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30th Legislature(2017-2018)

Bill Text 30th Legislature

00 Enrolled HB 80                                                                                                          
01 Adopting the Municipal Property Assessed Clean Energy Act; authorizing municipalities to                                
02 establish programs to impose assessments for energy improvements in regions designated by                               
03 municipalities; imposing fees; and providing for an effective date.                                                     
04                           _______________                                                                               
05    * Section 1. AS 29.10.200 is amended by adding a new paragraph to read:                                              
06                 (66)  AS 29.55.100 - 29.55.165 (energy improvement assessment                                           
07       programs).                                                                                                        
08    * Sec. 2. AS 29.35.200(b) is amended to read:                                                                        
09            (b)  A first class borough may by ordinance exercise the following powers on                                 
10       an areawide basis:                                                                                                
11                 (1)  provide transportation systems;                                                                    
12                 (2)  provide water pollution control;                                                                   
13                 (3)  provide air pollution control in accordance with AS 46.14.400;                                     
01                 (4)  license day care facilities;                                                                       
02                 (5)  license, impound, and dispose of animals;                                                        
03                 (6)  establish an energy improvement assessment program under                                         
04       AS 29.55.100 - 29.55.165.                                                                                       
05    * Sec. 3. AS 29.35.210(a) is amended to read:                                                                        
06            (a)  A second class borough may by ordinance exercise the following powers                                   
07       on a nonareawide basis:                                                                                           
08                 (1)  provide transportation systems;                                                                    
09                 (2)  regulate the offering for sale, exposure for sale, sale, use, or                                   
10       explosion of fireworks;                                                                                           
11                 (3)  license, impound, and dispose of animals;                                                          
12 (4)  subject to AS 29.35.050, provide garbage, solid waste, and septic                                                  
13       waste collection and disposal;                                                                                    
14                 (5)  provide air pollution control under AS 46.14.400;                                                  
15                 (6)  provide water pollution control;                                                                   
16 (7)  participate in federal or state loan programs for housing                                                          
17       rehabilitation and improvement for energy conservation;                                                           
18                 (8)  provide for economic development;                                                                  
19 (9)  provide for the acquisition and construction of local service roads                                                
20       and trails under AS 19.30.111 - 19.30.251;                                                                        
21 (10)  establish an emergency services communications center under                                                       
22       AS 29.35.130;                                                                                                     
23 (11)  subject to AS 28.01.010, regulate the licensing and operation of                                                  
24       motor vehicles and operators;                                                                                     
25                 (12)  engage in activities authorized under AS 29.47.460;                                               
26 (13)  contain, clean up, or prevent a release or threatened release of oil                                              
27 or a hazardous substance, and exercise a power granted to a municipality under                                          
28 AS 46.04, AS 46.08, or AS 46.09; the borough shall exercise its authority under this                                    
29 paragraph in a manner that is consistent with a regional master plan prepared by the                                    
30       Department of Environmental Conservation under AS 46.04.210;                                                    
31 (14)  establish an energy improvement assessment program under                                                        
01       AS 29.55.100 - 29.55.165.                                                                                       
02    * Sec. 4. AS 29.35.210(b) is amended to read:                                                                        
03            (b)  A second class borough may by ordinance exercise the following powers                                   
04       on an areawide basis:                                                                                             
05                 (1)  provide transportation systems;                                                                    
06                 (2)  license, impound, and dispose of animals;                                                          
07                 (3)  provide air pollution control under AS 46.14.400;                                                  
08                 (4)  provide water pollution control;                                                                   
09                 (5)  license day care facilities;                                                                     
10 (6)  establish an energy improvement assessment program under                                                         
11       AS 29.55.100 - 29.55.165.                                                                                       
12    * Sec. 5. AS 29.55 is amended by adding new sections to read:                                                        
13             Article 2. Municipal Property Assessed Clean Energy Act.                                                    
14 Sec. 29.55.100. Establishment of program. (a) A municipality may establish                                              
15 an energy improvement assessment program under AS 29.55.100 - 29.55.165 to                                              
16       finance the installation or modification of permanent improvements that are                                       
17 (1)  fixed to existing privately owned commercial or industrial                                                         
18       property; and                                                                                                     
19 (2)  intended to reduce energy consumption or demand, energy costs, or                                                  
20 emissions affecting local air quality, including a product, device, or interacting group                                
21 of products or devices that use energy technology to generate electricity, provide                                      
22       thermal energy, or regulate temperature.                                                                          
23 (b)  To establish a program under AS 29.55.100 - 29.55.165, the governing                                               
24       body of a municipality shall take the following actions in the following order:                                   
25                 (1)  adopt a resolution of intent that includes                                                         
26 (A)  a finding that financing energy improvement projects                                                               
27            through assessments serves a valid public purpose;                                                           
28 (B)  a statement that the municipality intends to allow privately                                                       
29 owned commercial or industrial property owners to make assessments to repay                                             
30            financing for energy improvement projects;                                                                   
31 (C)  a description of energy improvement projects that may be                                                           
01            subject to assessments;                                                                                      
02                      (D)  a description of the boundaries of a region within the                                        
03            municipality's boundaries in which the program is available;                                                 
04                      (E)  a description of any proposed arrangements to make third-                                     
05            party financing available or any financing the municipality will provide for                                 
06            energy improvement projects; and                                                                             
07                      (F)  a description of municipal debt servicing procedures for                                      
08            any third-party financing and assessments;                                                                   
09                 (2)  prepare the report required under AS 29.55.110 and provide notice                                  
10       of the report with the                                                                                            
11                      (A)  location where the report is available for public inspection;                                 
12 (B)  time and place for a public hearing on the proposed                                                                
13            program; and                                                                                                 
14 (C)  name of the local official who administers the program and                                                         
15 the appropriate assessor or person who collects the proposed assessments with                                           
16            property taxes imposed on the assessed property;                                                             
17 (3)  hold a public hearing at which the public may comment on the                                                       
18       proposed program and the report prepared under AS 29.55.110; and                                                  
19 (4)  adopt an ordinance establishing the program and the terms of the                                                   
20 program, including each item included in the report required under AS 29.55.110,                                        
21       which may be incorporated by reference.                                                                           
22            (c)  A municipality may                                                                                      
23 (1)  hire and set the compensation of a program administrator and                                                       
24       program staff; or                                                                                                 
25 (2)  contract for professional services necessary to administer a                                                       
26       program.                                                                                                          
27 (d)  A municipality may impose fees to offset the costs of administering a                                              
28       program. The fees authorized under this subsection may be assessed as a                                           
29 (1)  program application fee paid by the property owner applying to the                                                 
30       program;                                                                                                          
31 (2)  component of the interest rate on the assessment in the written                                                    
01       contract between the municipality and the property owner; or                                                      
02                 (3)  combination of (1) and (2) of this subsection.                                                     
03            Sec. 29.55.105. Assessment. (a) A municipality that establishes a program                                    
04       under AS 29.55.100 may                                                                                            
05 (1)  enter into a written contract with a record owner of privately owned                                               
06 commercial or industrial property in a region designated under AS 29.55.100 to                                          
07 impose an assessment to repay the financing of an energy improvement project on that                                    
08       property;                                                                                                         
09                 (2)  contract with the governing body of another taxing unit to perform                                 
10 the duties of the municipality relating to collection of assessments imposed by the                                     
11       municipality under this section.                                                                                  
12            (b)  Financing repaid by an assessment may                                                                   
13 (1)  be provided by a third party under a written contract with the                                                     
14       municipality that authorizes the municipality to service the debt by assessment; or                               
15 (2)  if authorized by municipal ordinance, be provided by the                                                           
16       municipality.                                                                                                     
17 (c)  An assessment under this section may repay financing for costs of an                                               
18       energy improvement project, including                                                                             
19 (1)  the cost of materials and labor necessary for the energy                                                           
20       improvement project;                                                                                              
21                 (2)  permit fees;                                                                                       
22                 (3)  inspection fees;                                                                                   
23                 (4)  lender's fees;                                                                                     
24                 (5)  program application and administrative fees;                                                       
25                 (6)  energy improvement project development and engineering fees;                                       
26 (7)  third-party review fees, including verification review fees, under                                                 
27       AS 29.55.120; and                                                                                                 
28 (8)  any other fees or costs that may be incurred by the property owner                                                 
29 incident to the installation, modification, or improvement on a specific or pro rata                                    
30       basis, as determined by the municipality.                                                                         
31            (d)  An assessment under this section may not repay financing for the costs of                               
01                 (1)  facilities for undeveloped lots or lots undergoing development at                                  
02       the time of the assessment;                                                                                       
03                 (2)  the purchase or installation of products or devices not permanently                                
04       fixed to the privately owned commercial or industrial property; or                                                
05 (3)  a utility's purchase or installation of a product, device, or                                                      
06 improvement, if the product, device, or improvement will generate electricity or                                        
07 provide thermal energy distributed or used outside of the assessed property; in this                                    
08       paragraph, "utility" has the meaning given in AS 42.05.990.                                                       
09            (e)  A municipality may establish more than one region. The boundaries of                                    
10       each region may be separate, overlapping, or coterminous.                                                         
11 (f)  A municipality may not impose a period of assessment under this section                                            
12 on privately owned commercial or industrial property that exceeds 20 years or the                                       
13       useful life of the project that is the basis for the assessment, whichever is shorter.                            
14 (g)  Except as otherwise provided in (h) of this section, the total financing                                           
15       repaid by assessments                                                                                             
16 (1)  may not exceed 20 percent of the assessed value of the property at                                                 
17       the time of program application;                                                                                  
18 (2)  must be exceeded by the projected monetary savings to the                                                          
19 property owner over the life of the assessment as a result of the energy improvement                                    
20       project.                                                                                                          
21 (h)  If the total financing repaid by assessments does not exceed 50 percent of                                         
22 the assessed value of the property at the time of program application, the property                                     
23 owner may apply for a waiver from the municipality to exceed a limitation under (g)                                     
24       of this section. A waiver application under this subsection must                                                  
25 (1)  include a reasonable justification acknowledged in writing by the                                                  
26 property owner and the party providing the financing to be repaid by the assessment;                                    
27       and                                                                                                               
28 (2)  for a waiver from the limitation in (g)(2) of this section, address the                                            
29       interests of potential tenants and future property owners.                                                        
30 Sec. 29.55.110. Report regarding assessment program. (a) The municipality                                               
31       shall prepare a report for a proposed program required by AS 29.55.100 that includes                              
01                 (1)  a map showing the boundaries of each proposed region within                                        
02       which the program is available;                                                                                   
03                 (2)  a form for a contract between the municipality and a property                                      
04       owner specifying the terms of                                                                                     
05                      (A)  assessment under the program; and                                                             
06                      (B)  financing provided by a third party or the municipality, as                                   
07            appropriate;                                                                                                 
08                 (3)  if the proposed program provides for third-party financing, a form                                 
09       for a contract between the municipality and the third party regarding the servicing of                            
10       the debt through assessments;                                                                                     
11                 (4)  a description of projects that may qualify for assessments;                                        
12 (5)  a plan for ensuring sufficient capital for third-party financing and,                                              
13 if appropriate, raising capital for municipal financing for energy improvement                                          
14       projects;                                                                                                         
15 (6)  if bonds will be issued to provide capital to finance energy                                                       
16       improvement projects as part of the program as provided by AS 29.55.140,                                          
17 (A)  a maximum aggregate annual dollar amount for municipal                                                             
18            financing repaid by assessments under the program;                                                           
19 (B)  if requests appear likely to exceed the authorization                                                              
20 amount, a priority order for ranking a property owner's application for                                                 
21            financing repaid by assessments; and                                                                         
22                      (C)  a formula for calculating                                                                     
23 (i)  the interest rate and period during which contracting                                                              
24                 owners would pay an assessment; and                                                                     
25                           (ii)  the maximum amount of an assessment;                                                    
26 (7)  a method to calculate a period of assessment consistent with                                                       
27       AS 29.55.105(f);                                                                                                  
28 (8)  a description of the application process and eligibility requirements                                              
29       for financing repaid by assessments under the program;                                                            
30 (9)  a method for a property owner applying to participate in the                                                       
31 program to demonstrate the property owner's ability to fulfill financial obligations and                                
01       pay assessments; the method must be based on appropriate underwriting factors,                                    
02       including                                                                                                         
03                      (A)  verification that the property owner                                                          
04                           (i)  is the legal owner of the benefited property;                                            
05                           (ii)  is current on mortgage and property tax payments;                                       
06                 and                                                                                                     
07                           (iii)  is not insolvent or in bankruptcy proceedings; and                                     
08                      (B)  an appropriate ratio between the amount of the assessment                                     
09            and the assessed value of the property;                                                                      
10 (10)  an explanation of the manner in which the municipality shall                                                      
11       assess the property and collect assessments;                                                                      
12                 (11)  the lender notice requirement under AS 29.55.115;                                                 
13                 (12)  the review requirement under AS 29.55.120;                                                        
14 (13)  a description of marketing and participant education services                                                     
15       provided by the municipality for the program;                                                                     
16 (14)  a description of quality assurance and antifraud measures                                                         
17 instituted by the municipality for the program and the consequence or penalty                                           
18 prescribed by the municipality for a property owner who participates in the program                                     
19       but does not complete an energy improvement project as proposed; and                                              
20 (15)  a description of the insurance requirements, including a                                                          
21 requirement that the property owner have insurance against damage to the energy                                         
22       improvement project for the life of the assessment.                                                               
23            (b)  The municipality shall make the report available for public inspection                                  
24                 (1)  on the Internet website of the municipality; and                                                   
25                 (2)  at the primary governing offices of the municipality.                                              
26 Sec. 29.55.115. Notice to mortgage holder required for participation.                                                   
27 Before a municipality may enter into a written contract with a record owner of                                          
28 property to impose an assessment to repay the financing of an energy improvement                                        
29       project under AS 29.55.100, the property owner shall                                                              
30 (1)  give each holder of a mortgage lien on the property at least 30 days'                                              
31 written notice of the intention of the property owner to participate in a program under                                 
01       AS 29.55.100; and                                                                                                 
02                 (2)  obtain a written consent from each holder of a mortgage lien on the                                
03       property.                                                                                                         
04            Sec. 29.55.120. Review required. The record owner of property on which an                                    
05       assessment is imposed under AS 29.55.105 shall obtain from an independent, third-                                 
06       party qualified energy auditor the following:                                                                     
07                 (1)  for each proposed energy improvement project,                                                      
08                      (A)  a review of the energy or emissions baseline conditions, as                                   
09            appropriate; and                                                                                             
10 (B)  the projected reduction in energy costs, energy                                                                    
11 consumption or demand, or emissions affecting local air quality, as                                                     
12            appropriate; and                                                                                             
13 (2)  for each completed energy improvement project, verification that                                                   
14       the energy improvement project was properly completed and is operating as intended.                               
15 Sec. 29.55.125. Direct acquisition by owner. The proposed arrangements for                                              
16       financing an energy improvement project may authorize the property owner to                                       
17 (1)  purchase directly the related equipment and materials for the                                                      
18       energy improvement project; and                                                                                   
19 (2)  contract directly, including through lease, a power purchase                                                       
20       agreement, or other service contract, for the energy improvement project.                                         
21 Sec. 29.55.130. Recording of notice of assessment. (a) A municipality that                                              
22 authorizes financing through assessments under AS 29.55.105 shall file written notice                                   
23 of each assessment in the property records of the recording district in which the                                       
24       property is located.                                                                                              
25            (b)  The notice under (a) of this section must contain                                                       
26                 (1)  the amount of the assessment;                                                                      
27                 (2)  the legal description of the property;                                                             
28                 (3)  the name of each property owner; and                                                               
29 (4)  a reference to the statutory assessment lien provided under                                                        
30       AS 29.55.135.                                                                                                     
31 Sec. 29.55.135. Lien. (a) Assessments under AS 29.55.105 and any interest or                                            
01 penalties on the assessments are liens on the property assessed and are prior and                                       
02 paramount to all liens except municipal tax liens and special assessments. Assessment                                   
03 liens may be enforced as provided in AS 29.45.320 - 29.45.470 for enforcement of                                        
04       property tax liens.                                                                                               
05            (b)  Assessment liens run with the land, and that portion of the assessment                                  
06       under the assessment contract that has not yet become due is not eliminated by                                    
07       foreclosure of a property tax lien.                                                                               
08            (c)  Penalties and interest may be added to delinquent installments of the                                   
09       assessments in the same manner as provided in AS 29.45.250.                                                       
10 (d)  A municipality may recover costs and expenses, including attorney fees, in                                         
11 a suit to collect a delinquent installment of an assessment in the same manner as in a                                  
12       suit to collect a delinquent property tax.                                                                        
13 Sec. 29.55.140. Bonds or notes. (a) A municipality may issue bonds or notes                                             
14       to finance energy improvement projects subject to assessment under AS 29.55.105.                                  
15 (b)  Bonds or notes issued under this section may not be general obligations of                                         
16 the municipality. The bonds or notes must be secured by one or more of the following,                                   
17 as provided by the governing body of the municipality in the resolution or ordinance                                    
18       approving the bonds or notes:                                                                                     
19 (1)  payments of assessments on benefited property in one or more                                                       
20       specified regions designated under AS 29.55.100;                                                                  
21 (2)  reserves established by the municipality from grants, bonds, or net                                                
22       proceeds or other lawfully available funds;                                                                       
23 (3)  municipal bond insurance, lines of credit, public or private                                                       
24 guaranties, standby bond purchase agreements, collateral assignments, mortgages, or                                     
25       any other available means of providing credit support or liquidity; and                                           
26 (4)  any other funds lawfully available for purposes consistent with                                                    
27       AS 29.55.100 - 29.55.165.                                                                                         
28 (c)  A municipal pledge of assessments, funds, or contractual rights in                                                 
29 connection with the issuance of bonds or notes by the municipality under this section                                   
30 is a first lien on the assessments, funds, or contractual rights pledged in favor of the                                
31 person to whom the pledge is given, without further action by the municipality. The                                     
01       lien is valid and binding against any other person, with or without notice.                                       
02            (d)  Bonds or notes issued under this section must further one or more of the                                
03       following essential public and governmental purposes:                                                             
04                 (1)  improvement of the reliability of local electrical systems;                                        
05                 (2)  reduction of energy costs;                                                                         
06                 (3)  reduction of energy demand on local utilities;                                                     
07                 (4)  reduction of emissions affecting local air quality;                                                
08                 (5)  economic stimulation and development;                                                              
09                 (6)  enhancement of property values;                                                                    
10                 (7)  enhancement of employment opportunities.                                                           
11 Sec. 29.55.145. Joint implementation. A municipality may enter into an                                                  
12       agreement with                                                                                                    
13                 (1)  a third party to administer a program under AS 29.55.100;                                          
14 (2)  one or more municipalities to implement or administer jointly a                                                    
15 program under AS 29.55.100; if two or more municipalities jointly implement a                                           
16 program, a single public hearing held jointly by the cooperating municipalities is                                      
17       sufficient to satisfy the requirement of AS 29.55.100(b)(3).                                                      
18 Sec. 29.55.150. Prohibited acts. A municipality that establishes a region under                                         
19 AS 29.55.100 may not make the issuance of a permit, license, or other authorization                                     
20 from the municipality to a person who owns property in the region contingent on the                                     
21 person entering into a written contract to repay the financing of an energy                                             
22 improvement project through assessments under AS 29.55.105, or otherwise compel a                                       
23 person who owns property in the region to enter into a written contract to repay the                                    
24       financing of an energy improvement project through assessments under AS 29.55.105.                                
25 Sec. 29.55.155. Application. AS 29.55.100 - 29.55.165 apply to home rule and                                            
26       general law municipalities.                                                                                       
27            Sec. 29.55.160. Definitions. In AS 29.55.100 - 29.55.165,                                                    
28                 (1)  "mortgage" has the meaning given in AS 13.06.050;                                                  
29                 (2)  "program" means a program established under AS 29.55.100.                                          
30 Sec. 29.55.165. Short title. AS 29.55.100 - 29.55.165 may be cited as the                                               
31       Municipal Property Assessed Clean Energy Act.                                                                     
01    * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).                                                   
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