HB-5640, As Passed House, April 22, 2010

SUBSTITUTE FOR

HOUSE BILL NO. 5640

A bill to authorize local units of government to adopt

property assessed clean energy programs and to create districts to

promote the use of renewable energy systems and energy efficiency

improvements by owners of real property; to provide for the

financing of such programs through voluntary property assessments

and other means; to authorize a local unit of government to issue

bonds, notes, and other evidences of indebtedness and to pay the

cost of renewable energy systems and energy efficiency improvements

from the proceeds thereof; to provide for the repayment of bonds,

notes, and other evidences of indebtedness; to authorize certain

fees; to prescribe the powers and duties of certain governmental

officers and entities; and to provide for remedies.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"property assessed clean energy act".

Sec. 3. As used in this act:

(a) "District" means a district created under a property

assessed clean energy program by a local unit of government that

lies within the local unit of government's jurisdictional

boundaries. A local unit of government may create more than 1

district under the program, and districts may be separate,

overlapping, or coterminous.

(b) "Energy efficiency improvement" means the installation or

modification of equipment, devices, or materials intended to

decrease energy consumption, including, but not limited to, all of

the following:

(i) Insulation in walls, roofs, floors, foundations, or heating

and cooling distribution systems.

(ii) Storm windows and doors; multi-glazed windows and doors;

heat-absorbing or heat-reflective glazed and coated window and door

systems; and additional glazing, reductions in glass area, and

other window and door system modifications that reduce energy

consumption.

(iii) Automated energy control systems.

(iv) Heating, ventilating, or air-conditioning and distribution

system modifications or replacements.

(v) Caulking, weather-stripping, and air sealing.

(vi) Replacement or modification of lighting fixtures to reduce

the energy use of the lighting system.

(vii) Energy recovery systems.

(viii) Day lighting systems.

(ix) Installation or upgrade of electrical wiring or outlets to

charge a motor vehicle that is fully or partially powered by

electricity.

(x) Any other installation or modification of equipment,

devices, or materials approved as a utility cost-savings measure by

the governing body.

of a county, the township board of a township, or the council or

other similar elected legislative body of a city or village.

(d) "Local unit of government" means a county, township, city,

or village.

(e) "Person" means an individual, firm, partnership,

association, corporation, unincorporated joint venture, or trust,

organized, permitted, or existing under the laws of this state or

any other state, including a federal corporation, or a combination

thereof. However, person does not include a local unit of

government.

(f) "Property" means privately owned real property located

within the local unit of government.

(g) "Property assessed clean energy program" or "program"

means a program as described in section 5(2).

(h) "Record owner" means the person or persons possessed of

the most recent fee title or land contract vendee's interest in

property as shown by the records of the county register of deeds.

(i) "Renewable energy resource" means a resource that

naturally replenishes over a human, not a geological, time frame

and that is ultimately derived from solar power, water power, or

wind power. Renewable energy resource does not include petroleum,

nuclear, natural gas, or coal. A renewable energy resource comes

from the sun or from thermal inertia of the earth and minimizes the

output of toxic material in the conversion of the energy and

includes, but is not limited to, all of the following:

(i) Biomass.

(ii) Solar and solar thermal energy.

(iii) Wind energy.

(iv) Geothermal energy.

(v) Methane gas captured from a landfill.

(j) "Renewable energy system" means a fixture, product,

device, or interacting group of fixtures, products, or devices

installed on the customer's side of the meter that use 1 or more

renewable energy resources to generate electricity. Renewable

energy system includes a biomass stove but does not include an

incinerator or digester.

Sec. 5. (1) Pursuant to the procedures provided in section 7,

a local unit of government may establish a property assessed clean

energy program and may, from time to time, create a district or

districts under the program.

(2) Under the program, the local unit of government may enter

into a contract with the record owner of property within a district

to finance or refinance energy efficiency improvements or the

acquisition, installation, or improvement of 1 or more renewable

energy systems on the property. The contract shall provide for the

repayment of the cost of the energy efficiency improvements or

renewable energy systems through assessments upon the property

benefited. The financing or refinancing may include the cost of

materials and labor necessary for installation, permit fees,

inspection fees, application and administrative fees, bank fees,

and all other fees that may be incurred by the property owner

pursuant to the installation on a specific or pro rata basis, as

determined by the local unit of government.

Sec. 7. (1) To establish a property assessed clean energy

program, the governing body of a local unit of government shall

take the following actions in the following order:

(a) Adopt a resolution of intent that includes all of the

following:

(i) A finding that the financing of renewable energy systems

and energy efficiency improvements is a valid public purpose.

(ii) A statement of intent to provide funds for energy

efficiency improvements and renewable energy systems to be repaid

by assessments on the property benefited, with the agreement of the

record owners.

(iii) A description of the proposed arrangements for financing

the program.

(iv) The types of energy efficiency improvements and renewable

energy systems that may be financed.

(v) Reference to a report on the proposed program as described

in section 9(1) and a location where the report is available

pursuant to section 9(2).

(vi) The time and place for a public hearing on the proposed

program.

(b) Hold a public hearing at which the public may comment on

the proposed program, including the report required by section 9.

forth its terms and conditions, including a description of which

aspects of the program may be amended without a new public hearing

and which aspects may be amended only after a new public hearing is

held.

(2) A property assessed clean energy program may be amended by

resolution of the governing body. Adoption of the resolution shall

be preceded by a public hearing if required pursuant to subsection

(1)(c).

Sec. 9. (1) The report on the proposed program required under

section 7 shall include all of the following:

(a) A form of contract between the local unit of government

and record owner governing the terms and conditions of financing

and assessment under the program.

(b) Identification of an official authorized to enter into a

program contract on behalf of the local unit of government.

to be provided by the local unit of government under the program.

(d) An application process and eligibility requirements for

financing energy efficiency improvements or renewable energy

systems under the program.

(e) A method for determining interest rates on assessment

installments, repayment periods, and the maximum amount of an

assessment.

(f) Explanation of how assessments will be made and collected

consistent with section 13(2).

(g) A plan for raising capital to finance improvements under

the program. The plan may include any of the following:

(i) The sale of bonds or notes, subject to the revised

municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

(ii) Amounts to be advanced by the local unit of government

through funds available to it from any other source.

(h) Information regarding all of the following, to the extent

known, or procedures to determine the following in the future:

(i) Any reserve fund or funds to be used as security for bonds

or notes described in subdivision (g).

(ii) Any application, administration, or other program fees to

be charged to property owners participating in the program that

will be used to finance costs incurred by the local unit of

government as a result of the program.

(2) The local unit of government shall make the report

available for review on the local unit of government's website or

at the office of the clerk or the official authorized to enter

contracts on behalf of the local unit of government under the

property assessed clean energy program.

Sec. 11. (1) A local unit of government may impose an

assessment under a property assessed clean energy program only

pursuant to a written contract with the record owner of the

property to be assessed.

(2) Before entering into a contract with a property owner

under a program, the local unit of government shall verify all of

the following:

(a) That there are no delinquent taxes, special assessments,

or water or sewer charges on the property.

(b) That there are no delinquent assessments on the property

under a property assessed clean energy program.

Sec. 13. (1) An assessment imposed under a property assessed

clean energy program, including any interest on the assessment and

any penalty, constitute a lien against the property on which the

assessment is imposed until the assessment, including any interest

or penalty, is paid in full. The lien runs with the property and

has the same priority and status as other property tax and

assessment liens. The local unit of government has all rights in

the case of delinquency in the payment of an assessment as it does

with respect to delinquent property taxes. When the assessment,

including any interest and penalty, is paid, the lien shall be

removed from the property.

(2) Installments of assessments due under a program shall be

included in each summer and winter tax bill issued under the

general property tax act, 1893 PA 206, MCL 211.1 to 211.155, and

shall be collected at the same time and in the same manner as taxes

collected under the general property tax act, 1893 PA 206, MCL

211.1 to 211.155. Alternatively, installments may be billed and

collected as provided in a special assessment ordinance of general

applicability adopted by the local unit of government pursuant to

state law or local charter.

Sec. 15. (1) A local unit of government may issue bonds or

notes to finance energy efficiency improvements and renewable

energy systems under a property assessed clean energy program.

(2) Bonds or notes issued under subsection (1) shall not be

general obligations of the local unit of government, but shall be

secured by 1 or more of the following as provided by the governing

body in the resolution or ordinance approving the bonds or notes:

(a) Payments of assessments on benefited property within the

district or districts specified.

(b) Reserves established by the local unit of government from

grants, bond or note proceeds, or other lawfully available funds.

public or private guaranties, standby bond purchase agreements,

collateral assignments, mortgages, and any other available means of

providing credit support or liquidity, including, but not limited

to, arrangements described in section 315 of the revised municipal

finance act, 2001 PA 34, MCL 141.2315.

(d) Tax increment revenues that may be lawfully available for

such purposes.

(e) Any other amounts lawfully available for such purposes.

(3) A pledge of assessments, funds, or contractual rights made

by a governing body in connection with the issuance of bonds or

notes by a local unit of government under this act constitutes a

statutory lien on the assessments, funds, or contractual rights so

pledged in favor of the person or persons to whom the pledge is

given, without further action by the governing body. The statutory

lien is valid and binding against all other persons, with or

without notice.

(4) Bonds or notes of 1 series issued under this act may be

secured on a parity with bonds or notes of another series issued by

the local unit of government pursuant to the terms of a master

indenture or master resolution entered into or adopted by the

governing body of the local unit of government.

(5) A local unit of government may issue its general

obligation bonds or notes under this act for the purpose of:

(a) Establishing a reserve fund to secure bonds or notes

issued pursuant to subsection (1).

(b) Paying the costs associated with creating a property

assessed clean energy program, including, but not limited to, legal

fees, the cost of preparing forms of contracts, the cost of

establishing procedures and regulations, the cost of preparing the

report described in section 9(1), and the cost of conducting

preliminary energy audits within the local unit of government.

(6) Bonds or notes issued under this act are subject to the

revised municipal finance act, 2001 PA 34, MCL 141.2101 to

141.2821.

(7) Bonds or notes issued under this act, and interest payable

on such bonds and notes, are exempt from all taxation by this state

and its political subdivisions.

(8) Bonds or notes issued under this act further essential

public and governmental purposes, including, but not limited to,

reduced energy costs, reduced greenhouse gas emissions, economic

stimulation and development, improved property valuation, and

increased employment.

Sec. 17. (1) A local unit of government may join with any

other local unit of government, or with any person, or with any

number or combination thereof, by contract or otherwise as may be

permitted by law, for the implementation of a property assessed

clean energy program, in whole or in part.

(2) If a property assessed clean energy program is implemented

jointly by 2 or more local units of government pursuant to

subsection (1), a single public hearing held jointly by the

cooperating local units of government is sufficient to satisfy the

requirements of section 7(1)(b).