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REFERENCE TITLE: water and energy improvement districts |
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State of Arizona House of Representatives Fifty-second Legislature First Regular Session 2015
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HB 2666 |
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Introduced by Representatives Sherwood: Clark
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AN ACT
amending section 48-572, Arizona Revised Statutes; amending title 48, chapter 4, Arizona Revised Statutes, by adding article 7; relating to special taxing districts.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 48-572, Arizona Revised Statutes, is amended to read:
48-572. Purposes for which public improvements may be undertaken; powers incidental to public improvements
A. When If the public interest or convenience requires, the governing body of a municipality may:
1. Order the whole or any portion, either in length or width, of one or more of the streets of the municipality graded or regraded, paved or repaved, or otherwise improved or reimproved.
2. Order the construction, reconstruction or repair of any tunnel, subway, viaduct or conduit in, on, under or over any street, or land of the municipality or any land on, under or over which the municipality may have an easement or right-of-way therefor.
3. Order the construction or reconstruction of sidewalks, crosswalks, curbs, gutters, culverts, bridges, tunnels, siphons, manholes, steps, parkings and parkways and also pipes, hydrants and appliances for fire protection.
4. Order construction, reconstruction or acquisition of sewers, ditches, drains, conduits, pipelines and channels for sanitary and drainage purposes, or either or both thereof, with outlets, cesspools, manholes, catch basins, flush tanks, septic tanks, connecting sewers, ditches, drains, conduits, channels and other appurtenances in, under, over or through any street, or any land of the municipality or any right-of-way granted or obtained for such purpose, either within or without the limits of the municipality.
5. Order construction, reconstruction or acquisition of waterworks, ditches, canals, channels, conduits, pipelines and siphons, together with the necessary or usual appurtenances for carrying storm water or water from irrigation ditches, watercourses, streams or springs into, through or out of the municipality, in, under, over or through any street, or any land of the municipality or any right-of-way granted or obtained for such purpose, either within or without the limits of the municipality.
6. Order construction, reconstruction or acquisition of breakwater levees or walls, docks, wharves, marinas, boat harbors and related facilities.
7. Order construction, reconstruction or acquisition of lighting plants and poles, wires, conduits, lamps, standards and other appliances for the purpose of lighting and beautifying the streets improved.
8. Order the whole or any portion of any off‑street parking area and entrances thereto of the municipality graded or regraded, paved or repaved, or otherwise improved or reimproved, order lighting plants and poles, wires, conduits, lamps, standards, and other appliances for the purpose of lighting, landscaping and beautifying the streets or off-street parking areas and entrances thereto to be improved and order construction on such land of parking structures that may have any portion at, above or below grade. If in connection with any lot or parcel within a proposed assessment district adequate off-street parking facilities have been provided, such lot or parcel shall be excluded from the assessment district and shall not be assessed for such improvements if within the time and in the manner provided in section 48‑579, subsection C the owner or owners file a written objection to the extent of the assessment district. For the purposes of this paragraph in cities having a zoning code or ordinance, unless the off-street parking facilities provided meet or exceed the requirements of the zoning code or ordinance for a lot or parcel of that size in that zone, then such off‑street parking facilities shall not be deemed adequate. In cities not having a zoning code or ordinance, the facilities provided shall not be deemed adequate unless parking space for one motor vehicle is provided for each three hundred square feet of floor space in the building served by such off‑street parking site. If any lot or parcel within a proposed assessment district organized for improvements provided for in this paragraph is zoned and used exclusively for single family residential purposes, such lot or parcel shall be excluded from the assessment district and shall not be assessed for such improvements if within the time and in the manner provided in section 48‑579, subsection C the owner or owners file a written objection to the extent of the assessment district.
9. Order the construction or reconstruction of any work incidental to or connected with the improvements set forth in this subsection.
10. Pursuant to section 48‑622, and notwithstanding any other law, construct, acquire or improve a wastewater treatment facility, drinking water facility or nonpoint source project with monies borrowed from or financial assistance including forgivable principal provided by the water infrastructure finance authority of Arizona.
11. Pursuant to article 7 of this chapter, provide for the use of energy or water efficient systems or devices.
B. In addition to all powers specifically granted by or reasonably inferred under the provisions of this article, cities and towns, acting through their governing bodies, may:
1. Join with other cities or towns or any improvement district or sanitary district or the state, or any of its departments or agencies, the federal government or any of its departments, agencies or instrumentalities, in the construction, operation or maintenance of improvements authorized by this section.
2. Join with any other city, town, improvement district or sanitary district in improving streets running upon on or along the boundaries of the city or town and levy assessments or issue bonds for the proportionate part of the city or town of the cost of the improvement.
3. Accept from the state, or federal government, or any agency, department or instrumentality of either, grants for or in aid of the construction of any of the improvements provided by this article, and enter into contracts with the state, the federal government, or any agency, department or instrumentality of either or both, for the construction or supervision of construction by the state, the federal government or any agency, department or instrumentality of either or both of any such improvements, in accordance with the plans, specifications, rules and regulations of the state, the federal government, or any agency, department or instrumentality of either or both, but reserving to the city or town the right to assess against the property benefited by the improvement, and located within the city or town, that portion of the cost of the improvement which does not qualify for aid under the state or federal grant.
Sec. 2. Title 48, chapter 4, Arizona Revised Statutes, is amended by adding article 7, to read:
ARTICLE 7. WATER AND ENERGY IMPROVEMENT DISTRICTS
48-751. Definitions
In this article, unless the context otherwise requires:
1. "District" means a water and energy improvement district that is established and designated under this article.
2. "Governing body" means the body that by law is constituted as the legislative department of the local government.
3. "Local government" means a city, town or county.
4. "Program" means a program that is established under this article.
5. "Qualified improvement" means an improvement that is fixed to qualified real property and that is intended to make the property more energy or water efficient or independent, including a product, device or interacting group of products or devices on the customer's side of the meter that use energy technology to generate electricity, provide thermal energy or regulate temperature.
6. "Qualified project" means the installation or modification of a qualified improvement.
7. "Qualified real property" means privately owned commercial or industrial real property or residential real property with five or more dwelling units.
48-752. Establishment of program; financing
A. The governing body of a local government may determine that it is convenient and advantageous to establish a program under this article.
B. An authorized official of the local government that establishes a program may enter into a written contract with a record owner of qualified real property in a district that is designated under this article to impose an assessment to repay the owner's financing of a qualified project on the owner's property. A third party or, if authorized by the program, the local government may provide the financing to be repaid through assessments.
C. If the program provides for third-party financing, the authorized official of the local government who enters into a written contract with a property owner under subsection B of this section must also enter into a written contract with the party that provides the financing for a qualified project under the program in order to service the debt through assessments.
D. If the program provides for local government financing, the written contract prescribed by subsection B of this section must be a contract to finance the qualified project through assessments.
E. The financing for which assessments are imposed may include any of the following:
1. The cost of materials and labor necessary for the installation or modification of a qualified improvement.
2. Permit fees.
3. Inspection fees.
4. Lender fees.
5. Program application and administrative fees.
6. Project development and engineering fees.
7. Third-party review fees, including fees for verification reviews, prescribed by section 48-757.
8. Any other fees or costs that may be incurred by the property owner incident to the installation, modification or improvement on a specific or pro rata basis, as determined by the local government.
48-753. Designation of district
A. The governing body of a local government may determine that it is convenient and advantageous to designate an area within the local government's jurisdiction as a district within which authorized local government officials and record owners of qualified real property may enter into written contracts to impose assessments to repay the financing by owners of qualified projects on the owners' property and, if authorized by the local government program, finance the qualified project. Only those record owners of qualified real property that is located within the jurisdictional boundaries of the local government for which the program has been formed who have entered into voluntary written agreements pursuant to this article may be included within the district and are subject to an assessment under this article.
B. An area that is designated as a district by the governing body of a local government under this section shall be composed of any qualified real property that is located within the jurisdictional boundaries of the local government and that from time to time is subject to a voluntary written agreement between the district and the record owner of the qualified real property pursuant to this article. The district may include noncontiguous real property if it is wholly within the jurisdictional boundaries of the local government.
48-754. Procedure for establishment of program; amendment of program
A. To establish a program under this article, the governing body of a local government shall take the following actions in the following order:
1. Adopt a resolution of intent that includes all of the following:
(a) A finding that, if appropriate, financing qualified projects through contractual assessments is a valid public purpose.
(b) A statement that the local government intends to make contractual assessments to repay financing for qualified projects available to property owners.
(c) A description of the types of qualified projects that may be subject to contractual assessments.
(d) A description of the boundaries of the district.
(e) A description of any proposed arrangements for third-party financing to be available or any local government financing to be provided for qualified projects.
(f) A description of local government debt servicing procedures if third-party financing will be provided and if assessments will be collected to service a third-party debt.
(g) A reference to the report on the proposed program that is prepared according to section 48-755 and a statement that identifies the location where the report is available for public inspection.
(h) A statement of the time and place for a public hearing on the proposed program.
(i) A statement that identifies the appropriate local official and the appropriate assessor for the purposes of consultation regarding collecting the proposed contractual assessments by way of property taxes that are imposed on the assessed property.
2. Hold a public hearing at which the public may comment on the proposed program, including the report that is required by section 48-755.
3. Adopt a resolution that establishes the program and the terms of the program, including each item that is included in the report under section 48-755 and a description of each aspect of the program that may be amended only after another public hearing is held. The resolution may incorporate the report or the amended version of the report, as appropriate, by reference.
B. The governing body of a local government may amend a program by resolution.
C. On proper formation of a district, a local government may:
1. Hire and set the compensation of a program administrator and program staff.
2. Contract for professional services that are necessary to administer a program.
3. Impose fees to offset the costs of administering a program. The fees that are authorized by this paragraph may be assessed as:
(a) A program application fee that the property owner who requests to participate in the program pays.
(b) A component of the interest rate on the assessment in the written contract between the local government and the property owner.
(c) A combination of subdivisions (a) and (b) of this paragraph.
48-755. Report regarding assessment; demonstration of financial ability
A. The report for a proposed program required by section 48-754 must include:
1. A map that shows the boundaries of the proposed district.
2. A form contract between the local government and the property owner that specifies the terms of both of the following:
(a) The assessment under the program.
(b) The financing that a third party or the local government, as appropriate, provides.
3. If the proposed program provides for third-party financing, a form contract between the local government and the third party regarding the servicing of the debt through assessments.
4. A description of types of qualified projects that are eligible for contractual assessments.
5. A statement that identifies a local government official who is authorized to enter into written contracts on behalf of the local government.
6. A plan for ensuring sufficient capital for third-party financing and, if appropriate, raising capital for local government financing for qualified projects.
7. If bonds will be issued to provide capital to finance qualified projects as part of the program as provided by section 48-764, all of the following:
(a) A maximum aggregate annual dollar amount for financing through contractual assessments to be provided by the local government under the program.
(b) A method for ranking requests from property owners for financing through contractual assessments in priority order if requests appear likely to exceed the authorization amount.
(c) A method for determining the interest rate and period during which contracting owners would pay an assessment and the maximum amount of an assessment.
8. A method for ensuring that the period of the contractual assessment does not exceed the useful life of the qualified project that is the basis for the assessment.
9. A description of the application process and eligibility requirements for financing qualified projects to be repaid through contractual assessments under the program.
10. A method as prescribed by subsection B of this section for ensuring that property owners who request to participate in the program demonstrate the financial ability to fulfill financial obligations to be repaid through contractual assessments.
11. A statement that explains the manner in which property will be assessed and assessments will be collected.
12. A statement that explains the lender notice requirement provided by section 48-756.
13. A statement that explains the review requirement provided by section 48-757.
14. A description of marketing and participant education services to be provided for the program.
15. A description of quality assurance and antifraud measures to be instituted for the program.
16. The procedures for collecting the proposed contractual assessments.
B. The method for ensuring a demonstration of financial ability under subsection A of this section must be based on appropriate underwriting factors, including:
1. Providing for verification of all of the following:
(a) That the property owner who requests to participate under the program is all of the following:
(i) The legal owner of the qualified real property to be benefited.
(ii) Current on mortgage and property tax payments.
(iii) Not insolvent or in bankruptcy proceedings.
(b) That the title of the qualified real property to be benefited is not in dispute.
2. Requiring an appropriate ratio of the amount of the assessment to the assessed value of the property.
C. The local government shall make the report available for public inspection at both of the following:
1. The local government's website.
2. The office of the official who is designated to enter into written contracts on behalf of the local government under the program.
48-756. Notice to mortgage holder required for participation
Before a local government may enter into a written contract with a record owner of qualified real property to impose an assessment to repay the financing of a qualified project under this article, both of the following must occur:
1. The holder of any mortgage or deed of trust on the property must be given written notice of the owner's intention to participate in a program under this article on or before the thirtieth day before the date the written contract for assessment between the owner and the local government is executed.
2. A written consent from the holder of the mortgage or deed of trust on the property must be obtained.
48-757. Review required
A. A program that is established under this article must require a review of water or energy baseline conditions and a review of the projected water or energy savings for each proposed qualified project.
B. After a qualified project is completed, the local government shall obtain verification that the qualified project was properly completed and is operating as intended.
C. An independent third party shall conduct the baseline water or energy review or verification review under this section.
48-758. Direct acquisition by owner
The proposed arrangements for financing a qualified project may authorize the property owner to purchase directly the related equipment and materials for the installation or modification of a qualified improvement and contract directly, including through lease, power purchase agreement or other service contract, for the installation or modification of a qualified improvement.
48-759. Recording of notice of contractual assessment required
A. A local government that authorizes financing through contractual assessments under this article shall record a written notice of each contractual assessment in the real property records of the county in which the property is located.
B. The notice prescribed by this section must contain all of the following:
1. The amount of the assessment.
2. The legal description of the property.
3. The name of each property owner.
4. A reference to the statutory assessment lien provided under this article.
48-760. Exercise of powers
The governing body of a local government that establishes a program as prescribed by section 48-754 may exercise the powers that are granted under this article.
48-761. Authorized assessments
A. An assessment under this article may be imposed to repay the financing of qualified projects on qualified real property that is located in a district designated under this article.
B. An assessment under this article may not be imposed to repay the financing of:
1. Facilities for undeveloped lots or lots that are undergoing development at the time of the assessment.
2. The purchase or installation of products or devices that are not permanently fixed to real property.
C. An assessment may be imposed under this article only if there is a written contract regarding the assessment with the record owner of the qualified real property to be assessed.
48-762. Lien; enforcement; delinquency
A. A contractual assessment under this article and any interest or penalties on the assessment:
1. Is a first and prior lien against the real property on which the assessment is imposed from the date on which the notice of contractual assessment is recorded as provided by section 48-759 and until the assessment, interest or penalty is paid.
2. Has the same priority status as a lien for any other ad valorem tax.
B. The lien that arises pursuant to this section runs with the land, and that portion of the assessment under the assessment contract that has not yet become due is not eliminated by foreclosure of a property tax lien.
C. The assessment lien may be enforced by the local government in the same manner that a property tax lien against real property may be enforced by the local government.
D. Delinquent installments of the assessments incur interest and penalties in the same manner as delinquent property taxes.
E. A local government may recover costs and expenses, including attorney fees, in a suit to collect a delinquent installment of an assessment in the same manner as in a suit to collect a delinquent property tax.
48-763. Collection of assessments
The governing body of a local government may contract with the governing body of another jurisdiction or district, including the county assessor of the county in which the district is to be located, to perform the duties of the local government relating to the collection of assessments that the local government imposes under this article.
48-764. Bonds or notes; security; public purpose
A. A local government may issue bonds or notes to finance qualified projects through contractual assessments under this article.
B. Bonds or notes that are issued under this section may not be general obligations of the local government. The bonds or notes must be secured by one or more of the following as provided by the governing body of the local government in the resolution or ordinance that approves the bonds or notes:
1. Payments of contractual assessments on benefited property in one or more specified districts designated under this article.
2. Reserves that the local government establishes from grants, bonds or net proceeds or other lawfully available funds.
3. Municipal bond insurance, lines of credit, public or private guaranties, standby bond purchase agreements, collateral assignments, mortgages or any other available means of providing credit support or liquidity.
4. Any other funds that are lawfully available for purposes that are consistent with this article.
C. A local government pledge of assessments, funds or contractual rights in connection with the issuance of bonds or notes by the local government under this article is a first lien on the assessments, funds or contractual rights that are pledged in favor of the person to whom the pledge is given, without further action by the local government. The lien is valid and binding against any other person, with or without notice.
D. Bonds or notes that are issued under this article further an essential public and governmental purpose, including:
1. Improvement of the reliability of the state electrical system.
2. Reduction of energy costs.
3. Economic stimulation and development.
4. Enhancement of property values.
5. Enhancement of employment opportunities.
6. Reduction in greenhouse gas emissions.
48-765. Joint implementation
A. Any combination of local governments may agree to jointly implement or administer a program under this article.
B. If two or more local governments implement a program jointly, a single public hearing held jointly by the cooperating local governments is sufficient to satisfy the requirement of section 48-754, subsection A, paragraph 2.
C. One or more local governments may contract with a third party, including another local government, to administer a program.
48-766. Prohibited acts
A local government that establishes a district under this article may not:
1. Make the issuance of a permit, license or other authorization from the local government to a person who owns property in the district contingent on the person entering into a written contract to repay the financing of a qualified project through contractual assessments under this article.
2. Otherwise compel a person who owns property in the district to enter into a written contract to repay the financing of a qualified project through contractual assessments under this article.
Sec. 3. Legislative intent
The legislature finds, determines and declares that:
1. The development and creation of new jobs and opportunities within the energy and construction industries of this state are critically important to the growth of the economy in this state in the twenty-first century.
2. The installation of energy efficiency upgrades in homes and buildings within this state will continue to play a central and critical role in the future of this state and of the nation as a whole and will advance the security, economic well-being and public and environmental health of this state, as well as contribute to the energy independence of our nation.
3. The development, production and efficient use of renewable energy will continue to play a central and critical role in the future of this state and of the nation as a whole and will advance the security, economic well‑being and public and environmental health of this state, as well as contribute to the energy independence of our nation.
4. The conservation and efficient use of water resources likewise play a central and critical role in the future of this state and its individual cities and counties and serve to advance the security, economic well-being and public and environmental health of this state.
5. The inclusion of energy efficiency and renewable energy production projects and water conservation improvements and water resource management improvements for use in improvement districts, and the powers conferred under title 48, chapter 4, article 7, Arizona Revised Statutes, as well as the expenditures of public monies made pursuant to title 48, chapter 4, article 7, Arizona Revised Statutes, serve a valid public purpose, and that the enactment of this section is expressly declared to be in the public interest.