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Inspector General letter to Governor 8-11-10

Inspector General letter to Governor 8-11-10

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Published by CaliforniaWatch

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Published by: CaliforniaWatch on Aug 11, 2010
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08/11/2010

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STATE OF
CALIFORNIA
OFFICE
OF
THE
INSPECTOR
GENERAL
AMERICAN
RECOVERY
ACT
FUNDS
LAURA N. CHICKINSPECTOR GENERAL
August 11, 2010The Honorable Arnold SchwarzeneggerOffice
of
the GovernorState CapitolSacramento, California 95814Dear Governor Schwarzenegger:The American Recovery and Reinvestment Act provides California
with
an
opportunity
for
action in areaswhere the economic meltdown
has
stalled progress. One
of
these opportunities
is
the ability
to
implement your call
to
green state buildings.California cannot maximize the stimulus funding unless its agencies and departments take all reasonablesteps
to
ensure
that
these dollars are spent correctly and expediently. Doing
so
includes a mandate
to
I
do things differently, smarter, and faster.
.
by
streamlining, identifying
and
eliminating needless red tape!and looking
for
ways
to
create efficiencies and get results.
I
California
was
perfectly situated
at the
start
of
ARRA
to
be the poster child
for
greening state ownedbuildings.
In
2004, well before
ARRA,
you issued Executive Order S-20-04 which directed the state
to"commit
to
aggressive action
to
reduce state building electricity usage by retrofitting, building andoperating the most energy and resource efficient buildings
by
taking all cost-effective measuresdescribed in the Green Building Action
Plan
for
facilities owned, funded
or
leased by the state and
to
encourage cities, counties and schools
to
do the same." Then, in Spring
of
2009,
as
Congress
passed
theRecovery Act, the State Department
of
General Services
(DGS)
began
to
advocate
for
funding
to
financeenergy savings measures
for
state bUildings. That funding, $25 million,
was
approved in September2009.Early on I began inquiring about
DGS'
progress in moving these greening projects forward. Theseprojects improve the environment, pOSition the State
to
appropriately serve
as
a role model, and mostimportantly, create desperately needed jobs
in
the private sector. I was assured repeatedly
by
DGS
that
all necessary steps were being taken
to
have these projects up and running
as
quickly
as
possible.Unfortunately,
that
proved
not
to
be
the
case.
As
of
their
June 30, 2010 report,
DGS
has
only expended
i
$121,788,
or
1%
of
which they have been awarded.
Since
your Executive Order
of
2004, and certainly since
the
advent
of
the Recovery Act in 2009,
DGS
could have been aggressively planning, organizing, and strategizing
to
assure
that
these funds would
be
i
spent
as
quickly
as
possible.
In
addition, they should have been proactively trouble shooting and looking
for
all possible road blocks and finding solutions in advance.
The
sooner a project
is
completed, realizes
i
its energy savings, and repays its loan, the faster the state
can
add additional buildings
to
green and
I
move California
toward
its energy reduction goals.
1400
TENTH STREET, SACRAMENTO, CALIFORNIA
95814(916)
322-3003'
FAX
(916) 322-3013
 
While
DGS
has
offered up a myriad
of
unacceptable excuses
for
their
slow pace (please
see
attached
DGS
document) and assured me they will meet the
ARRA
deadline
of
June 2012
for
expenditures, I am
writing
you
to
say
that
this
is
not
good enough; we absolutely can do better!
DGS
must
see
this
as
a
top"now"
priority, hound dog
it to
death, and take whatever immediate action necessary
to
move theseprojects forward
as
efficientlyand effectively
as
possible. Although
DGS
has
been slow
to
expend thesefunds,
1
must
point
out that the
California Energy Commission
has
been
an
equal partner. They must
join with
DGS
to
be part
of
the
solution.Sincerely,
LAURAN.
CHICK
Inspector General
 
ENERGY EFFICIENT STATE PROPERTY REVOLVING FUND
AMERICAN RECOVERY AND REINVESTMNET ACT OF 2009
08/04/10 P-1
Executive Summary
The $25 million American Recovery and Reinvestment Act of 2009 (ARRA) EnergyEfficient State Property Revolving Fund (Loan Fund) has evolved over the last sixmonths. The Loan Fund initially started with two project pipelines, a Large BuildingsProgram and a Small Buildings Program. The DGS Large Building Program, which isopen to all agencies and departments, began with a $16 million funding allocation. TheSmall Building Program, which covers state buildings smaller than 50,000 square feet,initially had an allocation of $9 million.The first loan with the Department of General Services (DGS) Building and PropertyManagement Branch (BPM) was executed on December 28, 2009 for approximately$3.7 million. Shortly after the execution of this loan, the loan amount was reduced by $2million to reflect the elimination of the Board of Equalization Building. Moreover, $7million worth of shovel ready projects
in state buildings that are part of the Governor’s
Sale/Leaseback Initiative had to be withdrawn to protect the Initiative from potentialcontractor liens.To mitigate this $ 9 million loss, DGS shifted $7 million to the Small Building Program,but, unfortunately, the shift comes with a long lead time since an energy servicecompany (ECCO) must conduct an energy audit to validate savings before the projectcan be funded. However, loan applications and agreements for these small buildingprojects are currently being developed and will be finalized by September 30, 2010. Inaddition, following an aggressive marketing effort, a loan with the California Departmentof Corrections (CDCR) was executed on April 8, 2010 for approximately $4.1 millionwhich also helps to offset the loss of these $9 million in shovel ready projects.Regrettably, the CDCR projects are on hold until the
State’s
2010-11 Budget is adopted.On a positive note, $3 million in loans for the DGS Large Buildings Program will beexecuted by August 15, 2010. Moreover, CDCR and the California State UniversitySystem (CSU) have identified additional projects totaling $13.5 million, which exceedsavailable funds.
Background
The ARRA (Public Law 111-5) provided funds to the United States Department ofEnergy to make allocations to existing State Energy Programs [SEP]. Accordingly, onJune 25, 2009, the California Energy Commission (CEC) received $226,093,000 fordistribution under its SEP guidelines.On June 28, 2009, Governor Schwarzenegger signed ABx4 11, adding Sections 25470through 25474 to the Public Resources Code, created the Loan Fund and directed DGSto administer it. In March 2010, CEC transferred $25,000,000 of the $226,093,000 intothe Loan Fund to finance energy efficient retrofits in state facilities. Participating stateagencies will use the savings [cost avoidance] from these retrofits to service their debt tothe Loan Fund. These debt payments will allow DGS to fund future retro-fit projects instate buildings.

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