Trial Engrossment of Amendment A05169 to Senate Bill 0234 P.N. 1286, Regular Session 2017-2018

A05169

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

234

Session of

2017

INTRODUCED BY BLAKE, RESCHENTHALER, SABATINA, SCHWANK, FONTANA,

SCAVELLO, BREWSTER, COSTA, YUDICHAK, McGARRIGLE, LEACH,

HAYWOOD, RAFFERTY, TARTAGLIONE, HUGHES, BOSCOLA, McILHINNEY,

KILLION, BROWNE, TOMLINSON, GREENLEAF, BARTOLOTTA, LAUGHLIN,

VOGEL, FARNESE, DINNIMAN, STREET AND ARGALL, JANUARY 31, 2017

SENATOR SCAVELLO, COMMUNITY, ECONOMIC AND RECREATIONAL

DEVELOPMENT, AS AMENDED, OCTOBER 24, 2017

AN ACT

Amending Title 12 (Commerce and Trade) of the Pennsylvania

Consolidated Statutes, authorizing assessments for energy

improvements in districts designated by municipalities.

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

PROPERTY ASSESSED CLEAN ENERGY PROGRAM

Sec.

4301. Purpose.

4302. Definitions.

4303. Establishment of a program.

4304. Notice to mortgage holder required for participation.

4305. Review required SCOPE OF WORK .

4306. Notice.

4307. Lien.

4308. Collection of assessments.

4309. Bonds or notes .

4310. Joint implementation.

§ 4301. Purpose.

This chapter authorizes the establishment of a property

assessed clean energy program in the Commonwealth , which is

important so TO ENSURE that owners of AGRICULTURAL, commercial

and industrial properties can obtain low-cost, long-term

financing for energy efficiency, water conservation and

renewable energy projects.

§ 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

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.

"Assessment." An increase in the property tax rate for a

commercial or industrial property located in a district where

the property owner has chosen to participate in the program. The

property tax increase shall be used solely to repay the bonds.

The municipality or county that established the program agrees

to collect and remit the increased property tax amount on the

assessed property to the local financier or the owner financer

under section 4308 (relating to collection of assessments).

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"ASSESSMENT." A CHARGE AGAINST THE REAL PROPERTY WITHIN A

DISTRICT WHICH IS LEVIED AND COLLECTED BY THE COUNTY OR

MUNICIPALITY THAT ESTABLISHES THE DISTRICT.

"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 used to finance

a qualified project.

"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.

"District." An area or group of real properties within a

municipality or county, designated by the municipality or county

for the purpose of establishing a property assessed clean energy

program.

"Financial institution." Any person who in the ordinary

course of business extends credit based on a lien, mortgage or

security interest in real property or an encumbrance of real

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property, or relies upon a lien, mortgage or security interest

in real property or an encumbrance of real property to secure a

current, contingent or future payment obligation. The term

includes, but is not limited to, the following:

(1) A bank, savings association, trust company, credit

union or a subsidiary or affiliate of a bank, savings

association, trust company or credit union.

(2) A person engaged in the mortgage lending business

subject to, or exempt from licensing under 7 Pa.C.S. Ch. 61

(relating to mortgage loan industry licensing and consumer

protection).

(3) A person subject to or exempt from licensing under

the act of February 19, 1980 (P.L.15, No.9), known as the

Real Estate Licensing and Registration Act .

(4) A person registered as a management company or unit

investment trust or treated as a business development company

under the Investment Company Act of 1940 (54 Stat. 789, 15

U.S.C. § 80a-1 et seq.) or is excluded from registration

under the Investment Company Act of 1940.

(5) An insurance company.

(6) A pension or employee health and welfare fund.

(7) An association engaged in construction or the

development or improvement of real property.

(8) A condominium or cooperative association or planned

community association.

(9) A Federal, State or local agency, authority or an

instrumentality of a government entity that is engaged in the

financing or supports the financing of real estate

development or the purchase or improvement of real estate.

"Local financing." Financing A BOND provided or facilitated

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by a municipality, county, district, economic development

corporation, related authority or any government sponsored

entity. This term does not include general obligation bonds.

"Owner financing." Financing A BOND PROVIDED by a real

property owner or a third-party provider. This term may include

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." A property assessed clean energy program

established under this chapter.

"Property assessed clean energy program." A means of

financing qualified projects in a district through an

assessment.

"Qualified party." A contractor , OR subcontractor or

financial institution that meets the following standards:

(1) Possesses 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) Possesses 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.

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(3) Does 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 CONTRACTOR OR SUBCONTRACTOR has entered into and

is in compliance with a payment agreement with the locality

for such taxes, fines or fees.

(4) Meets 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.

"Qualified project." The installation or modification of a

permanent improvement fixed to real property that is a clean

energy project, water conservation project or alternative energy

system, which generates measurable energy savings or reductions

in water usage and the installation is performed by a qualified

party in a district. The term includes installation of

alternative energy-generating equipment affixed to the land or

building.

"Real property." Any AGRICULTURAL, commercial or industrial

land or building owned by an individual, partnership, limited

liability corporation, corporation or nonprofit. The term does

not include multi-family housing or any residential property.

"Water conservation project." A project that reduces the

usage of water or increases the efficiency of water usage.

§ 4303. Establishment of a program.

A municipality or county may establish a property assessed

THE FOLLOWING APPLY:

(1) A MUNICIPALITY WITH A COMMUNITY OR ECONOMIC

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DEVELOPMENT DEPARTMENT OR COUNTY MAY ESTABLISH A PROPERTY

ASSESSED clean energy program by adopting an ordinance or

resolution that will establish the program, define the

district and provide other operational standards and

guidelines . A county that establishes a program must notify ,

WHICH SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING:

(I) REQUIRE ALL CLEAN ENERGY PROJECTS TO COMPLY WITH

NATIONAL ENERGY EFFICIENCY STANDARDS.

(II) DEVELOP CRITERIA AND PROCEDURES TO DETERMINE

THE ELIGIBILITY OF REAL PROPERTY AND OWNERS FOR

PARTICIPATION IN A PROGRAM.

(III) OTHER MEASURES AS NEEDED TO SATISFY THE

REQUIREMENTS OF THIS CHAPTER OR TO ENSURE THAT A PROGRAM

IS EFFECTIVE, EFFICIENT AND FAIR TO PROPERTY OWNERS.

(2) A COUNTY THAT ESTABLISHES A PROGRAM MUST NOTIFY any

municipality that may be in the district of their possible

inclusion, before a resolution establishing a program is

approved. A municipality or county may contract with a third

party to administer the program.

§ 4304. Notice to mortgage lien holder required for

participation.

Before a real property can establish an assessment under the

program and begin a local financing or an owner financing of a

qualified project, the following shall occur:

(1) The holder of any first mortgage EXISTING lien on

the REAL property Any financial institution holding a lien,

mortgage or security interest in or other encumbrance of the

REAL property that secures a current, future or contingent

payment obligation, must be given written notice of the real

property owner's intention to participate in the program and

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acknowledge in writing to the property owner and municipality

or county that established the program that they have

received such notice.

(2) The holder of the mortgage ANY EXISTING lien ON THE

REAL PROPERTY Any financial institution required to be given

notice under paragraph (1) must provide written consent to

the property owner and municipality or county that

established the program that the property may participate in

the program.

§ 4305. Review required SCOPE OF WORK .

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

chapter must require for each proposed qualified project a

review of REQUIREMENT.--A PROGRAM SHALL REQUIRE FOR EACH

PROPOSED QUALIFIED PROJECT A SCOPE OF WORK, energy baseline or

water usage baseline and the projected energy savings or water

usage reductions in order to establish the VIABILITY OF THE

QUALIFIED PROJECT AND THE projected energy savings or water

usage reductions.

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

improvement PROJECT is completed, the municipality or county

shall obtain verification FROM THE REAL PROPERTY OWNER AND FROM

AN INDEPENDENT PROFESSIONAL INSPECTOR OR BUILDING CODE OFFICIAL

that the qualified improvement PROJECT was properly completed

and is operating as intended .

§ 4306. Notice.

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

program shall post online and make available to the public a

notice of each qualified project financed through an assessment.

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

must contain:

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(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 PROJECT AND A COMPLETE DESCRIPTION OF THE

QUALIFIED PROJECT .

(4) The assessment needed to satisfy the qualified

improvements BOND .

(5) A reference to the statutory assessment lien

provided under this chapter.

(6) THE FINANCING RATE ON THE BOND, THE TOTAL AMOUNT OF

THE BOND FINANCING AND ANY FINANCING CHARGES ASSOCIATED WITH

THE BOND.

§ 4307. Lien.

(a) General rule.-- An IF A PROPERTY OWNER FAILS TO PAY

ASSESSMENTS DUE, INCLUDING PAST DUE ASSESSMENTS AND TOTAL

ASSESSMENTS ON THE PROPERTY THAT MAY BE DISCHARGED, COMPROMISED

OR ABATED IN THE SAME MANNER AS DELINQUENT PROPERTY TAX

OBLIGATIONS, AN An assessment under this chapter , including past

due amounts and required future payments and any interest or

penalties on the assessment:

(1) Is SHALL BE 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 and

until the assessment, interest or penalty is satisfied . ;

(2) Has SHALL HAVE the same priority status as a lien

for any other tax imposed by any agency, municipality or

county of the Commonwealth . AND SHALL BE TREATED AS A TAX

IMPOSED BY ANY AGENCY, MUNICIPALITY OR COUNTY; AND

(3) MUST BE RECORDED WITH THE TITLE, INCLUDING ALL

INFORMATION REQUIRED UNDER SECTION 4306 (RELATING TO NOTICE),

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UNTIL THE LIEN IS DISCHARGED . ; and

(4) may be discharged, compromised or abated in the same

manner as delinquent property tax obligations.

(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.

§ 4308. Collection of assessments.

The governing body of a municipality or county that THE

FOLLOWING APPLY:

(1) THE GOVERNING BODY OF A MUNICIPALITY OR COUNTY THAT

establishes a district is required to collect the assessments

for that district using their present tax collection process .

AND REMIT FOR PAYMENT OF THE LOCAL FINANCING OR OWNER FINANCING.

(2) THE ASSESSMENT SHALL BE MADE ONLY UPON THE REAL

PROPERTY WHOSE OWNER HAS EXECUTED A WRITTEN AGREEMENT WITH

THE GOVERNING BODY AGREEING TO THE ASSESSMENT.

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(3) PROCEEDS MAY ONLY BE USED TO FUND A LOCAL FINANCING OR

AN OWNER FINANCING AND LASTS ONLY FOR THE TERM OF THE LOCAL

FINANCING OR OWNER FINANCING.

§ 4309. Bonds or notes .

(a) Issuance.--Local financing or owner financing may be

used to issue bonds or notes to finance qualified projects in a

district .

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

may not be general obligations of the municipality or county.

bond may only be used for the following purposes:

(1) Design, engineering and project development costs of

a qualified project.

(2) Infrastructure related to and necessary for a

qualified project.

(3) Purchase and installation cost of any equipment

needed for a qualified project.

(4) Payment of normal and customary issuance and closing

fees of a bond.

(5) Normal and customary administrative fees necessary

to continue operations of the municipal or county financing

agency. The fees can include, but are not limited to, audits

and application fees.

§ 4310. Joint implementation.

Any combination of municipalities or counties may agree to

jointly implement or administer a program under this chapter.

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

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