To: Sonoma County Board of Supervisors, Sonoma Water Board of Directors and the Sonoma County Public Financing Authority Board Members
Department or Agency Name(s): County Administrator Office, Auditor-Controller/Treasurer-Tax Collector, Sonoma Water, and Sonoma County Public Financing Authority
Staff Name and Phone Number: Terri Somers 707-565-6489; Erick Roeser 707-565-3295
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Sonoma County Energy Independence Program Semi-Annual Bonding Authorization
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Recommended Action:
Recommended action
A) Acting as the Board of Supervisors: Adopt resolutions authorizing the Treasurer to invest in bonds issued by the Sonoma County Public Finance Authority, setting interest rates, and authorizing execution of various related agreements with the Sonoma County Public Finance Authority, including a bond purchase agreement and a loan agreement.
B) Acting as the Board of Directors of the Sonoma County Water Agency: Adopt resolutions withdrawing funds from the Sonoma County Treasury Pool and authorizing the withdrawn funds to be invested in Sonoma County Energy Independence Program bonds as a long-term Sonoma Water investment.
C) Acting as the Board of Directors of the Sonoma County Public Finance Authority: Adopt resolutions approving agreements with the County, authorizing continued issuance and sale of revenue bonds to fund the Sonoma County Energy Independence Program, and setting interest rates.
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Executive Summary:
The Sonoma County Energy Independence Program (the “Program”) is requesting authorization to issue bonds and enter into related financing agreements to continue the Program through March 31, 2024.
Discussion:
In March 2023, your Board authorized the issuance of bonds related to the Program for the period of April 1, 2023 to September 30, 2023. Reauthorization is needed ensure the continuance of an alternative financing mechanism that allows property owners to install improvements that contribute to the reduction of greenhouse gas emissions through the built environment, make buildings healthier, more durable and resilient to natural disasters.
Over its fourteen-year history, the Program has cumulatively funded $102 million in residential and commercial property improvements. Through the installation of building improvements, the County has eliminated over 137,309 metric tons of carbon dioxide, and created or retained over 2,000 jobs.
In May 2023, your Board authorized an increase in the fixed interest rate for the Program assessment contracts from 6.99 percent to 7.49 percent, effective July 1, 2023, with 4.00 percent to remain allocated to Program operations. Interest rates for new bonds will be increased from 2.99 percent to 3.49 percent with this new bonding cycle.
Bond Issuance
The Program is bond financed, and must be reauthorized per State statute. Since the bonds carry a final maturity in excess of 5 years, Government Code section 53601 requires that your Board approve and authorize the Treasurer to make these dedicated investments. The Board previously established a $60 million program limit that reflects the total bond funding commitment from the Treasury ($45 million) and Sonoma Water ($15 million) collectively. There is currently $28.8 million in outstanding bonds and $31.2 million in available funding.
Due to the nature of the bonds issued by the Authority, including variations in term lengths, bond issue dates and capitalized interest, interest cannot be accurately estimated in advance of issuing bonds. The Authority does not incur any financing charges or fees paid to third parties, except for a small amount (expected to be less than $200) paid to the California Debt and Investment Advisory Commission in connection with filings for the bonds and $1,750 paid to outside legal counsel for the monthly bond issuance.
Authority bonds associated with Program contracts executed after June 30, 2023 will have a fixed interest rate of 3.49 percent. The total aggregate principal amount of bonds outstanding cannot exceed $60 million. The current outstanding aggregate principal amount of bonds is $28.8 million and the Authority may issue up to $31.2 million in additional bonds. In March 2023 the Board authorized bonds to be issued by the Authority that were subsequently purchased (invested) by the Treasury on behalf of the Treasury Pool and Sonoma Water for the purposes of the Program. The current Sonoma Water ($15 million) bonding commitment has been met. All bonding is currently directed to the Treasury Pool until Sonoma Water’s outstanding bond amount decreases below $15 million, at which time Sonoma Water will resume its investment in Authority bonds.
With this item, staff is requesting authorization to issue bonds and enter into related financing agreements to continue the Program for the period of October 1, 2023 to March 31, 2024.
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Climate Action and Resiliency
Goal: Goal 2: Invest in the community to enhance resiliency and become carbon neutral by 2030
Objective: Objective 2: Provide $20 million in financing by 2026 that incentivizes property managers and renters to retrofit existing multi-family housing towards achieving carbon neutral buildings.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
Yes
Racial Equity Analysis - Utilizing the Racial Equity Toolkit, published by the Government Alliance on Race and Equity, Program staff last reported in has expanded consideration of racial equity in decisions, including policies, practices, programs, and budgets. Staff recognizes the racial equity tool can help to develop strategies and actions that reduce racial inequities and improve success for underserved members of our community. Below are several questions adapted from the Toolkit provided by the County.
How does your Program align with or leverage other Countywide initiatives to advance racial equity?
The Program provides access to capital through financing that does not consider the applicant’s income, credit score, or debt-to-income ratio, which increases access to non-traditional capital resources. The building improvements financed by the Program can reduce utility costs, improve energy efficiency, resiliency, health, indoor air quality and safety during earthquake and fire disasters for the occupants - all of which disproportionately affect underserved communities. The Program has consumer protections and assurances and an impartial application review process, and includes bilingual service and provides outreach and education through Spanish media.
What specific racial and/or economic inequities in Sonoma County does this Program intend to address/reduce?
The Program intends to increase access by property owners in underserved communities to property improvements that reduce energy costs, improve resilience and comfort in the home, and make properties safer from climate hazards and interruptions in grid power. Currently, the Program does this through its Tool Lending Library (TLL) program and Do-it-Yourself (DIY) Energy and Water Saving Toolkits. Both of these programs are available to low-income residents at no cost. The TLL was developed as a workforce development initiative to provide low-income residents, entering the green workforce, access to expensive, specialized tools through a no-cost rental program. The DIY Kits are available to all residents through the Sonoma County Library. In September 2023 we will update all DIY Energy and Water Savings Guide (in both Spanish and English) within the kits to keep updated and relevant information available to our community. These kits are important in that they allow renters an opportunity to make simple changes, at no cost, that saves them energy, water and money. In addition, consistent with Strategic Plan Goal CAR 2.2, the Program is increasing focus on financing these improvements at multi-family housing. The County has 40% renters and many live in multi-family housing. Much of this building stock is older and in need of improvements related to efficiency, resiliency, health, indoor air quality and durability. The improvements can also lower utility costs that are often part of the renter’s responsibility. the Program received Strategic Plan funds to increase education and outreach to multi-family properties. Staff developed radio ads targeted to both renters and multi-family property owners. These ads have been well received by the community and have increased awareness of our Program Services. Direct mailers have been sent to over 1,000 multi-family property owners and we have increased bi-lingual outreach on talk shows that target our Spanish speaking communities. We also hosted a virtual multi-family workshop. These efforts are leveraged with rebates from the Bay Area Regional Energy Network (BayREN) multi-family program and Sonoma Clean Power’s multi-family incentives.
Will the Program have impacts in specific geographic areas (neighborhoods, areas, or regions)? What are the racial demographics of those living in the area?
This financing option is available countywide to any residential or commercial property owner. The Program does not collect personal income or racial demographic details, so it is difficult to determine demographic outcomes. Recently, however, staff evaluated the locations of projects financed through the Program based on median household income using Census data. The results show the financing is utilized by all income levels, and over 27% of the projects were financed in areas with median income levels of $49,856.-$73,614.
Who are the most affected community members who are concerned with or have experience related to this issue/program? How will you involve these community members in the development and implementation of this program?
This is a County-wide financing program. It has historically benefited property owners, but current efforts to increase financing of projects at multi-family properties will expand benefits to renters and to more underserved communities. Program staff does extensive outreach and education throughout the County in communities. The Program is expanding efforts to reach more of the Spanish speaking communities in Sonoma County better meet their needs, including on-staff bilingual services and providing community education and outreach about the Program in Spanish. The Division is establishing relationships with trusted CBOs and partnering with them to include community input for future Program improvements. In addition, the Program supports a Tool Lending Library that is free of charge, and offers Do-it-Yourself Energy and Water toolkits as part of specific education and outreach efforts.
Does the estimated Program budget and timeline include sufficient resources and time to ensure accessibility, i.e. translation, interpretation, outreach, etc.?
Program has historically supported these activities. During a constrained budget period staff secured alternate funding to sustain and increase outreach in underserved sectors. We anticipate that as the SCEIP revenues will recover resources will be available to continue translation and interpretation as well as targeted marketing and outreach.
How will the Program document and evaluate the Program’s impact on communities of color and low-income communities?
Since the Program does not collect income or personal data, staff has relied on Census data to geographically evaluate the distribution of financing projects across the County. Staff also collects statistics as part of education activities, and performs satisfaction surveys after financing projects are completed. Discussion regarding efforts to collect race and ethnicity information are on-going. Historically, the fact that the Program does not collect the same personal data collected by traditional credit programs has been viewed by users of the Program as a significant strength and benefit. In order to ensure the Program reaches and serves our underserved communities, staff is evaluating non-intrusive and voluntary methods of data collection, such as simple surveys after a financing project is approved. The goal is to collect data that better characterize the use of the Program in underserved communities, in a way that doesn’t deter users from accessing the Program’s benefits.
What additional disaggregated demographic data will your Program need to collect, track, and evaluate to inform future decisions, and/or develop mitigation practices to respond to unintended impacts of the project in communities of color?
Staff is currently evaluating these questions. One example of a mitigation practice is staff is exploring is developing a partnership with low-income housing non-profits in our work on multi-family housing to ensure the property remains available for low-income residents, and the residents are not displaced by subsequent increases in rent. Staff is also seeking grant funding to defray project costs at low-income multi-family housing, and would constrain grant recipients from displacing low-income residents after receipt of project funding.
Prior Board Actions:
06/12/23 - Board authorization for the approval of Skylane LLC’s Sonoma County Energy Independence Program (SCEIP) financing application in the amount of up to $751,990.00 05/23/23 - Sonoma County energy Independence Program Update, Approval of Program Operational Changes, and Annual Interest Rate Determination
3/14/23 - Sonoma County Energy Independence Program Semi-Annual Bonding Authorization 8/30/22 - Board authorization for the approval of Grapevine Holding, LLC Sonoma County Energy Independence Program (SCEIP) financing application for $722,160.
7/6/22 - Sonoma County Energy Independence Program Semi-Annual Bonding Authorization, and Annual Interest Rate Determination
9/1/21 - Sonoma County Energy Independence Program Semi-Annual Bonding Authorization, Program Update, and Annual Interest Rate Determination
Fiscal Summary
Narrative Explanation of Fiscal Impacts:
Fiscal Impact: None
Narrative Explanation of Staffing Impacts (If Required):
None
Attachments:
1. Resolution authorizing the Public Financing Authority to issue and sell Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2023
2. County Resolution Authorizing the Treasury to Invest in Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2023
3. County Resolution Approving Loan Agreements - Oct 2023
4. Water Agency Resolution Authorizing the Water Agency Funds to Invest in Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2023
5. County Resolution consenting to Water Agency investment in Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2023
6. County Resolution Determining Interest Rates - 3.00%
7. Authority Resolution Determining Interest Rates - 3.00%
8. County Resolution Determining Interest Rates - 1.99%
9. Authority Resolution Determining Interest Rates -1.99%
Related Items “On File” with the Clerk of the Board:
• Agreement 1: Form of Bond Purchase Agreement between the Treasury and Public Financing Authority to purchase Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2023
• Agreement 2: Form of Loan Agreement between the County and the Public Financing Authority - Oct 2023