California Assembly Bill 2699 (Gonzalez) is a bill to watch if you are a home improvement contractor that installs solar energy systems or, for that matter, a contractor in California. AB 2699 would, among other things, require the Contractors State License Board (CSLB) to develop a “solar energy system disclosure document” and, in turn, require solar energy systems companies to provide this document to its customers prior to the completion of a sale, financing, or lease of a solar energy system.

AB 2699 would also require the CSLB to establish through regulation requirements for a contractor to maintain a blanket performance and payment bond for the purpose of solar installation work and, of particular note, even with this bond, the contractor will be subject to the down-payment restriction set forth in California Business & Professions Code § 7159.5(a)(8). If this bill is signed into law, this latter requirement will certainly translate into increased costs for contractors that currently do not have in place a blanket performance and payment bond. In turn, as a practical matter, this lIsley will translate into higher costs for consumers who want to install a solar system because such costs will trickle down to them. There may also be pressure put on others in the industry to reduce costs to make up for this increase in costs.

The bill analysis currently provides an explanation for the proposed solar energy system disclosure document. What is noticeably absent is an explanation for solar installation system work being singled out for the bonding requirement and disqualification from the exemption. The bond and exemption disqualification appear to be counterintuitive to California’s goal “to address the ongoing threats of climate change, including the adoption of aggressive goals for renewable energy production” and to “achiev[e] these goals and mitigat[e] the dangerous impact people are having on our climate [by the] ongoing investment in home solar systems.” Although I’m not an economist, it’s reasonable to assume that if all other factors remain equal, the higher the price for a solar energy system, the less in demand they will be.

The Proposed “Solar Energy System Disclosure Document” (New Section 7169)

As currently drafted, AB 2699 would require the solar energy system disclosure document to include:

“(a) [t]he amounts and sources of financing obtained[;]
(b) [t]he total cost and payments for the system, including financing costs[;]
(c) [t]he calculations used by the home improvement salesperson to determine how many panels the homeowner needs to install[;]
(d) [t]he calculations used by the home improvement salesperson to determine how much energy the panels will generate[;]
(e) [a]ny additional monthly fees the homeowner’s electric company may bill, any turn-on charges, and any fees added for the use of an Internet monitoring system of the panels or inverters[;]
(f) [t]he terms and conditions of any guaranteed rebate[;]
(g) [t]he final contract price, without the inclusion of possible rebates[;]
(h) [t]he solar energy system company’s contractor license number[;]
(i) [t]he impacts of solar energy system installations not performed to code[;]
(j) [t]ypes of solar energy system malfunctions[;]
(k) [i]nformation about the difference between a solar energy system lease and a solar energy system purchase[; and]
(l) [i]nformation on how and to whom consumers may provide complaints.”

The Existing Blanket Performance and Payment Bond Exemption (Section 7159.5(a)(8))

Section 7159.5(a)(8) of the Contractors’ State License Law, Cal. Bus. & Prof. Code §§ 7000 et seq., exempts home improvement contractors that furnish a performance and payment bond, lien and completion bond, or bond equivalent covering full performance and payment from certain requirements from certain requirements and disclosures. An exemp contractor may accept full payment prior to completion of the work. Otherwise, Section 7159.5(a)(3) permits only a down payment that dones not exceed $1,000 or 10% of the contract amount, whichever is less.

The New Blanket Performance and Payment Bond, and Disqualification from the Section 7159.5(a)(8) Exemption (New Sections 7170 and 7171)

If signed into law, AB 2699 would add two sections to the Contractors’ State License Law:

Section 7170. “The [CSLB] shall establish through regulation requirements for a contractor to maintain a blanket performance and payment bond for the purpose of solar energy systems installation.”

Section 7171. “Notwithstanding [Section 7159.5(a)(8)], a contractor installing a solar energy system shall be subject to the down payment restrictions in [Section 7159.5(a)(3)].”

It’s a slippery slope if one trade is singled out. Will your trade be next?n