CSHB 118(CRA): "An Act adopting the Municipal Property Assessed Clean Energy Act; authorizing municipalities to establish programs to impose assessments for energy improvements in municipalities; imposing fees; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 118(CRA) 01 "An Act adopting the Municipal Property Assessed Clean Energy Act; authorizing 02 municipalities to establish programs to impose assessments for energy improvements in 03 municipalities; imposing fees; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 29.10.200 is amended by adding a new paragraph to read: 06 (65) AS 29.49 (energy improvement assessment programs). 07 * Sec. 2. AS 29.35.200(b) is amended to read: 08 (b) A first class borough may by ordinance exercise the following powers on 09 an areawide basis: 10 (1) provide transportation systems; 11 (2) provide water pollution control; 12 (3) provide air pollution control in accordance with AS 46.14.400; 13 (4) license day care facilities; 14 (5) license, impound, and dispose of animals;
01 (6) establish an energy improvement assessment program under 02 AS 29.49. 03 * Sec. 3. AS 29.35.210(b) is amended to read: 04 (b) A second class borough may by ordinance exercise the following powers 05 on an areawide basis: 06 (1) provide transportation systems; 07 (2) license, impound, and dispose of animals; 08 (3) provide air pollution control under AS 46.14.400; 09 (4) provide water pollution control; 10 (5) license day care facilities; 11 (6) establish an energy improvement assessment program under 12 AS 29.49. 13 * Sec. 4. AS 29 is amended by adding a new chapter to read: 14 Chapter 49. Municipal Property Assessed Clean Energy Act. 15 Sec. 29.49.010. Exercise of powers. A municipality that establishes a program 16 under AS 29.49.060 may exercise powers granted under this chapter. 17 Sec. 29.49.020. Authorized assessments. (a) A municipality may impose an 18 assessment under this chapter to repay the financing of qualified projects on real 19 property located in the municipality. 20 (b) An assessment under this chapter may not be imposed to repay the 21 financing of 22 (1) facilities for undeveloped lots or lots undergoing development at the 23 time of the assessment; or 24 (2) the purchase or installation of products or devices not permanently 25 fixed to real property. 26 Sec. 29.49.030. Written contract for assessment required. A municipality 27 may impose an assessment under this chapter only under a written contract with the 28 record owner of the real property assessed. 29 Sec. 29.49.040. Establishment of program. (a) The governing body of a 30 municipality may establish a program under this chapter. 31 (b) A municipality that establishes a program under this chapter may enter into
01 a written contract with a record owner of real property in the municipality to impose 02 an assessment to repay the financing of a qualified project on property of the owner. 03 The financing repaid through assessments may be provided by a third party or, if 04 authorized by municipal ordinance, by the municipality. 05 (c) If a program provides for third-party financing, when a municipality enters 06 into a contract under (b) of this section, the municipality shall enter into a written 07 contract with the third party providing for the municipality to service the debt through 08 assessments. 09 (d) If a program provides for municipal financing, the municipality shall enter 10 into a written contract with the record owner of the real property to finance the 11 qualified project through assessments. 12 (e) The financing for which assessments are imposed may be for costs of the 13 project, including 14 (1) the cost of materials and labor necessary for installation or 15 modification of a qualified improvement; 16 (2) permit fees; 17 (3) inspection fees; 18 (4) lender's fees; 19 (5) program application and administrative fees; 20 (6) project development and engineering fees; 21 (7) third-party review fees, including verification review fees, under 22 AS 29.49.090; and 23 (8) any other fees or costs that may be incurred by the property owner 24 incident to the installation, modification, or improvement on a specific or pro rata 25 basis, as determined by the municipality. 26 Sec. 29.49.050. Applicability of program. (a) A program established by a 27 borough under this chapter may be established only on an areawide basis. 28 (b) Notwithstanding (a) of this section and AS 29.35.250, a city inside a 29 borough may, by city ordinance, exempt the city or terminate an exemption for the 30 city from a program established in the borough under this chapter. A city that is 31 exempted shall send a copy of the ordinance exempting the city from a borough
01 program established under this chapter to the borough within 30 days after the date of 02 adoption of the ordinance. 03 (c) A program established by a city under this chapter shall apply to the entire 04 city. 05 (d) Notwithstanding AS 29.35.250(b), on adoption of a borough ordinance to 06 establish a program under this chapter, a city within the borough may not establish a 07 program under this chapter, and the borough succeeds to all of the rights, powers, 08 duties, assets, and liabilities of a city within the borough with respect to any program 09 established by the city under this chapter. 10 Sec. 29.49.060. Procedure for establishment of program. (a) To establish a 11 program under this chapter, the governing body of a municipality shall take the 12 following actions in the following order: 13 (1) adopt a resolution of intent that includes 14 (A) a finding that financing qualified projects through 15 contractual assessments serves a valid public purpose; 16 (B) a statement that the municipality intends to allow property 17 owners to make contractual assessments to repay financing for qualified 18 projects; 19 (C) a description of qualified projects that may be subject to 20 contractual assessments; 21 (D) a description of any proposed arrangements to make third- 22 party financing available or any financing the municipality will provide for 23 qualified projects; 24 (E) a description of municipal debt servicing procedures for any 25 third-party financing and assessments; 26 (F) a notice of the report on the proposed program required 27 under AS 29.49.070 and the location where the report is available for public 28 inspection; 29 (G) the time and place for a public hearing on the proposed 30 program; and 31 (H) the names of the local official who administers the program
01 and the appropriate assessor or person who collects the proposed contractual 02 assessments with property taxes imposed on the assessed property; 03 (2) hold a public hearing at which the public may comment on the 04 proposed program and the report prepared under AS 29.49.070; and 05 (3) adopt an ordinance establishing the program and the terms of the 06 program, including each item included in the report required under AS 29.49.070, 07 which may be incorporated by reference. 08 (b) A municipality may 09 (1) hire and set the compensation of a program administrator and 10 program staff; or 11 (2) contract for professional services necessary to administer a 12 program. 13 (c) A municipality may impose fees to offset the costs of administering a 14 program. The fees authorized under this subsection may be assessed as a 15 (1) program application fee paid by the property owner applying to the 16 program; 17 (2) component of the interest rate on the assessment in the written 18 contract between the municipality and the property owner; or 19 (3) combination of (1) and (2) of this subsection. 20 Sec. 29.49.070. Report regarding assessment program. (a) The report for a 21 proposed program required by AS 29.49.060 must include 22 (1) a form for a contract between the municipality and the property 23 owner specifying the terms of 24 (A) assessment under the program; and 25 (B) financing provided by a third party or the municipality, as 26 appropriate; 27 (2) if the proposed program provides for third-party financing, a form 28 for a contract between the municipality and the third party regarding the servicing of 29 the debt through assessments; 30 (3) a description of projects that may qualify for contractual 31 assessments;
01 (4) a plan for ensuring sufficient capital for third-party financing and, if 02 appropriate, raising capital for municipal financing for qualified projects; 03 (5) if bonds will be issued to provide capital to finance qualified 04 projects as part of the program as provided by AS 29.49.140, 05 (A) a maximum aggregate annual dollar amount for municipal 06 financing repaid by contractual assessments under the program; 07 (B) if requests appear likely to exceed the authorization amount, 08 a priority order for ranking a property owner's application for financing repaid 09 by contractual assessments; and 10 (C) a formula for calculating 11 (i) the interest rate and period during which contracting 12 owners would pay an assessment; and 13 (ii) the maximum amount of an assessment; 14 (6) a method for ensuring that the period of the contractual assessment 15 does not exceed the useful life of the qualified project that is the basis for the 16 assessment; 17 (7) a description of the application process and eligibility requirements 18 for financing of qualified projects repaid by contractual assessments under the 19 program; 20 (8) a method under (b) of this section for a property owner applying to 21 participate in the program to demonstrate the property owner's ability to fulfill 22 financial obligations repaid by contractual assessments; 23 (9) a statement explaining the manner in which property will be 24 assessed and assessments will be collected; 25 (10) a statement explaining the lender notice requirement under 26 AS 29.49.080; 27 (11) a statement explaining the review requirement under 28 AS 29.49.090; 29 (12) a description of marketing and participant education services to be 30 provided for the program; 31 (13) a description of quality assurance and antifraud measures to be
01 instituted for the program; and 02 (14) the procedures for collecting the proposed contractual assessments. 03 (b) The municipality shall establish a method by which a property owner shall 04 demonstrate financial ability based on appropriate underwriting factors, including 05 (1) verification that the property owner applying to participate in the 06 program is 07 (A) the legal owner of the benefited property; 08 (B) current on mortgage and property tax payments; and 09 (C) not insolvent or in bankruptcy proceedings; and 10 (2) an appropriate ratio between the amount of the assessment and the 11 assessed value of the property. 12 (c) The municipality shall make the report available for public inspection 13 (1) on the Internet website of the municipality; and 14 (2) at the primary governing offices of the municipality. 15 Sec. 29.49.080. Notice to mortgage holder required for participation. 16 Before a municipality may enter into a written contract with a record owner of real 17 property to impose an assessment to repay the financing of a qualified project under 18 this chapter, the property owner shall 19 (1) give the holder of a mortgage lien on the property at least 30 days' 20 written notice of the intention of the property owner to participate in a program under 21 this chapter before the written contract for assessment between the owner and the 22 municipality is executed; and 23 (2) obtain a written consent from the holder of a mortgage lien on the 24 property. 25 Sec. 29.49.090. Review required. (a) A program established under this 26 chapter must require a review of the energy baseline conditions for each proposed 27 qualified project and the projected energy savings to establish the projected energy 28 savings. 29 (b) After a qualified project is completed, the municipality shall obtain 30 verification that the qualified project was properly completed and is operating as 31 intended.
01 (c) An independent third party must conduct both a baseline energy review and 02 a verification review under this section. 03 Sec. 29.49.100. Direct acquisition by owner. The proposed arrangements for 04 financing a qualified project may authorize the property owner to 05 (1) purchase directly the related equipment and materials for the 06 installation or modification of a qualified improvement; and 07 (2) contract directly, including through lease, power purchase 08 agreement, or other service contract, for the installation or modification of a qualified 09 improvement. 10 Sec. 29.49.110. Recording of notice of contractual assessment. (a) A 11 municipality that authorizes financing through contractual assessments under this 12 chapter shall file written notice of each contractual assessment in the real property 13 records of the recording district in which the property is located. 14 (b) The notice under (a) of this section must contain 15 (1) the amount of the assessment; 16 (2) the legal description of the property; 17 (3) the name of each property owner; and 18 (4) a reference to the statutory assessment lien provided under this 19 chapter. 20 Sec. 29.49.120. Lien. (a) Contractual assessments under this chapter and any 21 interest or penalties on the assessments are liens on the property assessed and are prior 22 and paramount to all liens except municipal tax liens and special assessments. 23 Contractual assessment liens may be enforced as provided in AS 29.45.320 - 24 29.45.470 for enforcement of property tax liens. 25 (b) Contractual assessment liens run with the land, and that portion of the 26 assessment under the assessment contract that has not yet become due is not 27 eliminated by foreclosure of a property tax lien. 28 (c) Penalties and interest may be added to delinquent installments of the 29 assessments in the same manner as provided in AS 29.45.250. 30 (d) A municipality may recover costs and expenses, including attorney fees, in 31 a suit to collect a delinquent installment of an assessment in the same manner as in a
01 suit to collect a delinquent property tax. 02 Sec. 29.49.130. Collection of assessments. The governing body of a 03 municipality may contract with the governing body of another taxing unit to perform 04 the duties of the municipality relating to collection of assessments imposed by the 05 municipality under this chapter. 06 Sec. 29.49.140. Bonds or notes. (a) A municipality may issue bonds or notes 07 to finance qualified projects through contractual assessment under this chapter. 08 (b) Bonds or notes issued under this section may not be general obligations of 09 the municipality. The bonds or notes must be secured by one or more of the following, 10 as provided by the governing body of the municipality in the resolution or ordinance 11 approving the bonds or notes: 12 (1) payments of contractual assessments on property benefited under 13 this chapter; 14 (2) reserves established by the municipality from grants, bonds, or net 15 proceeds or other lawfully available funds; 16 (3) municipal bond insurance, lines of credit, public or private 17 guaranties, standby bond purchase agreements, collateral assignments, mortgages, or 18 any other available means of providing credit support or liquidity; and 19 (4) any other funds lawfully available for purposes consistent with this 20 chapter. 21 (c) A municipal pledge of assessments, funds, or contractual rights in 22 connection with the issuance of bonds or notes by the municipality under this chapter 23 is a first lien on the assessments, funds, or contractual rights pledged in favor of the 24 person to whom the pledge is given, without further action by the municipality. The 25 lien is valid and binding against any other person, with or without notice. 26 (d) Bonds or notes issued under this chapter further an essential public and 27 governmental purpose, including 28 (1) improvement of the reliability of local electrical systems; 29 (2) reduction of energy costs; 30 (3) reduction of energy demand on local utilities; 31 (4) economic stimulation and development;
01 (5) enhancement of property values; and 02 (6) enhancement of employment opportunities. 03 Sec. 29.49.150. Joint implementation. (a) Any combination of municipalities 04 may agree to jointly implement or administer a program under this chapter. 05 (b) If two or more municipalities jointly implement a program, a single public 06 hearing held jointly by the cooperating municipalities is sufficient to satisfy the 07 requirement of AS 29.49.060(a)(2). 08 (c) One or more municipalities may contract with a third party, including 09 another municipality, to administer a program. 10 Sec. 29.49.160. Prohibited acts. A municipality that establishes a program 11 under this chapter may not 12 (1) make the issuance of a permit, license, or other authorization from 13 the municipality to a person who owns property in the municipality contingent on the 14 person entering into a written contract to repay the financing of a qualified project 15 through contractual assessments under this chapter; or 16 (2) otherwise compel a person who owns property in the municipality 17 to enter into a written contract to repay the financing of a qualified project through 18 contractual assessments under this chapter. 19 Sec. 29.49.890. Application of chapter. This chapter applies to home rule and 20 general law municipalities. 21 Sec. 29.49.900. Definitions. In this chapter, 22 (1) "program" means a program established under this chapter; 23 (2) "qualified improvement" means a permanent improvement fixed to 24 real property and intended to decrease energy consumption or demand, including a 25 product, device, or interacting group of products or devices that uses energy 26 technology to generate electricity, provide thermal energy, or regulate temperature; 27 (3) "qualified project" means the installation or modification of a 28 qualified improvement; 29 (4) "real property" means privately owned commercial or industrial real 30 property. 31 Sec. 29.49.995. Short title. This chapter may be cited as the Municipal
01 Property Assessed Clean Energy Act. 02 * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).