1Amending Title 53 (Municipalities Generally) of the Pennsylvania
2Consolidated Statutes, authorizing assessments for energy
3improvements in areas designated by municipalities; and
4imposing a fee.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1. Title 53 of the Pennsylvania Consolidated
8Statutes is amended by adding a chapter to read:

9CHAPTER 63

10PennSTAR - Sustainable Technology

11Assistance for Retrofits

12Sec.

136301. Short title of chapter.

146302. Definitions.

156303. Exercise of powers.

166304. Authorized assessments.

176305. Written contract for assessment required.

186306. Establishment of program.

196307. Designation of area.

16308. Procedure for establishment of program.

26309. Report regarding assessment.

36310. Notice to mortgage holder required for participation.

46311. Review required.

56312. Direct acquisition by owner.

66313. Recording of notice of contractual assessment.

76314. Lien.

86315. Collection of assessments.

96316. Bonds or notes.

106317. Joint implementation.

116318. Prohibited acts.

12§ 6301. Short title of chapter.

13This chapter shall be known and may be cited as the PennSTAR
14- Sustainable Technology Assistance for Retrofits Act.

15§ 6302. Definitions.

16The following words and phrases when used in this chapter
17shall have the meanings given to them in this section unless the
18context clearly indicates otherwise:

19"Alternative energy system." Energy generated from
20alternative energy sources as defined under the act of November
2130, 2004 (P.L.1672, No.213), known as the Alternative Energy
22Portfolio Standards Act.

23"Authorized officer." A person authorized by the governing
24body of the municipality to perform the duties provided under
25section 6308 (relating to procedure for establishment of
26program).

27"Business." A corporation, partnership, sole proprietorship,
28limited liability company, business trust or other commercial
29entity approved by the authority.

30"Clean energy project." A project which does any of the

1following:

2(1) Replaces or supplements an existing energy system
3that utilizes nonrenewable energy with an energy system that
4utilizes alternative energy.

5(2) Facilitates the installation of an alternative
6energy system in an existing building or a major renovation
7of a building.

8(3) Facilitates the retrofit of an existing building to
9meet high-performance building standards.

10(4) Installs equipment to facilitate or improve energy
11conservation or energy efficiency, including heating and
12cooling equipment and solar thermal equipment.

13(5) An energy service project.

14"Department." The Department of Community and Economic
15Development of the Commonwealth.

16"Program." A program established under this chapter.

17"Qualified improvement." A permanent improvement fixed to
18real property that is intended to decrease energy consumption or
19demand, including an alternative energy system or clean energy
20project.

21"Qualified project." The installation or modification of a
22qualified improvement.

23"Real property." Privately owned commercial property owned
24by a business.

25"Sustainable technology assistance zone." An area of not
26more than three square miles, as designated by the Secretary of
27Community and Economic Development, which has a high number of
28real properties that could benefit from a qualified improvement
29or project.

30§ 6303. Exercise of powers.

1In addition to the authority provided to municipalities by
2law, the governing body of a municipality that establishes a
3program in accordance with the requirements of this chapter
4shall exercise all necessary powers granted by this chapter.

5§ 6304. Authorized assessments.

6(a) General rule.--An assessment under this chapter may be
7imposed to repay the financing of qualified projects on real
8property located in a municipality designated under this
9chapter.

10(b) Restrictions.--An assessment under this chapter may not
11be imposed to repay the financing of:

12(1) facilities for undeveloped lots or lots undergoing
13development at the time of the assessment; or

14(2) the purchase or installation of products or devices
15not permanently fixed to real property.

16§ 6305. Written contract for assessment required.

17A municipality may impose an assessment under this chapter
18only under a written contract with the record owner of the real
19property to be assessed.

20§ 6306. Establishment of program.

21(a) General rule.--The governing body of a municipality may
22determine that it is convenient and advantageous to establish a
23program under this chapter by adopting a resolution that is
24consistent with the provisions of this chapter.

25(b) Contract.--An authorized official of the municipality
26that establishes a program may enter into a written contract
27with a record owner of real property in a municipality
28designated under this chapter to impose an assessment to repay
29the owner's financing of a qualified project on the owner's
30property.

1(c) Municipality financing.--If the program provides for
2municipality financing, the written contract described by
3subsection (b) must be a contract to finance the qualified
4improvement through assessments.

5(d) Inclusion.--The financing for which assessments are
6imposed may include:

7(1) The cost of materials and labor necessary for
8installation or modification of a qualified improvement.

9(2) Permit fees.

10(3) Inspection fees.

11(4) Lender's fees.

12(5) Program application and administrative fees.

13(6) Project development and engineering fees.

14(7) Third-party review fees, including verification
15review fees, under section 6311 (relating to review
16required).

17(8) Any other fees or costs that may be incurred by the
18property owner incident to the installation, modification or
19improvement on a specific or pro rata basis, as determined by
20the municipality.

21§ 6307. Designation of area.

22(a) General rule.--The governing body of a municipality may
23determine that it is convenient and advantageous to designate an
24area of the municipality as an area within which authorized
25municipality officials and record owners of real property may
26enter into written contracts to impose assessments to repay the
27financing by owners of qualified projects on the owners'
28property and, if authorized by the municipality program, finance
29the qualified project.

30(b) Designation.--An area designated by the governing body

1of a municipality under this section:

2(1) may include the entire municipality; and

3(2) must be located wholly within the municipality's
4jurisdiction.

5(c) Multiple areas designated.--A municipality may designate
6more than one area. If multiple areas are designated, the areas
7may be separate, overlapping or coterminous.

8(d) Department designation.--The department, in consultation
9with a municipality, may designate an area in the municipality
10as a sustainable technology assistance zone. The Secretary of
11Community and Economic Development shall designate no more than
1212 such zones in this Commonwealth. Such zones shall receive
13preference for funding under the act of July 9, 2008 (1st
14Sp.Sess., P.L.1873, No.1), known as the Alternative Energy
15Investment Act.

16§ 6308. Procedure for establishment of program.

17(a) Establishment.--To establish a program under this
18chapter, the governing body of a municipality must take the
19following actions in the following order:

20(1) Adopt an ordinance of intent that includes:

21(i) a finding that, if appropriate, financing
22qualified projects through contractual assessments is a
23valid public purpose;

24(ii) a statement that the municipality intends to
25make contractual assessments to repay financing for
26qualified projects available to property owners;

27(iii) a description of the types of qualified
28projects that may be subject to contractual assessments;

29(iv) a description of the boundaries of the area;

30(v) a reference to the report on the proposed

1program prepared as provided by section 6309 (relating to
2report regarding assessment) and a statement identifying
3the location where the report is available for public
4inspection;

5(vi) a statement of the time and place for a public
6hearing on the proposed program; and

7(vii) a statement identifying the appropriate local
8official and the appropriate assessor-collector for
9purposes of consulting regarding collecting the proposed
10contractual assessments with property taxes imposed on
11the assessed property.

12(2) Hold a public hearing at which the public may
13comment on the proposed program, including the report
14required by section 6309.

15(3) Adopt an ordinance establishing the program and the
16terms of the program, including:

17(i) each item included in the report under section
186309; and

19(ii) a description of each aspect of the program
20that may be amended only after another public hearing is
21held.

22(b) Establishment resolution.--For purposes of subsection
23(a)(3)(i), the ordinance may incorporate the report or the
24amended version of the report, as appropriate, by reference.

25(c) Amendment of program.--Subject to the terms of the
26resolution establishing the program as referenced by subsection
27(a)(3)(ii), the governing body of a municipality may amend a
28program by ordinance.

29(d) Municipality duties.--A municipality may:

30(1) hire and set the compensation of a program

1administrator and program staff; or

2(2) contract for professional services necessary to
3administer a program.

4(e) Imposition of fees.--A municipality may impose fees to
5offset the costs of administering a program. The fees authorized
6by this subsection may be assessed as:

7(1) a program application fee paid by the property owner
8requesting to participate in the program;

9(2) a component of the interest rate on the assessment
10in the written contract between the municipality and the
11property owner; or

12(3) a combination of paragraphs (1) and (2).

13§ 6309. Report regarding assessment.

14(a) Report.--The report for a proposed program required by
15section 6308 (relating to procedure for establishment of
16program) must include:

17(1) A map showing the boundaries of the proposed area.

18(2) A form contract between the municipality and the
19property owner specifying the terms of:

20(i) assessment under the program; and

21(ii) financing provided by the municipality.

22(3) A description of types of qualified projects that
23may be subject to contractual assessments.

24(4) A statement identifying a municipality official
25authorized to enter into written contracts on behalf of the
26municipality.

27(5) A plan for raising sufficient capital for
28municipality financing for qualified projects. This may
29include bond issuance in accordance with Subpart B of Part
30VII (relating to indebtedness and borrowing).

1(6) If bonds will be issued to provide capital to
2finance qualified projects as part of the program as provided
3by section 6316 (relating to bonds or notes):

4(i) a maximum aggregate annual dollar amount for
5financing through contractual assessments to be provided
6by the municipality under the program;

7(ii) a method for ranking requests from property
8owners for financing through contractual assessments in
9priority order if requests appear likely to exceed the
10authorization amount; and

11(iii) a method for determining:

12(A) the interest rate and period during which
13contracting owners would pay an assessment; and

14(B) the maximum amount of an assessment.

15(7) A method for ensuring that the period of the
16contractual assessment does not exceed the useful life of the
17qualified project that is the basis for the assessment.

18(8) A description of the application process and
19eligibility requirements for financing qualified projects to
20be repaid through contractual assessments under the program.

21(9) A method as prescribed by subsection (b) for
22ensuring that property owners requesting to participate in
23the program demonstrate the financial ability to fulfill
24financial obligations to be repaid through contractual
25assessments.

26(10) A statement explaining the manner in which property
27will be assessed and assessments will be collected.

28(11) A statement explaining the lender notice
29requirement provided by section 6310 (relating to notice to
30mortgage holder required for participation).

1(12) A statement explaining the review requirement
2provided by section 6311 (relating to review required).

3(13) A description of marketing and participant
4education services to be provided for the program.

5(14) A description of quality assurance and antifraud
6measures to be instituted for the program.

7(15) The procedures for collecting the proposed
8contractual assessments.

9(b) Financial ability.--The method for ensuring a
10demonstration of financial ability under subsection (a)(10) must
11be based on appropriate underwriting factors, including:

12(1) Providing for verification that:

13(i) The property owner requesting to participate
14under the program:

15(A) is the legal owner of the benefited
16property;

17(B) is current on mortgage and property tax
18payments;

19(C) is not insolvent or in bankruptcy
20proceedings; and

21(D) owns property that does not have a loan
22managed by a Federal agency that restricts
23participation under this chapter.

24(ii) The title of the benefited property is not in
25dispute.

26(2) Requiring an appropriate ratio of the amount of the
27assessment to the assessed value of the property.

28(c) Public inspection.--The municipality shall make the
29report available for public inspection:

30(1) On the municipality's Internet website.

1(2) At the office of the official designated to enter
2into written contracts on behalf of the municipality under
3the program.

4§ 6310. Notice to mortgage holder required for participation.

5Before a municipality may enter into a written contract with
6a record owner of real property to impose an assessment to repay
7the financing of a qualified project under this chapter the
8following shall occur:

9(1) the holder of any mortgage lien on the property must
10be given written notice of the owner's intention to
11participate in a program under this chapter on or before the
1230th day before the date the written contract for assessment
13between the owner and the municipality is executed; and

14(2) a written consent from the holder of the mortgage
15lien on the property must be obtained.

16§ 6311. Review required.

17(a) Review required.--A program established under this
18chapter must require for each proposed qualified project a
19review of energy baseline conditions and the projected energy
20savings to establish the projected energy savings.

21(b) Verification of completion.--After a qualified
22improvement is completed, the municipality shall obtain
23verification that the qualified improvement was properly
24completed and is operating as intended.

25(c) Third-party review or verification.--A baseline energy
26review or verification review under this section must be
27conducted by an independent third party.

28§ 6312. Direct acquisition by owner.

29The proposed arrangements for financing a qualified
30improvement may authorize the property owner to:

1(1) Purchase directly the related equipment and
2materials for the installation or modification of a qualified
3improvement.

4(2) Contract directly, including through lease, power
5purchase agreement or other service contract, for the
6installation or modification of a qualified improvement.

7§ 6313. Recording of notice of contractual assessment.

8(a) Notice.--A municipality that authorizes financing
9through contractual assessments under this chapter shall file
10written notice of each contractual assessment in the real
11property records of the county in which the property is located.

12(b) Contents of notice.--The notice under subsection (a)
13must contain:

14(1) The legal description of the property.

15(2) The name of each property owner.

16(3) The total amount of the qualified improvements of
17the project.

18(4) The amount and number of assessments to satisfy the
19qualified improvements.

20(5) A reference to the statutory assessment lien
21provided under this chapter.

22§ 6314. Lien.

23(a) General rule.--A contractual assessment under this
24chapter and any interest or penalties on the assessment:

25(1) Is a first and prior lien against the real property
26on which the assessment is imposed from the date on which the
27notice of contractual assessment is recorded as provided by
28section 6313 (relating to recording of notice of contractual
29assessment) and until the assessment, interest or penalty is
30satisfied.

1(2) Has the same priority status as a lien for any other
2tax imposed by any agency of the Commonwealth or municipality
3of the Commonwealth.

4(b) Lien.--The lien runs with the land, and that portion of
5the assessment under the assessment contract that has not yet
6become due is not eliminated by foreclosure of a property tax
7lien.

8(c) Enforcement.--The assessment lien may be enforced by the
9municipality in the same manner that a property tax lien against
10real property may be enforced by the municipality to the extent
11the enforcement is consistent with the laws of this
12Commonwealth.

13(d) Delinquency charge.--Delinquent installments of the
14assessments incur interest and penalties in the same manner as
15delinquent property taxes.

16(e) Costs and expenses.--A municipality may recover costs
17and expenses, including attorney fees, in a suit to collect a
18delinquent installment of an assessment in the same manner as in
19a suit to collect a delinquent property tax.

20§ 6315. Collection of assessments.

21The governing body of a municipality may contract with the
22governing body of another taxing unit or another entity,
23including a county assessor-collector, to perform the duties of
24the municipality relating to collection of assessments imposed
25by the municipality under this chapter.

26§ 6316. Bonds or notes.

27(a) Issuance.--A municipality may issue bonds or notes to
28finance qualified projects through contractual assessments under
29this chapter pursuant to the authority of Subpart B of Part VII
30(relating to indebtedness and borrowing).

1(b) Restrictions.--Bonds or notes issued under this chapter
2may not be general obligations of the municipality. The bonds or
3notes must be secured by one or more of the following as
4provided by the governing body of the municipality in the
5resolution or ordinance approving the bonds or notes:

6(1) Payments of contractual assessments on benefited
7property in one or more specified areas designated under this
8chapter.

9(2) Reserves established by the municipality from
10grants, bonds or net proceeds or other lawfully available
11funds.

12(3) Municipal bond insurance, lines of credit, public or
13private guaranties, standby bond purchase agreements,
14collateral assignments, mortgages or any other available
15means of providing credit support or liquidity.

16(4) Any other funds lawfully available for purposes
17consistent with this chapter.

18(c) First lien.--A municipality pledge of assessments, funds
19or contractual rights in connection with the issuance of bonds
20or notes by the municipality under this chapter is a first lien
21on the assessments, funds or contractual rights pledged in favor
22of the person to whom the pledge is given, without further
23action by the municipality. The lien is valid and binding
24against any other person, with or without notice.

25(d) Purpose.--Bonds or notes issued under this chapter
26further an essential public and governmental purpose, including:

27(1) Improvement of the reliability of the Commonwealth's
28electrical system.

29(2) Economic stimulation and development.

30(3) Enhancement of property values.

1(4) Enhancement of employment opportunities.

2(5) Reduction in greenhouse gas emissions.

3§ 6317. Joint implementation.

4(a) General rule.--Any combination of municipalities may
5agree to jointly implement or administer a program under this
6chapter.

7(b) Single hearing.--If two or more municipalities implement
8a program jointly, a single public hearing held jointly by the
9cooperating municipalities is sufficient to satisfy the
10requirement of section 6308(a)(2) (relating to procedure for
11establishment of program).

12(c) Incentives and grants.--The department may establish a
13program to create incentives for municipalities that agree to
14jointly implement or administer a program under subsection (a).
15The department may withhold grants under 12 Pa. Code Ch. 119
16(relating to councils of government assistance program) from a
17municipality that refuses to jointly implement or administer a
18program under subsection (a).

19§ 6318. Prohibited acts.

20A municipality that establishes an area under this chapter
21may not:

22(1) make the issuance of a permit, license or other
23authorization from the municipality to a person who owns
24property in the area contingent on the person entering into a
25written contract to repay the financing of a qualified
26project through contractual assessments under this chapter;
27or

28(2) otherwise compel a person who owns property in the
29area to enter into a written contract to repay the financing
30of a qualified project through contractual assessments under

1this chapter.

2Section 2. This act shall take effect in 60 days.