Sen. Karen McConnaughay

Filed: 4/6/2017

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1700

2    AMENDMENT NO. ______. Amend Senate Bill 1700, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 1. Short title. This Act may be cited as the
6Property Assessed Clean Energy Act.
 
7    Section 5. Definitions. As used in this Act:
8    "Alternative energy improvement" means the installation or
9upgrade of electrical wiring, outlets, or charging stations to
10charge a motor vehicle that is fully or partially powered by
11electricity.
12    "Assessment contract" means a voluntary written contract
13between the local unit of government and record owner governing
14the terms and conditions of financing and assessment under a
15program.
16    "PACE area" means an area within the jurisdictional

 

 

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1boundaries of a local unit of government created by an
2ordinance or resolution of the local unit of government to
3provide financing for energy projects under a property assessed
4clean energy program. A local unit of government may create
5more than one PACE area under the program, and PACE areas may
6be separate, overlapping, or coterminous.
7    "Energy efficiency improvement" means equipment, devices,
8or materials intended to decrease energy consumption or promote
9a more efficient use of electricity, natural gas, propane, or
10other forms of energy on property, including, but not limited
11to, all of the following:
12        (1) insulation in walls, roofs, floors, foundations,
13    or heating and cooling distribution systems;
14        (2) storm windows and doors, multi-glazed windows and
15    doors, heat-absorbing or heat-reflective glazed and coated
16    window and door systems, and additional glazing,
17    reductions in glass area, and other window and door system
18    modifications that reduce energy consumption;
19        (3) automated energy control systems;
20        (4) high efficiency heating, ventilating, or
21    air-conditioning and distribution system modifications or
22    replacements;
23        (5) caulking, weather-stripping, and air sealing;
24        (6) replacement or modification of lighting fixtures
25    to reduce the energy use of the lighting system;
26        (7) energy controls or recovery systems;

 

 

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1        (8) day lighting systems; and
2        (9) any other installation or modification of
3    equipment, devices, or materials approved as a utility
4    cost-savings measure by the governing body.
5    "Energy project" means the installation or modification of
6an alternative energy improvement, energy efficiency
7improvement, or water use improvement, or the acquisition,
8installation, or improvement of a renewable energy system that
9is affixed to a stabilized existing property (not new
10construction).
11    "Governing body" means the county board or board of county
12commissioners of a county, the city council of a city, or the
13board of trustees of a village.
14    "Local unit of government" means a county, city, or
15village.
16    "Person" means an individual, firm, partnership,
17association, corporation, limited liability company,
18unincorporated joint venture, trust, or any other type of
19entity that is recognized by law and has the title to or
20interest in property. "Person" does not include a local unit of
21government or a homeowner's or condominium association.
22    "Program administrator" means a for-profit entity or
23not-for profit entity that will administer a program on behalf
24of or at the discretion of the local unit of government. It or
25its affiliates, consultants, or advisors shall have done
26business as a program administrator or capital provider for a

 

 

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1minimum of 18 months and shall be responsible for arranging
2capital for the acquisition of bonds issued by the local unit
3of government to finance energy projects.
4    "Property" means privately-owned commercial, industrial,
5non-residential agricultural, or multi-family (of 5 or more
6units) real property located within the local unit of
7government, but does not include property owned by a local unit
8of government or a homeowner's or condominium association.
9    "Property assessed clean energy program" or "program"
10means a program as described in Section 10.
11    "Record owner" means the person who is the titleholder or
12owner of the beneficial interest in property.
13    "Renewable energy resource" includes energy and its
14associated renewable energy credit or renewable energy credits
15from wind energy, solar thermal energy, photovoltaic cells and
16panels, biodiesel, anaerobic digestion, and hydropower that
17does not involve new construction or significant expansion of
18hydropower dams. For purposes of this Act, landfill gas
19produced in the State is considered a renewable energy
20resource. The term "renewable energy resources" does not
21include the incineration or burning of any solid material.
22    "Renewable energy system" means a fixture, product,
23device, or interacting group of fixtures, products, or devices
24on the customer's side of the meter that use one or more
25renewable energy resources to generate electricity.
26    "Water use improvement" means any fixture, product,

 

 

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1system, device, or interacting group thereof for or serving any
2property that has the effect of conserving water resources
3through improved water management or efficiency.
 
4    Section 10. Property assessed clean energy program;
5creation.
6    (a) Pursuant to the procedures provided in Section 15, a
7local unit of government may establish a property assessed
8clean energy program and, from time to time, create a PACE area
9or areas under the program.
10    (b) Under a program, the local unit of government may enter
11into an assessment contract with the record owner of property
12within a PACE area to finance or refinance one or more energy
13projects on the property. The assessment contract shall provide
14for the repayment of the cost of an energy project through
15assessments upon the property benefited. The financing or
16refinancing may include any and all of the following: the cost
17of materials and labor necessary for installation, permit fees,
18inspection fees, application and administrative fees, bank
19fees, and all other fees that may be incurred by the record
20owner pursuant to the installation and the issuance of bonds on
21a specific or pro rata basis, as determined by the local unit
22of government and may also include a prepayment premium.
23    (c) A program may be administered by a program
24administrator or the local unit of government.
 

 

 

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1    Section 15. Program established.
2    (a) To establish a property assessed clean energy program,
3the governing body of a local unit of government shall adopt a
4resolution or ordinance that includes all of the following:
5        (1) a finding that the financing of energy projects is
6    a valid public purpose;
7        (2) a statement of intent to facilitate access to
8    capital from a program administrator to provide funds for
9    energy projects, which will be repaid by assessments on the
10    property benefited with the agreement of the record owners;
11        (3) a description of the proposed arrangements for
12    financing the program through a program administrator;
13        (4) the types of energy projects that may be financed;
14        (5) a description of the territory within the PACE
15    area;
16        (6) reference to a report on the proposed program as
17    described in Section 20; and
18        (7) the time and place for any public hearing required
19    for the adoption of the proposed program by resolution or
20    ordinance;
21        (8) matters required by Section 20 to be included in
22    the report; for this purpose, the resolution or ordinance
23    may incorporate the report or an amended version thereof by
24    reference; and
25        (9) a description of which aspects of the program may
26    be amended without a new public hearing and which aspects

 

 

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1    may be amended only after a new public hearing is held.
2    (b) A property assessed clean energy program may be amended
3by resolution or ordinance of the governing body. Adoption of
4the resolution or ordinance shall be preceded by a public
5hearing if required.
 
6    Section 20. Report. The report on the proposed program
7required under Section 15 shall include all of the following:
8        (1) a form of assessment contract between the local
9    unit of government and record owner governing the terms and
10    conditions of financing and assessment under the program.
11        (2) identification of an official authorized to enter
12    into a assessment contract on behalf of the local unit of
13    government;
14        (3) a maximum aggregate annual dollar amount for all
15    financing to be provided by the program administrator under
16    the program;
17        (4) an application process and eligibility
18    requirements for financing energy projects under the
19    program;
20        (5) a method for determining interest rates on
21    assessment installments, repayment periods, and the
22    maximum amount of an assessment;
23        (6) an explanation of how assessments will be made and
24    collected;
25        (7) a plan to raise capital to finance improvements

 

 

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1    under the program pursuant to the sale of bonds, subject to
2    the Special Assessment Supplemental Bond and Procedures
3    Act, to a program administrator;
4        (8) information regarding all of the following, to the
5    extent known, or procedures to determine the following in
6    the future:
7            (A) any revenue source or reserve fund or funds to
8        be used as security for bonds described in paragraph
9        (7); and
10            (B) any application, administration, or other
11        program fees to be charged to record owners
12        participating in the program that will be used to
13        finance costs incurred by the local unit of government
14        as a result of the program;
15        (9) a requirement that the term of an assessment not
16    exceed the useful life of the energy project paid for by
17    the assessment; provided that the local unit of government
18    may allow projects that consist of multiple improvements
19    with varying lengths of useful life to have a term that is
20    no greater than the improvement with the longest useful
21    life;
22        (10) a requirement for an appropriate ratio of the
23    amount of the assessment to the assessed value of the
24    property or market value of the property as determined by a
25    recent appraisal no older than 12 months;
26        (11) a requirement that the record owner of property

 

 

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1    subject to a mortgage obtain written consent from the
2    mortgage holder before participating in the program;
3        (12) provisions for marketing and participant
4    education;
5        (13) provisions for an adequate debt service reserve
6    fund, if any; and
7        (14) quality assurance and antifraud measures.
 
8    Section 25. Contracts with record owners of property.
9    (a) After creation of a program and PACE area, a record
10owner of property within the PACE area may apply with the local
11unit of government or its program administrator for funding to
12finance an energy project.
13    (b) A local unit of government may impose an assessment
14under a property assessed clean energy program only pursuant to
15the terms of a recorded assessment contract with the record
16owner of the property to be assessed.
17    (c) Before entering into an assessment contract with a
18record owner under a program, the local unit of government
19shall verify all of the following:
20        (1) that the property is within the PACE area;
21        (2) that there are no delinquent taxes, special
22    assessments, or water or sewer charges on the property;
23        (3) that there are no delinquent assessments on the
24    property under a property assessed clean energy program;
25        (4) there are no involuntary liens on the property,

 

 

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1    including, but not limited to, construction or mechanics
2    liens, lis pendens or judgments against the record owner,
3    environmental proceedings, or eminent domain proceedings;
4        (5) that no notices of default or other evidence of
5    property-based debt delinquency have been recorded and not
6    cured;
7        (6) that the record owner is current on all mortgage
8    debt on the property, the record owner has not filed for
9    bankruptcy in the last 2 years, and the property is not an
10    asset to a current bankruptcy.
11        (7) all work requiring a license under any applicable
12    law to make a qualifying improvement shall be performed by
13    a registered contractor that has agreed to adhere to a set
14    of terms and conditions through a process established by
15    the local unit of government.
16        (8) the contractors to be used have signed a written
17    acknowledgement that the local unit of government will not
18    authorize final payment to the contractor until the local
19    unit of government has received written confirmation from
20    the record owner that the improvement was properly
21    installed and is operating as intended; provided, however,
22    that the contractor retains all legal rights and remedies
23    in the event there is a disagreement with the owner;
24        (9) that the amount of the assessment in relation to
25    the greater of the assessed value of the property or the
26    appraised value of the property, as determined by a

 

 

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1    licensed appraiser, does not exceed 25%; and
2        (10) a requirement that an assessment of the existing
3    water or energy use and a modeling of expected monetary
4    savings have been conducted for any proposed project.
5    (d) At least 30 days before entering into an agreement with
6the local unit of government, the record owner shall provide to
7the holders or loan servicers of any existing mortgages
8encumbering or otherwise secured by the property a notice of
9the record owner's intent to enter into an assessment contract
10with the local unit of government, together with the maximum
11principal amount to be financed and the maximum annual
12assessment necessary to repay that amount, along with a request
13that the holders or loan servicers of any existing mortgages
14consent to the record owner subjecting the property to the
15program. A verified copy or other proof of those notices and
16the written consent of the existing mortgage holder for the
17record owner to enter into the assessment contract and
18acknowledging that the existing mortgage will be subordinate to
19the financing and assessment agreement and that the local unit
20of government can foreclose the property if the assessment is
21not paid shall be provided to the local unit of government.
22    (e) A provision in any agreement between a local unit of
23government and a public or private power or energy provider or
24other utility provider is not enforceable to limit or prohibit
25any local unit of government from exercising its authority
26under this Section.

 

 

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1    (f) The record owner has signed a certification that the
2local unit of government has complied with the provisions of
3this Section, which shall be conclusive evidence as to
4compliance with these provisions, but shall not relieve any
5contractor, or local unit of government, from any potential
6liability.
7    (g) This Section is additional and supplemental to county
8and municipal home rule authority and not in derogation of such
9authority or limitation upon such authority.
 
10    Section 30. Assessments constitute a lien; billing.
11    (a) An assessment imposed under a property assessed clean
12energy program, including any interest on the assessment and
13any penalty, shall constitute a lien against the property on
14which the assessment is imposed until the assessment, including
15any interest or penalty, is paid in full. The lien of the
16assessment contract shall run with the property until the
17assessment is paid in full and a satisfaction or release for
18the same has been recorded with the local unit of government
19and shall have the same priority and status as other property
20tax and assessment liens. The local unit of government shall
21have all rights and remedies in the case of default or
22delinquency in the payment of an assessment as it does with
23respect to delinquent property taxes. When the assessment,
24including any interest and penalty, is paid, the lien shall be
25removed from the property.

 

 

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1    (b) Installments of assessments due under a program may be
2included in each tax bill issued under the Property Tax Code
3and may be collected at the same time and in the same manner as
4taxes collected under the Property Tax Code. Alternatively,
5installments may be billed and collected as provided in a
6special assessment ordinance of general applicability adopted
7by the local unit of government pursuant to State law or local
8charter. In no event will partial payment of an assessment be
9allowed.
 
10    Section 35. Bonds.
11    (a) A local unit of government may issue bonds under the
12Special Assessment Supplemental Bond and Procedures Act to
13finance energy projects under a property assessed clean energy
14program.
15    (b) Bonds issued under subsection (a) shall not be general
16obligations of the local unit of government, but shall be
17secured by the following as provided by the governing body in
18the resolution or ordinance approving the bonds:
19        (1) payments of assessments on benefited property
20    within the PACE area or areas specified; and
21        (2) if applicable, revenue sources or reserves
22    established by the local unit of government from bond
23    proceeds or other lawfully available funds.
24    (c) A pledge of assessments, funds, or contractual rights
25made by a governing body in connection with the issuance of

 

 

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1bonds by a local unit of government under this Act constitutes
2a statutory lien on the assessments, funds, or contractual
3rights so pledged in favor of the person or persons to whom the
4pledge is given, without further action by the governing body.
5The statutory lien is valid and binding against all other
6persons, with or without notice.
7    (d) Bonds of one series issued under this Act may be
8secured on a parity with bonds of another series issued by the
9local unit of government pursuant to the terms of a master
10indenture or master resolution entered into or adopted by the
11governing body of the local unit of government.
12    (e) Bonds issued under this Act are subject to the Bond
13Authorization Act and the Registered Bond Act.
14    (f) Bonds issued under this Act further essential public
15and governmental purposes, including, but not limited to,
16reduced energy costs, reduced greenhouse gas emissions,
17economic stimulation and development, improved property
18valuation, and increased employment.
19    (g) A program administrator can assign its rights to
20purchase the bonds to a third party (the "bond purchaser").
21    (h) A program administrator shall retain a law firm to give
22a bond opinion for the benefit of the program administrator or
23bond purchaser.
 
24    Section 40. Joint property assessed clean energy programs.
25    (a) A local unit of government may join with any other

 

 

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1local unit of government, or with any public or private person,
2or with any number or combination thereof, under the
3Intergovernmental Cooperation Act, by contract or otherwise as
4may be permitted by law, for the implementation of a property
5assessed clean energy program, in whole or in part.
6    (b) If a program is implemented jointly by 2 or more local
7units of government pursuant to subsection (a), a single public
8hearing held jointly by the cooperating local units of
9government is sufficient to satisfy the requirements of this
10Act.
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.".