Rep. Lou Lang

Filed: 3/10/2017





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2    AMENDMENT NO. ______. Amend House Bill 2831 by replacing
3everything after the enacting clause with the following:
4    "Section 1. Short title. This Act may be cited as the
5Property Assessed Clean Energy Act.
6    Section 5. Definitions. As used in this Act:
7    "Alternative energy improvement" means the installation or
8upgrade of electrical wiring, outlets, or charging stations to
9charge a motor vehicle that is fully or partially powered by
11    "Assessment contract" means a voluntary written contract
12between the local unit of government and record owner governing
13the terms and conditions of financing and assessment under a
15    "PACE area" means an area within the jurisdictional
16boundaries of a local unit of government created by an



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



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



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



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



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



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



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



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1    education;
2        (13) provisions for an adequate debt service reserve
3    fund, if any; and
4        (14) quality assurance and antifraud measures.
5    Section 25. Contracts with record owners of property.
6    (a) After creation of a program and PACE area, a record
7owner of property within the PACE area may apply with the local
8unit of government or its program administrator for funding to
9finance an energy project.
10    (b) A local unit of government may impose an assessment
11under a property assessed clean energy program only pursuant to
12the terms of a recorded assessment contract with the record
13owner of the property to be assessed.
14    (c) Before entering into an assessment contract with a
15record owner under a program, the local unit of government
16shall verify all of the following:
17        (1) that the property is within the PACE area;
18        (2) that there are no delinquent taxes, special
19    assessments, or water or sewer charges on the property;
20        (3) that there are no delinquent assessments on the
21    property under a property assessed clean energy program;
22        (4) there are no involuntary liens on the property,
23    including, but not limited to, construction or mechanics
24    liens, lis pendens or judgments against the record owner,
25    environmental proceedings, or eminent domain proceedings;



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



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



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



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



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



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1may be permitted by law, for the implementation of a property
2assessed clean energy program, in whole or in part.
3    (b) If a program is implemented jointly by 2 or more local
4units of government pursuant to subsection (a), a single public
5hearing held jointly by the cooperating local units of
6government is sufficient to satisfy the requirements of this
8    Section 99. Effective date. This Act takes effect upon
9becoming law.".