In 2008, California passed legislation to enable every city (and county) in the state to establish voluntary districts for homeowners wanting to fit their homes with renewable energy or make energy efficiency improvements and pay for the improvements with a special assessment on their property taxes.
Previously, only charter cities in California had this ability. Under the Mello-Roos Community Facilities Act of 1982, land owners/developers in Californian charter cities have the authority to form a community facilities district, a CFD to levy a special tax and to authorize bonds secured by that special property tax assessment granted to them. Using this law, Berkeley, California, pioneered its municipal property tax financing program for renewable energy and energy efficiency improvements.
But because only 108 of California’s 478 cities are charter cities, the state enacted AB 811 to grant municipal property tax financing for renewable energy and energy efficiency improvements to all cities (and counties) in the state. Using a different financing tool than Mello-Roos, all cities in California have the authority to create contractual assessment districts for homeowners to pay back the cities for lending the upfront capital for renewable energy and energy efficiency improvements.
A few days after Governor Schwarzenegger signed the bill into law, the City of Palm Desert passed a resolution to utilize the law and initiate a program using contractual assessment districts to finance renewable energy and energy efficiency improvements. Cities and counties (San Diego, Santa Cruz, Santa Monica, Sonoma County, etc) have also started planning their own programs.
- Full Text of California AB 811 – July 2008