Regular Session 2021-2022 Senate Bill 0635 P.N. 1125

PRIOR PRINTER'S NO. 710

PRINTER'S NO. 1125

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

635

Session of

2021

INTRODUCED BY YUDICHAK, BOSCOLA, KANE, KEARNEY, MENSCH,

TARTAGLIONE, ARGALL, SCAVELLO, CAPPELLETTI, COLLETT AND

L. WILLIAMS, MAY 4, 2021

SENATOR YUDICHAK, COMMUNITY, ECONOMIC AND RECREATIONAL

DEVELOPMENT, AS AMENDED, SEPTEMBER 29, 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

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

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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] 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 which improves

health or performance outcomes THE RATED PERFORMANCE OF 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] A qualifying commercial

property that is a clean energy project, resiliency improvement

project, indoor air quality project, water conservation project

or alternative energy system[, which generates measurable energy

savings or reductions in water usage] or improves the rated

performance in indoor air quality and the installation is

performed by a qualified party in a district. The term includes

installation of alternative energy-generating equipment affixed

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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 multifamily housing or any residential property.]

"Qualifying commercial property." As follows:

(1) Real property that meets any of the following

criteria:

(i) Any real property that is agricultural,

commercial, industrial or multifamily housing with five

or more units owned by an individual, partnership,

limited liability corporation, corporation or nonprofit.

(ii) A mixed-use real property of any of the

property types under subparagraph (i), whether land or

building.

(2) The term does not include property that is

residential housing with four or fewer units.

"Resiliency improvement." Any fixture, product, system,

equipment, device, material or interacting group of fixtures,

products, systems, equipment, devices or materials intended to

increase resiliency or improve the durability of real property,

including flood mitigation, wind resistance, energy storage,

microgrids and backup power generation or otherwise designated

by a local government entity. ANY RESIDENTIAL PROPERTY, EXCEPT

FOR A COMMERCIAL, MULTIFAMILY RENTAL PROPERTY OR MIXED-USE

PROPERTY WHICH CONTAINS NO LESS THAN FIVE RESIDENTIAL UNITS.

"RESILIENCY IMPROVEMENT." ANY FIXTURE, PRODUCT, SYSTEM,

EQUIPMENT, DEVICE, MATERIAL OR INTERACTING GROUP, THEREOF

INTENDED TO INCREASE RESILIENCE OR IMPROVE THE DURABILITY OF

QUALIFYING COMMERCIAL PROPERTY, NEEDED TO WITHSTAND NATURAL

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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(b) 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

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

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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) and, (b) AND (C) of Title 12

are amended and the section is amended by adding a subsection

SUBSECTIONS to 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;

* * *

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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] Notwithstanding any other provision of law, the

assessment cannot be accelerated or extinguished until fully

repaid.

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.--A municipality or county shall utilize the

provisions under the act of July 7, 1947 (P.L.1368, No.542),

known as the Real Estate Tax Sale Law, or the act of May 16,

1923 (P.L.207, No.153), referred to as the Municipal Claim and

Tax Lien Law, to collect delinquent installments of assessments.

(G) RESTRICTIONS.--PROGRAM FUNDS MAY NOT BE USED DIRECTLY OR

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:

* * *

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(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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