Allowing local governments to establish economic property assessed capital expenditure programs

The bill defines “assessment agreement”, “capital provider”, “E-PACE assessment”, “economic property”, “economic property assessed capital expenditure program” or “E-PACE program”, “financing agreement”, “local government”, “program administrator”, “program guidebook”, “qualified improvement”, and “qualified project”. The bill authorizes a local government to establish E-PACE programs. The bill allows a local government to impose E-PACE assessments on economic properties to repay the financing of a qualified project on economic property located within the boundaries governed by the local government. The bill prohibits a local government from imposing an E-PACE assessment to repay the financing of the purchase or installation of products or devices not permanently affixed to economic property. The bill allows a local government to impose an E-PACE assessment only after the local government approves a project application related to the property to be assessed. The E-PACE assessment shall be created through a written contract between the local government and the owner of the property to be assessed. The bill allows a local government that establishes an E-PACE program to enter into an assessment agreement with an economic property owner to impose an E-PACE assessment on the owner’s property as the means to repay the owner’s financing of a qualified project on that property. _____ party. The bill requires, if a local government delegates administration of an E-PACE program to a third party, the contract delegating administrative authority to require the third party to reimburse the local government for costs associated with monitoring the program, imposing E-PACE assessments, and billing and collecting payments on behalf of the third party. The bill allows financing to pay for E-PACE assessments to include but not be limited to the cost of materials and labor necessary for the installation or modification of a qualified improvement; permit fees; inspection fees; lender fees; E-PACE program application and administration fees; project development and engineering fees; interest reserves; capitalized interest, in an amount determined by the economic property owner and the third party providing financing for an E-PACE program’s qualified project; and other fees or costs incurred by the property owner incidental or ancillary to the installation, modification, or improvement on a specific or pro rata basis, as determined by the local government. The bill provides that an assessment agreement constitutes written notice to the economic property owner subject to the assessment agreement that the owner may be responsible for the payment of any remaining principal balance of the assessment upon the refinance or sale of the property unless the remaining principal balance is assumed by the acquiring property owner. The bill requires each local government to require each economic property owner entering into an assessment agreement to acknowledge, in writing, the notice as part of the execution of the assessment agreement. _____ government intends to authorize E-PACE assessments, entered into voluntarily by a property owner with the local government by means of a written contract, to repay the financing for qualified projects available to property owners; a description of the types of projects that may qualify for E-PACE assessments; a description of the boundaries of the region; a description of the proposed arrangements for administration of the E-PACE program; a statement of the time and place for a public hearing on the proposed E-PACE program; and a statement designating the person or entity charged with administering the E-PACE program and executing assessment agreements. The bill requires a local government establishing an E-PACE program to hold a hearing for the public to comment on the proposed E-PACE program as outlined in the resolution of intent. The bill provides that if two or more local governments have contracted to work together on an E-PACE program, then only one local government shall be required to hold a hearing for public comment on a proposed E-PACE program. The bill requires a local government establishing an E-PACE program to adopt a resolution establishing the E-PACE program and its terms after holding a public hearing relating to the establishment of the E-PACE program. The bill requires a local government to adopt a program guidebook that is consistent with the resolution establishing the E-PACE program. The bill allows a local government to amend an E-PACE program by resolution, subject to the terms of the resolution the local government adopted after holding a public hearing relating to the establishment of the E-PACE program. The bill requires a local government that amends an E-PACE program via resolution to amend the program guidebook related to that E-PACE program accordingly. However, the bill allows the program administrator to amend the language in the program guidebook that does not conflict with the resolution. _____ and its terms to allow the local government to place voluntary E-PACE assessments on property without any additional action by the local government. For the purposes of implementing and administering an E-PACE program, the bill allows a local government to either designate a local government official to administer the E-PACE program, or delegate or contract for professional or administrative services necessary to administer the E-PACE program on a nonexclusive basis. The bill authorizes local governments to impose service fees to offset the actual and reasonable costs of administering an E-PACE program. A one-time fee of no more than $500 may be charged at the time of a property owner’s application. In addition, a servicing fee for approved applications may be calculated as one percent of the total amount financed, not to exceed $50,000. The bill requires each property owner requesting to participate in an E-PACE program to provide a statement certifying the property owner is the legal owner of the benefiting property, the property owner is not delinquent on any mortgage or property tax payments that affect the benefiting property, the property owner is not insolvent or in bankruptcy proceedings, and the title of the benefiting property is not in dispute. The bill prohibits the total debt secured by a property participating in a local government’s E-PACE program, including any E-PACE assessments from the E-PACE program, from exceeding percent of the fair market value of the property as stabilized. The bill prohibits an assessment taken pursuant to an E-PACE program from exceeding percent of the fair market value of the property. _____ E-PACE program. The bill prohibits the term of an E-PACE assessment from exceeding the life of the longest lived qualifying improvement financed in a project that is the basis for the E-PACE assessment. The bill requires the standards for determining a qualifying improvement’s useful life to be contained in the E-PACE program’s program guidebook. The bill requires a local government, prior to approving any qualified projects for an E-PACE program, to provide a description of each type of project that is eligible for the E-PACE program, identify the person or entity that will be authorized to enter into written contracts on behalf of the local government, provide a statement explaining the manner in which property will be assessed and how assessments will be collected, and outline the procedures for billing and collecting E-PACE assessments and remedies for enforcement of a delinquent E-PACE assessment. The bill requires a local government participating in an E-PACE program to establish the form and manner a person may apply to commence a project under the E-PACE program, and to establish a review process to evaluate project applications for E-PACE program financing. The bill lists several requirements for E-PACE program applicants that an E-PACE program application must include. The bill requires a local government to establish a process for reviewing and approving applications for financing. The local government may require a capital provider to certify to the local government, in accordance with a process approved by the local government, that the property owner and the project meet statutory requirements and program guidebook requirements and qualify for financing. The bill requires a local government to execute and record each assessment agreement authorized by the local government’s program administrator. _____ each notice of assessment created for a qualified project authorized by the local government’s program administrator. The bill requires a local government to execute and record each assignment of an assessment agreement to a capital provider and each notice of assignment of assessment authorized by the local government’s regional administrator, with the county recorder where the property subject to the assessment agreement is located. The bill requires, upon completion of a qualified project, the property owner who applied for the qualified project, or the owner’s legal representative, to provide written confirmation that the qualified project was properly completed and is operating as intended. The bill requires a local government, in relation to E-PACE assessment liens for a qualified project, to either bill, collect, and enforce an E-PACE assessment lien at the same time and in the same manner as a property tax, or assign the rights to bill, collect, and enforce an E-PACE assessment to a capital provider. The bill prohibits a local government from making an assignment of the rights to bill, collect, and enforce an E-PACE assessment after the execution of an assessment agreement relating to the qualified project for which the E-PACE assessment is being imposed. The bill allows a capital provider who was assigned the rights to bill, collect, and enforce an E-PACE assessment to enforce the E-PACE assessment in the same manner as prescribed in Code chapter 654 (foreclosure of real estate mortgages) for a mortgage, except assessments not yet due may not be accelerated or eliminated by foreclosure. The bill requires any outstanding and delinquent property taxes to be satisfied prior to the delinquent amounts related to an E-PACE assessment. _____ law or equity for actions taken pursuant to E-PACE program statutes, except in cases of gross negligence, recklessness, or willful misconduct. The bill allows financing for a qualified project to authorize a property owner to directly purchase the equipment and materials necessary for the qualified project; contract, including through a lease agreement, power purchase agreement, or other service contract, for the equipment and materials necessary for the qualified project; or both. The bill requires a local government that authorizes financing through E-PACE assessments to file a written notice of assessment in the recorder’s office of the county in which the property subject to the E-PACE assessment is located. The bill requires the notice to contain the legal description of the property, the name of each property owner, the amount of the assessment, the date on which the assessment was created, the principal amount of the assessment, the term of the assessment, a copy of the assessment agreement, and a reference to the Code chapter authorizing the E-PACE assessment on the property. The bill requires a local government to file and record each executed assignment of an assessment agreement and notice of assignment of assessment. The bill allows a local government to delegate recording responsibilities for a qualified project to a capital provider if the local government assigned its rights to the E-PACE assignment related to that qualified project to the capital provider. The bill requires an E-PACE assessment to be considered a first and prior lien against the property on which the E-PACE assessment is imposed from the date on which the notice of assessment is recorded until the assessment and all associated interest and penalties are paid in full. The bill requires an E-PACE assessment to be considered junior to any local government property tax or ad valorem tax. _____ The bill makes an E-PACE assessment run with the land, and prohibits any portion of the E-PACE assessment under the assessment agreement that is not yet due shall not be accelerated or eliminated by foreclosure of a property tax lien or other foreclosure. The bill makes any provision of a deed of trust, mortgage, or other agreement between a lienholder and a property owner providing for the acceleration of any payment under the deed of trust, mortgage, or agreement solely as the result of entering into an agreement to finance an E-PACE assessment unenforceable as to an assessment agreement. The bill allows a lienholder or loan servicer to increase the monthly amount held in escrow for an economic property as required to annually pay the E-PACE assessment related to that property. The bill allows a local government implementing an E-PACE program pursuant to this chapter may contract with another local government in accordance with Code chapter 28E (joint exercise of governmental powers), including a county assessor, to perform the duties of the local government relating to the billing, collection, enforcement, and remittance of E-PACE assessments. The bill allows a combination of local governments to agree in accordance with Code chapter 28E to implement an E-PACE program jointly. The bill allows a local government to contract with a third party on a nonexclusive basis. If a local government contracts with a third party including but not limited to another local government to administer an E-PACE program, then the bill allows other third parties to enter into a contract to administer the E-PACE program on the same terms if the contracting local government determines it requires a third-party administrator in the future. _____ or other authorization from the local government to a property owner contingent on the person entering into an assessment agreement to repay the financing of a qualified project, or otherwise compel a property owner to enter into an assessment agreement. The bill prohibits the state and each local government from using public funds to fund or repay a loan between a capital provider and a property owner. The bill prohibits provisions being enacted in the bill from being construed to pledge, offer, or encumber the full faith and credit of a local government. The bill prohibits a local government from pledging its full faith and credit for a lien amount through an E-PACE program.