Bill Text: CT HB05563 | 2016 | General Assembly | Comm Sub

Connecticut House Bill 5563 (Prior Session Legislation)

Bill Title: An Act Concerning The Residential Sustainable Energy Program.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2016-04-27 - File Number 735 [HB05563 Detail]

Download: Connecticut-2016-HB05563-Comm_Sub.html

General Assembly		*Substitute Bill No. 5563*
*February Session, 2016*		_____HB05563ET____041916____

AN ACT CONCERNING THE RESIDENTIAL SUSTAINABLE ENERGY PROGRAM.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 7-121n of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2017):

(a) As used in this section:

(1) ["Energy improvements"] "Qualifying improvements" means any renovation or retrofitting of qualifying real property to reduce energy consumption or installation of a [renewable energy] system for clean energy, as defined in section 16-245n, or customer-side distributed resources, as defined in section 16-1, permanently fixed to such qualifying real property to service qualifying real property, [provided such renovation, retrofit or installation is permanently fixed to such qualifying real property] including, but not limited to, (A) related improvements to address water conservation, (B) waste reduction, (C) health and safety issues, including, but not limited to, asbestos, mold and lead remediation, and (D) resiliency measures, including, but not limited to, flood-resistant construction and hurricane resistant construction;

(2) ["Qualifying real property"] "Qualifying residential real property" means a single-family or multifamily residential dwelling [or a nonresidential building, regardless of ownership, that a municipality has determined can benefit from energy improvements] of four or fewer units that meets the qualifications established for the residential sustainable energy program;

(3) "Property owner" means an owner or owners of qualifying residential real property who [desires] desire to install [energy] qualifying improvements and [provides] who provide free and willing consent to the [contractual] benefit assessment against the qualifying residential real property; [and]

[(4) "Sustainable energy program" means a municipal program that authorizes a municipality to enter into contractual assessments on qualifying real property with property owners to finance the purchase and installation of energy improvements to qualifying real property within its municipal boundaries.]

(4) "Residential sustainable energy program" means a program that facilitates qualifying improvements and utilizes the benefit assessment authorized by this section as security for the financing of qualifying improvements;

(5) "Municipality" means a municipality, as defined in section 7-369;

(6) "Benefit assessment" means the assessment authorized by this section;

(7) "Participating municipality" means a municipality that has entered into a written agreement, as approved by its chief executive officer or its legislative body, with the bank pursuant to which the municipality has agreed to assess, collect, remit and assign benefit assessments to the bank in return for qualifying improvements for benefited property owners within such municipality and costs reasonably incurred in performing such duties;

(8) "Bank" means the Connecticut Green Bank, established under section 16-245n; and

(9) "Third-party capital provider" means an entity, other than a bank, that provides financing, leases or power purchase agreements directly to benefited property owners for qualifying improvements.

[(b) Any municipality, that determines it is in the public interest, may establish a sustainable energy program to facilitate the increase of energy efficiency and renewable energy. A municipality shall make such a determination after issuing public notice and providing an opportunity for public comment regarding the establishment of a sustainable energy program.]

(b) (1) The bank shall establish a residential sustainable energy program in the state. In furtherance of such program, the bank is authorized to make appropriations and issue bonds, notes or other obligations for the purpose of financing (A) qualifying improvements, (B) related energy audits, and (C) verification reports of the installation and effectiveness of such improvements. The bank may encourage third-party capital providers to provide financing directly to benefited property owners in lieu of or in addition to the bank providing such financing. The bonds, notes, other obligations or other financing provided by third-party capital providers may be secured as to both principal and interest by a (i) pledge of the liens, (ii) such other collateral, and (iii) revenues to be derived from the residential sustainable energy program, including revenues from benefit assessments on qualifying residential real property, as authorized in this section.

(2) When the bank or third-party capital provider has made appropriations for qualifying improvements for qualifying residential real property, the participating municipality in which the qualifying residential real property is located shall, upon notice from the bank or third-party capital, levy a benefit assessment against the qualifying residential real property benefited by such qualifying improvements.

(3) Any such qualifying improvement shall be permanently fixed to such property but may include (A) the property owners share of ancillary construction costs to extend the energy infrastructure as necessary to enable the clean energy or distributed energy improvement, (B) a third-party ownership arrangement, including, but not limited to, a power purchase agreement and a lease agreement, provided the duration of any such third-party ownership agreement is not less than the lesser of the average estimated useful life of the principal components or ten years, and (C) subscribership in a shared clean energy facility, as defined in public act 15-113.

[(c)] (4) [Notwithstanding the provisions of section 7-374 or any other public or special act that limits or imposes] The bank shall develop program guidelines governing the terms and conditions [on municipal bond issues, any municipality that establishes a sustainable energy program under this section may issue bonds, as necessary, for the purpose of financing (1) energy improvements; (2) related energy audits; and (3) renewable energy system feasibility studies and the verification of the installation of such improvements. Such financing shall be secured by special contractual assessments on the qualifying real property.] under which funding may be made available to the residential sustainable energy program, in consultation with representatives from the banking industry, municipalities and property owners, and serve as an aggregating entity for the purpose of securing state and private third-party financing for qualifying residential real property especially benefited thereby.

(5) The bank shall adopt general standards establishing eligible qualifying improvements, products and measures that satisfy energy savings, water conservation or other clean energy sustainability or resiliency goals consistent with the purpose of the residential sustainable energy program.

(6) The bank (A) shall establish, in consultation with the Department of Banking, a loan loss reserve or other credit enhancement program for qualifying residential real property, and (B) may use the services of one or more private, public or quasi-public third-party administrators to administer, provide support or obtain financing for the residential sustainable energy program.

(7) The bank shall adopt consumer protection standards in consultation with the Department of Banking with which any third-party capital provider or private, public or quasi-public third-party administrator shall demonstrate compliance before participating in the residential sustainable energy program.

(8) The bank shall adopt, in consultation with the Department of Banking, qualifications for third-party capital providers to participate in the residential sustainable energy program.

(9) The residential sustainable energy program shall comply with all federal directives or guidelines with regard to the property-assessed clean energy model for residential properties.

(10) No loan shall be issued in the state under the residential sustainable energy program until the Federal Housing Finance Agency affirmatively states that it will purchase loans to be issued under such program.

[(d) (1) Any municipality that establishes a sustainable energy program pursuant to this section may partner with another municipality or a state agency to (A) maximize the opportunities for accessing public funds and private capital markets for long-term sustainable financing, and (B) secure state or federal funds available for this purpose.

(2) Any municipality that establishes a sustainable energy program and issues bonds pursuant to this section may supplement the security of such bonds with any other legally available funds solely at the municipality's discretion.

(3) Any municipality that establishes a sustainable energy program pursuant to this section may use the services of one or more private, public or quasi-public third-party administrators to provide support for the program.]

[(e)] (c) Before establishing a program under this section, the [municipality] bank shall provide notice to the electric distribution company, as defined in section 16-1, that services the municipality.

[(f)] (d) If the property owner [of record of qualifying real property] requests financing from the bank or a third-party capital provider, for [energy improvements] qualifying improvements under this section, the [municipality implementing the sustainable energy program] bank shall:

[(1) Require performance of an energy audit or renewable energy system feasibility analysis on the qualifying real property before approving such financing;

(2) Enter into a contractual assessment on the qualifying real property with the property owner in a principal amount sufficient to pay the costs of energy improvements and any associated costs the municipality determines will benefit the qualifying real property and may cover any associated costs;]

[(3)] (1) Impose requirements and criteria to ensure that the proposed [energy] qualifying improvements are consistent with the purpose of the residential sustainable energy program; and

[(4)] (2) Impose requirements and conditions on the financing to ensure timely repayment, including, but not limited to, underwriting criteria and procedures for placing a lien on [a] the qualifying residential real property as security for [which an owner defaults on] repayment of the benefit assessment.

(e) (1) The bank or the third-party capital provider may enter into a financing agreement with the property owner of qualifying residential real property. After such agreement is entered into, and upon notice from the bank, the participating municipality shall (A) place a caveat on the land records indicating that a benefit assessment and a lien are anticipated upon completion of qualifying improvements for such property, or (B) at the direction of the bank, levy the benefit assessment and file a lien on the land records based on the estimated costs of the qualifying improvements prior to the completion or upon the completion of such improvements.

(2) The bank, or the third-party capital provider, shall disclose to the property owner the costs and risks associated with participating in the residential sustainable energy program and the terms and conditions of the assessment, including, but not limited to, term, payments and remedies for default and foreclosure. Such costs and risks include, but are not necessarily limited to, (A) the failure of the property owner to pay the benefit assessment, (B) the benefit assessment remaining on the property until satisfied, (C) the potential to impede the sale of the property, (D) the potential for violation of certain provisions under any existing indebtedness secured by the benefited property, and (E) the potential for the assessment to be paid off when such indebtedness is refinanced or when the property is sold. The bank, or the third-party capital provider, shall disclose to the property owner entering into a financing agreement the effective interest rate of the benefit assessment, including, but not limited to, fees charged by the bank or the third-party capital provider to administer the program. The bank or the third-party capital provider shall notify the property owner that such owner may rescind any financing agreement entered into pursuant to this section not later than three business days after entering into such agreement.

[(g)] (f) Prior to entering a contractual assessment, the [municipality] bank or third-party capital provider shall provide each property owner the following notice, which shall be set forth in at least fourteen-point bold type: SEEK LEGAL ADVICE BEFORE PARTICIPATING IN THIS LOAN PROGRAM TO ENSURE UNDERSTANDING OF POTENTIAL CONSEQUENCES, INCLUDING A POSSIBLE DEFAULT UNDER YOUR MORTGAGE.

[(h)] (g) Any benefit assessment levied pursuant to this section shall have a term not to exceed the [calculated payback period for] lesser of (1) the average estimated useful life of the installed [energy] qualifying improvements, as determined by the [municipality, and shall have no prepayment penalty. The municipality] bank or a contractor eligible to install such improvements under the residential sustainable energy program, or (2) twenty-five years. The bank or the third-party capital provider shall set a fixed rate of interest for the financing provided or a fixed payment schedule for leases, power purchase agreements or other such approved financing structures for the repayment of the principal assessed amount at the time the benefit assessment is made. Such interest rate, as may be supplemented with state or federal funding as may become available, shall be sufficient to pay the financing costs of the program, including delinquencies.

[(i) Assessments] (h) Benefit assessments levied pursuant to this section and the interest, fees and any penalties thereon shall constitute a lien against the qualifying residential real property on which they are made until they are paid. [Such lien] If the agreement for the benefit assessment provides, the benefit assessment shall be [levied and] paid in installments and each installment payment shall be collected in the same manner as the [general] property taxes of the participating municipality on real property, including, in the event of default or delinquency, [with respect to] any penalties, fees and remedies. [and lien priorities, provided such lien shall not have priority over any prior mortgages.]

[(j) The area encompassing the sustainable energy program in a municipality may be the entire municipal jurisdiction of the municipality or a subset of such.]

(i) Each such lien levied through the residential sustainable energy program shall be recorded and released in the manner provided for property tax liens and shall be subordinate to all liens on the qualifying residential real property in existence at the time the lien for the assessment is filed on the property. Each such lien levied through the residential sustainable energy program shall be superior to any other lien on the qualifying residential real property recorded after such filing except a (1) first mortgage on the property, and (2) lien for taxes of the municipality on real property. To the extent a benefit assessment is paid in installments and any such installment is not paid when due, the benefit assessment lien may be foreclosed, or enforced by levy and sale of such real property in accordance with chapter 204, to the extent of any unpaid installment payments and any penalties, interest and fees related thereto. If such benefit assessment lien is foreclosed, or enforced by levy and sale of the real property in accordance with chapter 204, such benefit assessment lien shall survive the judgment of the foreclosure, or levy and sale, to the extent of any unpaid installment payments of the benefit assessment secured by such benefit assessment lien that was not the subject of such judgment, or levy and sale. The form of collector's deed set forth in section 12-158 shall be used in a levy and sale of real property to satisfy a benefit assessment lien.

(j) A participating municipality shall assign to the bank, or the third-party capital provider as applicable, any liens filed by the tax collector pursuant to this section, as provided in the written agreement between the participating municipality and the bank. The bank or third-party capital provider may sell or assign, for consideration, any and all liens received from the participating municipality at its sole discretion. The assignee or assignees of such liens shall have and possess the same powers and rights at law or in equity as the participating municipality and its tax collector would have had if the lien had not been assigned with regard to the precedence and priority of such lien, the accrual of interest, and the fees and expenses of collection. The assignee shall have the same rights to enforce such liens as any private party holding a lien on real property, including, but not limited to, foreclosure and a suit on the debt. In accordance with subsection (h) of this section, the assignee shall also have the right to enforce the lien through the levy and sale procedure under chapter 204. Costs and reasonable attorneys' fees incurred by the assignee as a result of any foreclosure action or other legal proceeding brought pursuant to this section and directly related to the proceeding, including costs and fees incurred in enforcement of the lien by the levy and sale under section 12-140 and subsection (c) of section 12-157, shall be taxed in any such proceeding against each person having title to any property subject to the proceedings. Such costs and fees may be collected by the assignee at any time after demand for payment has been made by the assignee.

Sec. 2. (Effective January 1, 2017) On or before July 1, 2017, and annually thereafter, the Connecticut Green Bank shall submit a report, in accordance with the provisions of section 11-4a of the general statutes, to the joint standing committees of the General Assembly having cognizance of matters relating to banking and energy and technology, summarizing the progress of its residential sustainable energy program in the state.

Sec. 3. Subdivision (24) of section 36a-485 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(24) "Residential mortgage loan" means any loan primarily for personal, family or household use, except financing under a sustainable energy program pursuant to section 7-121n, as amended by this act, that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling;


This act shall take effect as follows and shall amend the following sections:
Section 1	January 1, 2017	7-121n
Sec. 2	January 1, 2017	New section
Sec. 3	from passage	36a-485(24)