Heater '(ankles Water Heater' On demand Recirculation Pump LiRil ing High Efficiency Lighting Retrofit Iighting (hard wired) lighting controls; including occupancy sensors •Windows, Doors and Skylights Skylight Window Window Alm Reflective Roof White Roofing Solar Solar Thermal installation Solar Photovoltaics Wind Wind Barbing PowetSyStenn Feel Cell Fuel Ceti PowerSystem Water Efficiency (after pilot) Fiieures Low Flow9fiowerheads Low Row Showers Tbllets: flush a ti8 ggf or Tess Urinals: flushing at OS gpf or less Showerheaifs: flow at L5 gem or less Aerators: flow at 1.0 pin or less Landscaping ' Grey water systems Otfrer 'storm Other measures such as potable water offsets, efficiency improvements, Irrigation.measures, process Improvements and water management improvements shati be considered on a case -by -case basis in consultation with the CalifomiaRRST program. 101 Exhibit D Bond Structure The bonds will be issued to finance the installation of Authorized Improvements for a specific list of properties in the County and, with limited exceptions (see "Stand -Alone Financings" in Section 3), debt service on the bonds will be secured by and payable from all of the contractual assessments paid by participating properties of a similar type in the County. The interest rate on bonds issued for the CaliforniaFIRST Program will be reflected in the amount of the contractual assessments paid by property owners. 7. Micro -bonds: "Micro -bonds" are bonds issued to finance the installation of Authorized Improvements for one or a limited number of properties. These bonds will be purchased by a third -party investor identified by California Communities, and will be remarketed to the public bond market when a significant number of micro -bonds have been issued The interest rale for micro -bonds will be set daily or weekly, but fixed at issuance of bonds. The interest on bonds issued for the CalifomiaFIRST Program will be included in the annual contractual assessment installments paid by property owners, and, the contractual assessments will be fixed for the duration of the repayment penod in the Assessment Contract. Property owners may drop out of the CalifomiaFIRST Program up to the time the hen is placed on the property without penalty beyond the cost of the application fee, subject to applicable law 2. Pooled bond. "Pooled bonds" are bonds issued to finance the installation of Authorized Improvements for a large group of properties- Pooled bonds will be sold to the market on a quarterly or more frequent basis depending upon the demand for financing by property owners in the county In order to facilitate pooled bond financings, Assessment Contracts will be sighed by property owners prior to issuance of the pooled bonds. The contractual assessment Installments payable by property owners will reflect a not -to -exceed interest rate on the pooled bonds. No bonds will be issued if the not to exceed interest rate would be exceeded, and contractual assessments will be reduced downward if the interest rate on the bonds is Tess than the not -to -exceed interest rate. If a property owner drops out of the CaliforniaFIRST program after the ten has been placed on the property but before bonds have been issued, the property owner must pay the costs of removing the lien and will forfeit the application fee, subject to the applicable law. If a property owner withdraws from the CalifomiaFIRST Program after the Assessment Contract has been signed and pooled bonds have been Issued, the property owner must pay the costs associated with removing the lien, including the administrative, financing, and pre -payment costs. 3. Stand -Alone Financings Large non-residential projects may be eligible for a stand-alone bond financing depending on the size and type of project. Banks and other financing partners may be utilized to provide funding for these projects. Under this approach, California Communities will issue a bond and the bank or other financing partner will purchase the bond. 102 P4ovoti. • int AfArL.stian Aaprovia r. wetA, Ontimerk,n I-4 dortAvi A.0.0'19 Poor.sF4rperoy. S..:rsar? 1 Aticro-Sond Process rial111111111M Cerests. Acriarrow , 21.40;4 Ktr.vw aro tbattke 4:"..3.sde sm'Msira! dirumenlatirsT or dems-i 103 Wtomo MFoonelforil.. 4 onroctoo . hprio::,,focon & -of App. Lova; Pot vootoo: Pins Mvp4m1y 10111 IL—iS 1 r—,ot ' F'19wilen leolomo S 11.11.111111 PetWO tro.dtarrotton 11 %tech, niroartioni 20 VS40. Pooled Bond Process P4aved tito Pn.roo:* .4sholaneor do.lcoom-gow.ofikte.x.. 91,14 Legend 104 ATTACHMENT 6 105 RESOLUTION NO. 10R-7 RESOLUTION DECLARING INTENTION TO FINANCE INSTALLATION OF DISTRIBUTED GENERATION RENEWABLE ENERGY SOURCES, ENERGY EFFICIENCY AND WATER EFFICIENCY IMPROVEMENTS COUNTY OF SAN DIEGO WHEREAS; the California Statewide Communities Development Authority ("California Communities") is authorized under the authority granted California Communities pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California in accordance with Chapter 29 of Part 3 of Division 7 of the Streets & Highways Code of the State of California ("Chapter 29") to authorize assessments to finance the installation of distributed generation renewable energy sources, and energy efficiency and water efficiency improvements that are permanently fixed to real property ("Authorized Improvements"); and WHEREAS, Chapter 29 authorizes California Communities to enter into contractual assessments to finance the installation of Authorized Improvements in the County of San Diego (the "County"); and WHEREAS, California Communities wishes to declare its intention to establish a CaliforniaFlRS T program (the "CaliforniaFlRS T Program') in the County, pursuant to which California Communities, subject to certain conditions set forth below, would enter into contractual assessments to finance the installation of Authorized Improvements in the County; NOW, THEREFORE, BE IT RESOLVED by the California Statewide Communities Development Authority, as follows: Section 1. Findings. Califomia Communities hereby finds and declares the following: (a) The above recitals are true and correct. (b) Energy conservation efforts, including the promotion of energy -related Authorized Improvements to residential, commercial, industrial, or other real property, are necessary to address the issue of global climate change and the reduction of greenhouse gas emissions in the County. (c) Water conservation efforts, including the promotion of water -related Authorized Improvements to residential, commercial, industrial, or other real property, are necessary to address the issue of chronic water shortages in California. (d) The upfront cost of making residential, commercial, industrial, or other real more energy and water efficient,along. with the fact that most commercial loans for that property �Y�>a p:: pose are due on the sale of the property, prevents many property owners from installing Authorized Improvements. (e) A public purpose will be served by establishing a contractual assessment program, to be known as the CaIiforniaFIRST Program, pursuant to which California Communities will finance the installation of Authorized Improvements to residential, commercial, industrial, or other real property in the County. Jones Hall, A Professional Law Corporation 1-20-10 1 106 Section 12, Set-Uo Fees. The County and various cities within the County may advance fees to California Communities to pay for certain costs of establishing the CalifomiaFIRST Program, some or all of which represent State Energy Program (SEP) funds. The Program Manager is hereby authorized and directed to return to the County and cities, as applicable, any fees paid to California Communities by the County and cities, as applicable, that do not represent SEP funds and that California Communities does not use to pay for the costs of establishing the CaliforniaFIRST Program. Section 13, Effective Date. This resolution shall take effect immediately upon its adoption. ************ PASSED AND ADOPTED by the California Statewide Communities Development Authority this January 27, 2010. I, the undersigned, an Authorized Signatory of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on January 27, 2010. By: /611414-41--"°—`^--. Authorized Signatory California Statewide Communities Development Authority 5 107 Section 2. Determination of Public Interest. Caiitomia Communities hereby determines that (a) it would be convenient, advantageous, and in the public interest to designate an area, which shall encompass the entire geographic territory within the boundaries of the County, within which California Communities and property owners within the County may enter into contractual assessments to finance the installation of Authorized Improvements pursuant to Chapter 29 and (b) it is in the public interest for California Communities to finance the installation of Authorized Improvements in the County pursuant to Chapter 29. Section 3. Identification of Authorized Improvements. California Communities hereby declares that it proposes to make contractual assessment financing available to property owners to finance installation of Authorized improvements, including but not limited to those improvements detailed in the Report described in Section 7 below, as that Report may be amended from time to time. Section 4. Identification of Boundaries. Contractual assessments may be entered into by property owners located within the entire geographic territory of the County; provided, however, that Califomia Communities shall not enter into contractual assessments to finance the installation of Authorized Improvements with the owner of any property in the County unless requested to do so first by the County if the property is located in unincorporated territory or a city if the property is located in incorporated territory and after such city or the County, as applicable, has held a public hearing pursuant to Section 6586.5 of the Government Code of the State of California. The form of resolution pursuant to which the County or cities may request California Communities to enter into contractual assessments to finance the installation of Authorized Improvements is attached as Exhibit A. Section 5. Proposed Financing Arrangements. Under Chapter 29, California Communities may issue bonds pursuant to Chapter 29 that are payable by contractual assessments and California Communities may advance its own funds to finance work to be repaid through contractual assessments, and may from time to time sell bonds to reimburse itself for such advances. Division 10 (commencing with Section 8500) of the Streets & Highways Code of the State (the "Improvement Bond Act of 1915") shall apply to any bonds issued pursuant to Chapter 29, insofar as the Improvement Bond Act of 1915 is not in conflict with Chapter 29. California Communities shall determine the creditworthiness of a property owner to participate in the financing of Authorized Improvements based on the criteria developed by the Program Manager in consultation with the CaliforniaFlRST Program financing team. In connection with bonds issued under the Improvement Bond Act of 1915 that are payable from contractual assessments, serial and/or term improvement bonds shall be issued in such series and shall mature in such principal amounts and at such times (not to exceed 20 years from the second day of September next following their date)and at such rate or rates of • a a (not .a aa. •aa ..� w. i•., t..� law) a... determined interest (not to exceed the maximum rate permitted by applicable raw) as shall be deterrmined by California Communities at the time of the issuance and sale of the bonds. The provisions of Part 11.1 of the Improvement Bond Act of 1915 shall apply to the calling of the bonds. it is the intention of California Communities to create a special reserve fund for the bonds under Part 16 of the Improvement Bond Act of 1915. California Communities will not advance available surplus funds from its treasury to cure any deficiency in the redemption fund to be created with respect to the bonds; provided, however, that this determination shall not prevent California Communities from, in its sole discretion, so advancing funds. The bonds may be refunded under Division 11.5 of the California Streets and Highways Code or other applicable 2 108 laws permitting refunding of the bonds, upon the conditions specified by and at the determination of California Communities. California Communities hereby authorizes the Program Manager, upon consultation with bond counsel and the CaliforniaFIRST Program underwriter, to provide for the issuance of bonds payable from contractual assessments. In connection with the issuance of bonds payable from contractual assessments, California Communities expects to obligate itself, through a covenant with the owners of the bonds, to exercise its foreclosure rights with respect to delinquent contractual assessment installments under specified circumstances. Section 6. Public Hearing. Pursuant to the Act, California Communities hereby orders that a public hearing be held before this Commission, at 1400 K Street, 3rd Floor, Sacramento, CA 95814, on March 10, 2010, at 10:00 a.m., for the purposes of allowing interested persons to object to or inquire about the proposed program or any of its particulars. The public hearing may be continued from time to time as determined by the Commission for a time not exceeding a total of 180 days. At the time of the hearing, the Report described in Section 7 below shall be summarized and the Commission shall afford all persons who are present an opportunity to comment upon, object to, or present evidence with regard to the proposed contractual assessment program, the extent of the area proposed to be included within the program, the terms and conditions of the draft Contract described in Section 7 below, or the proposed financing provisions. Following the public hearing, California Communities may adopt a resolution confirming the Report (the "Resolution Confirming Report") or may direct the Report's modification in any respect, or may abandon the proceedings. The Commission hereby orders the Secretary to publish a notice of public hearing once a week for two successive weeks. Two publications in a newspaper published once a week or more often, with at least five days intervening between the respective publication dates not counting such publication dates, are sufficient. The period of notice will commence upon the first day of publication and terminate at the end of the fourteenth day. The first publication shall occur not later than 20 days before the date of the public hearing. Section 7. Report. The Commission hereby directs the Program Manager for the CalifomiaFIRST Program to prepare and file with the Commission a report (the "Report") at or before the time of the public hearing described in Section 6 above containing all of the following: (a) A map showing the boundaries of the territory within which contractual assessments are proposed to be offered, as set forth in Section 4 above. (b) A draft contract (the "Contract") specifying the terms and conditions that would be agreed to by California Communities and a property owner within the County. The Contract may allow property owners to purchase directly the related equipment and materials for the installation of the Authorized Improvements and to contract directly for the installation of such Authorized Improvements. (c) A statement of California Communities' policies concerning contractual assessments including all of the following: 3 109 (1) Identification of types of Authorized Improvements that may be financed through the use of contractual assessments. (2) Identification of the California Communities official authorized to enter into contractual assessments on behalf of California Communities. (3) A maximum aggregate dollar amount of contractual assessments in the County. (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. (d) A plan for raising a capital amount required to pay for work performed pursuant to contractual assessments. The plan may include amounts to be advanced by California Communities through funds available to it from any source. The plan may include the sale of a bond or bonds or other financing relationship pursuant to Section 5898.28 of Chapter 29. The plan shall include a statement of or method for determining the interest rate and time period during which contracting property owners would pay any assessment. The plan shall provide for any reserve fund or funds. The plan shall provide for the apportionment of all or any portion of the costs incidental to financing, administration, and collection of the contractual assessment program among the consenting property owners and California Communities. (e) A report on the results of the consultations with the County Auditor -Controller described in Section 9 below concerning the additional fees, if any, that will be charged to California Communities for incorporating the proposed contractual assessments into the assessments of the general taxes of the County on real property, and a plan for financing the payment of those fees. Section 8. Nature of Assessments. Assessments levied pursuant to Chapter 29, and the interest and any penalties thereon, will constitute a lien against the Tots and parcels of fend on which they are made, until they are paid. Unless otherwise directed by California Communities, the assessments shall be collected in the same manner and at the same time as the general taxes of the County on real property are payable, and subject to the same penalties and remedies and lien priorities in the event of delinquency and default. Section 9. Consultations with Count Auditor -Controller. California Communities hereby directs the Program Manager to enter into consultations with the County Auditor - Controller in order to reach agreement on what additional fees, if any, will be charged to California Communities for incorporating the proposed contractual assessments into the assessments of the general taxes of the County on real property. Section 10. Preparation of Currant Roil of Assessment. Pursuant to Section 5898.24(c), California Communities hereby designates the Program Manager (or his/her designee) as the responsible official for annually preparing the current roll of assessment obligations by assessor's parcel number on property subject to a voluntary contractual assessment. Section 11. Procedures for Responding to inquiries. The Program Manager shall establish procedures to promptly respond to inquiries concerning current and future estimated liability for a voluntary contractual assessment_ 4 110 Section 12. Set -Up Fees. The County and various cities within the County may advance fees to California Communities to pay for certain costs of establishing the CaliforniaFIRST Program, some or all of which represent State Energy Program (SEP) funds. The Program Manager is hereby authorized and directed to return to the County and cities, as applicable, any fees paid to California Communities by the County and cities, as applicable, that do not represent SEP funds and that California Communities does not use to pay for the costs of establishing the CaliforniaFIRST Program. Section 13. Effective Date. This resolution shall take effect immediately upon its adoption. ************ PASSED AND ADOPTED by the Califomia Statewide Communities Development Authority this January 27, 2010. I, the undersigned, an Authorized Signatory of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on January 27, 2010. By: 5 Authorized Signatory California Statewide Communities Development Authority 111 ATTACHMENT 7 112 INDEMNIFICATION AND INSURANCE AGREEMENT BY AND BETWEEN THE CITY OF NATIONAL CITY AND RENEWABLE FUNDING, LLC This Indemnification and Insurance Agreement (the "Agreement") is entered into by and between the City of National City a municipal corporation (the "City") and Renewable Funding, LLC, a California limited liability company (the "Administrator"), the administrator of the CaiiforniaFIRST Program, which is a program of the California Statewide Communities Development Authority, a California joint exercise of powers authority (the "Authority"). RECITALS WHEREAS, the Authority is a joint exercise of powers authority whose members of which include the City in addition to other cities and counties in the State of California; and WHEREAS, the Authority established the CaliforniaFIRST Program ("PACE Program") to allow the financing of certain renewable energy, energy efficiency, and water efficiency improvements that are permanently affixed to real property through the levy of assessments voluntarily agreed to by the participating property owners pursuant to Chapter 29 of Division 7 of the California Streets and Highways Code ("Chapter 29") and the issuance of improvement bonds under the Improvement Bond Act of 1915 upon the security of the unpaid assessments; and WHEREAS, the Authority has conducted or will conduct proceedings required by Chapter 29 with respect to the territory within the boundaries of the City; and WHEREAS, on August 19, 2014, the City Council of the City of National City adopted a resolution authorizing the City to join the PACE Program, authorizing the Authority to accept applications from eligible property owners, conduct assessment proceedings and levy assessments within the territory of the City, and authorizing related actions; and WHEREAS, the Authority is solely responsible for the formation, operation, and administration of the PACE Program, as well as the sale and issuance of any bonds in connection therewith, including the conduct of assessment proceedings, the levy and collection of assessments and any remedialaction in the case of such assessment payments, and the offer, sale, and administration of any bonds issued by the Authority on behalf of the PACE Program; and WHEREAS, the Administrator is the administrator of the PACE Program and agrees to indemnify the City and provide insurance adding the City as an additional insured on its insurance policy or policies in connection with the operations of the PACE Program as set forth herein. NOW, THERFORE, in consideration of the above premises and of the City's agreement to join the PACE Program, the parties agree as follows: Indemnification and Insurance Agreement 1 City of Natonal City and Renewable Funding, LLC 113 1. Agreement to Indemnify. The Administrator agrees to defend, indemnify, and hold harmless the City, its officers, elected or appointed officials, employees, agents, and volunteers from and against any and all claims, damages, losses, expenses, fines, penalties, judgments, demands, and defense costs (including, without limitation, actual, direct, out-of- pocket costs and expenses, and amounts paid in compromise or settlement and reasonable outside legal fees arising from litigation of every nature or liability of any kind or nature including civil, criminal, administrative or investigative) arising out of or in connection with the PACE Program, except such loss or damage which was caused by the sole negligence or willful misconduct of the City. The Administrator will conduct all defenses at its sole cost and expense, and the City shall reasonably approve selectionof the Administrator's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies of the Administrator, its affiliates or any other parties are applicable thereto. The policy limits of any insurance of the Administrator, its affiliates or other parties are not a limitation upon the r obligation of the Administrator, including without limitation, the amount of indemnification to be provided by the Administrator. 2. Insurance. The Administrator agrees that, at no cost or expense to the City, at all times during the operation of the PACE Program, to maintain the insurance coverage set forth in Exhibit "A" to this Agreement. 3. Amendmentllnterpretation of this Agreement. This Agreement, including all Exhibits attached hereto, represents the entire understanding of the parties as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both parties hereto. This Agreement shall not be interpreted for or against any party by reason of the fact that such party may have drafted this Agreement or any of its provisions. 4. Section Headings. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 5. Waiver. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof. 6. Severability and Governing Law. If any provision or portion thereof of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent peed by law. This Agi eenieni. shall be governed by and construed and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed in California. 7. Notices. All notices, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed certified or registered mail and addressed as follows: Indemnification and Insurance Agreement 2 City of Natonal City and Renewable Funding, LLC 114 If to the Administrator Renewable Funding, LLC 500 12th Street, Suite 300 Oakland, CA 94607 If to the City: Alfredo Ybarra Director of Housing, Grants, and Asset Management City of National City 1243 National City Boulevard National City, CA 91950-4301 8. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, which together shall constitute the same instrument. 9. Effective Date. This Agreement will be effective as of the date of the signature of City's representative as indicated below in the City's signature block. IN WITNESS HEREOF, the parties hereto duly executed this Agreement as of the date below. CITY ADMINISTRATOR CITY OF NATIONAL CITY RENEWABLE FUNDING, LLC By: Ron Morrison, Mayor APPROVED AS TO FORM: Claudia Gaeitua Silva City Attorney Indemnification and Insurance Agreement By: (Name) (Print) (Title) Date,: By: (Name) (Print) (title) Date: 3 City of Natonal City and Renewable Funding, LLC 115 INSURANCE A. Minimum Scone of Insurance Coverage shall be at least as broad as: EXHIBIT A 1. The coverage provided by Insurance Services Office Commercial General Liability coverage ("occurrence") Form Nu Tiber CG 0001; and 2. The coverage provided by Insurance Services Office Form Number CA 0001 covering Automobile Liability. Coverage shall be included for all owned, non - owned and hired automobiles; and 3. Workers' Compensation insurance as required by the California Labor Code and Employers Liability insurance; and 4. Professional Liability Errors & Omissions for all professional services. There shall be no endorsement reducing the scope of coverage required above unless approved by the National City Risk Manager. B. Minimum Limits of Insurance Administrator shall maintain limits no less than: 1. Commercial General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit; and 2. Automobile Liability: $1,000,000 combined single limit per accident for bodily injury and property damage; and 3. Workers' Compensation and Employers Liability: Workers' Compensation limits as required by the California Labor Code and Employers Liability limits of $1,000,000 per accident; and 4. Professional Liability Errors & Omissions $1,000,000 per occurrence/ aggregate limit. C. Deductibles and Self -Insured Retentions Any deductibles or self -insured retentions must be declared to, and approved by the National City Risk Manager. At the option of City, either: the insurer shall reduce or eliminate such deductibles or self -insured retentions as respects City, its officers, employees, agents and contractors; or Administrator shall procure a bond guaranteeing payment of losses and related Indemnification and Insurance Agreement 4 City of Natonal City and Renewable Funding, LLC 116 investigations, claim administration and defense expenses in an amount specified by the National City Risk Manager. D. Other insurance Provisions The policies are to contain, or be endorsed to contain, the following provisions: 1. Commercial General Liability and Automobile Liability Coverages. a.. National City, its officers, employees, agents, and contractors are to be covered as additional insureds as respects: Liability arising out of activities performed by or on behalf of Administrator; products and completed operations of Administrator; premises owned, leased, or used by Administrator; and automobiles owned, leased, hired or borrowed by Administrator. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, employees, agents, and contractors. b. Administrator's insurance coverage shall be primary insurance as respects the City, its officers, employees, agents, and contractors. Any insurance or self-insurance maintained by City, its officers, employees, agents, or contractors shall be excess of Administrator's insurance and shall not contribute with it. c. Any failure to comply with reporting provisions of the policies by Administrator shall not affect coverage provided to the City, its officers, employees, agents, or contractors. d. Coverage shall state that Administrator's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. e. Coverage shall contain a waiver of subrogation in favor of the City, its officers, employees, agents, and contractors. 2. Workers' Compensation and Employers' Liability. Coverage shall contain waiver of subrogation in favor of National City, its officers, employees, agents and contractors. 3. All Coverages Each insurance policy required by this AGREEMENT shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days' prior written notice shall apply in the event of cancellation for nonpayment of premium. Indemnification and Insurance Agreement 5 City of Natonal City and Renewable Funding, LLC 117 E. Acceptability of Insurers. Insurance is to be placed with insurers acceptable to the National City Risk Manager. E. Verification of Coverage. Administrator shall furnish the City with certificates of insurance and with original endorsements affecting coverage required by this AGREEMENT. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. Proof of insurance shall be either emailed in pdf format to: eamaya@nationalcityca.gov or mailed io the following postal address or any subsequent address as may be directed in writing by the National City Risk Manager: Risk Manager City of National City 1243 National City Boulevard National City, CA 91950-4301 G. Subcontractors Administrator shall include all subcontractors as insureds under its policies or shall obtain separate certificates and endorsements for each subcontractor. Indemnification and Insurance Agreement 6 City of Natonal City and Renewable Funding, LLC 118 ATTACHMENT 8 119 FIGTREE PACE Program Report Revised: June 4, 2014 CONTENTS I. Introduction 1 A. Parties Identified in this Report 2 1. Issuing Agency: CEDA 2 2. Program Administrator: Figtree Company, Inc. ("Figtree") 2 3. Bond Administrator: Willdan Financial Services ("Willdan") 2 B. Participating Agencies Included in this Program Report 2 C. Background 3 D. Program Goals 3 E. Program Benefits 4 F. Program Administration 4 G. Financing Plans 5 H. Geographic Parameters 5 I. Changes to Report 5 II. Program Requirements for Participation in Commercial Financing 5 A. Eligible Property Owners and Property Classifications 5 B. Eligible Improvements 6 C. Eligible Costs 7 D. Administrative Costs 7 E. Application Process 8 III. Program Plan for Commercial PACE Financing 11 IV. Program Requirements for Participation in Residential Financing 11 A. Eligible Property Owners and Property Classifications 11 B. Eligible Improvements 12 C. Eligible Costs 12 D. Administrative Costs 13 E. Application Process 14 V. Program Plan for Residential PACE Financing 16 VI. Program Requirements for Participating Contractors 16 A. Eligible Contractors 16 VII. Appeals 17 VIII. Program and Financing Disclosures 18 A. Financing Amount and Terms — Commercial Properties 18 4829-6142-0561.1 121 1. Minimum Assessment Financing Amount 18 2. Maximum Assessment Financing Amount 18 3. Financing Term 18 B. Financing Amount and Terms — Residential Properties 19 1. Minimum Assessment Financing Amount 19 2. Maximum Assessment Financing Amount 19 3. Financing 'Perm 19 C. Maximum Portfolio 19 D. Priority of Funding 19 E. Accelerated Foreclosure 19 F. Prepayment 20 G. Assessment Interest Rate 20 IX. Exhibits 20 4829-6142-0561.1 122 I. INTRODUCTION This report ("Program Report") has been prepared in compliance with Section 5898.22 and 5898.23 of Chapter 29 of the California Streets and Highways Code in connection with the development and implementation of Figtree PACE (the "Program"), a Property Assessed Clean Energy ("PACE") financing program, within the jurisdictions of California cities and counties that are already members of or those which are pending or will become members of the California Enterprise Development Authority ("CEDA"), referred to as "Participating Agencies." The Figtree PACE program, also known as the California PACE Program, (both the "Program"), is a local government initiative designed to unlock the multibillion dollar economic stimulus of energy efficiency. The Program gives California Property Owners (defined as owners of record of commercial and/or residential property(ies)) access to upfront financing for energy efficiency, renewable energy, and water conservation property improvement projects which create local jobs, encourage sustainable building practices, and help municipalities reach climate protection goals — all without relying on public funds. The Program is offered by the California Enterprise Development Authority ("CEDA"), a joint powers authority established by the California Association for Local Economic Development ("CALED"), which has retained Figtree Company, Inc. ("Figtree") as the Program Administrator. The Program is established pursuant to California Assembly Bill 811, adopted in 2008, which provides for local agencies to leverage the power of voluntary contractual assessments, as a financing mechanism, to finance property improvements to promote the public purpose of energy and water resource efficiency. This Program Report is the authoritative document for the Program and fulfills the Section 5898.22 and 5898.23 requirements and contains the following: • Policies of CEDA concerning contractual assessments, which include the following: o Authorized improvements for Program financing (See Exhibit C) o Identification of the CEDA official authorized to enter into contractual assessments on behalf of CEDA (See section I.A) o Maximum aggregate dollar amount of voluntary contractual assessments authorized for the Program (See section VIII.C) o Guidelines for prioritizing financing requests in the event that such requests may exceed authorization amount (See section VIII.E) o Underwriting criteria for Program eligibility (See section II.A and IV.A) o Safeguards used to ensure total annual property tax and assessments on property will not exceed 5% of property value per California Code (See section VIII.A.2 and VIII.B.2) o Fundraising plan for capital to pay for work performed (See section III and V) • Summary of discussions with the County Auditor/Controllers with jurisdiction over the Participating Agencies as to the fees chargeable to Participating Agencies and/or Program participants for incorporating voluntary contractual assessments into the property tax bills (See section II.D and IV.C) • Maps showing the territory, with delineated boundaries, in which contractual assessments are offered (See Exhibits A-1 through A-47) • Draft Assessment Contract between a Property Owner and CEDA specifying the terms and conditions of the financing (See Exhibit B) 4829-6142-0561.1 1 123 A. Parties Identified in this Report Energy financing programs, such as Figtree PACE, are continually evolving with emerging financial products and solutions. Because of the nature of the energy efficiency fmancing structure, the financing team participants may vary throughout the life of the Program and additional financing participants may be used at the discretion of Figtree and/or CEDA, as required. 1.Issuing Agency: CEDA CEDA 550 Bercut Drive, Suite G Sacramento, CA 95811 Phone: 916-448-8252 Web: ceda.caled.org CEDA has authorized its Chair to enter into contractual assessments on behalf of CEDA. 2.Program Administrator: Figtree Company, Inc. ("Figtree") Figtree is a San Diego based company specializing in municipal and energy financial services. 3.Bond Administrator: Willdan Financial Services ("Willdan") Willdan is a subsidiary of Willdan Group, Inc., a publicly traded company (NASDAQ: WLDN), specializing in financial and economic consulting for growth planning, revenue generation, debt administration and municipal services. B. Participating Agencies Included in this Program Report The cities and counties that have adopted the required resolutions authorizing CEDA to establish and administer a PACE assessment district on their behalf (each a "Participating Agency," collectively "Participating Agencies") are as follows: • City of South San Francisco — adopted February 22, 2012 (Resolution Nos. 15-2012, 16-2012) • City of Pittsburg — adopted March 5, 2012 (Resolution No. 12-11786); • County of Kern — adopted March 13, 2012 (Resolution No. 2012-033); • City of Dublin - adopted March 20, 2012 (Resolution No. 36-12); • City of Redlands — adopted March 20, 2012 (Resolution No. 7140); • City of Rancho Cordova — adopted April 16, 2012 (Resolution No. 24-2012). • County of Alameda — adopted April 24, 2012 (R-2012-135); • City of Elk Grove — adopted May 31, 2012 (Resolution No. 12-24); • City of Yuba City — adopted August 16, 2012 (Resolution No. 12-035); • City of Kingsburg — adopted August 16, 2012 (Resolution No. 2012-31); 4 City of Clovis — adopted May 21, 2012 (Resolution No. 12-28); • City of Fresno — adopted October 18, 2012 (Resolution No. 2012-181); • City of San Diego — adopted October 23, 2012 (Resolution No. R-307794); • City of Commerce ce — [1.dupted November 20, 2012 (Resolution No. 12-130); • City of Palm Springs — adopted December 19, 2012 (Resolution No. 23282); • County of Butte — adopted March 26, 2013 (Resolution No. 13-048); • City of Bakersfield — adopted April 17, 2013 (Resolution No. 040-13); • City of San Marcos — adopted April 23, 2013 (Resolution No. 2013-7772); • City of Vista — adopted April 23, 2013 (Resolution No. 2013-48); • City of Santee — adopted April 24, 2013 (Resolution No. 029-2013); 4829-6142-0561.1 2 124 } City of Chico — adopted June 4, 2013 (Resolution No. 40-13); • City of Oroville — adopted June 4, 2013 (Resolution No. 8075); City of Oceanside — adopted June 5, 2013 (Resolution No. 13-R0397-1); County of San Diego — adopted August 6, 2013 (Resolution No. 13-106); • City of Turlock — adopted August 13, 2013 (Resolution No. 2013-141); • City of Hawthorne — adopted August 13, 2013 (Resolution No. 7568); • City of Stockton — adopted August 27, 2013 (Resolution No. 1201-02); • Town of Paradise — adopted July 9, 2013 (Resolution No. 13-39); • City of Rancho Palos Verdes — adopted September 9, 2013 (Resolution No. 2013-59); • City of Lomita — adopted August 19, 2013 (Resolution No. 2013-44); • City of El Segundo — adopted August 20, 2013 (Resolution No. 4837); • City of Anaheim — adopted October 8, 2013 (Resolution No. 159); ▪ City of San Jose — adopted December 3, 2013 (Resolution No. 76871); • City of Hermosa Beach — adopted September 10, 2013 (Resolution No. 13-6875); • City of Rolling Hills — adopted October 14, 2013 (Resolution No. 1152); ▪ City of Gardena — adopted October 8, 2013 (Resolution No. 6103); • City of Lemon Grove — adopted November 19, 2013 (Resolution No. 3233); ▪ City of Carlsbad — adopted December 3, 2013 (Resolution No. 2013-283); • City of Solana Beach — adopted March 26, 2014 (Resolution No. 2014-004); • City of Santa Paula — adopted April 21, 2014 (Resolution No. 6871); • County of Monterey — adopted May 14, 2014 (Resolution No. 14-424); • City of El Cajon — adopted April 22, 2014 (Resolution No. 040-14); • City of Escondido — adopted April 9, 2014 (Resolution No. 2014-47) • City of Cypress • City of Imperial Beach • City of Inglewood • City of Willows C. Background Assembly Bills 811 and 474 (the "Legislation") were approved by the California Legislature and signed into law by the Governor in 2008. Under these bills, the California Legislature declared that a public purpose is served by financing property improvement projects related to renewable energy, energy efficiency, water conservation (collectively known as the "Authorized Improvements") through voluntary contractual assessment programs. The Legislation applies to residential, commercial, industrial, and other real property. Figtree PACE was developed to provide California cities and counties a turnkey, no -cost approach in compliance with Assembly Bills 811 and 474. On December 15, 2011 CEDA approved the Program, becoming the requisite public agency for assessment district formation. Subsequently, cities and counties have opted to participate in the Program by joining CEDA and passing the requisite resolutions. Figtree has supported, and continues to support, public agencies along the path to participation in the Program. The Figtree PACE model has proved successful, with the initial round of project funding occurring in December 2011. D. Program Goals The primary goals for the Program are to create local jobs, stimulate local economies, and help cities and counties meet energy and climate protection goals. 4829-6142-0561.1 3 125 In terms of goals for the PACE category, the Program aims to create a financial lending product by which PACE financing becomes a mainstream asset class with a high degree of standardization, predictability, and scale, leading to decreased transaction costs for the benefit of California Property Owners. E. Program Benefits Figtree PACE offers multiple benefits to each category of Program stakeholders: Cities and counties, Property Owners, and contractors and vendors. Participating Agencies may benefit from: e Business attraction and retention • Increased sales tax revenues • Increased permit fee revenues a Cleaner communities and improved property values • Emissions reductions to comply with state mandates For Property Owners, the Program offers: • Opportunities to reduce utility costs through property improvements • Enabling project capital for much -needed upgrades • A no -money -down financing alternative a Fixed -rates and longer terms than many conventional financings For contractors and vendors, the Program offers: • Project -enabling financing to reach new and existing clients • Marketing and outreach opportunities • Development of sustainable business practices • Increased revenues and profitability F. Program Administration The Program is sponsored by CEDA, which is authorized to form assessment districts on behalf of the Participating Agcncics and enter into Assessment Contracts with Property Owners. Figtree has been retained by CEDA as the Program Administrator for all administrative, outreach, and funding activities of the Program, including but not limited to: • Advising Participating Agencies on Program setup; • Community education and Marketing outreach; • Responding to Property Owner inquiries; e Approving contractors for Program participation; • Processing assessment financing applications (the "Application"); • Bond administration and lien recordation; • Facilitating the distribution of funds 4829-6142-0561.1 4 126 G. Financing Plans In order to provide financing that suits the economics of energy efficiency, renewable energy, and water conservation projects, the Program has been designed to accommodate various sources and methods of funding the Authorized Improvements. Authorized Improvements may be funded through one or more of the following or any other legally available method approved by the CEDA board: • Issuance of municipal bonds: Issuing municipal bonds for either a single project or a pool of projects. • Free market sourcing: Facilitating the "open market" model by which a borrower can choose its own PACE lender and CEDA may issue a micro bond or assign the Assessment Contract for the benefit of the PACE lender. ▪ Warehouse Lending Facility: Utilizing warehouse or interim facility to fund PACE projects and hold Assessment Contracts until a takeout through securitization or issuance of bonds. H. Geographic Parameters The Program is available to Property Owners within the legal jurisdiction of the Participating Agencies. Both cities and counties may join the Program. When a county adopts the Program, the Program becomes available to Property Owners in unincorporated areas and incorporated cities gain a simplified approach to Program participation. A city within a participating county may opt -in to the Program by the city's legislative body adopting a resolution requesting inclusion in the existing county Program. Pursuant to such resolution to participate in the Program, the city will find and declare that the properties in the city's incorporated area will benefit from participation. Furthermore, the city's resolution will authorize CEDA to implement the Program, and take actions necessary for financing the Authorized Improvements. If the city is not a member of CEDA, it must also adopt a resolution joining CEDA. I. Changes to Report CEDA and/or Figtree may make changes to this Report that are reasonably determined to be necessary to clarify its provisions, accomplish Program goals, and provide additional services that do not conflict with any existing provisions. CEDA and/or Figtree may modify from time to time the Authorized Improvements (Exhibit C), the Assessment Contract (Exhibit B), and terms of the Figtree PACE Application (Exhibit D) as deemed necessary. Participating Agencies may request modifications to the Program Report and CEDA may make such modifications if deemed appropriate. II. PROGRAM REQUIREMENTS FOR PARTICIPATION IN COMMERCIAL FINANCING A. Eligible Property Owners and Property Classifications Figtree PACE is designed to be a robust program that responsibly delivers assessment financing. Program applicants (also "Property Owners") must meet a number of financial standards to qualify. Property Owners may be individuals, associations, business entities, cooperatives, and virtually any owner of taxable real property. The PACE financing structure enables Property Owners to make no personal guarantees, as the financing is secured by the Property (defined as the property which is the subject of an 4829-6142-0561.1 5 127 Application). Therefore, Figtree PACE financing does not encumber Property Owner's personal credit, making the Program a financially viable option for property owners large and small. While the upper limit on the amount of financing available, as determined by the value of the Property, is sufficient for most projects, Property Owners may use the Program as one layer of an overall financing strategy to accommodate the largest of projects. Additionally, Property Owners are eligible to make multiple Applications for additional energy and water efficiency measures, provided that the Applications are within the scope of the underwriting criteria. he underwriting criteria for qualifying Program participants include: • Applicant(s) is/are the legal owner(s) of the Property described in the Application • Property Owner is current on property taxes for the Property • Property Owner is current on private property debt and has not been delinquent in the past three (3) years or since owning the Property, if less than 3 years • Mortgage lender(s) has/have been provided the Notice of Request for Lender Consent and Acknowledgement (if applicable) • Property Owner has not declared bankruptcy in the past five (5) years • Property is not listed as an asset in bankruptcy • The lien -to -value ratio (excluding assessed financing amount) does not exceed one hundred percent (i.e. no negative equity) • Property is developed and located within the jurisdiction of a Participating Agency • Property is classified as Commercial (including Industrial, multifamily, etc.) Eligible Property Classifications Commercial property is generally defined as any property not used as a single family or multifamily residence (up to 4 units). Examples of eligible commercial property include: • Multifamily Units (5 or more units) • Warehouse • Manufacturing/Industrial • Hotel • Office o Retail/Wholesale • Shopping Centers o Restaurants B. Eligible Improvements The Program accommodates a wide range of energy and water savings measures, consistent with the following provisions. • Authorize Improvements must be permanently fixed to the Property. • Program financing is provided only for portion of project costs associated with the Authorized Improvements, that is, no costs of remodeling or new construction are eligible for Program financing (discussed further in section II.C). • Program financing is intended for replacement of outdated equipment and installation of new equipment that reduces energy and/or water consumption. • Program financing is made available for the following types of Authorized Improvements: o Energy efficiency 4829-6142-0561.1 6 128 o Renewable energy o Water conservation o Alternative/ Custom Improvements Note on Alternative/ Customer Improvements: Upon review and approval by Figtree, Program financing is made available for emerging technologies for energy improvements that provide new ways to save or generate energy. These improvements will be evaluated on a case -by -case basis. For further examples of Authorized Improvements, see Exhibit C. C. Eligible Costs Eligible costs of Authorized Improvements include the cost of equipment and installation. Installation costs may include, but are not limited to, materials, labor, legal fees, appraisal fees, drafting, engineering, application fees, permit fees, processing fees, energy audit, and inspection charges. Remodeling, repair, and/or new construction costs do not qualify for Program financing except to the extent such construction is required for installation of a qualifying Improvement. Such equipment may include solar leases where such leases meet requirements of the PACE Program. Property Owners are encouraged to obtain bids from multiple Eligible Contractors, as each transaction is between the Property Owner and the Eligible Contractor. Neither Figtree nor CEDA nor a Participating Agency makes representations of the quality of work provided by an Eligible Contractor. Property Owners must protect their own interests and obtain the best price, service, and warranties. The role of Participating Agencies is limited to authorizing a financing district. The Property Owner is fully responsible for his or her purchase, service and performance expectations, and warranties. In each case, Figtree will determine whether the estimated equipment and installation costs are reasonable. Figtree reserves the right to evaluate market conditions and, at its discretion, require additional bids to determine whether costs are reasonable. While the Property Owner is encouraged to select the bidder of his or her choice from the list of Eligible Contractors, the amount available for assessment financing may be limited to an amount deemed reasonable by Figtree. In the event that (a) the acquisition, construction and/or installation of the Improvements (including, but not limited to commencing the permit process) has not commenced within 180 days of the issuance of the financing for the Improvements, or (b) all or a portion of the proceeds of the financing are not utilized to fund the Improvements within two (2) years of the issuance of the financing, the remaining Improvements shall not be funded under the Assessment Contract and the amount of the financing amount owing to the Contractor shall not be tendered to the Contractor; and the Borrower shall be responsible for the unpaid accrued interest, closing costs, related administrative costs and a special five percent (5%) termination fee relating to the unfunded amount as of the settlement date. D. Administrative Costs Discussions with the appropriate Auditor/Controller's offices have been initiated. It is anticipated that standard fees for placing special assessments on the tax roll will apply. Figtree has been in consultation with the County Auditor -Controller of each Participating Agency regarding any fees resulting from the incorporation of the contractual assessments into the general taxes of the County on real property. Based on Figtree's current and ongoing discussions, fees will be in 4829-6142-0561.1 7 129 accordance with the normal fees of each County Auditor -Controller for placing similar assessment charges on the County tax roll for general property taxes. These fees will be collected directly from participating Property Owners as a portion of the Recovery Fee associated with the annual levy amount. Administrative fees are recovered by the "spread" between bond rates and the Program financing interest rate, and by an annual administrative charge added to the annual assessment amount billed to each Property Owner each year. Other than the fees below, the Property Owners will not be billed for any additional charges or assessments. The following costs will be the responsibility of the Property Owner: • Application Fee: The fee is $695 per Commercial Application and included in the total financing. A fee of $100 per parcel will apply to properties on multiple contiguous parcels with the same occupancy use if the assessment amount is allocated across such parcels. The Application Fee includes title verification and recordation of closing documents with the county in which the Property is situated. • Financing Issuance Fee: At the time of closing, Figtree will charge you a one-time administration fee of up to four percent (4%) and not less than two percent (2%) of the principal amount of the assessment on the Property to cover the additional transaction costs of the Program. This fee will be added to the total assessment amount financed. • Annual Administrative Fee: A charge of up to three percent (3%) and not less than one percent (1%) of the total annual assessment amount will apply for cost recovery. This administrative cost recovery will be added to the annual assessment amount. • Permit Fees: Property Owners must determine whether a permits) is/are required for the chosen improvement measures. If required, Property Owners will be responsible to pay permit fees. Permit fees are eligible for inclusion in the financing. • Progress Draws: For large projects, progress draws or multiple disbursements may be available to alleviate the burden of carrying costs. Progress draws are subject to a fee to the contractor of $495 each. A maximum of two progress draws may be taken. E. Application Process Step 1: Apply and Get Approved for Financing To begin, the Property Owner must apply to Figtree for Program fmancing and be approved for participation in the program based on qualification criteria. Figtree will verify Property ownership and existing liens by ordering a title report on the Property. The Property Owner submits the Application together with its required attachments to Figtree online at www.figtreefinancing com or by mail: Figtree Financing Attention: PACE Program 9915 Mira Mesa Blvd., Suite 130 San Diego, CA 92131 Questions regarding the status of an Application should be directed to Figtree toll free at (877) 577-7373. 4829-6142-0561.1 8 130 Figtree determines whether each Application is complete and acceptable per Program guidelines. Incomplete Applications will not be accepted. Applications will be processed on first -come, first -served basis. Step 2: Define the Scope of Work and Budget Upon approval for participation, the Property Owner should define the project's scope of work and obtain a bid from an Eligible Contractor(s) (defined as contractors meeting certain professional standards, as further described in Section VLA). Figtree maintains an online database of Eligible Contractors that are members of the Program at http://www.figtreefinancing.com/resources-contractors/. A description of the scope of work and a copy of the bid(s) should be submitted to Figtree in order to determine the amount of financing required and to verify that all proposed Authorized Improvements qualify under the Program underwriting standards. Step 3: Lender Consent For mortgaged commercial properties, Figtree requires notification to the mortgage lender(s) to obtain consent to the PACE assessment as described below. The PACE assessment is on par with property taxes and therefore senior to any existing the mortgage lien. Because most mortgage contracts include a "due on encumbrance" clause preventing a Property Owner from voluntarily placing a lien in a senior position, Figtree has instituted the lender consent requirement to protect Property Owners from potential violations of their mortgage contracts. Once Figtree has determined an applicant's eligibility for financing and the amount of financing required for the proposed project, Figtree will submit the proposed scope of work and budget to the mortgage lender for approval. Property Owners and Eligible Contractors should allow approximately three to four weeks for Figtree to obtain the mortgage lender's consent. Lender consent to Prior Assessment Lien: The Program provides for the holders of any private lien on the participating Property (the "Mortgage Lenders") to receive notice of the pending contractual assessment and requests written lender consent that the assessment lien will have the same priority as real property taxes. The Program's lender consent process has been designed to protect the security interest of the Mortgage Lenders. The Program Administrator will send notices requesting lender consent (the "Notice and Request for Lender Consent") via certified mail to all Mortgage Lenders' names and addresses listed in the participating Property Owner's Mortgage Loan Agreement, Promissory Note, Deed of Trust, and other Security Agreements as applicable (collectively the "Mortgage Documents"), as described by a title report obtained by Figtree. The Notice and Request for Lender Consent ("Lender Consent") requests (i) confirmation from the Mortgage Lender that the levy of the assessment pursuant to the Assessment Contract will not trigger an event of default or the exercise of remedies under the participating Property Owner's Mortgage Documents; (ii) provides notice that the assessment will be secured by a statutory lien on the participating Property pari passu with real property taxes; (iii) provides written notice of the proposed participation of the Property in the Program; and confirms that the Mortgage Lenders' signature constitute consent as required under the Mortgage Documents. 4829-6142-0561.1 9 131 Lender failure to respond to the Lender Consent: lithe lender returns the Notice and Request for Lender Consent and specifically states it does not consent, the Property Owner may not participate. If there is no written lender response received from the Mortgage Lender within 30 days after the postmarked date of the Lender Consent, (the "Lender Consent Period"), based upon the language in the Lender Consent and subject to the disclosure provisions of the Application and as otherwise required by Figtree, the participating Property Owner may request the Program. Administrator to proceed with the Property Owner's participation in the Program. The Program Administrator will review such a request and may determine to proceed subject to additional disclosures or documents required by Figtree. Step 4: Execute Assessment Documents Once the Scope of Work and Budget have been approved and Lender Consent has been obtained or otherwise resolved (if Property is mortgaged), Figtree will provide the Property Owner with an Assessment Contract to be signed and returned to Figtree. The Assessment Contract is an agreement on the financing amount and terms and is executed between the Property Owner and CEDA. Once the Assessment Contract is executed, a signed and notarized Notice of Assessment and Payment of Assessment will be recorded with the county in which the Property is situated. Step 5: Notice to Proceed No work may begin until Figtree has issued a written Notice to Proceed to both the Property Owner and Eligible Contractor. The Notice to Proceed is an indication that the PACE assessment has been recorded on the Property and funds are available for disbursement to the Eligible Contractor upon satisfactory project completion. When the Notice to Proceed has been issued, the Eligible Contractor(s) may begin to install the energy and water upgrade equipment. NOTE: If any work or expenses related to the proposed Scope of Work are incurred by the Property Owner or Eligible Contractor(s) before receiving a Notice to Proceed from Figtree, neither Figtree nor CEDA nor the City/County is, or will be responsible to pay or reimburse the Eligible Contractor or Property Owner for any direct or related expenses. Step 6: Project Completion and Inspection Figtree reserves the right to inspect projects for satisfactory completion. The Property Owner must acknowledge that work has been done to his or her satisfaction before payment is issued to the Eligible Contractor(s). Step i i Contractor Payment Upon satisfactory completion of the project and certification of completion by the Eligible Contractor(s), the bond trustee will issue a check to the Eligible Contractor(s) directly. 4829-6142-G561.1 10 132 III. PROGRAM PLAN FOR COMMERCIAL PACE FINANCING Figtree has embraced a free market and flexible approach to solving the financial challenges associated with capital -intensive energy projects. Figtree intends to raise capital for the Program through one or more of the following financing arrangements or other legally available arrangement approved by CEDA: Issuance of municipal bonds: Issuing municipal bonds for either a single project or a pool of projects. • Free market sourcing: Facilitating the "open market" model by which a borrower can choose its own PACE lender and CEDA may issue a micro bond or assign the Assessment Contract for the benefit of the PACE lender. • Warehouse Lending Facility: Utilizing warehouse or interim facility to fund PACE projects and hold Assessment Contracts until a takeout through securitization or issuance of bonds. Alternative financing options not listed above may also be pursued should such options benefit the ongoing viability of the Program. As the Program Administrator, Figtree will direct the Bond Administrator to place charges on each participating Property Owner's tax bill for repayment each year the Program financing is outstanding. In the event municipal bonds are sold, such bonds shall be a special, limited obligation of CEDA and, as such, are not a debt of the Participating Agencies, the State of California or any of its political subdivisions (other than CEDA). None of Participating Agencies, the State or any of its political subdivisions (other than CEDA) is liable for the payment thereof. The bonds are special, limited obligations of CEDA payable exclusively from the revenues (secured by assessment district liens on Property of participating Property Owners), and amounts held in certain funds and accounts created pursuant to the bond indenture. The bonds will not be payable from any other revenues or other assets of CEDA. CEDA does not have any taxing power. The bonds do not constitute indebtedness within the meaning of any constitutional or statutory limitation or restriction. IV. PROGRAM REQUIREMENTS FOR PARTICIPATION IN RESIDENTIAL FINANCING A. Eligible Property Owners and Property Classifications Figtree PACE is designed to be a robust program that responsibly delivers assessment financing. Program applicants (also "Property Owners") must meet a number of financial standards to qualify. Property Owners may be individuals, associations, business entities, cooperatives, and virtually any owner paying real property taxes. The PACE financing structure enables Property Owners to make no personal guarantees, as the financing is secured by the Property (defined as the property which is the subject of an Application). Therefore, Figtree PACE financing does not encumber Property Owner's personal credit, making the Program a financially viable option for property owners large and small. While the upper limit on the amount of financing available, as determined by the value of the Property, is sufficient for most projects, Property Owners may use the Program as one layer of an overall financing strategy to accommodate the largest of projects. Additionally, Property Owners are eligible to make multiple Applications for additional energy and water efficiency measures, provided that the Applications are within the scope of the underwriting criteria. 4829-6142-0561.1 I 1 133 The underwriting criteria for qualifying Program participants include: • Applicant(s) is/are the legal owner(s) of the Property described in the Application • The Property is not a leasehold (i.e., owned the Property fee simple). • The amount of financing requested under the Program shall not exceed 10% of the value of the Property. • All existing private debt recorded against the Property does not exceed 85% of the value of the Property. • There are no involuntary liens, defaults or judgments on the Property in excess of $1,000. • Property Owner has not declared bankruptcy in the past seven (7) years • Property Owner is current on property taxes for the Property • Property Owner is current on private property debt and has not been delinquent in the past three (3) years or since owning the Property, if less than 3 years • The Property title is not subject to power of attorney, easements, or subordination agreements restricting my authority to subject the Property to a PACE lien. • Property is classified as single family Residential or multifamily Residential (up to 4 units) B. Eligible Improvements The Program accommodates a wide range of energy and water savings measures, consistent with the following provisions. • Authorized Improvements must be permanently fixed to the Property. • Program financing is provided only for portion of project costs associated with the Authorized Improvements, that is, no costs of remodeling or new construction are eligible for Program financing (discussed further in section: IV.C). • Program financing is intended for replacement of outdated equipment and installation of new equipment that reduces energy and/or water consumption. • Program financing is made available for the following types of improvements: o Energy efficiency o Renewable energy o Water conservation o Alternative/ Custom Improvements. Upon review and approval by CEDA on a case -by -case basis, Program financing will be made available for emerging technologies that provide new ways to save or generate energy. For further examples of eligible measures, see Exhibit C. C. Eligible Costs Eligible costs of Authorized Improvements include the cost of equipment and installation. Installation costs may include, but are not limited to, materials, labor, legal fees, appraisal fees, drafting, engineering, application fees, permit fees, processing fees, energy audit, and inspection charges. Remodeling, repair, and/or new construction costs do not qualify for Program financing except to the extent such construction is required for installation of a qualifying Improvement. Such equipment may include solar leases where such leases meet requirements of the PACE Program. 4829-6142-0561.1 12 134 Property Owners are encouraged to obtain bids from multiple Eligible Contractors, as each transaction is between the Property Owner and the Eligible Contractor. Neither Figtree nor CEDA nor a Participating Agency makes representations of the quality of work provided by an Eligible Contractor. Property Owners must protect their own interests and obtain the best price, service, and warranties. The role of Participating Agencies is limited to authorizing a financing district. The Property Owner is fully responsible for his or her purchase, service and performance expectations, and warranties. In each case, Figtree will determine whether the estimated equipment and installation costs are reasonable. Figtree reserves the right to evaluate market conditions and, at its discretion, require additional bids to determine whether costs are reasonable. While the Property Owner is encouraged to select the bidder of his or her choice from the list of Eligible Contractors, the amount available for assessment financing may be limited to an amount deemed reasonable by Figtree. In the event that (a) the acquisition, construction and/or installation of the Improvements (including, but not limited to commencing the permit process) has not commenced within 60 days of the issuance of the financing for the Improvements, or (b) all or a portion of the proceeds of the financing are not utilized to fund the Improvements within 120 days of the issuance of the financing, the remaining Improvements shall not be funded under the Assessment Contract and the amount of the financing amount owing to the Contractor shall not be tendered to the Contractor; and the Borrower shall be responsible for the unpaid accrued interest, closing costs, related administrative costs and a special five percent (5%) termination fee relating to the unfunded amount as of the settlement date. D. Administrative Costs Discussions with the appropriate Auditor/Controller's offices have been initiated. It is anticipated that standard fees for placing special assessments on the tax roll will apply. Figtree has been in consultation with the County Auditor -Controller of each Participating Agency regarding any fees resulting from the incorporation of the contractual assessments into the general taxes of the County on real property. Based on Figtree's current and ongoing discussions, fees will be in accordance with the normal fees of each County Auditor -Controller for placing similar assessment charges on the County tax roll for general property taxes. These fees will be collected directly from participating Property Owners through disclosed charges added to the Property Owner's annual levy amount. Administrative fees are recovered by the "spread" between bond rates and the Program financing interest rate, and by an annual administrative charge added to the annual assessment amount billed to each Property Owner each year. Other than the fees below, the Property Owners will not be billed for any additional charges or assessments. The following costs will be the responsibility of the Property Owner: • Application Fee: The Residential Application fee is included in the total financing in the amount stated in the Application. A fee of $100 per parcel will apply to properties on multiple contiguous parcels with the same occupancy use if the assessment amount is allocated across such parcels. The Application Fee includes title verification and recordation of closing documents with the county in which the Property is situated. 4829-6142-0561.1 13 135 • Financing Issuance Fee: At the time of closing, Figtree will charge you a one-time administration fee of up to four percent (4%) and not less than two percent (2%) of the principal amount of the assessment on the Property to cover the additional transaction costs of the Program. This fee will be added to the total assessment amount financed. • Annual Administrative Fee: A charge of up to three percent (3%) and not less than one percent (1%) of the total annual assessment amount will apply for cost recovery. This administrative cost recovery will be added to the annual assessment amount. Such administrative charges include, but not limited to staff time, Participating Agency staff time and expenses incurred in the formation and administration of the Program. • Permit Fees: Property Owners must determine whether a permit(s) is/are required for the chosen improvement measures. If required, Property Owners will be responsible to pay permit fees. Permit fees are eligible for inclusion in the financing. • Inspection Fee: An Inspection Fee of $150 will apply to any required site visit, including a final inspection to verify satisfactory completion of work. • Progress Draws: For large projects, progress draws or multiple disbursements may be available to alleviate the burden of carrying costs. Progress draws are subject to a fee of $450 each. E. Application Process Step 1: Apply and Get Approved for Financing To begin, the Property Owner must apply to Figtree for Program financing and be approved for participation in the program based on qualification criteria. Figtree will verify Property ownership and existing liens by ordering a title report on the Property. The Property Owner submits the Application together with its required attachments to Figtree online at www.figtreefinancing.com or by mail: Figtree Financing Attention: PACE Program 9915 Mira Mesa Blvd., Suite 130 San Diego, CA 92131 Questions regarding the status of an Application should be directed to Figtree toll free at (877) 577-7373. Figtree determines whether each Application is complete and acceptable per Program guidelines. Incomplete Applications will not be accepted. Applications will be processed on first -come, first -served basis. Step 2: Define the Scope of Work and Budget Upon approval for participation, the Property Owner should define the project's scope of work and obtain a bid from an Eligible Contractor(s). Figtree maintains an online database of Eligible Contractors that are members of its existing program at http://www.figtreefinancing.com/resources-contractors/. A description of the scope of work and a copy of the bid(s) should be submitted to Figtree in order to determine the amount of financing required and to verify that all proposed Authorized Improvements qualify under the Program underwriting standards. Step 3: Lender Notification 4829-6142-056I.1 14 136 For mortgaged residential properties, Figtree requires notification of the PACE assessment to the mortgage lender. The responsibility for the Mortgage Lender's written consent lies with the residential Borrower. Borrowers are required to acknowledge certain disclosures in the Application and the Assessment Contract and are required to declare the following: Borrower declares that (i) Borrower has received, read and understands the risks and characteristics of the Program described in the Property Owner Acknowledgments and Disclosures and FHFA Disclosure set forth in the Application and (ii) Borrower has been informed that executing this Contract, receiving financing for Authorized Improvements and consenting to the assessment levied against the Property without lender consent may constitute an event of default under Borrower's residential mortgage, and (iii) Borrower takes the sole responsibility for consequences of such default which may include acceleration of repayment obligations due under Borrower's residential mortgage. Step 4: Execute Assessment Documents Once the Scope of Work and Budget have been approved and Lender Consent has been obtained (if Property is mortgaged), Figtree will provide the Property Owner with an Assessment Contract to be signed and returned to Figtree. The Assessment Contract is an agreement on the financing amount and terms and is executed between the Property Owner and CEDA. Once the Assessment Contract is executed, a signed and notarized Notice of Assessment and Payment of Assessment will be recorded with the county in which the Property is situated. Step 5: Notice to Proceed No work may begin until Figtree has issued a written Notice to Proceed to both the Property Owner and Eligible Contractor. The Notice to Proceed is an indication that the PACE assessment has been recorded on the Property and funds are available for disbursement to the Eligible Contractor upon satisfactory project completion. When the Notice to Proceed has been issued, the Eligible Contractor(s) may begin to install the energy and water upgrade equipment. NOTE: If any work or expenses related to the proposed Scope of Work are incurred by the Property Owner or Eligible Contractor(s) before receiving a Notice to Proceed from Figtree, neither Figtree nor CEDA nor the City/County is, or will be responsible to pay or reimburse the Eligible Contractor or Property Owner for any direct or related expenses. Step 6: Project Completion and Inspection Figtree reserves the right to inspect projects for satisfactory completion. The Property Owner must acknowledge that work has been done to his or her satisfaction before payment is issued to the Eligible Contractor(s). Step 7: Contractor Payment Upon satisfactory completion of the project and certification of completion by the Eligible Contractor(s), the bond trustee will issue a check to the Eligible Contractor(s) directly. 4829-6142-0561.1 15 137 V. PROGRAM PLAN FOR RESIDENTIAL PACE FINANCING Figtree recognizes the importance of timely financing in the residential sector. Pursuant to speedy disbursement of funds, Figtree intends to raise capital for the Program through one or more of the following financing arrangements or other legally available arrangements approved by CEDA: • Issuance of municipal bonds: Issuing municipal bonds for either a single project or a pool of projects. • Warehouse Lending Facility: Utilizing warehouse or interim facility to fund PACE projects and hold Assessment Contracts until a takeout through securitization or issuance of bonds. Alternative financing options not listed above may also be pursued should such options benefit the ongoing viability of the Program. For any of the financing options, Figtree will direct the Bond Administrator to place charges on each participating Property Owner's tax bill for repayment each year the Program financing is outstanding. In the event municipal bonds are sold, such bonds shall be a special, limited obligation of CEDA and, as such, are not a debt of the Participating Agencies, the State of California or any of its political subdivisions (other than CEDA). None of Participating Agencies, the State or any of its political subdivisions (other than CEDA) is liable for the payment thereof. The bonds are special, limited obligations of CEDA payable exclusively from the revenues (secured by assessment district liens on Property of participating Property Owners), and amounts held in certain funds and accounts created pursuant to the bond indenture. The bonds will not be payable from any other revenues or other assets of CEDA. CEDA does not have any taxing power. The bonds do not constitute indebtedness within the meaning of any constitutional or statutory limitation or restriction. VI. PROGRAM REQUIREMENTS FOR PARTICIPATING CONTRACTORS A. Eligible Contractors Contractors ("Eligible Contractors" as defined in this section) must meet certain qualifications to be eligible to perform work on projects funded by the Program and all equipment must be approved, installed, and verified in accordance with the Program guidelines. Eligible Contractors must be licensed by and in good standing with the California State Contractors License Board, and must meet the following requirements. Eligibility requirements include: 9 Hold status of registered and licensed Contractor by the State of California; e Hold a business license in the jurisdiction where work is being performed; o Have a minimum of five (5) years work experience as a licensed Contractor in the State of California, or demonstrate sufficient experience in a relevant field of work; • Hold a minimum of $1,000,000 in general liability insurance; • Meet bonding and Worker's Compensation insurance requirements per California State Contractors License Board; • Agree to the Code of Ethics set forth in the contractor application. 4829-6142-0561.1 16 138 To apply to be an Eligible Contractor, a contractor must fill out a contractor application online at www.figtreefinancing.coln or download a contractor application form from the website to complete and mail to Figtree. Once approved (usually within 48 hours), the contractor will be added to the online directory of Eligible Contractors and may contract for projects financed through the Program. Per the Contractor Agreement (included in the contractor application), participating Eligible Contractors are responsible for installation of the equipment on the Property (after receiving a Notice to Proceed from Figtree). Upon satisfactory completion, the Eligible Contractor will be reimbursed by the Program within 14 business days. VII. APPEALS The Program provides an Appeal Process by which participating Property Owners may appeal disputes in the case of a denied Application and/or determination of ineligibility to participate in the Program. Property Owners who have not signed an Assessment Contract may appeal to Figtree as follows: 1. Written notice may be sent by certified mail to Figtree. The notice must identify the issue(s) for resolution, the circumstances that surround the issue(s), and a timeline of events. 2. Figtree shall discuss the matter with the Property Owner and shall attempt to resolve the dispute within thirty (30) calendar days after delivery of the notice. Figtree shall render a written decision in 30 calendar days and send that decision to the Property Owner. The decision of Figtree is final. Property Owners who have signed an Assessment Contract may appeal to Figtree as follows: 1. A Property Owner who has signed a CEDA Assessment Contract shall attempt in good faith to promptly resolve any dispute arising out of or relating to any Assessment Contract under the Program by negotiations with Figtree and/or the Chair of CEDA or his or her designated representative. 2. To appeal, Property Owners must notify in writing the other party or parties by certified mail of any dispute. Within thirty (30) calendar days after delivery of the notice, a Figtree representative or the Chair of CEDA and the Property Owner shall discuss the matter and shall attempt to resolve the dispute. 3. If the dispute has not been resolved within thirty (30) calendar days of the first meeting, any party may pursue other remedies, including mediation. All negotiations and any mediation conducted pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations, to which Section 1152.5 of the California Evidence Code shall apply, and Section 1152.5 is incorporated herein by reference. 4. Notwithstanding the foregoing provisions, a party may seek a preliminary injunction or other provisional judicial remedy if in its judgment such action is necessary to avoid irreparable damage or to resolve the status quo. Each party is required to continue to perform its obligations under the Assessment Contract pending final resolution of any dispute arising out of or relating to the Assessment Contract. 4829-6142-0561.1 17 139 Note on Appealing Property Valuation: If a Property Owner determines that the value of the Property as determined by Figtree is lower than the fair market value of the Property, the Property Owner may appeal to Figtree in an effort to establish a greater fmanceable amount. The Property Owner may, at its own expense, have an appraisal performed to establish a greater property value than that determined by Figtree. Figtree, at its discretion, may accept an appraisal and increase the financeable amount provided the appraisal is greater than the value determined by Figtree. The mortgage lender, if applicable, must also consent to this valuation. Figtree does not alter the Property Owner's ad valorem property taxes with the appraisal value; the appraisal is used only to determine the maximum Program financing amount. If a third party valuation tool is used to determine the value of the Property, the Property Owner shall have the right and obligation to a copy of the report used in connection with his or her Application. If the Property Owner wants to obtain a copy, he or she may write to Figtree within 90 days after Figtree provides notice of the action taken on the Property Owner's Application. VIII. PROGRAM AND FINANCING DISCLOSURES A. Financing Amount and Terms — Commercial Properties 1. Minimum Assessment Financing Amount The minimum size for Commercial assessment financing is $5,000. 2. Maximum Assessment Financing Amount The maximum assessment financing amount is typically ten percent (10%) of the total property value; properties will be reviewed on a case -by -case basis for financing up to twenty percent (20%) of total property value. The Program will determine a maximum assessment financing amount based on the most recent county -assigned assessed value of the Property or other valuation deemed acceptable by Figtree. Valuation may be based on a third party valuation tool provided by a qualified vendor or a qualified appraisal. Such valuation must have been determined and/or remain valid as of no less than ninety (90) days prior to the date of issuance of Program financing. The interest rate shall be based on market conditions and may be tiered by financing term and lien to value ratio. Figtree will calculate and determine the financing available for the Property Owner before final approval as a safeguard so that in any case the total annual property tax and assessments on the Property will not exceed five percent (5%) of the Property's value per California code. If a Property Owner determines that the assessed values do not accurately reflect the market value, an appraisal may be authorized. Authorizations are provided on a case by case basis. The maximum amount available for Program finanri.ng may be limited to an amount deemed reasonable by Figtree. 3. Financing Term The term of the Program financing is based on the useful life of the Authorized Improvements installed up to a maximum of 20 years. Terms of five, ten, fifteen and twenty years are available subject to the useful life determination according to the preceding sentence. 4829-6142-0561.1 18 140 B. Financing Amount and Terms — Residential Properties 1. Minimum Assessment Financing Amount The minimum size for Residential assessment financing is $2,500. 2. Maximum Assessment Financing Amount The maximum assessment financing amount is typically ten percent (10%) of the total property value; properties will be reviewed on a case -by -case basis for financing up to twenty percent (20%) of total property value. The Program will determine a maximum assessment financing amount based on the most recent county -assigned assessed value of the Property or other valuation deemed acceptable by Figtree. Valuation may be based on a third party valuation tool provided by a qualified vendor or a qualified appraisal. Interest rates will be determined by the financing term and posted on the Program website, with applicable adjustments, from time to time. Figtree will calculate and determine the financing available for the Property Owner before final approval as a safeguard so that in any case the total annual property tax and assessments on the Property will not exceed five percent (5%) of the Property's value per California code. If a Property Owner determines that the assessed values do not accurately reflect the market value, an appraisal may be authorized. Authorizations are provided on a case by case basis. The maximum amount available for Program financing may be limited to an amount deemed reasonable by Figtree. 3. Financing Term The term of the Program financing is based on the useful life of the Authorized Improvements installed up to a maximum of 20 years. Terms of five, ten, fifteen and twenty years are available subject to the useful life determination according to the preceding sentence. C. Maximum Portfolio The maximum principal amount of the Program fmancing available to Property Owners under the Program is under the authority of and determined by CEDA, which has authorized $500 million at this time. The total amount of financing available to all participating cities and counties that are Participating Agencies is expected to exceed $500 million. The maximum principal amount of the Program financing can be increased through CEDA resolution and CEDA Board Approval. A distinction should be made between bonding and funding capacity. Given that the Figtree PACE model accommodates various funding sources, actual funding capacity may exceed bonding capacity. D. Priority of Funding Applications from Property Owners for financing will be given priority based on the date on which the Application is approved. If a request from a Property Owner for financing would cause the Program to exceed the authorized maximum portfolio set by CEDA, then the Application will be ineligible for financing unless the CEDA board authorizes additional funding. CEDA will retain the authority to grant exceptions to the priority status of individual Applications. E. Accelerated Foreclosure The Program assessments are collected as a line item to the Property Owner's property tax bill. Each year the annual assessment amounts will be submitted to the County Tax Collector's office. If an annual 4829-6142-0561.1 19 141 assessment installment remains unpaid, the unpaid amounts will be subject to accelerated assessment lien foreclosure proceedings. These unpaid amounts will be removed from the real property tax rolls and given to a foreclosure attorney for collection via the foreclosure process. The special assessment foreclosure proceedings generally will occur well in advance of the County Tax Collector's Foreclosure Sale Date to remedy the delinquent general taxes on the Property. F. Prepayment At any time, the Property Owner can request a payoff quote to pre -pay the PACE assessment lien on the Property. Such payoff calculation includes the principal balance, any bond redemption premiums, interest amounts due, and a special administrative fee. A reasonable prepayment premium may be charged depending on the year of payoff. Prepayment premiums are published in the Application fora,.. G. Assessment Interest Rate Program financing will be issued to Property Owners at an annual interest rate that is determined by market conditions at the time of issuing bonds. The rate of interest is fixed over the financing term. In any event, California state law does not allow the interest rate on assessment district bonds to exceed 12%. Program financing that is entered into at different times may have different interest rates depending on bond market conditions and successful marketing of the bonds. Upon successfully arranging the financing in compliance with Financing Plans set forth in this Report, the interest rate for the project or group of projects will be established. After the Property Owner affirms that the Authorized Improvements have been installed as set forth in the Assessment Contract and after inspection of the Authorized Improvements, the funding cycle will conclude with distribution of funds. IX. EXHIBITS Maps Draft Assessment Contract Authorized Improvements Applications for Financing 4829-6142-0561.1 20 142 143 FIGTREE PACE PROGRAM ASSESSMENT FINANCING CONTRACT [A PROGRAM SPONSORED BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND ADMINISTERED BY FIGTREE COMPANY, INC., (the "Program Administrator")] This Assessment Financing Contract ("Contract") is made and entered into as of this day of , 20by and between the California Enterprise Development Authority, a California joint powers authority ("Authority"), and ("Borrower"). RECITALS WHEREAS, the Authority has established the Property Assessed Clean Energy (PACE) Program, (the "Program") by which the Authority assists property owners with the financing of the acquisition and installation on their property of certain qualifying renewable energy systems and energy or water efficiency equipment (the "Assessment Financing"). The purpose and method of administration of the assessments under the Program are described in the Figtree PACE Program Report adopted by the Authority on January 16, 2013 as it may be amended from time to time (the "Report"); and WHEREAS, the Program is authorized by Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (the "Act"); and WHEREAS, the Borrower has submitted to the Authority that certain Figtree PACE Application dated , a copy of which is attached hereto as Exhibit "A" and incorporated herein by this reference (the "Application") and the Authority has accepted the Application in accordance with the Report; and WHEREAS, the renewable energy system and/or energy or water efficiency equipment and those certain direct costs incurred by the Borrower as described in Exhibit C which shall be financed with the proceeds of the Assessment Financing described herein (the "Improvements") are described in Exhibit "B" attached hereto and incorporated herein by this reference, which Improvements shall be constructed on or installed on the property of Borrower identified in the Application (the "Property"); and WHEREAS, the Borrower wishes to participate in the Program by executing this Contract with the Authority and thereby requests that the Authority finance the acquisition, construction, and installation of the Improvements on t he Property and certain costs of issuance associated ateu therewith; WHEREAS, the Authority shall provide the proceeds of the Assessment Financing directly tothe Borrower and/or a licensed contractor selected by Borrower in accordance with the Report (the "Contractor") to pay for the Improvements in accordance with the guidelines outlined in the Report. WHEREAS, the Borrower acknowledges that funding for the Improvements will be provided by the Authority through the issuance of bonds, notes or other obligations secured in whole or in V242014 1 144 part by the payment by the Borrower of amounts required to be paid hereunder (collectively "Financing Instruments"); and WHEREAS, in order to repay such Assessment Financing, the Borrower has determined that the Property benefits from the Improvements in an amount at least equal to the Assessment and the Borrower voluntarily consents to the recordation of a voluntary and consensual Assessment Financing Lien (as defined in section 1.B. of this Contract) on the Property for an assessment of the Property each year until the Assessment Financing is paid in full; and WHEREAS, Borrower agrees that assessment installments (including principal, interest, and administrative costs) will be collected on the property tax bill for the Property in the same manner and at the same time as property taxes and shall be subject to the same penalties, remedies (including foreclosure and sale of the property), and lien priorities as are property taxes in the event of delinquency; and WHEREAS, Borrower has read and understands, and has executed the Disclosures, Declarations and Acknowledgments contained in the Application; 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: Assessment Financing Contract 1. Contract A. Subject to the conditions set forth herein, the Authority agrees, subject to obtaining sufficient funding therefore and the issuance of the Financing Instruments, to extend Assessment Financing to Borrower for the purpose of acquiring, installing, and constructing the Improvements in a dollar amount calculated pursuant to Exhibit "C" attached hereto and incorporated herein by this reference (the "Financing Amount"). The Borrower shall be solely responsible for the payment of all costs of the Improvements which exceed the Financing Amount and Borrower agrees, in any event, to complete the Improvements and to fund all costs associated with such completion which may be in excess of the Financing Amount. This Contract and the Application are collectively referred to herein as the "Documents." B. Interest shall accrue on the unpaid principal balance of the Financing Amount from the date the Financing Instruments are issued. The Borrower acknowledges that Financing Amount will be recorded against the Property pursuant to Section 5898.30 of the California Streets and Highway Code and officially becomes a 1 ien (the "Assessment Financing Lien") against the Property. The Financing Amount shall accrue interest at a rate of percent ( %) per annum. Interest shall be computed on the basis of a three hundred sixty (360) day year. If a law which applies to the Contract sets maximum interest rates or charges in a manner as would cause the interest or other charges collected or to be collected in connection with the Contract 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 V242014 2 145 limit; and (ii) any sums already collected which exceed permitted limits will be refunded by the Authority if required by, and in the manner set by, law. C. The Borrower promises to pay to the Authority, without deduction or offset, the Financing Amount and the interest accrued thereon as provided herein. In addition, the Borrower promises to pay to the Authority, without deduction or offset, the reasonable costs which result from the administration and collection of assessments or from the administration or registration of any associated Financing Instruments issued for the Assessment Financing, including any reserve fund or other related funds associated with the Assessment Financing (the "Annual Administrative Assessment"). The Annual Administrative Assessment shall be the amount set forth in Exhibit "C" hereof. D. The Financing Amount and the Annual Administrative Assessment, and the interest and any penalties thereon shall constitute the Assessment Financing Lien on the Property until they are paid. The installments of the Financing Amount shall be included on the property tax bill for the Property, and shall be subject to the same penalties, remedies, and lien priorities as are property taxes in the event of non-payment. E. The Borrower hereby voluntarily and expressly consents to the levy of the annual assessment and the Annual Administrative Assessment and the imposition of the Assessment Financing Lien on the Property as described herein and in the Act. F. The amount of annual assessment as a result of the Assessment Financing on the Property is set forth in Exhibit "C" attached hereto and incorporated herein by this reference. Following the issuance of the Financing Instruments, the Program Administrator will determine the actual annual assessment amount based on the date of issuance and the actual interest rate of the Financing Instruments. G. The term of the Assessment Financing and this Contract is described in Exhibit "C" and shall be equal to the term of years of the Financing Instrument to be issued to fund the acquisition, installation and construction of the Improvements and shall not exceed a period of twenty (20) years. H. The outstanding principal balance of the Financing Amount may be prepaid, in whole or in part, at any time upon the payment of a premium in an amount equal to a percentage of the amount of the principal to be prepaid as calculated pursuant to Exhibit "C" attached hereto and incorporated herein by this reference. In addition, prepayment costs may also include trustee fees, Financing Instrument interest, and other related charges. I. The Borrower acknowledges and agrees that the Authority's obligations hereunder are conditioned upon t he Authority obtaining financing for the Improvements through the issuance of the Financing Instruments. The inability of the Authority to obtain such financing for any reason shall relieve the Authority of any and all of its obligations to the Borrower hereunder. 2. Use of Proceeds All proceeds of the Assessment Financing shall be used for the purpose of paying for the reasonable costs and expenses of the Improvements on the Property, to pay costs of issuance of V242014 3 146 the Financing Instrument, to fund capitalized interest on the Financing Instrument. In connection with that portion of the Assessment Financing used to pay for the costs and expenses of the Improvements, the Borrower shall comply with all requirements set forth herein and in the Application. The Borrower understands that the Authority will transfer the proceeds directly to the Contractor to pay for the Improvements in accordance with the guidelines outlined in the Report of the Authority as on file with the Authority. Disbursement Procedures A. Notwithstanding anything to the contrary contained herein, the Authority shallhave no obligation to disburse the funds for the Improvements to the Contractor(s) unless and until each of the following conditions are satisfied, or any such condition is expressly waived in writing by the Authority: (i) The receipt by the Authority of a written certification from Borrower and the Contractor that performed the Improvements, stating the actual cost of such Improvements for which disbursement is requested and stating that the installation of the Improvements is complete. (ii) A determination by the Authority that the Improvements have been installed on the Property. (iii) The receipt by the Authority of statements of Contractor(s), under penalty of perjury, and releases or waivers of lien, and any such other documents and instruments as the Authority may require, all in compliance with the requirements of applicable law. (iv) Borrower has, as appropriate, executed and delivered to the Authority the Documents and such other documents or instruments pertaining to the financing or the Improvements as the Authority may require. (v) As of the date of disbursement of the Financing Amount, nothing has come to the attention of the Authority which would lead the Authority to believe that the representations of the Borrower contained in the Documents are untrue, and no D efault (as defined in Section 10 below) shall have occurred and be continuing. (vi) No stop payment or mechanic's lien notice pertaining to the Improvements has been served upon t he Borrower or Authority or recorded against the Property and which remains in effect. (vii) The Authority shall have performed title verification (the "Title Report") in a form and substance acceptable to the Authority. The Authority may require the Borrower to take action to remove exceptions to the Title Report. (viii) In the event that (a) the construction of the Improvements (including, but not limited to commencing the permit process) has not commenced within one hundred and eighty (180) days of the issuance of the Financing Instruments issued for the Financing Amount, or (b) all or a portion of the proceeds of the Financing Instruments issued for the Financing Amount are not utilized to fund the Improvements within two (2) years of the issuance thereof, any remaining balance or portion of Improvements shall not be funded V242014 4 147 under this Contract and the Financing Amount shall not be tendered to the Contractor. Property owner shall be responsible for unpaid accrued interest on t he Financing Instruments, any related pro-rata portion of the financing costs, as well as a five (5%) termination fee based on the outstanding principal amount. B. Borrower will, within ten calendar days (10) of presentation by the Authority, execute any and all documents or instruments required by the Documents in connection with the disbursement of the Financing Amount. C. Progress Payments. T he foregoing Disbursement Procedures shall apply to progress payments to Contractor(s) for partially completed installation of the Improvements. If a progress payment is requested a f ee as reasonably determined by the Program Administrator shall apply. + r 3. Reports Borrower shall, upon t he request of the Authority, deliver within thirty (30) days to the Authority, or, if appropriate, cause its Contractor(s) to deliver within thirty (30) days to the Authority, a written report regarding the status of installation of the Improvements. 4. Representations and Warranties of Borrower Borrower represents and warrants that each representation and warranty set forth below is true, accurate and complete as of the date of this Contract. The disbursement of the Financing Amount shall be deemed to be a reaffirmation by the Borrower of each and every representation and warranty made by Borrower in this Contract. A. Formation and Authority. If Borrower is anything other than a natural person, it has complied with all applicable 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 Authority in connection therewith. This Contract and the Application have been duiy executed and delivered by Borrower and are valid and binding upon and enforceable against the Borrower in accordance with their terms. No consent or approval of any third party, which has not been previously obtained by the Borrower, is required for the Borrower's execution of the Contract and the Application, 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 no t 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 V2 2014 5 148 under any of the terms or provisions of any other 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 representations of this Section 4 shall also pertain to the trustor(s) of the trust. All reports, documents, instruments, information and forms of evidence which have been delivered to Authority concerning the Assessment Financing are accurate, correct and sufficiently complete to give Authority 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 materially 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. 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 Contract. H. Attribution of Benefit. Borrower confirms that based upon his knowledge and ownership of the Property, he voluntarily has attributed the percentages and amounts of benefit set out under the Act to each parcel and Borrower voluntarily and expressly consents to the Assessments so attributed. 5. Borrower's Covenants Borrower covenants, as follows: A. Completion and Maintenance of the Improvements. Borrower shall cause Contractor to commence within thirty (30) days, construction of the Improvements, and diligently continue to completion, in a good and workmanlike manner and in accordance with sound construction and installation practices. Borrower shall maintain the Improvements in good condition and repair. B. Compliance with Law and Agreements. In commencing and completing the Improvements, Borrower shall comply with all existing 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 Improvements and which are applicable to the Improvements, 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 approvalswhich are required to be obtained from any governmental authority in order to commence and complete the Improvements. Borrower, upon t he request of the Authority, shall deliver within fifteen (15) days, copies of all such permits, licenses and approvals to the Authority. V242014 6 149 D. Site Visits. Borrower grants Authority, 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 Improvements. Authority will make reasonable efforts during any site visit to avoid interfering with Borrower's use of the Property. Borrower shall also allow Authority to examine and copy records and other documents of Borrower which relate to the Improvements. Authority is under no duty to visit the Property, or observe any aspects of the Improvements, or examine any records, and Authority shall not incur any obligation or liability by reason of not making any such visit or examination. Any site visit, observation or examination by Authority shall he solely tor the purposes of protecting Authority's rights under the Documents. E. Protection against Lien Claims. Borrower shall pay within thirty (30) days or otherwise discharge any claims and liens for labor done and materials and services furnished to the Property in connection with the Improvements. 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 Improvements. F. Insurance. Borrower shall provide, maintain and keep in force at all times during the term of this Contract, all risk property damage insurance on the Property, with a policy limit equal to the full replacement cost of the Improvements. G. Notices. Borrower shall notify Authority within fifteen (15) days in writing of any Default under this Contract, or any event which, with notice or lapse of time or both, would constitute a Default hereunder. 6. 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 Improvements, the Authority may summarily refuse to make any disbursement for the Improvements, and in the event Borrower fails to furnish the Authority a bond or other credit instrument causing such notice or lien to be released within ten (10) days of notice from the Authority to do s o, such failure shall at the option of Authority constitute a Default under the terms of this Contract. Borrower shall deliver within fifteen (15) days to the Authority copies of all such notices or liens. 7. Indemnification A. Borrower shall indemnify, defend, protect, and hold harmless the Authority, Program Administrator, any city or county which may have formed the assessment district, and any and all agents, employees, representatives and attorneys thereof (collectively, the "Authority Parties"), from and against ail losses, liabilities, claims, damages (including but not limited to 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) any breach or Default by Borrower under the Documents, (ii) the Financing Amount and the Annual Administrative Assessment, (iii) the Improvements or the Property, or (iv) any other fact, circumstance or event related to Authority's extension of the Assessment Financing to Borrower or Borrower's V242014 7 150 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 Financing Amount. B. The indemnity obligations described in this Section 7 shall survive the disbursement of the Financing Amount, the repayment of the financing, the transfer or sale of the Property by the Borrower, and the termination of this Contract. 8. Waiver of Claims Because this Contract reflects Borrower's free and willing consent to enter into this Contract and to pay the Financing Amount, and the assessment thereof, and the Annual Administrative Assessment, Borrower hereby waives any otherwise applicable requirements for or right to the preparation of an engineer's report, notice of public hearing, public hearing, protest or opportunity to submit an assessment ballot in support of or in opposition to the Financing Amount, assessment thereof and the Annual Administrative Assessment pursuant to Article XIIID of the California Constitution, the Proposition 218 Omnibus Implementation Act (commencing at California Government Code Section 53750) and any other provision of California law. Borrower agrees and acknowledges that the assessment is not a "tax" as used in Section 1(e) of Article XIIIC of the California Constitution and that if such assessment is a 1 evy, charge, or exaction of any kind by the Authority, it is a charge imposed for a specific benefit conferred or privilege granted to Borrower that is not provided to those not charged, and which does not exceed the reasonable costs to the Authority of conferring the benefit or granting the privilege to Borrower. Borrower further knowing and voluntarily waives any otherwise applicable requirements for or rights granted under Article XIIIA or XIIIC pertaining to the assessment. Borrower hereby waives Borrower's right to repeal or reduce the assessment by initiative or any other action, or to file any lawsuit or other proceeding, at law or in equity, to challenge the validity of the assessment or the proceedings of the Authority, or any portion thereof, undertaken in connection with the establishment of the Program. For and in consideration of the Authority's execution and delivery of this Contract, 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 Authority 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 Authority Parties and accruing from or related to (i) the acquisition, construction, installation and use of the Improvements, (ii) any damage to or diminution in value of the Property that may result in connection with the Improvements, (iii) any personal injury, property damage or death that may result from the Improvements, (iv) the selection of manufacturer(s), dealer(s), supplier(s), contractor(s) and/or installer(s), and their action or inaction with respect to the Improvements, (v) the merchantability and fitness for any particular purpose, use or application of the Improvements, (vi) the amount of energy savings resulting from the Improvements, (vii) the workmanship of any third parties. This release includes claims, obligations, liabilities, causes of action, and damages of which Borrower isnot presently aware or which Borrower does not suspect to exist which, if known by Borrower, would materially affect Borrower's release of the Authority Parties. T he waiver contained in this V242014 8 151 paragraph shall exclude any and all claims, obligations, liabilities, causes of action, or damages, including attorneys' fees and court costs incurred by Borrower arising from the gross negligence or willful misconduct of any Authority Party. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CNIL CODE SECTION 1542 ("SECTION 1542"), WHICH IS SET FORTH BELOW: "A GENERAL RELEASE DOES NOT EX'1END 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 MA 1'I'FRS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVERS AND RELEASES. Borrower's Initials The waivers and releases by Borrower contained in this Section 8 shaft survive the disbursement of the Financing Amount, the repayment of the financing, the transfer or sale of the Property by the Borrower, and the termination of this Contract. 9. Further Assurances The Borrower shall execute any further documents or instruments consistent with the terms of this Contract, including documents and instruments in recordable form, as Authority shall from time to time find necessary or appropriate to effectuate its purposes in entering into this Contract and disbursing funds to the Borrower. 10. Default A. Subject to the further provisions of this Section 10, the failure of any representation, covenant 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 10(C) and (D) below, as applicable. B. The Authority shall give written notice of Default to Borrower, specifying the Default. Delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. All times for notice are calendar days. C. If a monetary event of Default occurs, prior to exercising any remedies under the Documents or the Act, Authority 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 Authority. V242014 9 152 D. If a non -monetary event of default occurs, prior to exercising any remedies under the Documents or the Act, Authority 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 Authority 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 reasonably necessary to cure the Default prior to exercise of any remedies by Authority. However, in no event shall Authority 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 and has not been cured within the applicable time period, then, upon the election of Authority, (i) if there has been no di sbursement of the Financing Amount, this Contract shall terminate and, except as otherwise expressly provided herein, the parties have no further obligations or rights hereunder, or (ii) if the Financing Amount has been disbursed in whole or in part, Authority may terminate its obligations to make any further disbursement of the Financing 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 reasonable costs and expenses incurred by the Authority in pursuing its remedies hereunder shall be additional indebtedness of the Borrower to the Authority hereunder, and shall be secured and collected as provided in the Act. G. Except as otherwise expressly stated in this Contract, the rights and remedies of the Authority are cumulative, and the exercise of one or more of such rights or remedies shall not preclude the exercise by the Authority, 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 Authority 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 Authority 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 B orrower hereunder with respect to the commencement and completion of the Improvements and the timely utilization of the Financing Amount 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. I. In the event that (1) the construction of the Improvements (including, but not limited to commencing the permit process) has not commenced within one hundred and eighty (180) days of the date that the Authority has notified the Borrower pursuant to Section V242014 10 153 13 below in writing of the issuance of the Financing instruments issued for the Financing Amount, or (b) all or a portion of the proceeds of the Financing Instruments are not utilized to fund the Improvements within 2 years of the issuance of the Financing Instruments, the remaining Financing Amount shall not be tendered to the Contractor, and the Improvements shall not be funded under this Contract. The Authority shall have no further obligation hereunder. 11. Compliance with Local, State and Federal Laws Borrower shall cause the Improvements to be constructed, 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 and hold the Authority 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 Section 7 shall survive the disbursement of the Financing Amount, the repayment of the Financing Amount, and the termination of this Contract. 12. Severabilitv Each and every provision of this Contract is, and shall be construed to be, a separate and independent covenant and contract. If any term or provision of this Contract or the application thereof shall to any extent be held to be invalid or unenforceable, the remainder of this Contract, 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 Contract shall be valid and shall be enforced to the extent permitted by law. 13. 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 and provided the Authority may designate a Program Administrator other than Figtree and provide notice information for such replacement party to the Borrower: To Authority: and CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY 550 Bercut Drive, Suite G Sacramento, CA 95811 FICTREE COMPANY, INC. 9915 Mira Mesa Blvd Suite 130 San Diego, CA 92131 V242014 11 154 To Borrower: 14. Attorneys' Fees and Costs In the event that any action is instituted to enforce payment or performance under this Contract, the parties agree that the non -prevailing party shall be responsible for and shall pay all reasonable costs and all attorneys' fees incurred by the prevailing party in enforcing this Contract. 15. No Waiver No disbursement of all or any portion of the Financing Amount shall constitute a waiver of any conditions to the Authority'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 Authority from thereafter declaring such inability to constitute a Default under this Contract. No disbursement of any amount based upon inadequate or incorrect information shall constitute a waiver of the right of Authority to receive a refund thereof from Borrower. No waiver of any term or condition of this Agreement or any of the Documents shall constitute a continuing waiver thereof. 16. Governing Law This Contract shall be governed by the laws of the State of California. Any legal action brought under this Contract must be instituted in the Superior Court of the County of Sacramento, State of California. 17. Amendment of Contract No modification, rescission, waiver, release or amendment of any provision of this Contract shall be made except by a written agreement executed by the Borrower and the Authority. 18. Authority May Assign: Role of the Authority Authority, at its option, may (i) assign any or all of its rights and obligations under the Contract, and (ii) pledge and assign its right to receive the Assessment, the Annual Administrative Assessment, and the repayment of the financing and any other payments due to the Authority hereunder, without obtaining the consent of the Borrower. 19. Borrower Assignment Prohibited In no event shall Borrower assign or transfer any portion of this Contract or Borrower's rights or obligations under the Contract without the prior express written consent of Authority, which V242014 12 155 consent may be granted or withheld in the reasonable discretion of the Authority. Sale, transfer, or rental of the Property is not an assignment or transfer of this Contract. 20. Notice to Subsequent Purchasers Borrower agrees to provide written notice to any subsequent purchaser of the Property that the Property is subject to an assessment lien for this Program, and to provide any subsequent purchaser a copy of this Contract. 2I. Relationship of Borrower and Authority The relationship of Borrower and Authority pursuant to this Contract 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 Contract and of each and every provision hereof. This Contract, together with the other Documents, constitutes the entire contract between the parties hereto, and there shall be no other contract 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 Contract 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. [SIGNATURES ON FOLLOWING PAGE] V242014 13 156 IN WITNESS WHEREOF, Borrower and Authority have entered into this Contract as of the date and year first above written. BORROWER NAME By: Name: Authorized Signature BORROWER NAME By: Authorized Signature Name: V242014 CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, a joint powers authority 14 By: Name: Its: Chair Attest: Name: Its: Assistant Secretary 157 EXHIBIT "A" [ATTACH COPY OF EXECUTED AND ACCEPTED APPLICATION; V242014 A-1 158 EXHIBIT "B" DESCRIPTION OF THE PROPERTY AND IMPROVEMENTS V242014 B-1 EXHIBIT "C" SCHEDULE OF FINANCING TERMS AND AMOUNT DETERMINATION, ANNUAL ASSESSMENT INSTALLMENTS, AND PREPAYMENT PREMIUM 1. Financing Terms Improvement Amount Term of Financing (Years) Interest Rate Closing Date of Financing Instruments 2. Financing Amount Determination Cost of Improvements Cost of Issuance ( % of the Total Financing Amount) Capitalized Interest (based on closing date through September 2, 20 ) Processing Fee Total: V242014 C-1 160 3. Annual Assessment Installments Annual Debt Service [Principal & Interest]: Annual Administrative Assessment: 4. Prepayment Premium $ $ The prepayment premium shall be calculated as a percentage of the outstanding principal balance of the Financing Amount as follows: Prepayment Occurring Between Amount September 2, 2014 to September 1, 2021 5% September 2, 2021 to September 1, 2024 3% September 2, 2024 and thereafter 0% V242014 C-2 161 EXHIBIT C Authorized vnprovements 4829-6142-0561.1 162 FIGTREE PACE EIigible Energy & Water Efficiency Measures (the "Improvements") The Program offers financing for a number of water and energy efficiency measures, solar systems, and other innovative, energy -saving measures. The energy and water efficiency measures listed in this section are meant to serve as examples of the types of measures that qualify for Program financing. CEDA and/or Figtree reserves the right to make a final determination as to whether any particular energy and/or water efficiency measure will ultimately qualify. Energy Efficiency Equipment / Measures • Lighting • Lighting fixture replacement • Dimmable lighting • Air Conditioning & Heating • Air heating, ventilation, and air conditioning systems Furnaces and boilers • Air conditioners and condensing units • Packaged terminal air conditioners and heat pumps • Closed Loop Cooling • Air conditioner condensate recovery • Building Infrastructure & Management • HVAC Duct Zoning • Skylights • Insulation • Pipe insulation ▪ Exterior doors • Occupancy sensors • Heat rejection equipment • Compressor controls • Equipment scheduling • Programmable thermostats • Electric Vehicle Plug -In • Building Equipment • Refrigerated coolers • Water chillers ▪ Variable Speed Drive pump motor upgrades • Air handler fan upgrades • Economizers • Ozone laundry system ▪ Carbon Dioxide or Silicon based dry cleaning system Dry Hood Exhaust systems 4829-6142-0561.1 163 Pool Equipment • Pool circulating pumps (must be Variable Flow and/or Multi -speed with controllers) • Natural gas pool heaters Solar Equipment / Renewable Energy Generation 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 qualify for Program funding. Such equipment may include solar leases where such leases meet requirements of the PACE Program. Solar electricity generating equipment includes: • Solar thermal systems (hot water) • Solar thermal systems for pool heating • Photovoltaic systems (electricity) • Battery back-up systems will be allowed • Funding for off -grid systems will be allowed • PV systems can be sized to accommodate plug-in electric vehicles • Plug in stations • Emerging technologies • Nano/thin film photovoltaic • High intensity (parabolic solar panels) • Battery back-up systems will be allowed • Funding for off -grid systems will be allowed Other electricity generating equipment includes: • Small wind turbines • Fuel Cells Water Conservation Measures • High efficiency toilets • Low flow shower heads • Bathroom sink aerators • Hot water delivery options • Hot water recirculation systems and on -demand hot water systems • Whole house manifold system or core plumbing systems • Demand initiation or instantaneous hot water heaters • Demand initiated water softeners • Hot water pipe insulation • Evapotransportation irrigation systems or smart irrigation controllers • Permanently installed rainwater cisterns 4829-6142-0561.1 164 • 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 outdoor irrigation • Smart irrigation systems / controllers ENERGY STAR The Program provides financing 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. Energy Star requirements are anticipated to "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) • 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 4829-6142-0561.1 165 EXHIBIT D Applications for Financing 4829-6142-0561.1 166 Application for Figtree PACE Financing for Commercial Properties This Application requests the information we will need to determine your commercial property's eligibility for Figtree PACE financing. Filling out this Application will take about 15 minutes. Information found on your property tax bill and mortgage documents, if applicable, will help you complete this form. There is no fee to apply. You may contact a Figtree PACE representative for assistance by calling 877-577-7373. 1. Determine the eligibility of your Commercial Property. To qualify, each of the following statements must be True. True False ❑ 0 I am/we are the property owner of record (legal owner) O 0 Property taxes are current and have not been delinquent in the past 3 years or since owning the property, if fess than 3 years. ❑ 0 I am/we are not in bankruptcy and have not been in bankruptcy in the past 5 years. ❑ ❑ The property is not listed as an asset in a current bankruptcy. ❑ ❑ There are no federal or state income tax liens, judgment liens or similar involuntary liens on the property in amounts exceeding $1,000. Please answer the following questions regarding mortgage(s) on the property. Yes No O 0 is this property mortgaged? If the property is mortgaged, the following statements must be True: True False O ❑ The current mortgage balance does not exceed the total value of the property. (Use value as found on property tax bill or as determined by an Appraisal Institute MAI Designated appraiser within the past 90 days.) ❑ ❑ Mortgage payments on the property are current and have not been delinquent in the past 3 years or since owning the property, if less than 3 years. 2. Tell us about your Commercial Property. What is the physical property address as listed on the property tax record? CA Street Address City What is the Assessor's Parcel Number(s) for the property? State ZIP Which of the following best describes your Commercial Property? ❑ Factory ❑ Hotel/ Motel/ Resort ❑ HOA Clubhouse ❑ Industrial ❑ Multi -family (5 or more units) ❑ Office building ❑ Packing plant ❑ Parking lot ❑ Ranch or farm ❑ Restaurant ❑ Retail/ Shopping mall ❑ Warehouse ❑ Winery or vineyard ❑ Other: 167 3. Tell us about your Project. If known, what kind of improvements would you like to finance? u Solar panels (photovoltaic) L I Low energy fight fixtures and lighting controls O Solar panels (thermal hot water) ❑ Low flow water fixtures and toilets ❑ Low flow irrigation systems and controls O Insulation and/or weaiherization u Efficient roofs G Skylights 0 Wind power ❑ HVAC (Heating/ Air Conditioning) ❑ Attic and/or ceiling fans O High -efficiency windows 17 High -efficiency pool pumps ❑ Fuel cells ❑ Electric vehicle plug-in (solar sourced) n Other: If known, what is the estimated Installed cost of your energy project? If known, which contractor would you like to install/construct your Improvements? 4. Tell us about the Property Owner ("Borrower"). Which best describes the property's legal ownership? (Select one) Note: If the property is owned by an entity other than a natural person, please provide supporting documents identifying the entity's authorized signers. ❑ Owned by individual(s) ❑ Owned by a trust ❑ Owned by a partnership, limited liability company, or corporation ❑ Other (please describe) What is the Borrower's legal name as it appears on the property tax record? Note: The last four digits of the Borrower's Social Security Number will be used to verify that Borrower is not in bankruptcy and has not been in bankruptcy in the past five years. Provide Borrower's Tax Identification Number if Property is owned by a business entity. Owner 1 Name Tax Identification Number or Last four digits of SSN Owner 2 Name 7 ax Identification Number or Last four digits of SSN I � I Owner 3 Name Tax Identification Number or Last four digits of SSN Owner 4 Name Tax Identification Number or Last four digits of SSN Who is the primary contact for the roperty regarding Figtree PACE financing? r Name! Title Email V5302014 Preferred Phone 168 5. Tell us about the Mortgage. Skip to Section 6 if there is no mortgage on the property. For mortgaged properties, Figtree requires written Lender Acknowledgment to protect Borrower from potential breach of mortgage covenants, which may result in penalties and/or acceleration of the mortgage. Provide your mortgage lender's contact information below and submit the following with this Application: ❑ A copy of the most recent mortgage statement ❑ A copy of the mortgage documents (including note, deed of trust or other mortgage agreement) Note: In order for Figtree to initiate the Lender Acknowledgment process, you must execute the form of Authorization to Furnish and Release Information attached to this Application. Lender1 . Name of Lending Institution or Lender Contact Name Email Phone N 'rl.r Account Number Account Balance Lender 2 as of [Date of Balance] Name of Lending Institution or Lender Contact Name Email Phone Number Account Number Account Balance as of IDate of Balance] V5302014 169 i 6. Disclosures Regarding Assessment Financing What is Figtree PACE? Figtree Financing ("Figtree") is the administrator of the Figtree PACE program, which has been adopted by the California Enterprise Development Authority ("CEDA") and certain cities and counties that are members of CEDA. Figtree PACE provides assessment financing to participating property owners pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.10) for the installation of energy efficiency, water efficiency and renewable energy improvements (the "Improvements") that are permanently affixed to the owner's real property (the "Property"). Execution of Assessment Financing Contract. Each financing will be made pursuant to an Assessment Financing Contract between CEDA and Borrower. Subsequent to approval of this Application by Figtree; Borrower must enter into an Assessment Financing Contract with CEDA in order to obtain financing for qualified Improvements. Figtree will provide the Assessment Financing Contract to Borrower when the scope of Improvements has been finalized by a Figtree Registered Contractor and Lender Acknowledgment has been received, if applicable. Borrower must submit to Figtree a qualifying proposal for work and such proposal must be signed by both the issuing Figtree Independent Contractor and Borrower. Figtree will provide an estimated amortization schedule for the amount of financing required for the proposed improvements. How it Works. The financing will be secured by and be repayable through an assessment lien levied against the Property (the "Assessment"). Each year until the financing is fully repaid, assessment installments (including principal, interest and administrative costs) will be collected on the property tax bill for the Property in the same manner and at the same time as general property taxes_ Assessment installments will be subject to the same penalties, remedies (including foreclosure and sale of the property), and lien priorities as property taxes in the event of delinquency. Priority of Lien. The Assessment and each installment thereof, and any interest and penalties thereon, will constitute a lien against the Property until paid even though prior to full payment the Property is conveyed to another person. The Assessment will be recorded against the Borrowers Property in the office of the County Recorder in the county in which the Property is situated. The Assessment will be paramount to all existing and future private liens against the Property, including mortgages, deeds of trust and other security instruments. Default of Other Agreements. Before completing this Application, Borrower should carefully review any agreement(s) or security instrument(s) which affect the Property or to which Borrower is a party. ENTERING INTO A FIGTREE PACE PROGRAM ASSESSMENT FINANCING CONTRACT WITHOUT THE ACKNOWLEDGMENT OF BORROWER'S EXISTING LENDER(S) COULD CONSTITUTE AN EVENT OF DEFAULT UNDER SUCH AGREEMENTS OR SECURITY INSTRUMENTS. DEFAULTING UNDER AN EXISTING AGREEMENT OR SECURITY INSTRUMENT COULD HAVE SEROUS CONSEQUENCES TO THE BORROWER, WHICH COULD INCLUDE THE ACCELERATION OF THE REPAYMENT OBLIGATIONS DUE UNDER SUCH AGREEMENT OR SECURITY INSTRUMENT. Lender Anknovi Fed snnen4 i!fnr Mortgaged Properties). Under the Figtree PACE program, Lender Acknowledgment is required before financing is approved. Figtree may assist with the Lender Acknowledgment process where applicable. If you, the Borrower, have any questions regarding any agreements or security instruments which affect the Property or to which you are a party or your authority to enter into an Assessment Financing Contract with CEDA, please consult with your own legal counsel and/or your lender(s). CEDA AND/OR FIGTREE STAFF WILL NOT PROVIDE PROPERTY OWNERS WITH ADVICE REGARDING EXISTING AGREEMENTS OR SECURITY INSTRUMENTS. Figtree will send notice requesting Lender Acknowledgment to all mortgage lenders listed in Borrower's mortgage loan agreement, promissory note, deed of trust, and/or other security agreements as applicable (co!!ect:ve!y the "Mortgage Documents"), as listed in a title report obtained by Figtree. V5302014 170 If there is no written Lender Acknowledgment received from the mortgage lender(s) within 30 days after the date of sending the Lender Acknowledgment, (the "Lender Acknowledgment Period"), Borrower may request Figtree to proceed with providing financing pursuant to this Application. Figtree will review such a request and may determine to proceed with providing financing subject to additional disclosures or documents which may be required by Figtree. Registered Contractor Requirement: Any work including purchase, construction and/or installation of Improvements on the Property must be performed by a contractor registered with the Figtree PACE program. Registered contractors must meet certain minimum qualifications including: • Holding an active contractor's license of the appropriate kind as required by the California State Contractors License Board for the Improvements, • Maintaining Worker's Compensation insurance, and • Maintaining a General Liability insurance policy in the minimum amount of $1,000,000 per occurrence, Further information about registered contractors is available at http:/lwww.figtreefinancinq.com/contractors/. Application Does Not Guarantee Financing: The obligations of CEDA to finance any Improvements are conditioned upon obtaining financing for the Improvements through the issuance of Financing Instruments, which may include bonds, notes or other instruments. The inability of CEDA to obtain such financing for any reason shall relieve CEDA of any and all of its obligations to the Borrower. Acknowledgement 1/We acknowledge that I/we have received the Disclosures Regarding Assessment Financing and agree to the terms. Authorized 1 Signature Authorized 2 Signature Authorized 3 Signature Authorized 4 Signature Name (Please print) Name (Please print) Name (Please print) Name (Please print) Date Date Date Date V5302014 171 1 11 7. Disclosures Regarding Interest Rates, Fees and Qualifications Interest Rates and Terms Disclosure' !nterest Rate The interest rate is market-basea and aetermined at the tune ot financing. Current rates are between 4.50% to 6.99%. Minimum Financing $5,000 Maximum Financing Not to exceed 20% of the Total Property Value. Payments I Payment is due semi-annually at the same time as property taxes. Assessment installments are payable to the tax collector of the county in which the property is situated.• Terms Assessments are available in 5, 10, 15 and 20 year terms, not to exceed the useful life of the improvements. Due to the timing of payments through the property tax bill, payments may be amortized over a number of years one or two years fewer than the chosen assessment term depending on the date of project funding. Rebates and Incentives Improvements may be eligible for rebates and/or incentives. Figtree does not assist with processing rebates and/or incentives. All processing of rebates and/or incentives is between the property owner and the party offering the rebate and/or incentive. No Personal Guarantee Figtree PACE assessments are land -secured and require no personal guarantee. Capitalized Interest Any interest accruing from the time of fund allocation to the next applicable debt service payment will be capitalized (added to the assessment). Figtree will notify the property owner of the estimated amount of capitalized interest before the property owner executes an Assessment Financing Contract. Fee- Processing Fee -- --.�.-- — - 1- ___ _ A fee ot $b95 will be added to the total amount ot the assessment at the time of closing. An additional $100 charge will apply to each of any additional parcels in connection with the assessment. This fee pays for costs incurred to process the application, including a title report, and documentation fees for recording liens. This fee is included in the total amount of financing. Annual Administrative Fee An annual charge of $15 to $30 for every $1,000 of the annual assessment amount will be incurred for recovery of the program's administrative costs. Cost of Issuance Figtree charges a Cost of Issuance fee of 2% to 4% of the total financing to cover costs of issuing bonds to fund projects. This fee is not an out-of-pocket expense for the property owner, but apportioned from the total financing. Progress Payment Fee (incurred by Contractor) A fee of $495 will be charged to any Contractor requesting a progress payment for partially completed purchase, installation or construction of Improvements. Contractors may draw a total of two (2) progress payments in addition to a final payment for completed work. V5302014 172 . Prepayment Prepayment Fee If prepaid in years: Years 1 - 5 The assessment !flan S5.,000. corresponding PMpolyrraant 57o in increments of not Tess wing prepaid times 1he schedule_ can hn paid off pror Lc- maturity al any time A Prepayment Fee will be charged in the amount Prepayment Fee, ac,.cording to the f, llowang Fee Years 6-10 3% Years 11 - 20 None • Queillfications' Legal Owner Borrower must _ be the property owner ui recora. Current on Taxes Borrower must be current on property taxes owed on the Property and must not have been delinquent in the past three (3) years or since owning the property, if less than 3 years. Current on Mortgage (if applicable) If the property is mortgaged, the Borrower must be current on mortgage payments and must not have been delinquent in the past three (3) years or since owning the property, if less than 3 years. No Bankruptcy Borrower must not be in bankruptcy and must not have been in bankruptcy in the past five (5) years. The property must not be an asset in bankruptcy. Value -to -Lien Not "Underwater" The outstanding mortgage must not be an amount greater than the property's total assessed value (Owner must not be "underwater"). An appraised value can be used if the assessed total value is deemed inaccurate. Lender Acknowledgment If the property is encumbered by a mortgage, deed of trust or other financing instrument, written lender acknowledgment of the PACE lien is required. See "Section 6: Disclosures Regarding Assessment Financing" of this Application for more information. Acknowledgement IIWe acknowledge that Ilwe and agree to the terms. 1/we assessment payment will amount and annual assessment Financing Contract, which have received the Disclosures also understand that a Figtree be calculated based on the payment will be presented must be executed by the Property Regarding Rates, Fees, PACE financing amount fees and criteria described on a not -to -exceed basis Owner prior to issuance and Other Information and annual herein. Such financing in the Assessment of funds. Authorized 1 Signature Authorized 2 Signature Authorized 3 Signature Authorized 4 Signature Name (Please print) Name (Please print) Name (Please print) Name (Please print) Date Date Date Date V5302014 173 8. Assignment of Green Attributes to Figtree Financing Certain Green Attributes may arise from the Improvements financed through the Figtree PACE program. Where applicable, Figtree Financing may aggregate Green Attributes from the improvements. Owner acknowledges that any Green Attributes, including renewable energy credits attributable to the improvements, shall be owned by Figtree Financing. Green Attributes The undersigned participating Property Owner in the Figtree PACE program hereby provides and conveys all Green Attributes, including Renewable Energy Credits ("'REC"), associated with all electricity generation from the Improvements to Figtree Financing. Property Owner represents and warrants that Property Owner holds the rights to all Green Attributes (including REC) from the Improvements, and Property Owner agrees to convey and hereby conveys aii such Green Attributes (including REC) to Figtree Financing. Definitions "Green Attributes" means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Improvements, and its avoided emission of pollutants. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emission of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth's climate by trapping heat in the atmosphere; (3) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights. Green Tag Reporting Rights are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser's discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a MWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. "Renewable Energy Credit" has the meaning set forth in Public Utilities Code Section 399.12(f), as may be amended from time to time or as further defined or supplemented by Law. Acknowledgement UWe acknowledge that I/we have received the Assignment of Green Attributes to Figtree Financing and agree to the terms. Authorized 1 Signature Authorized 2 Signature Authorized 3 Signature Authorized 4 Signature Name (Please print) Name (Please print) Name (Please print) Name (Please print) Date Date Date Date V5302014 174 9. Declarations and Acknowledgments By signing this Application below, the undersigned hereby declares under penalty of perjury under the laws of the State of California all of the following: 1. Ownership: 1/(we) am/(are) current owner(s) of record of the Property described herein. 2. No Bankruptcy: I/(we) have not, and the Property described herein has not, been involved in a bankruptcy proceeding in the past five (5) years. 3. No Delinquency: I/(we) have been current on all mortgage(s) or other loan(s) secured by the Property and all property taxes for the past (3) three years, or since owning the Property if less than 3 years. 4. Information: That (i) the information provided in this Application is true and correct and (ii) that 1/(we) understand that any intentional or negligent misrepresentation(s) of the information contained in this Application may result in civil liability and/or criminal penalties and liability for monetary damages to the California Enterprise Development Authority ("CEDA") and/or the City and County Agencies in which the Property resides, its agents, successors and assigns, insurers and any other person who may suffer any loss due to reliance upon any misrepresentation which 1/(we) have made in this Application. 5. Assessment Financing Contract Authority: I/(we) am/(are) applying for assessment financing pursuant to the Figtree PACE program. I/(we) understand that I/(we) must execute an Assessment Financing Contract with CEDA in order to receive financing and I/(we) have the authority, without the consent of any third party which has not been previously obtained, to execute and deliver the Assessment Contract, this Application, and the various documents and instruments referenced herein. 6. Default of other agreements: I/(we) have read the "Default of Other Agreements" and "Lender Acknowledgment" provisions in the Disclosure Regarding Assessment Financing and understand that participation in the Figtree PACE financing program will require the acknowledgment of my/our mortgage lender if the property is mortgaged and a lender may not grant acknowledgement in some cases. Obtaining the lender's acknowledgment prior to executing the Assessment Financing Contract is required. If there is no written Lender Acknowledgment received from the mortgage lender(s) within 30 days after the date of sending the Lender Acknowledgment, Borrower may request Figtree to proceed with providing financing pursuant to this Application. Figtree will review such a request and may determine to proceed with providing financing subject to additional disclosures or documents which may be required by Figtree. 7. Improvements Representations: a. I/(we) agree that the selection of product(s), equipment, and/or measures referenced in this Application (the "Equipment"), the selection of manufacturer(s), dealer(s), supplier(s), contractor(s) and/or installer(s), and the decision regarding the purchase, installation and ownership maintenance of the Equipment is/are my/(our) sole responsibility and that II(we) do not rely upon any representations or recommendations of Figtree, the Figtree PACE program, CEDA and/or the City and County Agencies in which the property is situated, in making such selection or decision. b. 1/(we) understand that Figtree, the Figtree PACE program, CEDA and/or the City and County Agencies in which the Property is situated, makes no warranty, whether express or implied, including without limitation, the implied warranties of merchantability and fitness for any particular purpose, use or application of the Equipment. V5302014 175 c. I/(we) agree that Figtree, the Figtree PACE program, CEDA and/or the City and County Agencies in which the property resides, has no liability whatsoever concerning (i) the quality or safety of the Equipment, including its fitness for any purpose, (ii) the estimated energy savings produced by the Equipment, (Hi) the workmanship of any third parties, (iv) the installation or use of the Equipment including, but not limited to, any effect on indoor pollutants, or any other matter with respect to the Figtree PACE program. d. I/(we) understand that I/(we) is/are responsible for meeting the requirements and complying with a!! the applicable Federal/State/County/City laws and any agreement which affects the use of the Property. 8. Indemnification and Waiver of Claims: I/(we) agreo to indemnify, and waive the right to recover from, CEDA, Figtree, any City or County from and against all losses, liabilities, claims, damages, etc. arising out of this Financing including (i) Documents, (ii) the improvements, (iii) any breach or default by me/(us), (iv) damage to my Property, (v) personal injury or death, (vi) merchantability and fitness of Improvements, (vii) the amount of energy savings,(viii) the workmanship of third parties, and (ix) any other matter with respect to this the Figtree PACE program. Acknowledgement I/We acknowledge that I/we have received the Declarations and Acknowledgments and agree to the terms. Authorized 1 Signature Owner 2 Signature Owner 3 Signature Owner 4 Signature Name (Please print) Name (Please print) Name (Please print) Name (Please print) Date Date Date Date V5302014 i i 176 Application Attachments Checklist Please check to see if any of the following apply. If so, please submit the supporting documents with this Application by mail to our office at 9915 Mira Mesa Blvd, Suite 130, San Diego, CA 92131 or by email to applications& figtreefinancinq.com. Please include your name and property address in the subject line. ❑ Copy of pages of incorporation or supporting documents which identify authorized signers (if applicable) This will be used to verify Applicant has the authority to sign the Assessment Financing Contract on behalf of the corporate entity. ❑ Copy of most recent mortgage statement (if applicable) ❑ Copy of mortgage documents (if applicable) ❑ Signed Authorization to Furnish and Release Information (See following page, if applicable) V5302014 177 Authorization to Furnish and Release Information To: Name of Mortgage Lender Date RE: Loan Number: Borrower Name(s): Property Address: Property City, State, ZIP: Last 4 Digits of Social Security Number or Tax identification Number I, [Borrower], currently residing at [Current Address], County of State of , hereby authorize [Mortgage Lender] to discuss, release, furnish and provide information related to my Loan Number to Figtree Company, Inc. (DBA Figtree Financing), 9915 Mira Mesa Boulevard, Suite 130, San Diego, California 92131 and authorize Figtree Financing to obtain lender acknowledgment from you for our PACE financing. Signed by: Authorized 1 Signature Authorized 2 Signature 1 1� E Authorized 3 Signature Authorized 4 Signature !I I Name (Please print) Name (Please print) Name (Please print) Name (Please print) Date Date Date Date V530201k 178 Application for FIGTREE PACE Financing for Residential Properties This Application requests the basic information we will need to determine the amount of FIGTREE PACE financing available for your property improvement project. Filling out the Application will take just a moment of your time. There is no fee to apply. You may contact a FIGTREE PACE representative for assistance by calling 877-577-7373. 1. Determine the eligibility of your Residential Property for financing. A "No" answer is required for each of these questions. Yes No ❑ ❑ As the property owner, are you in bankruptcy? ❑ ❑ Is the property listed as an asset in a current bankruptcy? 0 0 Are there any federal or state income tax liens, judgment liens or similar involuntary liens on the property in amounts exceeding $1,000? ❑ ❑ If there is/are a mortgage(s), does the total amount currently owed exceed the total assessed value of the property (as found on property tax bill)? A 'Yes" answer is required for each of these questions. Yes No NIA ❑ ❑ 0 Are the property taxes for this property current? ❑ ❑ 0 If there is a mortgage on the property, is it a "jumbo" (non -conforming) loan? D 0 0 If there is a mortgage on the property, is it current? 2. Tell us about your property. A copy of your property tax bill will provide the information requested in this section. What is the physical property address as listed on the property tax record? CA Street Address City State ZIP What is the Assessor's Parcel Number(s) for the property? Which best describes the property's legal ownership? (Select one) Note: If the property is owned by a trust, partnership, LLC or corporation, please provide supporting documents identifying authorized signers. ❑ Owned by individual(s) ❑ Owned by a trust ❑ Owned by a partnership ❑ Owned by a limited liability company (LLC) ❑ Owned by a corporation ❑ Other If known, what kind of improvements would you like to finance? 179 3. Tell us about the property owner. What is the property owner's !ega! name as it appears on the property tax record? The last four digits of the property owner's SSN will be used to verify bankruptcy eligibility. . Owner 1 Owner 2 I OR XXX-XX- 1 Tax identification Number (if owned by business entity) OR Last four digits of owner's Social Security Number List additional owners Who is the primary contact for the property regarding FIGTREE PACE financing? Name Email Preferred Phone Street Address City State ZIP What is the relationship between the primary contact and the property? (Select one) ❑ Owner ❑ Trustee ❑ Partner ❑ Representative of the company that owns the property ❑ Other 4. Mortgage Lender Consent For mortgaged properties, the Lender Consent requirement has been instituted to protect participating property owners from acceleration of mortgage payments under "due on encumbrance" or similar clauses found in some mortgage contracts. !s there a mortgage on this property? ❑ Yes 0 No If you answered "Yes," FIGTREE requires your mortgage lender's consent to place a PACE lien on the property in order to provide FIGTREE PACE financing. FIGTREE may assist with obtaining this consent. If applicable, please provide your mortgage lender's contact information ands copy of the most recent mortgage statement for the property. Name Email Street Address City State ZIP Preferred Phone Account Number 180 5. Disclosures Regarding Rates, Fees, and Other Information Interest Rates and i ier 5 interest Rate Terms Disclosures - �� 1 -- Not to exceea 7.25%- For financed amounts up to 10% of Total Property Value Tier 2 Interest Rate Not to exceed 7.99%* For financed amounts greater than 10% and up to 20% of Total Property Value Minimum Financing $5,000 Maximum Financing Not to exceed 20% of the Total Property Value. Payments Payment is due semi-annually at the same time as property taxes. Assessment installments are payable to the tax collector of the county in which the property is situated. Terms Assessments are available in 5, 10, 15 and 20 year terms, not to exceed the useful life of the improvements. Due to the timing of payments through the property tax bill, payments may be amortized over a number of years one or two years fewer than the chosen assessment term depending on the date of project funding. Rebates and Incentives Improvements may be eligible for rebates and/or incentives. Figtree does not assist with processing rebates and/or incentives. All processing of rebates and/or incentives is between the property owner and the party offering the rebate and/or incentive. No Personal Guarantee Figtree PACE assessments are land -secured and require no personal guarantee. Capitalized Interest Any interest accruing from the time of fund allocation to the next applicable debt service payment will be capitalized (added to the assessment). Figtree will notify the property owner of the estimated amount of capitalized interest before the property owner executes an Assessment Financing Contract. ate subject to change based on market conditions and term of financing. - I_ t t A tee of $695 wiii be addea to tne total amount of tne assessment at the time of closing. An additional $100 charge will apply to each of any additional parcels in connection with the assessment. This fee pays for costs incurred in processing each application, including a title search to verify property ownership and any liens on the property. _ - I Processing Fee Annual Administrative Fee An annual charge of $30 for every $1,000 of the annual assessment amount will be incurred for recovery of the program's administrative costs. Cost of Issuance Figtree charges a closing fee of 4% of the total financing to cover costs of issuing bonds to fund projects. This fee is not an out-of-pocket expense for the property owner, but apportioned from the total financing. Progress Payment Fee (Incurred by Contractor) A fee of $495 will be charged to any Contractor requesting a progress payment for partially completed purchase, installation or construction of Improvements. Contractors may draw a total of two (2) progress payments in addition to a final payment for completed work. 181 I Pre -Payment Pre -Payment Fee Tie assessment can be paid ott prior ro maturity. Early retirement of the Figtree PACE assessment will incur a Pre -Payment Fee calculated on the amour]; being paid oft, according to the fallowing schedUle: If pre -paid in year : Pre -Pa :II -lent F.ee: Years 1-7 5% `Years 8 —10 3% Years 11 - 20 , None Qualifications Legal Owner Borrower must be the property owner of record. Current on Taxes Borrower must be current on property taxes owed on the Property and must not have been delinquent in the past three (3) years or since owning the property, if less than 3 years. , Current on Mortgage (if applicable) If the property is mortgaged, the Borrower must be current on mortgage payments and must not have been delinquent in the past three (3) years or since owning the property, if less than 3 years. No Bankruptcy Borrower must not be in bankruptcy and must not have been in bankruptcy in the past five (5) years. The property must not be an asset in bankruptcy. Value -to -Lien Not "Underwater" The outstanding mortgage must not be an amount greater than the property's total assessed value (Owner must not be "underwater"). An appraised value can be -used if the assessed total value is deemed inaccurate. Lender Acknowledgment If the property is encumbered by a mortgage, deed of trust or other financing instrument, written lender acknowledgment of the PACE lien is required. See "Section 6: Disclosures Regarding Assessment Financing" of this Application for more information. Acknowledgement Illwe acknowledge that I/we have received the Disclosures Regarding Rates, Fees, and Other Information and agree to the terms. I/we also understand that a Figtree PACE financing amount and annual assessment payment will be calculated based on the fees and criteria described herein. Such financing amount and annual assessment payment will be presented on a not -to - exceed basis in the Assessment Financing Contract, which must be executed by the Property Owner prior to issuance of funds. Owner 1 Signature Owner 2 Signature Owner 3 Signature Owner 4 Signature Date Date Date Date i 182 6. Disclosures Regarding Assessment Financing What is Figtree PACE? Figtree Energy Financing ("Figtree") is the administrator of the Figtree PACE program, which has been adopted by the California Enterprise Development Authority ("CEDA") and certain cities and counties that are members of CEDA. Figtree PACE provides assessment financing to participating property owners pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.10) for the installation of energy efficiency, water efficiency and renewable energy improvements (the "Improvements") that are permanently affixed to the owner's real property (the "Property"). Execution of Assessment Financing Contract. Each financing will be made pursuant to an Assessment Financing Contract between CEDA and Borrower. Subsequent to approval of this Application by Figtree, Borrower must enter into an Assessment Financing Contract with CEDA in order to obtain financing for qualified Improvements. Figtree will provide the Assessment Financing Contract to Borrower when the scope of Improvements has been finalized by a Figtree Independent Contractor and Lender Acknowledgment has been received, if applicable. Borrower must submit to Figtree a qualifying proposal for work and such proposal must be signed by both the issuing Figtree Independent Contractor and Borrower. Figtree will provide an estimated amortization schedule for the amount of financing required for the proposed improvements. How it Works. The financing will be secured by and be repayable through an assessment lien levied against the Property (the "Assessment"). Each year until the financing is fully repaid, assessment installments (including principal, interest and administrative costs) will be collected on the property tax bill for the Property in the same manner and at the same time as general property taxes. Assessment installments will be subject to the same penalties, remedies (including foreclosure and sale of the property), and lien priorities as property taxes in the event of delinquency. Priority of Lien. The Assessment and each installment thereof, and any interest and penalties thereon, will constitute a lien against the Property until paid even though prior to full payment the Property is conveyed to another person. The Assessment will be recorded against the Borrower's Property in the office of the County Recorder in the county in which the Property is situated. The Assessment will be paramount to all existing and future private liens against the Property, including mortgages, deeds of trust and other security instruments. Default of Other Agreements. Before completing this Application, Borrower should carefully review any agreement(s) or security instrument(s) which affect the Property or to which Borrower is a party. ENTERING INTO A FIGTREE PACE PROGRAM ASSESSMENT FINANCING CONTRACT WITHOUT THE ACKNOWLEDGMENT OF BORROWER'S EXISTING LENDER(S) COULD CONSTITUTE AN EVENT OF DEFAULT UNDER SUCH AGREEMENTS OR SECURITY INSTRUMENTS. DEFAULTING UNDER AN EXISTING AGREEMENT OR SECURITY INSTRUMENT COULD HAVE SERIOUS CONSEQUENCES TO THE BORROWER, WHICH COULD INCLUDE THE ACCELERATION OF THE REPAYMENT OBLIGATIONS DUE UNDER SUCH AGREEMENT OR SECURITY INSTRUMENT. 183 i Lender Acknowledgment (for Mortgaged Properties). Under the Figtree PACE program, Lender Acknowledgment is required before financing is approved. Figtree may assist with the Lender Acknowledgment process where applicable. If you, the Borrower, have any questions regarding any agreements or security instruments which affect the Property or to which you are a party or your authority to enter into an Assessment Financing Contract with CEDA, please consult with your own legal counsel and/or your lender(s). CEDA AND/OR FIGTREE STAFF WILL NOT PROVIDE PROPERTY OWNERS WITH ADVICE REGARDING EXISTING AGREEMENTS OR SECURITY INSTRUMENTS. Figtree wiii send notice requesting Lender Acknowiedgment via certified mail to all mortgage lenders listed in Borrowers mortgage loan agreement, promissory note, deed of trust, and/or other security agreements as applicable (collectively the "Mortgage Documents"), as listed in a title report obtained by rigtree. If there is no written Lender Acknowledgment received from the mortgage lender(s) within 30 days after the postmarked date of the Lender Acknowledgment, (the "Lender Acknowledgment Period"), Borrower may request Figtree to proceed with providing financing pursuant to this Application. Figtree will review such a request and may determine to proceed with providing financing subject to additional disclosures or documents which may be required by Figtree. Application Does Not Guarantee Financing: The obligations of CEDA to finance any Improvements are conditioned upon obtaining financing tor the Improvements through the issuance of Financing Instruments, which may include bonds, notes or other instruments. The inability of CEDA to obtain such financing for any reason shall relieve CEDA of any and all of its obligations to the Borrower. Acknowledgement IIWe acknowledge that I/we have received the Disclosures Regarding Assessment Financing and agree to the terms. Owner 1 Signature Date Owner 3iwler 4 Si ra ure 184 7. Declarations and Acknowledgments By signing this Application below, the undersigned hereby declares under penalty of perjury under the laws of the State of California all of the following: 1. Ownership: 1/(we) am/(are) current owner(s) of record of the Property described herein. 2. No Bankruptcy: I/(we) have not, and the Property described herein has not, been involved in a bankruptcy proceeding in the past five (5) years. 3. No Delinquency: 1/(we) have been current on all mortgage(s) or other loan(s) secured by the Property and all property taxes for the past (3) three years, or since owning the Property if less than 3 years. 4. Information: That (i) the information provided in this Application is true and correct and (il) that 1/(we) understand that any intentional or negligent misrepresentation(s) of the information contained in this Application may result in civil liability and/or criminal penalties and liability for monetary damages to the California Enterprise Development Authority ("CEDA") and/or the City and County Agencies in which the Property resides, its agents, successors and assigns, insurers and any other person who may suffer any loss due to reliance upon any misrepresentation which 1/(we) have made in this Application. 5. Assessment Financing Contract Authority: I/(we) am/(are) applying for assessment financing pursuant to the Figtree PACE program. I/(we) understand that I/(we) must execute an Assessment Financing Contract with CEDA in order to receive financing and I/(we) have the authority, without the consent of any third party which has not been previously obtained, to execute and deliver the Assessment Contract, this Application, and the various documents and instruments referenced herein. 6. Default of other agreements: I/(we) have read the "Default of Other Agreements" and "Lender Acknowledgment" provisions in the Disclosure Regarding Assessment Financing and understand that participation in the Figtree PACE financing program will require the acknowledgment of my/our mortgage lender if the property is mortgaged and a lender may not grant acknowledgement in some cases. I/(we) am/(are) responsible for obtaining the lender's acknowledgment prior to executing the Assessment Financing Contract. 7. Improvements Representations: a. I/(we) agree that the selection of product(s), equipment, and/or measures referenced in this Application (the "Equipment"), the selection of manufacturer(s), dealer(s), supplier(s), contractor(s) and/or installer(s), and the decision regarding the purchase, installation and ownership maintenance of the Equipment is/are my/(our) sole responsibility and that I/(we) do not rely upon any representations or recommendations of Figtree, the Figtree PACE program, CEDA and/or the City and County Agencies in which the property is situated, in making such selection or decision. b. 1/(we) understand that Figtree, the Figtree PACE program, CEDA and/or the City and County Agencies in which the Property is situated, makes no warranty, whether express or implied, including without limitation, the implied warranties of 185 merchantability and fitness for any particular purpose, use or application of the Equipment. c. I/(we) agree that Figtree, the Figtree PACE program, CEDA and/or the City and County Agencies in which the property resides, has no liability whatsoever concerning (i) the quality or safety of the Equipment, including its fitness for any purpose, (ii) the estimated energy savings produced by the Equipment, (iii) the workmanship of any third parties, (iv) the installation or use of the Equipment including, but not limited to, any effect on indoor pollutants, or any other matter with respect to the Figtree PACE program. d. I/(we) understand that I/(we) is/are responsible for meeting the requirements and complying with all the applicable Federal/State/County/City laws and any agreement which affects the use of the Property, including homeowners' association (HOA) regulations, if any. 8. Indemnification and Waiver of Claims: I/(we) agree to indemnify, and waive the right to recover from, CEDA, Figtree, any City or County from and against all losses, liabilities, claims, damages, etc. arising out of this Financing including (i) Documents, (ii) the Improvements, (iii) any breach or default by me/(us), (iv) damage to my Property, (v) personal injury or death, (vi) merchantability and fitness of Improvements, (vii) the amount of energy savings,(viii) the workmanship of third parties, and (ix) any other matter with respect to this the Figtree PACE program. Acknowledgement 1/We acknowledge that I/we have received the Declarations and Acknowledgments and agree to the terms. Owner 1 Signature Owner 2 Signature Owner 3 Signature Owner 4 Signature Date Date Date 186 8. Assignment of Green Attributes to Figtree Energy Resource Company Certain Green Attributes may arise from the Improvements financed through the Figtree PACE program. Where applicable, Figtree Energy Financing may aggregate Green Attributes from the Improvements. Owner acknowledges that any Green Attributes, including renewable energy credits attributable to the Improvements, shall be owned by Figtree Energy Financing. Green Attributes The undersigned participating Property Owner in the Figtree PACE program hereby provides and conveys all Green Attributes, including Renewable Energy Credits ("REC"), associated with all electricity generation from the Improvements to Figtree Energy Financing. Property Owner represents and warrants that Property Owner holds the rights to all Green Attributes (including REC) from the Improvements, and Property Owner agrees to convey and hereby conveys all such Green Attributes (including REC) to Figtree Energy Financing. Definitions "Green Attributes" means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Improvements, and its avoided emission of pollutants. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emission of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth's climate by trapping heat in the atmosphere; (3) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights. Green Tag Reporting Rights are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser's discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a MWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. "Renewable Energy Credit" has the meaning set forth in Public Utilities Code Section 399.12(f), as may be amended from time to time or as further defined or supplemented by Law. Acknowledgement I/We acknowledge that I/we have received the Assignment of Green Attributes to Figtree Energy Financing and agree to the terms. Owner 1 Signature Owner 2 Signature Owner 3 Signature Owner 4 Signature Date Date Date Date 187 ATTACHMENT 9 188 RESOLUTION NO. i3-39 RESOLUTION CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY DECLARING INTENTION TO FINANCE INSTALLATION OF DISTRIBUTED GENERATION RENEWABLE ENERGY SOURCES, ENERGY EFFICIENCY AND WATER EFFICIENCY IMPROVEMENTS IN THE COUNTY OF SAN DIEGO WHEREAS, the California Enterprise Development Authority ("CEDA") is a joint powers authority authorized and existing pursuant to Joint Powers Act (Government Code Section 6500 et seq.) and that certain Joint Exercise of Powers Agreement (the "Agreement") dated as of June 1, 2006, by and among the cities of Eureka, Lancaster and Selma; and WHEREAS, CEDA is authorized under the Agreement, Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California and Chapter 29 of Part 3 of Division 7 of the Streets & Highways Code of the State of California ("Chapter 29") to finance the installation of distributed generation renewable energy sources, energy efficiency and water efficiency improvements that are permanently fixed to real property ("Authorized improvements"); and WHEREAS, CEDA has obtained authorization from the County of San Diego (the "County") to enter into contractual assessments for the fmancing of the installation of Authorized Improvements in the County; and WHEREAS, CEDA desires to declare its intention to establish a Figtree PACE program ("Figtree PACE") in the County, pursuant to which CEDA, subject to certain conditions set forth herein, would enter into contractual assessments to finance the installation of Authorized Improvements in the County. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, AS FOLLOWS: Section 1. Findings. The Board of Directors hereby finds and determines the following: (a) The above recitals are true and correct and are incorporated herein by this reference. (b) Energy and water conservation efforts, including the promotion of Authorized Improvements to residential, commercial, industrial, or other real property, are necessary to address the issue of global climate change and the reduction of greenhouse gas emissions in the County. (c) The upfront cost of making residential, commercial, industrial, or other real property more energy and water efficient, along with the fact that most 189 commercial loans for that purpose are due on the sale of the property, prevents many property owners from installing Authorized Improvements. (d) A public purpose will be served by establishing a contractual assessment program, to be known as Figtree PACE, pursuant to which CEDA will finance the installation of Authorized Improvements to residential, commercial, industrial, or other real property in the County. Section 2. Determination of Public Interest. The hoard of Directors hereby determines that (a) it would be convenient, advantageous, and in the public interest to designate an area, which shall encompass the entire geographic territory within the boundaries of the County, within which CEDA and property owners within the County may enter into contractual assessments to finance the installation of Authorized Improvements pursuant to Chapter 29 and (b) it is in the public interest for CEDA to finance the installation of Authorized Improvements in the County pursuant to Chapter 29. Section 3. Identification of Authorized Improvements. CEDA hereby declares its intention to make contractual assessment financing available to property owners to finance installation of Authorized Improvements, including but not .limited to those improvements detailed in the Report described in Section 8 hereof (the "Report"), as that Report may be amended from time to time. Section 4. Identification of Boundaries. Contractual assessments may be entered into by property owners located within the entire geographic territory of the County including unincorporated territory within County Boundaries. A property owner located within a City within the County may enter into contractual assessments with CEDA only after such City has adopted a resolution to authorize participation in the PACE Program. Section 5. Proposed Financing Arrangements. Under Chapter 29, CEDA may issue bonds, notes or other forms of indebtedness (the "Bonds") pursuant to Chapter 29 that are payable by contractual assessments. Division 10 (commencing with Section 8500) of the Streets & Highways Code of the State (the "Improvement Bond Act of 1915") shall apply to any indebtedness issued pursuant to Chapter 29, insofar as the Improvement Bond Act of 1915 is not in conflict with Chapter 29. The creditworthiness of a property owner to participate in the financing of Authorized Improvements will be based on the criteria developed by Figtree Energy Resource Company (the "Program Administrator") upon consultation with Figtree PACE Program underwriters or other financial representatives, CEDA general counsel and bond counsel, and as shall be approved by the Board of Directors of CEDA. In connection with indebtedness issued under the Improvement Bond Act of 1915 that are payable from contractual assessments, serial and/or term improvement bonds or other indebtedness shall be issued in such series and shall mature in such principal amounts and at such times (not to exceed 20 years from the second day of September next following their date) and at such rate or rates of interest (not to exceed the maximum rate permitted by applicable law) as shall be determined by the Board of Directors at the time of the issuance and sale of the indebtedness. The provisions of Part 11.1 of the Improvement Bond Act of 1915.shall apply to the calling of the bonds. It is the intention of the Board of Directors to create a special reserve fund for the bonds under Part 16 of the 4813.1212-4687.1 1 190 Improvement Bond Act of 1915. Neither CEDA, nor any of its members participating in the Figtree PACE Program, shall advance available surplus funds from its treasury to cure any deficiency in the redemption fund to be created with respect to the indebtedness; provided, however, that this determination shall not prevent CEDA or any of its members from, in their sole discretion, so advancing funds. The Bonds may be refunded under Division 11.5 of the California Streets and Highways Code or other applicable laws permitting refunding, upon the conditions specified by and upon determination of CEDA. CEDA hereby authorizes the Program Administrator, upon consultation with CEDA general counsel, bond counsel and the Figtree PACE underwriter, to commence preparation of documents and take necessary steps to prepare for the issuance of bonds, notes or other forms of indebtedness as authorized by Chapter 29. In connection with the issuance of bonds payable from contractual assessments, CEDA expects to obligate itself, through a covenant with the owners of the bonds, to exercise its foreclosure rights with respect to delinquent contractual assessment installments under specified circumstances. Section 6. Public Hearing. Pursuant to the Act, CEDA hereby orders that a public hearing be held before CEDA Board (the "Board"), at 550 Bercut Drive, Suite G, Sacramento, CA 95811, on Thursday, October 3"1, at 10:30 AM, for the purposes of allowing interested persons to object to, or inquire about, the proposed Figtree PACE Program. The public hearing may be continued from time to time as detertnined by the Board for a time not exceeding a total of 180 days. At the time of the hearing, the Report described in Section 8 hereof shall be summarized, and the Board shall afford all persons who are present an opportunity to comment upon, object to, or present evidence with regard to the proposed Figtree PACE Program, the extent of the area proposed to be included within the boundaries of the assessment district, the terms and conditions of the draft assessment contract described in Section 8 hereof (the "Contract"), or the proposed financing provisions. Following the public hearing, CEDA may adopt a resolution confirming the Report (the "Resolution. Confirming Report") or may direct the Report's modification in any respect, or may abandon the proceedings. The Board hereby orders the publication of a notice of public hearing once a week for two successive weeks. Two publications in a newspaper published once a week or more often, with at least five days intervening between the respective publication dates not counting such publication dates are sufficient. The period of notice will commence upon the first day of publication and terminate at the end of the fourteenth day. The first publication shall occur not later than 20 days before the date of the public hearing. Section 7. Notice to Water and Electric Providers. Pursuant to Section 5898.24 of the Streets & Highways Code, written notice of the proposed contractual assessment program within the County to all water and electric providers within the boundaries of the County has been provided. 4813-1212-4687.1 2 191 Section 8. Report. The Board hereby directs the Program Administrator to prepare the Report and file said Report with the Board at or before the time of the public hearing described in Section 6 hereof containing all of the following: (a) A map showing the boundaries of the territory within which contractual assessments are proposed to he offered, as set forth hi Section 4 hereof. (b) A draft contractual assessment contract (the "Contract") specifying the terms and conditions of the agreement between CEDA and a property owner. (c) A statement of CEDA's policies concerning contractual assessments including all of the following: (1) Identification of types of Authorized Improvements that may be financed through the use of contractual assessments. (2) Identification of the CEDA official authorized to enter into contractual assessments on behalf of CEDA. (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. (d) A plan for raising a capital amount required to pay for work performed in connection with contractual assessments. The plan may include the sale of a bond or bonds or other financing relationship pursuant to Section 5898.28 of Chapter 29. The plan (i) shall include a statement of, or method for determining, the interest rate and time period during which contracting property owners would pay any assessment, (ii) shall provide for any reserve fund or funds, and (iii) shall provide for the apportionment of all or any portion of the costs incidental to financing, administration and collection of the contractual assessment program among the consenting property owners and CEDA. A report on the results of the discussions with the County Auditor -Controller described in Section 10 hereof, concerning the additional fees, if any, that will be charged to CEDA for inclusion of the proposed contractual assessments on the general property tax roll of the County, and a plan for financing the payment of those fees. Section 9. Nature of Assessments. Assessments levied pursuant to Chapter 29, and the interest and any penalties thereon, will constitute a lien against the lots and parcels of land on which they are made, until they are paid. Unless otherwise directed by CEDA, the assessments shall be collected in the same manner and at the same time as the general taxes of the County on real property are payable, and subject to the same penalties and remedies and lien priorities in the event of delinquency and default. Section 10. Consultations with County Auditor -Controller. CEDA hereby directs the Program Administrator to enter into discussions with the County Auditor -Controller in order to reach agreement on what additional fees, if any, will be charged to CEDA for incorporating the proposed contractual assessments into the assessments of the general taxes of the County on real property. 4813-1212-4687.I 3 192 Section 11. Preparation of Current Roll of Assessment. Pursuant to Section 5898.24(c), CEDA hereby designates the Program Administrator as the responsible party for annually preparing the current roll of assessment obligations by assessor's parcel number on property subject to a voluntary contractual assessment. Section 12. Procedures for Responding to Inquiries. The Program Administrator shall establish procedures to promptly respond to inquiries concerning current and future estimated liability for a voluntary contractual assessment. Section 13. Effective Date. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED this 12111 day of September, 2013. ATTEST: Michelle tephens, Assistant Secret. CALIFORNIA ENTERPRISE DEVELOP MENT AUTHO By: 4813-12124687.1 4 Gurbax Srahota, Chair 7Y 193 ATTACHMENT 10 194 ASSOCIATE MEMBERSHIP AGREEMENT BY AND BETWEEN THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND THE CITY OF NATIONAL CITY THIS ASSOCIATE MEMBERSHIP AGREEMENT (the "Associate Membership Agreement"), is entered into this 19t" day of August, 2014, by and between CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY (the "Authority") and the CITY OF NATIONAL CITY, a municipal corporation, (the "City"). WITNESSETH: WHEREAS, the Cities of Selma, Lancaster and Eureka (individually, a "Member" and collectively, the "Members"), have entered into a Joint Powers Agreement, dated as of June 1, 2006 (the "Agreement"), establishing the Authority and prescribing its purposes and powers; and WHEREAS, the Agreement designates the Executive Committee of the Board of Directors and the President ofthe California Association for Local Economic Development as the initial Board of Directors of the Authority; and WHEREAS, the Authority has been formed for the purpose, among others, to assist for profit and nonprofit corporations and other entities to obtain financing for projects and purposes serving the public interest; and WHEREAS, the Agreement permits any other local agency in the State of California to join the Authority as an associate member (an "Associate Member"); and WHEREAS, the City desires to become an Associate Member of the Authority; and WHEREAS, City Council of the City has adopted a resolution approving the Associate Membership Agreement and the execution and delivery thereof; and WHEREAS, the Board of Directors of the Authority has determined that the City should become an Associate Member of the Authority. NOW, THEREFORE, in consideration of the above premises and of the mutual promises herein contained, the Authority and the City do hereby agree as follows: Section 1. Associate Member Status. The City is hereby made an Associate Member of the Authority for all purposes of the Agreement and the Bylaws of the Authority, the provisions of which are hereby incorporated herein by reference. From and after the date of execution and delivery of this Associate Membership Agreement by the City and the Authority, the City shall be and remain an Associate Member of the Authority. Section 2. Restrictions and Rights of Associate Members. The City shall not have the right, as an Associate Member of the Authority, to vote on any action taken by the Board of 1 195 Directors or by the Voting Members of the Authority. In addition, no officer, employee or representative of the City shall have any right to become an officer or director of the Authority by virtue of the City being an Associate Member of the Authority. Section 3. Effect of Prior Authority Actions. The City hereby agrees to be subject to and bound by all actions previously taken by the Members and the Board of Directors of the Authority to the same extent as the Members of the Authority are subject to and bound by such actions. Section 4. No Obligations of Associate Members. The debts, liabilities and obligations of the Authority shall not be the debts, liabilities and obligations of the City. Section S. Execution of the Agreement. Execution of this Associate Membership Agreement and the Agreement shall satisfy the requirements of the Agreement and Article XII of the Bylaws of the Authority for participation by the City in all programs and other undertakings of the Authority. IN WITNESS WHEREOF, the parties hereto have caused this Associate Membership Agreement to be executed and attested by their proper officers thereunto duly authorized, on the day and year first set forth above. CALIFORNIA ENTERPRISE CITY OF NATIONAL CITY DEVELOPMENT AUTHORITY By: Gurbax Sahota, Chair Board of Directors ATTEST: Michelle Stephens Assistant Secretary By: Ron Morrison, Mayor ATTEST: Michael R. Dalla, City Clerk APPROVED AS TO FORM: Claudia Gacitua Silva City Attorney City of National City 2 California Enterprise Development Authority August 19, 2014 Associate Membership Agreement 196 ATTACHMENT 11 197 INDEMNIFICATION AGREEMENT BY AND BETWEEN THE CITY OF NATIONAL CITY AND FIGTREE COMPANY, INC. This Indemnification Agreement (the "Agreement") is entered into by and between the City of National City, a municipal corporation (the "City") and Figtree Company, Inc., a California corporation, the administrator of the Figtree Property Assessed Clean Energy and Job Creation Program (the "Administrator"), which is a program of the California Enterprise Development Authority, a California joint exercise ofpowers authority (the "Authority"). RECITALS WHEREAS, the Authority is a joint exercise ofpowers authority whose members include the City in addition to other cities and counties in the State of California; and WHEREAS, the Authority established the Figtree Property Assessed Clean Energy and Job Creation Program (the "Figtree PACE Program") to allow the financing of certain renewable energy, energy efficiency and water efficiency improvements that are permanently affixed to real property through the levy of assessments voluntarily agreed to by the participating property owners pursuant to Chapter 29 of Division 7 of the California Streets and Highways Code ("Chapter 29") and the issuance of improvement bonds, or other forms of indebtedness, under the Improvement Bond Act of 1915 upon the security of the unpaid assessments; and WHEREAS, the Authority has conducted or will conduct proceedings required by Chapter 29 with respect to the territory within the boundaries of the City; and WHEREAS, the City Council of the City adopted a resolution authorizing the City to join the Figtree PACE Program; and WHEREAS, the City will not be responsible for the formation, operation and administration of the Figtree PACE Program as well as the sale and issuance of any bonds or other forms of indebtedness in connection therewith, including the conducting of assessment proceedings, the Ievy and collection of assessments and any remedial action in the case of such assessment payments, and the offer, sale and administration of any bonds issued by the Authority on behalf of the Figtree PACE Program; and WHEREAS, the Administrator is the administrator of the Figtree PACE Program and agrees to indemnify the City in connection with the operations of the Figtree PACE Program as set forth herein; NOW, THEREFORE, in consideration of the above premises and of the City's agreement to join the Figtree PACE Program, the parties agree as follows: 1 . Indemnification. Figtree has provided the CEDA with an indemnification for negligence or malfeasance of any type as a result of the acts or omissions of Figtree, its officers, employees, subcontractors and agents, arising from or related to the Figtree PACE Program, the 198 assessments, the assessment districts, the improvements or the financing and marketing thereof. Figtree agrees, on behalf of itself and the CEDA, to defend, indemnify and hold harmless the City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all actions, suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and attorneys' fees, for injury or damage arising out of or in connection with the Figtree PACE Program, except for such loss or damage which was caused by the sole negligence or willful misconduct of the City. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Figtree. 2. Amendment/Interpretation of tins Agreement. This Agreement represents the entire understanding of the parties as to those matters contained herein. No prior oral o understanding shall be of any force or effect with respect to those matters covered hereunder. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. This Agreement shall not be interpreted for or against any party by reason of the fact that such party may have drafted this Agreement or any of its provisions. 3. Section headings. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 4. Waiver. No waiver of any of the provisions of this Agreement shall be binding unless in the form of writing signed by the party against whom enforcement is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof. 5. Severability and Governing Law. If any provision or portion thereof of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed in California. 6. Notices. All notices, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed certified or registered mail and addressed as follows: if to the Administrator Chief Executive Officer Figtree Company, Inc. 9915 Mira Mesa Boulevard Suite 130 San Diego, CA 92131 2 Indemnification Agreement by and between City of National City and Figtree Company, Inc. 199 If to the City: Director of Housing, Grants, and Assessment Management City of National City • 1243 National City Boulevard National City, CA 91950-4301 7. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, which together shall constitute the same instrument. 8. Effective Date. This Agreement will be effective as of the date of the signature of City's representative as indicated below in the signatureblock. IN WITNESS HEREOF, the parties hereto duly executed this Agreement as of the date below. CITY OF NATIONAL CITY FIGTREE COMPANY, INC. (Signatures of two corporate officers required) By: Ron Morrison, Mayor APPROVED AS TO FORM: Claudia Gacitua Silva City Attorney By: Mahesh Shah, CEO Date: By: (Name) (Print) (Title) Date: 3 Indemnification Agreement by and between City of National City and Figtree Company, Inc. 200