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Public Act 100-0077


 

Public Act 0077 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-0077
 
HB2831 EnrolledLRB100 06946 HLH 19794 b

    AN ACT concerning revenue.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    "Section 1. Short title. This Act may be cited as the
Property Assessed Clean Energy Act.
 
    Section 5. Definitions. As used in this Act:
    "Alternative energy improvement" means the installation or
upgrade of electrical wiring, outlets, or charging stations to
charge a motor vehicle that is fully or partially powered by
electricity.
    "Assessment contract" means a voluntary written contract
between the local unit of government and record owner governing
the terms and conditions of financing and assessment under a
program.
    "PACE area" means an area within the jurisdictional
boundaries of a local unit of government created by an
ordinance or resolution of the local unit of government to
provide financing for energy projects under a property assessed
clean energy program. A local unit of government may create
more than one PACE area under the program, and PACE areas may
be separate, overlapping, or coterminous.
    "Energy efficiency improvement" means equipment, devices,
or materials intended to decrease energy consumption or promote
a more efficient use of electricity, natural gas, propane, or
other forms of energy on property, including, but not limited
to, all of the following:
        (1) insulation in walls, roofs, floors, foundations,
    or heating and cooling distribution systems;
        (2) 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;
        (3) automated energy control systems;
        (4) high efficiency heating, ventilating, or
    air-conditioning and distribution system modifications or
    replacements;
        (5) caulking, weather-stripping, and air sealing;
        (6) replacement or modification of lighting fixtures
    to reduce the energy use of the lighting system;
        (7) energy controls or recovery systems;
        (8) day lighting systems; and
        (9) any other installation or modification of
    equipment, devices, or materials approved as a utility
    cost-savings measure by the governing body.
    "Energy project" means the installation or modification of
an alternative energy improvement, energy efficiency
improvement, or water use improvement, or the acquisition,
installation, or improvement of a renewable energy system that
is affixed to a stabilized existing property (not new
construction).
    "Governing body" means the county board or board of county
commissioners of a county, the city council of a city, or the
board of trustees of a village.
    "Local unit of government" means a county, city, or
village.
    "Person" means an individual, firm, partnership,
association, corporation, limited liability company,
unincorporated joint venture, trust, or any other type of
entity that is recognized by law and has the title to or
interest in property. "Person" does not include a local unit of
government or a homeowner's or condominium association.
    "Program administrator" means a for-profit entity or
not-for profit entity that will administer a program on behalf
of or at the discretion of the local unit of government. It or
its affiliates, consultants, or advisors shall have done
business as a program administrator or capital provider for a
minimum of 18 months and shall be responsible for arranging
capital for the acquisition of bonds issued by the local unit
of government to finance energy projects.
    "Property" means privately-owned commercial, industrial,
non-residential agricultural, or multi-family (of 5 or more
units) real property located within the local unit of
government, but does not include property owned by a local unit
of government or a homeowner's or condominium association.
    "Property assessed clean energy program" or "program"
means a program as described in Section 10.
    "Record owner" means the person who is the titleholder or
owner of the beneficial interest in property.
    "Renewable energy resource" includes energy and its
associated renewable energy credit or renewable energy credits
from wind energy, solar thermal energy, photovoltaic cells and
panels, biodiesel, anaerobic digestion, and hydropower that
does not involve new construction or significant expansion of
hydropower dams. For purposes of this Act, landfill gas
produced in the State is considered a renewable energy
resource. The term "renewable energy resources" does not
include the incineration or burning of any solid material.
    "Renewable energy system" means a fixture, product,
device, or interacting group of fixtures, products, or devices
on the customer's side of the meter that use one or more
renewable energy resources to generate electricity.
    "Water use improvement" means any fixture, product,
system, device, or interacting group thereof for or serving any
property that has the effect of conserving water resources
through improved water management or efficiency.
 
    Section 10. Property assessed clean energy program;
creation.
    (a) Pursuant to the procedures provided in Section 15, a
local unit of government may establish a property assessed
clean energy program and, from time to time, create a PACE area
or areas under the program.
    (b) Under a program, the local unit of government may enter
into an assessment contract with the record owner of property
within a PACE area to finance or refinance one or more energy
projects on the property. The assessment contract shall provide
for the repayment of the cost of an energy project through
assessments upon the property benefited. The financing or
refinancing may include any and all of the following: 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 record
owner pursuant to the installation and the issuance of bonds on
a specific or pro rata basis, as determined by the local unit
of government and may also include a prepayment premium.
    (c) A program may be administered by a program
administrator or the local unit of government.
 
    Section 15. Program established.
    (a) To establish a property assessed clean energy program,
the governing body of a local unit of government shall adopt a
resolution or ordinance that includes all of the following:
        (1) a finding that the financing of energy projects is
    a valid public purpose;
        (2) a statement of intent to facilitate access to
    capital from a program administrator to provide funds for
    energy projects, which will be repaid by assessments on the
    property benefited with the agreement of the record owners;
        (3) a description of the proposed arrangements for
    financing the program through a program administrator;
        (4) the types of energy projects that may be financed;
        (5) a description of the territory within the PACE
    area;
        (6) reference to a report on the proposed program as
    described in Section 20; and
        (7) the time and place for any public hearing required
    for the adoption of the proposed program by resolution or
    ordinance;
        (8) matters required by Section 20 to be included in
    the report; for this purpose, the resolution or ordinance
    may incorporate the report or an amended version thereof by
    reference; and
        (9) 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.
    (b) A property assessed clean energy program may be amended
by resolution or ordinance of the governing body. Adoption of
the resolution or ordinance shall be preceded by a public
hearing if required.
 
    Section 20. Report. The report on the proposed program
required under Section 15 shall include all of the following:
        (1) a form of assessment contract between the local
    unit of government and record owner governing the terms and
    conditions of financing and assessment under the program.
        (2) identification of an official authorized to enter
    into a assessment contract on behalf of the local unit of
    government;
        (3) a maximum aggregate annual dollar amount for all
    financing to be provided by the program administrator under
    the program;
        (4) an application process and eligibility
    requirements for financing energy projects under the
    program;
        (5) a method for determining interest rates on
    assessment installments, repayment periods, and the
    maximum amount of an assessment;
        (6) an explanation of how assessments will be made and
    collected;
        (7) a plan to raise capital to finance improvements
    under the program pursuant to the sale of bonds, subject to
    the Special Assessment Supplemental Bond and Procedures
    Act, to a program administrator;
        (8) information regarding all of the following, to the
    extent known, or procedures to determine the following in
    the future:
            (A) any revenue source or reserve fund or funds to
        be used as security for bonds described in paragraph
        (7); and
            (B) any application, administration, or other
        program fees to be charged to record 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;
        (9) a requirement that the term of an assessment not
    exceed the useful life of the energy project paid for by
    the assessment; provided that the local unit of government
    may allow projects that consist of multiple improvements
    with varying lengths of useful life to have a term that is
    no greater than the improvement with the longest useful
    life;
        (10) a requirement for an appropriate ratio of the
    amount of the assessment to the assessed value of the
    property or market value of the property as determined by a
    recent appraisal no older than 12 months;
        (11) a requirement that the record owner of property
    subject to a mortgage obtain written consent from the
    mortgage holder before participating in the program;
        (12) provisions for marketing and participant
    education;
        (13) provisions for an adequate debt service reserve
    fund, if any; and
        (14) quality assurance and antifraud measures.
 
    Section 25. Contracts with record owners of property.
    (a) After creation of a program and PACE area, a record
owner of property within the PACE area may apply with the local
unit of government or its program administrator for funding to
finance an energy project.
    (b) A local unit of government may impose an assessment
under a property assessed clean energy program only pursuant to
the terms of a recorded assessment contract with the record
owner of the property to be assessed.
    (c) Before entering into an assessment contract with a
record owner under a program, the local unit of government
shall verify all of the following:
        (1) that the property is within the PACE area;
        (2) that there are no delinquent taxes, special
    assessments, or water or sewer charges on the property;
        (3) that there are no delinquent assessments on the
    property under a property assessed clean energy program;
        (4) there are no involuntary liens on the property,
    including, but not limited to, construction or mechanics
    liens, lis pendens or judgments against the record owner,
    environmental proceedings, or eminent domain proceedings;
        (5) that no notices of default or other evidence of
    property-based debt delinquency have been recorded and not
    cured;
        (6) that the record owner is current on all mortgage
    debt on the property, the record owner has not filed for
    bankruptcy in the last 2 years, and the property is not an
    asset to a current bankruptcy.
        (7) all work requiring a license under any applicable
    law to make a qualifying improvement shall be performed by
    a registered contractor that has agreed to adhere to a set
    of terms and conditions through a process established by
    the local unit of government.
        (8) the contractors to be used have signed a written
    acknowledgement that the local unit of government will not
    authorize final payment to the contractor until the local
    unit of government has received written confirmation from
    the record owner that the improvement was properly
    installed and is operating as intended; provided, however,
    that the contractor retains all legal rights and remedies
    in the event there is a disagreement with the owner;
        (9) that the amount of the assessment in relation to
    the greater of the assessed value of the property or the
    appraised value of the property, as determined by a
    licensed appraiser, does not exceed 25%; and
        (10) a requirement that an assessment of the existing
    water or energy use and a modeling of expected monetary
    savings have been conducted for any proposed project.
    (d) At least 30 days before entering into an agreement with
the local unit of government, the record owner shall provide to
the holders or loan servicers of any existing mortgages
encumbering or otherwise secured by the property a notice of
the record owner's intent to enter into an assessment contract
with the local unit of government, together with the maximum
principal amount to be financed and the maximum annual
assessment necessary to repay that amount, along with a request
that the holders or loan servicers of any existing mortgages
consent to the record owner subjecting the property to the
program. A verified copy or other proof of those notices and
the written consent of the existing mortgage holder for the
record owner to enter into the assessment contract and
acknowledging that the existing mortgage will be subordinate to
the financing and assessment agreement and that the local unit
of government can foreclose the property if the assessment is
not paid shall be provided to the local unit of government.
    (e) A provision in any agreement between a local unit of
government and a public or private power or energy provider or
other utility provider is not enforceable to limit or prohibit
any local unit of government from exercising its authority
under this Section.
    (f) The record owner has signed a certification that the
local unit of government has complied with the provisions of
this Section, which shall be conclusive evidence as to
compliance with these provisions, but shall not relieve any
contractor, or local unit of government, from any potential
liability.
    (g) This Section is additional and supplemental to county
and municipal home rule authority and not in derogation of such
authority or limitation upon such authority.
 
    Section 30. Assessments constitute a lien; billing.
    (a) An assessment imposed under a property assessed clean
energy program, including any interest on the assessment and
any penalty, shall 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 of the
assessment contract shall run with the property until the
assessment is paid in full and a satisfaction or release for
the same has been recorded with the local unit of government
and shall have the same priority and status as other property
tax and assessment liens. The local unit of government shall
have all rights and remedies in the case of default or
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.
    (b) Installments of assessments due under a program may be
included in each tax bill issued under the Property Tax Code
and may be collected at the same time and in the same manner as
taxes collected under the Property Tax Code. 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. In no event will partial payment of an assessment be
allowed.
 
    Section 35. Bonds.
    (a) A local unit of government may issue bonds under the
Special Assessment Supplemental Bond and Procedures Act to
finance energy projects under a property assessed clean energy
program.
    (b) Bonds issued under subsection (a) shall not be general
obligations of the local unit of government, but shall be
secured by the following as provided by the governing body in
the resolution or ordinance approving the bonds:
        (1) payments of assessments on benefited property
    within the PACE area or areas specified; and
        (2) if applicable, revenue sources or reserves
    established by the local unit of government from bond
    proceeds or other lawfully available funds.
    (c) A pledge of assessments, funds, or contractual rights
made by a governing body in connection with the issuance of
bonds 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.
    (d) Bonds of one series issued under this Act may be
secured on a parity with bonds 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.
    (e) Bonds issued under this Act are subject to the Bond
Authorization Act and the Registered Bond Act.
    (f) Bonds 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.
    (g) A program administrator can assign its rights to
purchase the bonds to a third party (the "bond purchaser").
    (h) A program administrator shall retain a law firm to give
a bond opinion for the benefit of the program administrator or
bond purchaser.
 
    Section 40. Joint property assessed clean energy programs.
    (a) A local unit of government may join with any other
local unit of government, or with any public or private person,
or with any number or combination thereof, under the
Intergovernmental Cooperation Act, 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.
    (b) If a program is implemented jointly by 2 or more local
units of government pursuant to subsection (a), a single public
hearing held jointly by the cooperating local units of
government is sufficient to satisfy the requirements of this
Act.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 8/11/2017