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