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