State of Illinois
2019 and 2020


Introduced 2/7/2019, by Sen. Melinda Bush


50 ILCS 50/5
50 ILCS 50/20
50 ILCS 50/25
50 ILCS 50/45 new
50 ILCS 50/50 new
50 ILCS 50/55 new

    Amends the Property Assessed Clean Energy Act. Makes changes adding residential property to the scope of the Act. Modifies the requirements of a report needed to establish a PACE area and requirements before entering into an assessment contract. For program administrators and contracts that finance residential properties of 4 or fewer units: provides for contractor oversight and training for residential properties inside PACE areas; prohibits specified soliciting, advertising, and direct or indirect cash payments or other things of value to property owners; requires a local unit of government and third-party program administrators to develop a disclosure form for homeowners and a right to cancel within 3 business days assessment contracts; and requires an oral confirmation call to property owners with specified minimum requirements for the call. Effective immediately.

LRB101 07063 AWJ 52100 b






SB1296LRB101 07063 AWJ 52100 b

1    AN ACT concerning local government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Property Assessed Clean Energy Act is
5amended by changing Sections 5, 20, and 25 and by adding
6Sections 45, 50, and 55 as follows:
7    (50 ILCS 50/5)
8    Sec. 5. Definitions. As used in this Act:
9    "Alternative energy improvement" means the installation or
10upgrade of electrical wiring, outlets, or charging stations to
11charge a motor vehicle that is fully or partially powered by
13    "Assessment contract" means a voluntary written contract
14between the local unit of government (or a permitted assignee)
15and record owner governing the terms and conditions of
16financing and assessment under a program.
17    "Authority" means the Illinois Finance Authority.
18    "PACE area" means an area within the jurisdictional
19boundaries of a local unit of government created by an
20ordinance or resolution of the local unit of government to
21provide financing for energy projects under a property assessed
22clean energy program. A local unit of government may create
23more than one PACE area under the program, and PACE areas may



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1be separate, overlapping, or coterminous.
2    "Energy efficiency improvement" means equipment, devices,
3or materials intended to decrease energy consumption or promote
4a more efficient use of electricity, natural gas, propane, or
5other forms of energy on property, including, but not limited
6to, all of the following:
7        (1) insulation in walls, roofs, floors, foundations,
8    or heating and cooling distribution systems;
9        (2) storm windows and doors, multi-glazed windows and
10    doors, heat-absorbing or heat-reflective glazed and coated
11    window and door systems, and additional glazing,
12    reductions in glass area, and other window and door system
13    modifications that reduce energy consumption;
14        (3) automated energy control systems;
15        (4) high efficiency heating, ventilating, or
16    air-conditioning and distribution system modifications or
17    replacements;
18        (5) caulking, weather-stripping, and air sealing;
19        (6) replacement or modification of lighting fixtures
20    to reduce the energy use of the lighting system;
21        (7) energy controls or recovery systems;
22        (8) day lighting systems;
23        (8.1) any energy efficiency project, as defined in
24    Section 825-65 of the Illinois Finance Authority Act; and
25        (9) any other installation or modification of
26    equipment, devices, or materials approved as a utility



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1    cost-savings measure by the governing body.
2    "Energy project" means the installation or modification of
3an alternative energy improvement, energy efficiency
4improvement, or water use improvement, or the acquisition,
5installation, or improvement of a renewable energy system that
6is affixed to a stabilized existing property (including new
8    "Governing body" means the county board or board of county
9commissioners of a county, the city council of a city, or the
10board of trustees of a village.
11    "Local unit of government" means a county, city, or
13    "Permitted assignee" means (i) any body politic and
14corporate, (ii) any bond trustee, or (iii) any warehouse
15lender, or any other assignee of a local unit of government
16designated in an assessment contract.
17    "Person" means an individual, firm, partnership,
18association, corporation, limited liability company,
19unincorporated joint venture, trust, or any other type of
20entity that is recognized by law and has the title to or
21interest in property. "Person" does not include a local unit of
22government or a homeowner's or condominium association, but
23does include other governmental entities that are not local
24units of government.
25    "Program administrator" means a for-profit entity or
26not-for-profit not-for profit entity that will administer a



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1program on behalf of or at the discretion of the local unit of
2government. It or its affiliates, consultants, or advisors
3shall have done business as a program administrator or capital
4provider for a minimum of 18 months and shall be responsible
5for arranging capital for the acquisition of bonds issued by
6the local unit of government or the Authority to finance energy
8    "Property" means privately-owned residential, commercial,
9industrial, non-residential agricultural, or multi-family (of
105 or more units) real property located within the local unit of
11government, but does not include property owned by a local unit
12of government or a homeowner's or condominium association.
13    "Property assessed clean energy program" or "program"
14means a program as described in Section 10.
15    "Record owner" means the person who is the titleholder or
16owner of the beneficial interest in property.
17    "Renewable energy resource" includes energy and its
18associated renewable energy credit or renewable energy credits
19from wind energy, solar thermal energy, photovoltaic cells and
20panels, biodiesel, anaerobic digestion, and hydropower that
21does not involve new construction or significant expansion of
22hydropower dams. For purposes of this Act, landfill gas
23produced in the State is considered a renewable energy
24resource. The term "renewable energy resources" does not
25include the incineration or burning of any solid material.
26    "Renewable energy system" means a fixture, product,



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1device, or interacting group of fixtures, products, or devices
2on the customer's side of the meter that use one or more
3renewable energy resources to generate electricity, and
4specifically includes any renewable energy project, as defined
5in Section 825-65 of the Illinois Finance Authority Act.
6    "Warehouse fund" means any fund established by a local unit
7of government, body politic and corporate, or warehouse lender.
8    "Warehouse lender" means any financial institution
9participating in a PACE area that finances an energy project
10from lawfully available funds in anticipation of issuing bonds
11as described in Section 35.
12    "Water use improvement" means any fixture, product,
13system, device, or interacting group thereof for or serving any
14property that has the effect of conserving water resources
15through improved water management or efficiency.
16(Source: P.A. 100-77, eff. 8-11-17; 100-980, eff. 1-1-19;
17revised 9-28-18.)
18    (50 ILCS 50/20)
19    Sec. 20. Report. The report on the proposed program
20required under Section 15 shall include all of the following:
21        (1) a form of assessment contract between the local
22    unit of government and record owner governing the terms and
23    conditions of financing and assessment under the program.
24        (2) identification of an official authorized to enter
25    into an assessment contract on behalf of the local unit of



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1    government;
2        (3) a maximum aggregate annual dollar amount for all
3    financing to be provided by the applicable program
4    administrator under the program;
5        (4) an application process and eligibility
6    requirements for financing energy projects under the
7    program;
8        (5) a method for determining interest rates on
9    assessment installments, repayment periods, and the
10    maximum amount of an assessment;
11        (6) an explanation of how assessments will be made and
12    collected;
13        (7) a plan to raise capital to finance improvements
14    under the program pursuant to the sale of bonds, subject to
15    this Act or the Special Assessment Supplemental Bond and
16    Procedures Act, or alternatively, through the sale of bonds
17    by the Authority pursuant to subsection (d) of Section
18    825-65 of the Illinois Finance Authority Act;
19        (8) information regarding all of the following, to the
20    extent known, or procedures to determine the following in
21    the future:
22            (A) any revenue source or reserve fund or funds to
23        be used as security for bonds described in paragraph
24        (7); and
25            (B) any application, administration, or other
26        program fees to be charged to record owners



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1        participating in the program that will be used to
2        finance costs incurred by the local unit of government
3        as a result of the program;
4        (9) a requirement that the term of an assessment not
5    exceed the useful life of the energy project paid for by
6    the assessment; provided that the local unit of government
7    may allow projects that consist of multiple improvements
8    with varying lengths of useful life to have a term that is
9    no greater than the improvement with the longest useful
10    life;
11        (10) a requirement for an appropriate ratio of the
12    amount of the assessment to the assessed value of the
13    property or market value of the property as determined by
14    an automated valuation model provided by a third-party
15    vendor or by a recent appraisal no older than 12 months;
16        (11) a requirement that the record owner of property
17    subject to a mortgage obtain written consent from the
18    mortgage holder before participating in the program;
19        (11) (12) provisions for marketing and participant
20    education;
21        (12) (13) provisions for an adequate debt service
22    reserve fund, if any; and
23        (13) (14) quality assurance and antifraud measures.
24(Source: P.A. 100-77, eff. 8-11-17; 100-980, eff. 1-1-19.)
25    (50 ILCS 50/25)



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1    Sec. 25. Contracts with record owners of property.
2    (a) After creation of a program and PACE area, a record
3owner of property within the PACE area may apply with the local
4unit of government or its program administrator or
5administrators for funding to finance an energy project.
6    (b) A local unit of government may impose an assessment
7under a property assessed clean energy program only pursuant to
8the terms of a recorded assessment contract with the record
9owner of the property to be assessed.
10    (c) Before entering into an assessment contract with a
11record owner under a program, the local unit of government
12shall verify all of the following:
13        (1) that the property is within the PACE area;
14        (2) that there are no delinquent taxes, special
15    assessments, or water or sewer charges on the property;
16        (3) that there are no delinquent assessments on the
17    property under a property assessed clean energy program;
18        (4) there are no involuntary liens on the property,
19    including, but not limited to, construction or mechanics
20    liens, lis pendens or judgments against the record owner,
21    environmental proceedings, or eminent domain proceedings;
22        (5) that no notices of default or other evidence of
23    property-based debt delinquency have been recorded and not
24    cured;
25        (6) that the record owner is current on all mortgage
26    debt on the property, the record owner has not filed for



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1    bankruptcy in the last 2 years, and the property is not an
2    asset to a current bankruptcy.
3        (7) all work requiring a license under any applicable
4    law to make a qualifying improvement shall be performed by
5    a registered contractor that has agreed to adhere to a set
6    of terms and conditions through a process established by
7    the local unit of government.
8        (8) the contractors to be used have signed a written
9    acknowledgement that the local unit of government will not
10    authorize final payment to the contractor until the local
11    unit of government has received written confirmation from
12    the record owner that the improvement was properly
13    installed and is operating as intended; provided, however,
14    that the contractor retains all legal rights and remedies
15    in the event there is a disagreement with the owner;
16        (9) that the amount of the assessment in relation to
17    the greater of the assessed value of the property or the
18    appraised value of the property, as determined by a
19    licensed appraiser, does not exceed 25%; and
20        (10) a requirement that an assessment of the existing
21    water or energy use and a modeling of expected monetary
22    savings have been conducted for any proposed project on
23    non-residential real property.
24    (d) At least 30 days before entering into an assessment
25contract with the local unit of government, the record owner
26shall provide to the holders or loan servicers of any existing



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1mortgages encumbering or otherwise secured by the property a
2notice of the record owner's intent to enter into an assessment
3contract with the local unit of government, together with the
4maximum principal amount to be financed and the maximum annual
5assessment necessary to repay that amount. , along with a
6    If the record owner is of a commercial property, an
7additional request that the holders or loan servicers of any
8existing mortgages consent to the record owner subjecting the
9property to the program must be included. A verified copy or
10other proof of those notices and the written consent of the
11existing mortgage holder for the record owner to enter into the
12assessment contract and acknowledging that the existing
13mortgage will be subordinate to the financing and assessment
14agreement and that the local unit of government or its
15permitted assignee can foreclose the property if the assessment
16is not paid shall be provided to the local unit of government.
17    (e) A provision in any agreement between a local unit of
18government and a public or private power or energy provider or
19other utility provider is not enforceable to limit or prohibit
20any local unit of government from exercising its authority
21under this Section.
22    (f) The record owner has signed a certification that the
23local unit of government has complied with the provisions of
24this Section, which shall be conclusive evidence as to
25compliance with these provisions, but shall not relieve any
26contractor, or local unit of government, from any potential



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2    (g) This Section is additional and supplemental to county
3and municipal home rule authority and not in derogation of such
4authority or limitation upon such authority.
5    (h) The imposition of any assessment pursuant to this Act
6shall be exempt from any other statutory procedures or
7requirements that condition the imposition of assessments or
8other taxes against a property, except as set forth in this
10(Source: P.A. 100-77, eff. 8-11-17; 100-980, eff. 1-1-19.)
11    (50 ILCS 50/45 new)
12    Sec. 45. Contractor oversight and training for residential
14    (a) A program administrator shall not permit contractors or
15other third parties to advertise the availability of assessment
16contracts that are administered by the program administrator or
17to solicit property owners on behalf of the program
18administrator unless:
19        (1) the contractor maintains a permit, license, or
20    registration required for engaging in its business in the
21    jurisdiction where it operates and maintains the required
22    bond and insurance coverage for engaging in its business;
23    and
24        (2) the program administrator obtains the contractor's
25    written agreement that the contractor or third party will



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1    act in accordance with applicable advertising and
2    marketing laws and regulations and all other applicable
3    laws.
4    (b) A program administrator shall not provide any direct or
5indirect cash payment or other thing of material value to a
6contractor or third party in excess of the actual price charged
7by that contractor or third party to the property owner for one
8or more qualified improvements financed by an assessment
10    (c) A program administrator shall not provide to a
11contractor engaged in soliciting financing agreements on its
12behalf any information that discloses the maximum amount of
13funds for which a property owner may be eligible for qualifying
14improvements or the amount of equity in a property.
15    (d) A program administrator shall not reimburse a
16contractor or third party for expenses for advertising and
17marketing campaigns and collateral which solely benefit the
18contractor. A program administrator may reimburse a
19contractor's bona fide and reasonable training expenses
20related to PACE area financing if:
21        (1) the training expenses are actually incurred by the
22    contractor; and
23        (2) the reimbursement is paid directly to the
24    contractor and is not paid to its salespersons or agents.
25    (e) A program administrator shall not provide any direct or
26indirect cash payment or other thing of value to a property



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1owner conditioned upon that property owner entering into an
2assessment contract. Programs or promotions that offer reduced
3fees or interest rates to property owners are not a "direct or
4indirect cash payment or other thing of value" if the reduced
5fee or interest rate is reflected in the assessment contract
6and the program or promotion is not provided to the property
7owner as a cash consideration.
8    (f) A contractor shall not provide a different price for a
9project financed under this Section than the contractor would
10provide if paid in cash by the property owner.
11    (g) A program administrator shall establish and maintain a
12training program for contractors that includes, but is not
13limited to, the following topics:
14        (1) Programs and assessment contracts.
15        (2) Disclosures.
16        (3) Ethics.
17        (4) Fraud prevention.
18        (5) Nondiscrimination.
19        (6) Senior financial abuse.
20    (h) This Section only applies to program administrators and
21contractors that finance residential properties of 4 or fewer
22units. This Section does not apply to commercial, industrial,
23multi-family (5 or more units), or agricultural properties.
24    (50 ILCS 50/50 new)
25    Sec. 50. Disclosure form.



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1    (a) Every local unit of government or third-party program
2administrator shall develop a disclosure form for homeowners
3that shall disclose all key financing terms of the assessment
4contract, including, but not limited to:
5        (1) the total amount funded, including the cost of the
6    installed improvements, program fees, and capitalized
7    interest, if any;
8        (2) the annual tax obligation process and schedule;
9        (3) the annual payment amounts;
10        (4) the term of the assessment;
11        (5) the fixed rate of interest charged;
12        (6) the annual percentage rate;
13        (7) a payment schedule that fully amortizes the amount
14    financed;
15        (8) the improvements to be installed;
16        (9) that if the property owners sell or refinance their
17    property, then they may be required by a mortgage lender to
18    pay off the assessment as a condition of sale or refinance;
19        (10) the penalty that shall be assessed or collected
20    for prepayment of the assessment, if a prepayment penalty
21    exists, and the form shall disclose if there is no
22    pre-payment penalty for the assessment;
23        (11) that any potential utility savings are not
24    guaranteed and will not reduce the assessment payments or
25    total assessment amount;
26        (12) that the assessment will be collected along with



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1    their property taxes and will result in a lien on their
2    property from the date of the assessment contract;
3        (13) that the payments will be added to their property
4    tax bill, and if they pay their property taxes through
5    their mortgage payment, using an impound account, the
6    property owners should notify their mortgage lender so that
7    their monthly mortgage payment can be adjusted to cover
8    their increased property tax bill;
9        (14) that failure to pay the property assessment may
10    result in penalties and fees and issuance of a tax sale or
11    foreclosure that could result in the property owners losing
12    their home; and
13        (15) that the property owners should seek professional
14    tax advice if they have questions regarding tax credits,
15    tax deductibility, or of the tax impact on the assessment
16    contract or financing agreement.
17    (b) A program administrator shall present the disclosure
18form to property owners for acknowledgment prior to the
19execution of an assessment contract.
20    (c) A program administrator shall, as a part of its
21assessment contract, provide a 3-day right to cancel the
22qualifying improvements financing. The 3-day right to cancel
23expires on midnight of the fourth day, not including weekends
24or holidays, after a property owner signs the assessment
25contract. A program administrator shall provide a printed form
26for the right to cancel that is presented to the property



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1owners no later than the time of signing of the assessment
3    (d) The local unit of government shall develop a form to
4notify the property owner in writing and to include in the call
5procedure in Section 55 that the owner may rescind any
6assessment contract entered into pursuant to this Section not
7later than 3 days, not including weekends and holidays, after
8entering into the agreement. All local units of governments or
9third-party program administrators shall provide the form at
10the same time as the disclosure form above. The notification
11shall be provided to the property owner as a printed copy
12unless the property owner agrees to an electronic copy.
13    (e) This Section only applies to program administrators and
14contractors that finance residential properties of 4 or fewer
15units. This Section does not apply to commercial, industrial,
16multi-family (5 or more units), or agricultural properties.
17    (50 ILCS 50/55 new)
18    Sec. 55. Oral confirmation call.
19    (a) Before a property owner executes an assessment
20contract, the local unit of government or third-party program
21administrator shall:
22        (1) make an oral confirmation that at least one owner
23    of the property has a copy of the assessment contract
24    documents with all the key terms completed, the financing
25    estimate and disclosure form, and the right-to-cancel form



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1    with a hard copy available upon request; and
2        (2) make an oral confirmation, in plain language, of
3    the key terms of the assessment contract with the property
4    owner on the call or to a verified authorized
5    representative of the owner on the call and shall obtain
6    acknowledgment from the property owner on the call to whom
7    the oral confirmation is given.
8    (b) The oral confirmation shall include, but is not limited
9to, all of the following information:
10        (1) At the onset of the call after the determination of
11    the preferred language of communication, that the property
12    owner on the call has the right to have other persons
13    present for the call and an inquiry as to whether the
14    property owner would like to exercise the right to include
15    anyone else on the call. This shall occur.
16        (2) The property owner on the call is informed that
17    they should review the assessment contract, financing
18    estimate, and disclosure form with all other owners of the
19    property.
20        (3) The qualified improvement being installed is being
21    financed by an assessment contract.
22        (4) The total estimated annual costs the property owner
23    will have to pay under the assessment contract, including
24    applicable fees.
25        (5) The total estimated average monthly amount of funds
26    the property owner would have to save in order to pay the



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1    annual costs under the assessment contract, including
2    applicable fees.
3        (6) The term of the assessment contract.
4        (7) That payments on the assessment contract will be
5    made through an additional annual assessment on the
6    property and paid either directly to the county tax
7    collector's office as part of the total annual secured
8    property tax bill or through the property owner's mortgage
9    impound account, and that if the property owner pays his or
10    her taxes through an impound account, he or she should
11    notify their mortgage lender to discuss adjusting his or
12    her monthly mortgage payment by the estimated monthly cost
13    of the assessment contract.
14        (8) That the property will be subject to a lien during
15    the term of the assessment contract and that the
16    obligations under the assessment contract may be required
17    by a mortgage lender to be paid in full before the property
18    owner sells or refinances the property.
19        (9) That the property owner has disclosed whether the
20    property has received or is seeking additional PACE area
21    assessments and has disclosed all other PACE area
22    assessments or special taxes that are or about to be placed
23    on the property if known to and understood by the property
24    owner.
25        (10) That any potential utility savings are not
26    guaranteed and may not reduce the assessment payments or



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1    total assessment amount.
2        (11) That the local unit of government, third-party
3    program administrator, or contractor do not provide tax
4    advice, and that the property owner should seek
5    professional tax advice if he or she has questions
6    regarding tax credits, tax deductibility, or of other tax
7    impacts on the PACE area assessment or assessment contract.
8        (12) That the property owner has a 3-day right to
9    cancel the assessment contract.
10        (13) The estimated date that the first payment will be
11    due.
12    (c) The program administrator shall comply with the
13following when giving the oral confirmation described in
14subsections (a) and (b):
15        (1) The program administrator shall record the oral
16    confirmation in an audio format in accordance with
17    applicable laws.
18        (2) The program administrator may not comply with the
19    requirements in subsections (a) and (b) solely through the
20    use of a prerecorded message or other similar device or
21    method.
22        (3) Recording of an oral confirmation shall be retained
23    by the program administrator for at least 5 years from the
24    time of the recording.
25    (d) The program administrator shall develop additional
26procedures to address the needs and concerns of elderly



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2    (e) This Section only applies to program administrators and
3contractors that finance residential properties of 4 or fewer
4units. This Section does not apply to commercial, industrial,
5multi-family (5 or more units), or agricultural properties.
6    Section 99. Effective date. This Act takes effect upon
7becoming law.