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A03234
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1760
Session of
2021
INTRODUCED BY HEFFLEY, BULLOCK, HERRIN AND SCHWEYER,
AUGUST 5, 2021
REFERRED TO COMMITTEE ON COMMERCE, AUGUST 5, 2021
AN ACT
Amending Title 12 (Commerce and Trade) of the Pennsylvania
Consolidated Statutes, in property assessed clean energy
program, further providing for purpose, for definitions, for
establishment of a program, for notice to lien holder
required for participation, for scope of work, for lien and
for collection of assessments.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 4301 of Title 12 of the Pennsylvania
Consolidated Statutes is amended to read:
§ 4301. Purpose.
This chapter authorizes the establishment of a property
assessed clean energy program in the Commonwealth to ensure that
owners of agricultural, commercial and industrial properties can
obtain low-cost, long-term financing for energy efficiency,
indoor air quality, resiliency improvement, water conservation
and renewable energy projects.
Section 2. The definitions of "financial institution,"
"owner financing," "qualified project" and "real property" in
section 4302 of Title 12 are amended and the section is amended
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by adding definitions to read:
§ 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:
* * *
"Financial institution." Any person who in the ordinary
course of business extends credit based on a lien, mortgage or
security interest in [real] qualifying commercial property or an
encumbrance of [real] qualifying commercial property or relies
upon a lien, mortgage or security interest in [real] qualifying
commercial property or an encumbrance of [real] qualifying
commercial 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.
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(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] qualifying commercial
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.
" Indoor air quality project." A project that improves the
rated performance in indoor air quality by reducing exposure to
indoor airborne contaminants.
* * *
"Owner financing." A bond provided by a [real] qualifying
commercial property owner or a third-party provider. This term
may include a power purchase agreement.
* * *
"Qualified project." The installation or modification of a
permanent improvement fixed to [real] qualifying commercial
property that is a clean energy project, resiliency improvement,
indoor air quality 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
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liability corporation, corporation or nonprofit. The term does
not include multifamily housing or any residential property.]
"Qualifying commercial property." Any real property that is
an agricultural, commercial or industrial land or building,
owned by an individual, partnership, limited liability
corporation, corporation or nonprofit. The term does not include
any residential property except for commercial multifamily
rental property or mixed-use property that contains no fewer
than five residential units.
"Resiliency improvement." Any fixture, product, system,
equipment, device, material or interacting group thereof
intended to increase resiliency or improve the durability of
real property needed to withstand natural disasters, including,
but not limited to, flood mitigation, wind resistance, energy
storage and microgrids, as defined by a local government.
* * *
Section 3. Sections 4303(1)(ii), 4304 introductory paragraph
and (1) and 4305 of Title 12 are amended to read:
§ 4303. Establishment of a program.
The following apply:
(1) A municipality with a community or economic
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, which shall include, but not be limited to, the
following:
* * *
(ii) Develop criteria and procedures to determine
the eligibility of [real] qualifying commercial property
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and owners for participation in a program.
* * *
§ 4304. Notice to lien holder required for participation.
Before [real] qualifying commercial property may be subject
to an assessment under the program and begin a local financing
or an owner financing of a qualified project, the following
shall occur:
(1) Any financial institution holding a lien, mortgage
or security interest in or other encumbrance of the [real]
qualifying commercial property that secures a current, future
or contingent payment obligation must be given written notice
of the [real] qualifying commercial property owner's
intention to participate in the program and acknowledge in
writing to the property owner and municipality or county that
established the program that they have received such notice.
* * *
§ 4305. Scope of work.
(a) Requirement.--A program shall require for each proposed
[qualified] clean energy project and water conservation 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 project
is completed, the municipality or county shall obtain
verification from the [real] qualifying commercial property
owner and from an independent professional inspector or building
code official that the qualified project was properly completed.
Section 4. Section 4307(a)(1), (b) and (c) of Title 12 are
amended and the section is amended by adding subsections to
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read:
§ 4307. Lien.
(a) General rule.--An assessment under this chapter,
including past-due amounts and required future payments and any
interest or penalties on the assessment:
(1) shall be a first and prior lien against the [real]
qualifying commercial 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;
* * *
(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] Notwithstanding any other provision of law, the
assessment cannot be accelerated or extinguished until fully
repaid.
(c) Enforcement.--The assessment lien may be enforced by the
municipality or county in the same manner that a property tax
lien against [real] qualifying commercial property may be
enforced by the municipality or county to the extent the
enforcement is consistent with the laws of this Commonwealth.
* * *
(f) Collection of delinquent installments.--A municipality
or county shall utilize the provisions in the act of May 16,
1923 (P.L.207, No.153), referred to as the Municipal Claim and
Tax Lien Law, or the act of July 7, 1947 (P.L.1368, No.542),
known as the Real Estate Tax Sale Law, to collect any delinquent
installments of assessments.
(g) Restrictions.--Program funds may not be used directly or
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indirectly to construct, renovate or improve a residential
condominium, cooperative unit or any other type of owner-
occupied residential unit. A property financed with an
assessment that, upon conveyance to a third party, is no longer
a qualifying commercial property shall have the assessment
immediately discharged upon conveyance by the payment of the
principal amount financed, accrued interest, other charges and
any prepayment penalty.
Section 5. Section 4308(2) of Title 12 is amended to read:
§ 4308. Collection of assessments.
The following apply:
* * *
(2) The assessment shall be made only upon the [real]
qualifying commercial property whose owner has executed a
written agreement with the governing body agreeing to the
assessment[.] and the entity providing financing for the
qualified project. The entity providing financing for the
qualified project may require the property owner to escrow or
otherwise provide for the maintenance, repairs and insurance
of the qualified project during the term of the assessment. A
property owner or subsequent purchaser of a qualifying
commercial property with an assessment may prepay the total
assessment amount by paying the principal amount financed,
accrued interest, fees, charges and any prepayment penalties
as specified in the financing agreement and, upon prepayment,
the assessment shall be released.
* * *
Section 6. This act shall take effect in 60 days.
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