Illinois General Assembly - Full Text of HB2831
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Full Text of HB2831  100th General Assembly




State of Illinois
2017 and 2018


Introduced , by Rep. Lou Lang


New Act

    Creates the Property Assessed Clean Energy Act. Provides that a local unit of government may establish a property assessed clean energy program. Provides that, to finance or refinance one or more energy projects on the property covered by the program, a local unit of government may impose an assessment pursuant to the terms of an assessment contract with the record owner of the property to be assessed. Provides that a local unit of government may issue bonds to finance energy projects under a property assessed clean energy program. Contains other provisions. Effective immediately.

LRB100 06946 HLH 19794 b






HB2831LRB100 06946 HLH 19794 b

1    AN ACT concerning revenue.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
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    "Assessment contract" means a contract between the local
8unit of government and record owner governing the terms and
9conditions of financing and assessment under a program.
10    "District" means a district created by a local unit of
11government under a property assessed clean energy program that
12lies within the local unit of government's jurisdictional
13boundaries. A local unit of government may create more than one
14district under the program, and districts may be separate,
15overlapping, or coterminous.
16    "Energy efficiency improvement" means equipment, devices,
17or materials intended to decrease energy consumption or promote
18a more efficient use of electricity, natural gas, propane, or
19other forms of energy on property, including, but not limited
20to, all of the following:
21        (1) insulation in walls, roofs, floors, foundations,
22    or heating and cooling distribution systems;
23        (2) storm windows and doors, multi-glazed windows and



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1    doors, heat-absorbing or heat-reflective glazed and coated
2    window and door systems, and additional glazing,
3    reductions in glass area, and other window and door system
4    modifications that reduce energy consumption;
5        (3) automated energy control systems;
6        (4) energy efficient heating, ventilating, or
7    air-conditioning and distribution system modifications or
8    replacements;
9        (5) caulking, weather-stripping, and air sealing;
10        (6) replacement or modification of lighting fixtures
11    to reduce the energy use of the lighting system;
12        (7) energy controls or recovery systems;
13        (8) day lighting systems;
14        (9) installation or upgrade of electrical wiring or
15    outlets to charge a motor vehicle that is fully or
16    partially powered by electricity;
17        (10) measures to reduce the usage of water or increases
18    the efficiency of water usage;
19        (11) any other installation or modification of
20    equipment, devices, or materials approved as a utility
21    cost-savings measure by the governing body;
22        (12) wind resistance improvements including, but not
23    limited to:
24            (A) improving the strength of the roof deck
25        attachment;
26            (B) creating a secondary water barrier to prevent



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1        water intrusion;
2            (C) installing wind-resistant shingles;
3            (D) installing gable-end bracing;
4            (E) reinforcing roof-to-wall connections;
5            (F) installing storm shutters; or
6            (G) installing opening protections.
7    "Energy project" means the installation or modification of
8an energy efficiency improvement or the acquisition,
9installation, or improvement of a renewable energy system that
10is affixed to a stabilized existing property (not new
12    "Governing body" means the county board or board of county
13commissioners of a county, the board of trustees of a township,
14the city council of a city, or the board of trustees of a
16    "Local unit of government" means a county or municipality.
17    "Person" means an individual, firm, partnership,
18association, corporation, unincorporated joint venture, or
19trust. "Person" does not include a local unit of government or
20a 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 shall have done business in Illinois for a
25minimum of 5 years and shall be responsible for providing
26capital for the acquisition of bonds issued by the local unit



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1of government to finance energy projects.
2    "Property" means privately-owned commercial, industrial,
3vacant and multi-family (of 4 or more units) real property
4located within the local unit of government.
5    "Property assessed clean energy program" or "program"
6means a program as described in Section 10.
7    "Record owner" means the titleholder or owner of the
8beneficial interest.
9    "Renewable energy resource" means a resource that
10naturally replenishes over a human, not a geological, time
11frame and that is ultimately derived from solar power, water
12power, or wind power. The term "renewable energy resource" does
13not include petroleum, nuclear, natural gas, or coal. A
14Renewable Energy Resource comes from the sun or from thermal
15inertia of the earth and minimizes the output of toxic material
16in the conversion of the energy, and includes, but is not
17limited to, all of the following:
18        (1) biomass or bioenergy;
19        (2) solar and solar thermal energy;
20        (3) wind energy;
21        (4) geothermal energy;
22        (5) methane gas captured from a landfill; and
23        (6) hydrogen
24    "Renewable energy system" means a fixture, product,
25device, or interacting group of fixtures, products, or devices
26on the customer's side of the meter that use one or more



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1renewable energy resources to generate electricity. Renewable
2energy system includes a biomass stove but does not include an
3incinerator or digester.
4    Section 10. Property assessed clean energy program;
6    (a) Pursuant to the procedures provided in Section 15, a
7local unit of government may establish a property assessed
8clean energy program and may, from time to time, create a
9district or districts 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 district 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 take the
4following actions:
5        (1) adopt a resolution or ordinance of intent that
6    includes all of the following:
7            (A) a finding that the financing of energy projects
8        is a valid public purpose;
9            (B) a statement of intent to facilitate access to
10        capital from a program administrator to provide funds
11        for energy projects, which will be repaid by
12        assessments on the property benefited with the
13        agreement of the record owners;
14            (C) a description of the proposed arrangements for
15        financing the program through a program administrator;
16            (D) the types of energy projects that may be
17        financed;
18            (E) reference to a report on the proposed program
19        as described in Section 20; and
20            (F) the time and place for any public hearing
21        required for the adoption of the proposed program by
22        resolution or ordinance;
23        (2) adopt a resolution or ordinance establishing the
24    program and setting forth its terms and conditions,
25    including all of the following:
26            (A) matters required by Section 20 to be included



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1        in the report; for this purpose, the resolution or
2        ordinance may incorporate the report or an amended
3        version thereof by reference; and
4            (B) a description of which aspects of the program
5        may be amended without a new public hearing and which
6        aspects may be amended only after a new public hearing
7        is held.
8    (b) A property assessed clean energy program may be amended
9by resolution or ordinance of the governing body. Adoption of
10the resolution or ordinance shall be preceded by a public
11hearing if required pursuant to paragraph (3) of subsection (a)
12of this Section.
13    Section 20. Report. The report on the proposed program
14required under Section 15 shall include all of the following:
15        (1) a form of assessment contract between the local
16    unit of government and record owner governing the terms and
17    conditions of financing and assessment under the program.
18        (2) identification of an official authorized to enter
19    into a assessment contract on behalf of the local unit of
20    government;
21        (3) a maximum aggregate annual dollar amount for all
22    financing to be provided by the program administrator under
23    the program;
24        (4) an application process and eligibility
25    requirements for financing energy projects under the



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1    program;
2        (5) a method for determining interest rates on
3    assessment installments, repayment periods, and the
4    maximum amount of an assessment;
5        (6) an explanation of how assessments will be made and
6    collected;
7        (7) a plan to raise capital to finance improvements
8    under the program pursuant to the sale of bonds, subject to
9    the Special Assessment Supplemental Bond and Procedures
10    Act, from a program administrator;
11        (8) information regarding all of the following, to the
12    extent known, or procedures to determine the following in
13    the future:
14            (A) any revenue source or reserve fund or funds to
15        be used as security for bonds described in paragraph
16        (7); and
17            (B) any application, administration, or other
18        program fees to be charged to record owners
19        participating in the program that will be used to
20        finance costs incurred by the local unit of government
21        as a result of the program;
22        (9) a requirement that the term of an assessment not
23    exceed the useful life of the energy project paid for by
24    the assessment; provided that projects that consist of
25    multiple improvements with varying lengths of useful life
26    shall have the lengths blended to determine an overall term



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1    that does not exceed the useful life of the improvements in
2    aggregate;
3        (10) a requirement for an appropriate ratio of the
4    amount of the assessment to the assessed value of the
5    property or market value of the property as determined by a
6    recent appraisal no older than 12 months;
7        (11) a requirement that the record owner of property
8    subject to a mortgage obtain written consent from the
9    mortgage holder before participating in the program;
10        (12) provisions for marketing and participant
11    education;
12        (13) provisions for an adequate debt service reserve
13    fund, if any; and
14        (14) quality assurance and antifraud measures.
15    Section 25. Contracts with record owners of property.
16    (a) A local unit of government may impose an assessment
17under a property assessed clean energy program only pursuant to
18the terms of a recorded assessment contract with the record
19owner of the property to be assessed.
20    (b) Before entering into an assessment contract with a
21record owner under a program, the local unit of government
22shall verify all of the following:
23        (1) that there are no delinquent taxes, special
24    assessments, or water or sewer charges on the property;
25        (2) that there are no delinquent assessments on the



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



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



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1modification solely as a result of entering into an agreement
2as provided for in this Section is not enforceable. This
3subsection does not limit the authority of the holder or loan
4servicer to increase the required monthly escrow by an amount
5necessary to annually pay the qualifying energy efficiency
7    (d) A provision in any agreement between a local unit of
8government and a public or private power or energy provider or
9other utility provider is not enforceable to limit or prohibit
10any local unit of government from exercising its authority
11under this Section.
12    (e) The record owner has signed a certification that the
13local unit of government has complied with the provisions of
14this Section, which shall be conclusive evidence as to
15compliance with these provisions, but shall not relieve any
16contractor, or local unit of government, from any potential
18    (f) This Section is additional and supplemental to county
19and municipal home rule authority and not in derogation of such
20authority or limitation upon such authority.
21    Section 30. Assessments constitute a lien; billing.
22    (a) An assessment imposed under a property assessed clean
23energy program, including any interest on the assessment and
24any penalty, shall constitute a lien against the property on
25which the assessment is imposed until the assessment, including



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1any interest or penalty, is paid in full. The lien of the
2assessment contract shall run with the property until the
3assessment is paid in full and a satisfaction or release for
4the same has been recorded with the local unit of government
5and shall have the same priority and status as other property
6tax and assessment liens. The local unit of government shall
7have all rights and remedies in the case of default or
8delinquency in the payment of an assessment as it does with
9respect to delinquent property taxes. When the assessment,
10including any interest and penalty, is paid, the lien shall be
11removed from the property.
12    (b) Installments of assessments due under a program shall
13be included in each tax bill issued under the Property Tax Code
14and shall be collected at the same time and in the same manner
15as taxes collected under the Property Tax Code. Alternatively,
16installments may be billed and collected as provided in a
17special assessment ordinance of general applicability adopted
18by the local unit of government pursuant to State law or local
19charter. In no event will partial payment of an assessment be
21    Section 35. Bonds.
22    (a) A local unit of government may issue bonds under the
23Special Assessment Supplemental Bond and Procedures Act to
24finance energy projects under a property assessed clean energy



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1    (b) Bonds issued under subsection (a) shall not be general
2obligations of the local unit of government, but shall be
3secured by the following as provided by the governing body in
4the resolution or ordinance approving the bonds:
5        (1) payments of assessments on benefited property
6    within the district or districts specified; and
7        (2) if applicable, revenue sources or reserves
8    established by the local unit of government from bond
9    proceeds or other lawfully available funds.
10    (c) A pledge of assessments, funds, or contractual rights
11made by a governing body in connection with the issuance of
12bonds by a local unit of government under this Act constitutes
13a statutory lien on the assessments, funds, or contractual
14rights so pledged in favor of the person or persons to whom the
15pledge is given, without further action by the governing body.
16The statutory lien is valid and binding against all other
17persons, with or without notice.
18    (d) Bonds of one series issued under this Act may be
19secured on a parity with bonds of another series issued by the
20local unit of government pursuant to the terms of a master
21indenture or master resolution entered into or adopted by the
22governing body of the local unit of government.
23    (e) Bonds issued under this Act are subject to the Bond
24Authorization Act and the Registered Bond Act.
25    (f) Bonds issued under this Act further essential public
26and governmental purposes, including, but not limited to,



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1reduced energy costs, reduced greenhouse gas emissions,
2economic stimulation and development, improved property
3valuation, and increased employment.
4    (g) A program administrator can assign its rights to
5purchase the bonds to a third party (the "bond purchaser").
6    (h) A program administrator shall retain a law firm to give
7a bond opinion for the benefit of the program administrator or
8bond purchaser.
9    Section 40. Joint property assessed clean energy programs.
10    (a) A local unit of government may join with any other
11local unit of government, or with any public or private person,
12or with any number or combination thereof, under the
13Intergovernmental Cooperation Act, by contract or otherwise as
14may be permitted by law, for the implementation of a property
15assessed clean energy program, in whole or in part.
16    (b) If a program is implemented jointly by 2 or more local
17units of government pursuant to subsection (a), a single public
18hearing held jointly by the cooperating local units of
19government is sufficient to satisfy the requirements of this
21    Section 99. Effective date. This Act takes effect upon
22becoming law.