PRIOR PRINTER'S NOS. 255, 1286
PRINTER'S NO. 1376
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, ARGALL AND MENSCH,
JANUARY 31, 2017
AS AMENDED ON SECOND CONSIDERATION, DECEMBER 11, 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. Scope of work .
4306. Notice.
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4307. Lien.
4308. Collection of assessments.
4309. Bonds.
4310. Joint implementation.
§ 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,
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." 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
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entity.
"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
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
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(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." A bond provided or facilitated 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." 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
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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 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.
(3) Does not have any outstanding liability to the
locality in the form of tax obligations, fines or other fees,
unless the 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,
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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.
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:
(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.
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(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 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
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 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. Scope of work .
(a) Requirement.--A program shall require for each proposed
qualified project a scope of work, energy baseline or water
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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 property owner and from an
independent professional inspector or building code official
that the qualified project was properly completed.
§ 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:
(1) The legal description of the property.
(2) The name of each property owner.
(3) The total amount of the qualified project and a
complete description of the qualified project .
(4) The assessment needed to satisfy the 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.-- 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
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obligations, an 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
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) 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
a ny agency, municipality or county; and
(3) must be recorded with the title, including all
information required under section 4306 (relating to notice),
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.
(c) Enforcement.--The assessment lien may be enforced by the
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
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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 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.
(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.
(a) Issuance.--Local financing or owner financing may be
used to issue bonds to finance qualified projects.
(b) Restrictions.--Bonds issued under this chapter may not
be general obligations of the municipality or county.
(c) Use of proceeds.--Funds generated from the issuance of a
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.
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(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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