SB 39: "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 SENATE BILL NO. 39 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 (66) AS 29.55.100 - 29.55.165 (energy improvement assessment 08 programs). 09 * Sec. 2. AS 29.35.200(b) is amended to read: 10 (b) A first class borough may by ordinance exercise the following powers on 11 an areawide basis: 12 (1) provide transportation systems; 13 (2) provide water pollution control; 14 (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. 16 (b) To establish a program under AS 29.55.100 - 29.55.165, the governing 17 body of a municipality shall take the following actions in the following order: 18 (1) adopt a resolution of intent that includes 19 (A) a finding that financing qualified projects through 20 assessments serves a valid public purpose; 21 (B) a statement that the municipality intends to allow eligible 22 property owners to make assessments to repay financing for qualified projects; 23 (C) a description of qualified projects that may be subject to 24 assessments; 25 (D) a description of the boundaries of a region within the 26 municipality's boundaries in which the program is available; 27 (E) a description of any proposed arrangements to make third- 28 party financing available or any financing the municipality will provide for 29 qualified projects; and 30 (F) a description of municipal debt servicing procedures for 31 any third-party financing and assessments;
01 (2) provide a notice of the report required under AS 29.55.110 with the 02 (A) location where the report is available for public inspection; 03 (B) time and place for a public hearing on the proposed 04 program; and 05 (C) name of the local official who administers the program and 06 the appropriate assessor or person who collects the proposed assessments with 07 property taxes imposed on the assessed property; 08 (3) hold a public hearing at which the public may comment on the 09 proposed program and the report prepared under AS 29.55.110; and 10 (4) adopt an ordinance establishing the program and the terms of the 11 program, including each item included in the report required under AS 29.55.110, 12 which may be incorporated by reference. 13 (c) A municipality may 14 (1) hire and set the compensation of a program administrator and 15 program staff; or 16 (2) contract for professional services necessary to administer a 17 program. 18 (d) A municipality may impose fees to offset the costs of administering a 19 program. The fees authorized under this subsection may be assessed as a 20 (1) program application fee paid by the property owner applying to the 21 program; 22 (2) component of the interest rate on the assessment in the written 23 contract between the municipality and the property owner; or 24 (3) combination of (1) and (2) of this subsection. 25 Sec. 29.55.105. Assessment. (a) A municipality that establishes a program 26 under AS 29.55.100 may 27 (1) enter into a written contract with a record owner of eligible 28 property in a region designated under AS 29.55.100 to impose an assessment to repay 29 the financing of a qualified project on that property; 30 (2) contract with the governing body of another taxing unit to perform 31 the duties of the municipality relating to collection of assessments imposed by the
01 municipality under this section. 02 (b) Financing repaid by an assessment may be provided by 03 (1) a third party under a written contract with the municipality that 04 authorizes the municipality to service the debt by assessment; or 05 (2) if authorized by municipal ordinance, the municipality. 06 (c) An assessment under this section may repay financing for costs of the 07 qualified project, including 08 (1) the cost of materials and labor necessary for the qualified project; 09 (2) permit fees; 10 (3) inspection fees; 11 (4) lender's fees; 12 (5) program application and administrative fees; 13 (6) qualified project development and engineering fees; 14 (7) third-party review fees, including verification review fees, under 15 AS 29.55.120; and 16 (8) any other fees or costs that may be incurred by the eligible property 17 owner incident to the installation, modification, or improvement on a specific or pro 18 rata basis, as determined by the municipality. 19 (d) An assessment under this section may not repay financing for the costs of 20 (1) facilities for undeveloped lots or lots undergoing development at 21 the time of the assessment; or 22 (2) the purchase or installation of products or devices not permanently 23 fixed to eligible property. 24 (e) A municipality may establish more than one region. The boundaries of 25 each region may be separate, overlapping, or coterminous. 26 Sec. 29.55.110. Report regarding assessment program. (a) The municipality 27 shall prepare a report for a proposed program required by AS 29.55.100 that includes 28 (1) a map showing the boundaries of each proposed region within 29 which the program is available; 30 (2) a form for a contract between the municipality and a property 31 owner specifying the terms of
01 (A) assessment under the program; and 02 (B) financing provided by a third party or the municipality, as 03 appropriate; 04 (3) if the proposed program provides for third-party financing, a form 05 for a contract between the municipality and the third party regarding the servicing of 06 the debt through assessments; 07 (4) a description of projects that may qualify for assessments; 08 (5) a plan for ensuring sufficient capital for third-party financing and, 09 if appropriate, raising capital for municipal financing for qualified projects; 10 (6) if bonds will be issued to provide capital to finance qualified 11 projects as part of the program as provided by AS 29.55.140, 12 (A) a maximum aggregate annual dollar amount for municipal 13 financing repaid by assessments under the program; 14 (B) if requests appear likely to exceed the authorization 15 amount, a priority order for ranking a property owner's application for 16 financing repaid by assessments; and 17 (C) a formula for calculating 18 (i) the interest rate and period during which contracting 19 owners would pay an assessment; and 20 (ii) the maximum amount of an assessment; 21 (7) a method for ensuring that the period of the assessment does not 22 exceed the useful life of the qualified project that is the basis for the assessment; 23 (8) a description of the application process and eligibility requirements 24 for financing repaid by assessments under the program; 25 (9) a method for a property owner applying to participate in the 26 program to demonstrate the property owner's ability to fulfill financial obligations and 27 pay assessments; the method must be based on appropriate underwriting factors, 28 including 29 (A) verification that the property owner 30 (i) is the legal owner of the benefited property; 31 (ii) is current on mortgage and property tax payments;
01 and 02 (iii) is not insolvent or in bankruptcy proceedings; and 03 (B) an appropriate ratio between the amount of the assessment 04 and the assessed value of the property; 05 (10) an explanation of the manner in which the municipality shall 06 assess the property and collect assessments; 07 (11) the lender notice requirement under AS 29.55.115; 08 (12) the review requirement under AS 29.55.120; 09 (13) a description of marketing and participant education services 10 provided by the municipality for the program; and 11 (14) a description of quality assurance and antifraud measures 12 instituted by the municipality for the program. 13 (b) The municipality shall make the report available for public inspection 14 (1) on the Internet website of the municipality; and 15 (2) at the primary governing offices of the municipality. 16 Sec. 29.55.115. Notice to mortgage holder required for participation. 17 Before a municipality may enter into a written contract with a record owner of eligible 18 property to impose an assessment to repay the financing of a qualified project under 19 AS 29.55.100, the property owner shall 20 (1) give the holder of a mortgage lien on the property at least 30 days' 21 written notice of the intention of the property owner to participate in a program under 22 AS 29.55.100; and 23 (2) obtain a written consent from the holder of a mortgage lien on the 24 property. 25 Sec. 29.55.120. Review required. A program established under AS 29.55.100 26 must require from an independent third party 27 (1) a review of the energy baseline conditions and the projected energy 28 savings for each proposed qualified project; and 29 (2) after a qualified project is completed, verification that the qualified 30 project was properly completed and is operating as intended. 31 Sec. 29.55.125. Direct acquisition by owner. The proposed arrangements for
01 financing a qualified project may authorize the property owner to 02 (1) purchase directly the related equipment and materials for the 03 qualified project; and 04 (2) contract directly, including through lease, a power purchase 05 agreement, or other service contract, for the qualified project. 06 Sec. 29.55.130. Recording of notice of assessment. (a) A municipality that 07 authorizes financing through assessments under AS 29.55.105 shall file written notice 08 of each assessment in the property records of the recording district in which the 09 property is located. 10 (b) The notice under (a) of this section must contain 11 (1) the amount of the assessment; 12 (2) the legal description of the property; 13 (3) the name of each property owner; and 14 (4) a reference to the statutory assessment lien provided under 15 AS 29.55.135. 16 Sec. 29.55.135. Lien. (a) Assessments under AS 29.55.105 and any interest or 17 penalties on the assessments are liens on the property assessed and are prior and 18 paramount to all liens except municipal tax liens and special assessments. Assessment 19 liens may be enforced as provided in AS 29.45.320 - 29.45.470 for enforcement of 20 property tax liens. 21 (b) Assessment liens run with the land, and that portion of the assessment 22 under the assessment contract that has not yet become due is not eliminated by 23 foreclosure of a property tax lien. 24 (c) Penalties and interest may be added to delinquent installments of the 25 assessments in the same manner as provided in AS 29.45.250. 26 (d) A municipality may recover costs and expenses, including attorney fees, in 27 a suit to collect a delinquent installment of an assessment in the same manner as in a 28 suit to collect a delinquent property tax. 29 Sec. 29.55.140. Bonds or notes. (a) A municipality may issue bonds or notes 30 to finance qualified projects subject to assessment under AS 29.55.105. 31 (b) Bonds or notes issued under this section may not be general obligations of
01 the municipality. The bonds or notes must be secured by one or more of the following, 02 as provided by the governing body of the municipality in the resolution or ordinance 03 approving the bonds or notes: 04 (1) payments of assessments on benefited property in one or more 05 specified regions designated under AS 29.55.100; 06 (2) reserves established by the municipality from grants, bonds, or net 07 proceeds or other lawfully available funds; 08 (3) municipal bond insurance, lines of credit, public or private 09 guaranties, standby bond purchase agreements, collateral assignments, mortgages, or 10 any other available means of providing credit support or liquidity; and 11 (4) any other funds lawfully available for purposes consistent with 12 AS 29.55.100 - 29.55.165. 13 (c) A municipal pledge of assessments, funds, or contractual rights in 14 connection with the issuance of bonds or notes by the municipality under this section 15 is a first lien on the assessments, funds, or contractual rights pledged in favor of the 16 person to whom the pledge is given, without further action by the municipality. The 17 lien is valid and binding against any other person, with or without notice. 18 (d) Bonds or notes issued under this section further essential public and 19 governmental purposes, including 20 (1) improvement of the reliability of local electrical systems; 21 (2) reduction of energy costs; 22 (3) reduction of energy demand on local utilities; 23 (4) economic stimulation and development; 24 (5) enhancement of property values; and 25 (6) enhancement of employment opportunities. 26 Sec. 29.55.145. Joint implementation. A municipality may enter into an 27 agreement with 28 (1) a third party to administer a program under AS 29.55.100; 29 (2) one or more municipalities to jointly implement or administer a 30 program under AS 29.55.100; if two or more municipalities jointly implement a 31 program, a single public hearing held jointly by the cooperating municipalities is
01 sufficient to satisfy the requirement of AS 29.55.100(b)(3). 02 Sec. 29.55.150. Prohibited acts. A municipality that establishes a region under 03 AS 29.55.100 may not make the issuance of a permit, license, or other authorization 04 from the municipality to a person who owns property in the region contingent on the 05 person entering into a written contract to repay the financing of a qualified project 06 through assessments under AS 29.55.105, or otherwise compel a person who owns 07 property in the region to enter into a written contract to repay the financing of a 08 qualified project through assessments under AS 29.55.105. 09 Sec. 29.55.155. Application. AS 29.55.100 - 29.55.165 apply to home rule and 10 general law municipalities. 11 Sec. 29.55.160. Definitions. In AS 29.55.100 - 29.55.165, 12 (1) "eligible property" means privately owned commercial or industrial 13 real property; 14 (2) "program" means a program established under AS 29.55.100; 15 (3) "qualified improvement" means a permanent improvement fixed to 16 eligible property and intended to decrease energy consumption or demand, including a 17 product, device, or interacting group of products or devices that uses energy 18 technology to generate electricity, provide thermal energy, or regulate temperature; 19 (4) "qualified project" means the installation or modification of a 20 qualified improvement. 21 Sec. 29.55.165. Short title. AS 29.55.100 - 29.55.165 may be cited as the 22 Municipal Property Assessed Clean Energy Act. 23 * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).