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




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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    "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
17ordinance or resolution of the local unit of government to
18provide financing for energy projects under a property assessed
19clean energy program. A local unit of government may create
20more than one PACE area under the program, and PACE areas may
21be separate, overlapping, or coterminous.
22    "Energy efficiency improvement" means equipment, devices,
23or materials intended to decrease energy consumption or promote



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1a more efficient use of electricity, natural gas, propane, or
2other forms of energy on property, including, but not limited
3to, all of the following:
4        (1) insulation in walls, roofs, floors, foundations,
5    or heating and cooling distribution systems;
6        (2) storm windows and doors, multi-glazed windows and
7    doors, heat-absorbing or heat-reflective glazed and coated
8    window and door systems, and additional glazing,
9    reductions in glass area, and other window and door system
10    modifications that reduce energy consumption;
11        (3) automated energy control systems;
12        (4) high efficiency heating, ventilating, or
13    air-conditioning and distribution system modifications or
14    replacements;
15        (5) caulking, weather-stripping, and air sealing;
16        (6) replacement or modification of lighting fixtures
17    to reduce the energy use of the lighting system;
18        (7) energy controls or recovery systems;
19        (8) day lighting systems; and
20        (9) any other installation or modification of
21    equipment, devices, or materials approved as a utility
22    cost-savings measure by the governing body.
23    "Energy project" means the installation or modification of
24an alternative energy improvement, energy efficiency
25improvement, or water use improvement, or the acquisition,
26installation, or improvement of a renewable energy system that



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1is affixed to a stabilized existing property (not new
3    "Governing body" means the county board or board of county
4commissioners of a county, the city council of a city, or the
5board of trustees of a village.
6    "Local unit of government" means a county, city, or
8    "Person" means an individual, firm, partnership,
9association, corporation, limited liability company,
10unincorporated joint venture, trust, or any other type of
11entity that is recognized by law and has the title to or
12interest in property. "Person" does not include a local unit of
13government or a homeowner's or condominium association.
14    "Program administrator" means a for-profit entity or
15not-for profit entity that will administer a program on behalf
16of or at the discretion of the local unit of government. It or
17its affiliates, consultants, or advisors shall have done
18business as a program administrator or capital provider for a
19minimum of 18 months and shall be responsible for arranging
20capital for the acquisition of bonds issued by the local unit
21of government to finance energy projects.
22    "Property" means privately-owned commercial, industrial,
23non-residential agricultural, or multi-family (of 5 or more
24units) real property located within the local unit of
25government, but does not include property owned by a local unit
26of government or a homeowner's or condominium association.



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



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1clean energy program and, from time to time, create a PACE area
2or areas under the program.
3    (b) Under a program, the local unit of government may enter
4into an assessment contract with the record owner of property
5within a PACE area to finance or refinance one or more energy
6projects on the property. The assessment contract shall provide
7for the repayment of the cost of an energy project through
8assessments upon the property benefited. The financing or
9refinancing may include any and all of the following: the cost
10of materials and labor necessary for installation, permit fees,
11inspection fees, application and administrative fees, bank
12fees, and all other fees that may be incurred by the record
13owner pursuant to the installation and the issuance of bonds on
14a specific or pro rata basis, as determined by the local unit
15of government and may also include a prepayment premium.
16    (c) A program may be administered by a program
17administrator or the local unit of government.
18    Section 15. Program established.
19    (a) To establish a property assessed clean energy program,
20the governing body of a local unit of government shall adopt a
21resolution or ordinance that includes all of the following:
22        (1) a finding that the financing of energy projects is
23    a valid public purpose;
24        (2) a statement of intent to facilitate access to
25    capital from a program administrator to provide funds for



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



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1        (1) a form of assessment contract between the local
2    unit of government and record owner governing the terms and
3    conditions of financing and assessment under the program.
4        (2) identification of an official authorized to enter
5    into a assessment contract on behalf of the local unit of
6    government;
7        (3) a maximum aggregate annual dollar amount for all
8    financing to be provided by the program administrator under
9    the program;
10        (4) an application process and eligibility
11    requirements for financing energy projects under the
12    program;
13        (5) a method for determining interest rates on
14    assessment installments, repayment periods, and the
15    maximum amount of an assessment;
16        (6) an explanation of how assessments will be made and
17    collected;
18        (7) a plan to raise capital to finance improvements
19    under the program pursuant to the sale of bonds, subject to
20    the Special Assessment Supplemental Bond and Procedures
21    Act, to a program administrator;
22        (8) information regarding all of the following, to the
23    extent known, or procedures to determine the following in
24    the future:
25            (A) any revenue source or reserve fund or funds to
26        be used as security for bonds described in paragraph



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1        (7); and
2            (B) any application, administration, or other
3        program fees to be charged to record owners
4        participating in the program that will be used to
5        finance costs incurred by the local unit of government
6        as a result of the program;
7        (9) a requirement that the term of an assessment not
8    exceed the useful life of the energy project paid for by
9    the assessment; provided that the local unit of government
10    may allow projects that consist of multiple improvements
11    with varying lengths of useful life to have a term that is
12    no greater than the improvement with the longest useful
13    life;
14        (10) a requirement for an appropriate ratio of the
15    amount of the assessment to the assessed value of the
16    property or market value of the property as determined by a
17    recent appraisal no older than 12 months;
18        (11) a requirement that the record owner of property
19    subject to a mortgage obtain written consent from the
20    mortgage holder before participating in the program;
21        (12) provisions for marketing and participant
22    education;
23        (13) provisions for an adequate debt service reserve
24    fund, if any; and
25        (14) quality assurance and antifraud measures.



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



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1    bankruptcy in the last 2 years, and the property is not an
2    asset to a current bankruptcy.
3        (7) all work requiring a license under any applicable
4    law to make a qualifying improvement shall be performed by
5    a registered contractor that has agreed to adhere to a set
6    of terms and conditions through a process established by
7    the local unit of government.
8        (8) the contractors to be used have signed a written
9    acknowledgement that the local unit of government will not
10    authorize final payment to the contractor until the local
11    unit of government has received written confirmation from
12    the record owner that the improvement was properly
13    installed and is operating as intended; provided, however,
14    that the contractor retains all legal rights and remedies
15    in the event there is a disagreement with the owner;
16        (9) that the amount of the assessment in relation to
17    the greater of the assessed value of the property or the
18    appraised value of the property, as determined by a
19    licensed appraiser, does not exceed 25%; and
20        (10) a requirement that an assessment of the existing
21    water or energy use and a modeling of expected monetary
22    savings have been conducted for any proposed project.
23    (d) At least 30 days before entering into an agreement with
24the local unit of government, the record owner shall provide to
25the holders or loan servicers of any existing mortgages
26encumbering or otherwise secured by the property a notice of



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1the record owner's intent to enter into an assessment contract
2with the local unit of government, together with the maximum
3principal amount to be financed and the maximum annual
4assessment necessary to repay that amount, along with a request
5that the holders or loan servicers of any existing mortgages
6consent to the record owner subjecting the property to the
7program. A verified copy or other proof of those notices and
8the written consent of the existing mortgage holder for the
9record owner to enter into the assessment contract and
10acknowledging that the existing mortgage will be subordinate to
11the financing and assessment agreement and that the local unit
12of government can foreclose the property if the assessment is
13not paid shall be provided to the local unit of government.
14    (e) A provision in any agreement between a local unit of
15government and a public or private power or energy provider or
16other utility provider is not enforceable to limit or prohibit
17any local unit of government from exercising its authority
18under this Section.
19    (f) The record owner has signed a certification that the
20local unit of government has complied with the provisions of
21this Section, which shall be conclusive evidence as to
22compliance with these provisions, but shall not relieve any
23contractor, or local unit of government, from any potential
25    (g) This Section is additional and supplemental to county
26and municipal home rule authority and not in derogation of such



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1authority or limitation upon such authority.
2    Section 30. Assessments constitute a lien; billing.
3    (a) An assessment imposed under a property assessed clean
4energy program, including any interest on the assessment and
5any penalty, shall constitute a lien against the property on
6which the assessment is imposed until the assessment, including
7any interest or penalty, is paid in full. The lien of the
8assessment contract shall run with the property until the
9assessment is paid in full and a satisfaction or release for
10the same has been recorded with the local unit of government
11and shall have the same priority and status as other property
12tax and assessment liens. The local unit of government shall
13have all rights and remedies in the case of default or
14delinquency in the payment of an assessment as it does with
15respect to delinquent property taxes. When the assessment,
16including any interest and penalty, is paid, the lien shall be
17removed from the property.
18    (b) Installments of assessments due under a program may be
19included in each tax bill issued under the Property Tax Code
20and may be collected at the same time and in the same manner as
21taxes collected under the Property Tax Code. Alternatively,
22installments may be billed and collected as provided in a
23special assessment ordinance of general applicability adopted
24by the local unit of government pursuant to State law or local
25charter. In no event will partial payment of an assessment be



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2    Section 35. Bonds.
3    (a) A local unit of government may issue bonds under the
4Special Assessment Supplemental Bond and Procedures Act to
5finance energy projects under a property assessed clean energy
7    (b) Bonds issued under subsection (a) shall not be general
8obligations of the local unit of government, but shall be
9secured by the following as provided by the governing body in
10the resolution or ordinance approving the bonds:
11        (1) payments of assessments on benefited property
12    within the PACE area or areas specified; and
13        (2) if applicable, revenue sources or reserves
14    established by the local unit of government from bond
15    proceeds or other lawfully available funds.
16    (c) A pledge of assessments, funds, or contractual rights
17made by a governing body in connection with the issuance of
18bonds by a local unit of government under this Act constitutes
19a statutory lien on the assessments, funds, or contractual
20rights so pledged in favor of the person or persons to whom the
21pledge is given, without further action by the governing body.
22The statutory lien is valid and binding against all other
23persons, with or without notice.
24    (d) Bonds of one series issued under this Act may be
25secured on a parity with bonds of another series issued by the



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1local unit of government pursuant to the terms of a master
2indenture or master resolution entered into or adopted by the
3governing body of the local unit of government.
4    (e) Bonds issued under this Act are subject to the Bond
5Authorization Act and the Registered Bond Act.
6    (f) Bonds issued under this Act further essential public
7and governmental purposes, including, but not limited to,
8reduced energy costs, reduced greenhouse gas emissions,
9economic stimulation and development, improved property
10valuation, and increased employment.
11    (g) A program administrator can assign its rights to
12purchase the bonds to a third party (the "bond purchaser").
13    (h) A program administrator shall retain a law firm to give
14a bond opinion for the benefit of the program administrator or
15bond purchaser.
16    Section 40. Joint property assessed clean energy programs.
17    (a) A local unit of government may join with any other
18local unit of government, or with any public or private person,
19or with any number or combination thereof, under the
20Intergovernmental Cooperation Act, by contract or otherwise as
21may be permitted by law, for the implementation of a property
22assessed clean energy program, in whole or in part.
23    (b) If a program is implemented jointly by 2 or more local
24units of government pursuant to subsection (a), a single public
25hearing held jointly by the cooperating local units of



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1government is sufficient to satisfy the requirements of this
3    Section 99. Effective date. This Act takes effect upon
4becoming law.