Regular Session 2015-2016 Senate Bill 1069 P.N. 1531

PRINTER'S NO. 1531

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1069

Session of

2015

INTRODUCED BY BLAKE, BREWSTER, TARTAGLIONE, SABATINA, FONTANA,

YUDICHAK, COSTA, BOSCOLA, HAYWOOD, BROWNE AND HUGHES,

JANUARY 28, 2016

REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,

JANUARY 28, 2016

AN ACT

Amending Title 12 (Commerce and Trade) of the Pennsylvania

Consolidated Statutes, authorizing assessments for energy

improvements in districts designated by municipalities; and

imposing a fee.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Title 12 of the Pennsylvania Consolidated

Statutes is amended by adding a chapter to read:

CHAPTER 43

PENNSTAR - SUSTAINABLE TECHNOLOGY

ASSISTANCE FOR RETROFITS AND NEW

CONSTRUCTION

Sec.

4301. Purpose.

4302. Definitions.

4303. Authorized assessments.

4304. Written contract for assessment required.

4305. Establishment of program.

4306. Designation of districts.

4307. Procedure for establishment of program.

4308. Report regarding assessment.

4309. Notice to mortgage holder required for participation.

4310. Review required.

4311. Direct acquisition by owner.

4312. Recording of notice of contractual assessment.

4313. Lien.

4314. Collection of assessments.

4315. Bonds or notes.

4316. Joint implementation.

4317. Prohibited acts.

§ 4301. Purpose.

This chapter furthers an essential public and governmental

purpose, including:

(1) Improvement of the reliability of the Commonwealth's

energy and water systems.

(2) Economic stimulation and development.

(3) Enhancement of property values.

(4) Enhancement of employment opportunities.

(5) Enhance and expand the use of energy savings and

fuel efficient technologies in new construction and

rehabilitation and redevelopment projects.

(6) Reduction in greenhouse gas emissions and reliance

upon foreign energy sources.

§ 4302. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Alternative energy system." Energy generated from

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alternative energy sources as defined under the act of November

30, 2004 (P.L.1672, No.213), known as the Alternative Energy

Portfolio Standards Act. In addition to these energy sources,

programs may recognize alternative energy sources not included

in the Alternative Energy Portfolio Standards Act when approving

qualified project applications.

"Authorized officer." A person authorized by the governing

body of the municipality or county to perform the duties

provided under section 4307 (relating to procedure for

establishment of program).

"Bond." The term includes any public or private financing

note, mortgage, loan, deed of trust, instrument, refunding note

or other evidence of indebtedness or obligation.

"Business." A corporation, partnership, sole proprietorship,

limited liability company, business trust or other commercial

entity approved by the authority.

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

following:

(1) Replaces or supplements an existing energy system

that utilizes nonrenewable energy with an energy system that

utilizes alternative energy.

(2) Facilitates the installation of an alternative

energy system in an existing building or a major renovation

of a building.

(3) Facilitates the retrofit of an existing building to

meet high-performance building standards.

(4) Installs equipment to facilitate or improve energy

conservation or energy efficiency, including heating and

cooling equipment and solar thermal equipment.

(5) An energy service project.

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"Department." The Department of Community and Economic

Development of the Commonwealth.

"District." A district created under a property-assessed

clean energy program by a municipality or county that lies

within the municipality's or county's jurisdictional boundaries.

"Municipality or county financing." Financing provided or

facilitated by a municipality, county, district, economic

development corporation or any government sponsored entity.

"Owner-arranged financing." Financing by a third-party

provider. This term includes a power purchase agreement.

"Power purchase agreement." A financial arrangement in which

a third party owns, operates and maintains a permanently affixed

energy generation unit for a property owner and the property

owner purchases power from the third party at agreed-upon rates

in the arrangement. The third party would have the ability to

finance its equipment acquisitions with an assessment under a

property-assessed clean energy program.

"Program." Any property-assessed clean energy program

established under this chapter.

"Property-assessed clean energy program." A program that

enables the financing of a qualified project through an annual

assessment on the property tax bill of the property.

"Qualified improvement." A permanent improvement fixed to

real property that is a clean energy project or water

conservation project performed by qualified parties.

"Qualified parties." Inspectors, contractors,

subcontractors, and financial institutions that meet the

following standards and submit sworn statements verifying that

the inspector, contractor, subcontractor or financial

institution meets the following standards:

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(1) Possess all technical qualifications and resources,

including equipment, management, technical and craft labor

personnel, and financial resources necessary to perform the

contracted responsibilities, or will obtain the contracted

responsibilities through the use of qualified subcontractors.

(2) Possess all valid, current licenses, registrations

or other certificates required for the contractor or its

employees by Federal, State or local law necessary for the

type of work required for the project.

(3) Not have any outstanding liability to the locality

in the form of tax obligations, fines or other fees, unless

the inspector, contractor, subcontractor or financial

institution has entered into and is in compliance with a

payment agreement with the locality for such taxes, fines or

fees.

(4) Meet all bonding requirements, as required by

applicable law or contract specifications, and all insurance

requirements as required by applicable law or contract

specifications, including general liability insurance,

workers' compensation insurance and unemployment insurance

requirements.

(5) For contractors and subcontractors, participate in a

registered apprenticeship program with both classroom and

field instruction that has graduated apprentices each year

for the last three years for each separate trade or

classification in which the inspector, contractor,

subcontractor or financial institution employs craft

employees, except truck drivers.

"Qualified project." The installation or modification of a

qualified improvement. The term includes installation of

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alternative energy-generating equipment affixed to the land or

building.

"Real property." Privately owned commercial or industrial

property owned by a business and real property of nonprofits or

municipalities, counties or other government entity, including

public schools.

"Sustainable technology assistance zone." An area of not

more than three square miles, as designated by the Secretary of

Community and Economic Development, which has a high number of

real properties that could benefit from a qualified improvement

or project.

"Water conservation project." A project that reduces the

usage of water or increases the efficiency of water usage.

§ 4303. Authorized assessments.

An assessment under this chapter may be imposed to repay the

financing of qualified projects on real property located in a

municipality or county designated under this chapter. Each

qualified project must be executed by a qualified party.

§ 4304. Written contract for assessment required.

A municipality or county may impose an assessment under this

chapter only under a written contract with the record owner of

the real property to be assessed.

§ 4305. Establishment of program.

(a) General rule.--The governing body of a municipality or

county may determine that it is convenient and advantageous to

establish a program under this chapter by adopting an ordinance

that is consistent with the provisions of this chapter.

(b) Contract.--An authorized official of the municipality or

county that establishes a program may enter into a written

contract with a record owner of real property in a municipality

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or county designated under this chapter to impose an assessment

to repay the owner's financing of a qualified project on the

owner's property.

provides for municipality or county financing, the written

contract described by subsection (b) must be a contract to

finance the qualified improvement through assessments.

(d) Inclusion.--The financing for which assessments are

imposed may include:

(1) The cost of materials and labor necessary for

installation or modification of a qualified improvement.

(2) Permit fees.

(3) Inspection fees.

(4) Lender's fees.

(5) Program application and administrative fees.

(6) Project development and engineering fees.

(7) Third-party review fees, including verification

review fees.

(8) Any other fees or costs that may be incurred by the

property owner incident to the installation, modification or

improvement on a specific or pro rata basis, as determined by

the municipality or county.

§ 4306. Designation of districts.

(a) General rule.--The governing body of a municipality or

county may determine that it is convenient and advantageous to

designate an area of the municipality or county as a district

within which authorized municipality or county officials and

record owners of real property may enter into written contracts

to impose assessments to repay the financing by owners of

qualified projects on the owners' property and, if authorized by

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the municipality or county program, finance the qualified

project.

(b) Municipality or county designation.--A district

designated by the governing body of a municipality or county

under this section:

(1) may include the entire municipality or county; and

(2) must be located wholly within the municipality's or

county's jurisdiction.

may designate more than one district. If multiple districts are

designated, the districts may be separate, overlapping or

coterminous.

(d) Department designation of sustainable technology

assistance zones.--The department, in consultation with a

municipality or county, may designate an area in the

municipality as a sustainable technology assistance zone. The

Secretary of Community and Economic Development shall designate

no more than 12 such zones in this Commonwealth. The zones shall

receive preference for funding under the act of July 9, 2008

(1st Sp.Sess., P.L.1873, No.1), known as the Alternative Energy

Investment Act.

(e) Preferential status.--Zones shall receive preferential

status when they apply for any grant administered by the

Commonwealth Financing Authority and preference for funding

under the Alternative Energy Investment Act.

§ 4307. Procedure for establishment of program.

(a) Establishment.--To establish a program under this

chapter, the governing body of a municipality or county must, in

the following order:

(1) Adopt an ordinance of intent that includes:

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(i) a finding that, if appropriate, financing

qualified projects through contractual assessments is a

valid public purpose;

(ii) a statement that the municipality or county

intends to make contractual assessments to repay

financing for qualified projects available to property

owners;

(iii) a description of the types of qualified

projects that may be subject to contractual assessments;

(iv) a description of the boundaries of the

district;

(v) a reference to the report on the proposed

program prepared as provided by section 4308 (relating to

report regarding assessment) and a statement identifying

the location where the report is available for public

inspection;

(vi) a statement of the time and place for a public

hearing on the proposed program; and

(vii) a statement identifying the appropriate local

official and the appropriate assessor-collector for

purposes of consulting regarding collecting the proposed

contractual assessments with property taxes imposed on

the assessed property.

(2) Hold a public hearing at which the public may

comment on the proposed program, including the report

required by section 4308.

(3) Adopt an ordinance establishing the program and the

terms of the program, including:

(i) each item included in the report under section

4308; and

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(ii) a description of each aspect of the program

that may be amended only after another public hearing is

held.

(b) Establishment resolution.--For purposes of subsection

(a)(3)(i), the ordinance may incorporate the report or the

amended version of the report, as appropriate, by reference.

resolution establishing the program as referenced by subsection

(a)(3)(ii), the governing body of a municipality or county may

amend a program by ordinance.

(d) Municipality or county duties.--A municipality or county

may:

(1) hire and set the compensation of a program

administrator and program staff;

(2) contract for professional services ; or

(3) use existing staff from the municipality or county's

economic and community development department, economic

development corporation or redevelopment authority or other

designated entity to administer a program.

(e) Imposition of fees.--A municipality or county may impose

fees to offset the costs of administering a program. The fees

authorized by this subsection may be assessed as:

(1) a program application fee paid by the property owner

requesting to participate in the program;

(2) a component of the interest rate on the assessment

in the written contract between the municipality or county

and the property owner; or

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

§ 4308. Report regarding assessment.

(a) Report.--The report for a proposed program required by

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section 4307 (relating to procedure for establishment of

program) must include:

(1) A map showing the boundaries of the proposed

district.

(2) A form contract between the district and the

property owner specifying the terms of:

(i) assessment under the program;

(ii) financing arranged by the property owner; and

(iii) financing provided by the municipality or

county, district, economic development corporation or

government-sponsored entity.

(3) A description of types of qualified projects that

may be subject to contractual assessments.

(4) A statement identifying a municipality or county

official authorized to enter into written contracts on behalf

of the municipality or county.

(5) An optional plan for raising sufficient capital for

municipality or county financing in lieu of property-owner-

arranged financing for qualified projects. This may include

bond issuance in accordance with 53 Pa.C.S. Pt. VII Subpt. B

(relating to indebtedness and borrowing).

(6) If bonds will be issued in the capital markets to

provide capital or if a special purpose bond will be issued

to an individual investor as part of an owner-arranged

financing to finance qualified projects as part of the

program as provided by section 4315 (relating to bonds or

notes):

(i) a method for ranking requests from property

owners for financing through contractual assessments in

priority order if requests appear likely to exceed the

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authorization amount; and

(ii) a method for determining the interest rate and

period during which contracting owners would pay an

assessment.

(7) A method for ensuring that the period of the

contractual assessment does not exceed the useful life of the

qualified project that is the basis for the assessment.

(8) A description of the application process and

eligibility requirements for financing qualified projects to

be repaid through contractual assessments under the program.

(9) A method as prescribed by subsection (b) for

ensuring that property owners requesting to participate in

the program demonstrate the financial ability to fulfill

financial obligations to be repaid through contractual

assessments.

(10) A statement explaining the manner in which property

will be assessed and assessments will be collected.

(11) A statement explaining the lender notice

requirement provided by section 4309 (relating to notice to

mortgage holder required for participation).

(12) A statement explaining the review requirement

provided by section 4310 (relating to review required).

(13) A description of marketing and participant

education services to be provided for the program.

(14) A description of quality assurance and antifraud

measures to be instituted for the program.

(15) The procedures for collecting the proposed

contractual assessments.

(16) A method for collecting sworn statements from the

qualified parties affirming the parties meet the minimum

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standards specified in section 4302 (relating to

definitions).

(b) Financial ability.--The method for ensuring a

demonstration of financial ability under subsection (a)(10) must

be based on appropriate underwriting factors, including:

(1) Providing for verification that:

(i) The property owner requesting to participate

under the program:

(A) is the legal owner of the benefited

property;

(B) is current on mortgage and property tax

payments;

proceedings; and

(D) owns property that does not have a loan

managed by a Federal agency that restricts

participation under this chapter in the absence of

consent by the lender holding the first lien.

(ii) The title of the benefited property is not in

dispute.

(2) Requiring an appropriate ratio of the amount of the

assessment to the assessed value of the property.

make the report available for public inspection:

(1) On the municipality's or county's Internet website.

(2) At the office of the official designated to enter

into written contracts on behalf of the municipality or

county under the program.

(d) Effectiveness of the program.--A report shall be filed

with the department that measures the effectiveness of the

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program.

§ 4309. Notice to mortgage holder required for participation.

Before a municipality or county may enter into a written

contract with a record owner of real property to impose an

assessment to repay the financing of a qualified project under

this chapter, the following shall occur:

(1) the holder of any first mortgage lien on the

property must be given written notice of the owner's

intention to participate in a program under this chapter on

or before the 30th day before the date the written contract

for assessment between the owner and the municipality or

county is executed; and

(2) a written consent from the holder of the mortgage

lien on the property must be obtained.

§ 4310. Review required.

(a) Review required.--A program established under this

chapter must require for each proposed qualified project a

review of energy baseline conditions and the projected energy

savings to establish the projected energy savings.

(b) Verification of completion.--After a qualified

improvement is completed, the municipality or county shall

obtain verification that the qualified improvement was properly

completed and is operating as intended.

§ 4311. Direct acquisition by owner.

The proposed arrangements for financing a qualified

improvement may authorize the property owner to:

(1) Purchase directly the related equipment and

materials for the installation or modification of a qualified

improvement.

(2) Contract directly, including through lease, power

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purchase agreement or other service contract, for the

installation or modification of a qualified improvement.

§ 4312. Recording of notice of contractual assessment.

(a) Notice.--A municipality or county that authorizes

financing through contractual assessments under this chapter

shall file written notice of each contractual assessment in the

real property records of the county in which the property is

located.

(b) Contents of notice.--The notice under subsection (a)

must contain:

(1) The legal description of the property.

(2) The name of each property owner.

(3) The total amount of the qualified improvements of

the project.

(4) The amount and number of assessments to satisfy the

qualified improvements.

(5) A reference to the statutory assessment lien

provided under this chapter.

§ 4313. Lien.

(a) General rule.--A contractual assessment under this

chapter and any interest or penalties on the assessment:

(1) Is a first and prior lien against the real property

on which the assessment is imposed from the date on which the

notice of contractual assessment is recorded as provided by

section 4312 (relating to recording of notice of contractual

assessment) and until the assessment, interest or penalty is

satisfied.

(2) Has the same priority status as a lien for any other

tax imposed by any agency, municipality or county of the

Commonwealth.

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(b) Lien.--The lien runs with the land, and that portion of

the assessment under the assessment contract that has not yet

become due is not eliminated by foreclosure of a property tax

lien. The assessment cannot be accelerated or extinguished until

fully repaid.

municipality or county in the same manner that a property tax

lien against real property may be enforced by the municipality

or county to the extent the enforcement is consistent with the

laws of this Commonwealth.

(d) Delinquency charge.--Delinquent installments of the

assessments incur interest and penalties in the same manner as

delinquent property taxes.

(e) Costs and expenses.--A municipality or county may

recover costs and expenses, including attorney fees, in a suit

to collect a delinquent installment of an assessment in the same

manner as in a suit to collect a delinquent property tax.

§ 4314. Collection of assessments.

The governing body of a municipality or county may contract

with the governing body of another taxing unit or another

entity, including a county assessor-collector, to perform the

duties of the municipality or county relating to collection of

assessments imposed by the municipality or county under this

chapter.

§ 4315. Bonds or notes.

(a) Issuance.--A municipality or county may issue bonds or

notes to finance qualified projects through contractual

assessments under this chapter under 53 Pa.C.S. Pt. VII Subpt. B

(relating to indebtedness and borrowing).

(b) Restrictions.--Bonds or notes issued under this chapter

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may not be general obligations of the municipality or county.

The bonds or notes must be secured by one or more of the

following as provided by the governing body of the municipality

or county in the resolution or ordinance approving the bonds or

notes:

(1) Payments of contractual assessments on benefited

property in one or more specified districts designated under

this chapter.

(2) Reserves established by the municipality or county

from grants, bonds or net proceeds or other lawfully

available funds.

(3) Municipal or county bond insurance, lines of credit,

public or private guaranties, standby bond purchase

agreements, collateral assignments, mortgages or any other

available means of providing credit support or liquidity.

(4) Any other funds lawfully available for purposes

consistent with this chapter.

assessments, funds or contractual rights in connection with the

issuance of bonds or notes by the municipality or county under

this chapter is a first lien on the assessments, funds or

contractual rights pledged in favor of the person to whom the

pledge is given, without further action by the municipality or

county. The lien is valid and binding against any other person,

with or without notice.

(d) Use of Proceeds.--Funds generated from the issuance of a

program bond may only be used for the following purposes:

(1) Design and engineering of a clean energy project.

(2) Purchase and installation cost of any equipment

needed for a clean energy project.

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(3) Payment of normal and customary issuance and closing

fees.

(4) Other administrative fees necessary to implement a

clean energy project.

§ 4316. Joint implementation.

(a) General rule.--Any combination of municipalities or

counties may agree to jointly implement or administer a program

under this chapter.

(b) Incentives and grants.--The department may establish a

program to create incentives for municipalities or counties that

agree to jointly implement or administer a program under

subsection (a). The department may withhold grants under 12 Pa.

Code Ch. 119 (relating to councils of government assistance

program) from a municipality or county that refuses to jointly

implement or administer a program under subsection (a).

§ 4317. Prohibited acts.

A municipality or county that establishes a district under

this chapter may not:

(1) make the issuance of a permit, license or other

authorization from the municipality or county to a person who

owns property in the district contingent on the person

entering into a written contract to repay the financing of a

qualified project through contractual assessments under this

chapter; or

(2) otherwise compel a person who owns property in the

district to enter into a written contract to repay the

financing of a qualified project through contractual

assessments under this chapter.

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

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