Bill Text: MI SB0642 | 2015-2016 | 98th Legislature | Introduced

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Bill Title: Energy; alternative sources; property assessed clean energy program; authorize participation by residential property owners, eliminate requirement for consent of mortgagee, and authorize issuance of general obligation bonds. Amends secs. 3, 9 & 15 of 2010 PA 270 (MCL 460.933 et seq.).

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Introduced - Dead) 2015-12-08 - Referred To Committee On Energy And Technology [SB0642 Detail]

Download: Michigan-2015-SB0642-Introduced.html

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SENATE BILL No. 642

 

 

December 8, 2015, Introduced by Senators WARREN, ANANICH, GREGORY, BIEDA, HERTEL, HOPGOOD and YOUNG and referred to the Committee on Energy and Technology.

 

 

 

     A bill to amend 2010 PA 270, entitled

 

"Property assessed clean energy act,"

 

by amending sections 3, 9, and 15 (MCL 460.933, 460.939, and

 

460.945).

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3. As used in this act:

 

     (a) "District" means a district created under a property

 

assessed clean energy program by a local unit of government that

 

lies within the local unit of government's jurisdictional

 

boundaries. A local unit of government may create more than 1

 

district under the program, and districts may be separate,

 

overlapping, or coterminous.

 

     (b) "Energy efficiency improvement" means equipment, devices,

 

or materials intended to decrease energy consumption, including,

 

but not limited to, all of the following:

 

     (i) Insulation in walls, roofs, floors, foundations, or heating

 

and cooling distribution systems.

 

     (ii) 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.

 

     (iii) Automated energy control systems.

 

     (iv) Heating, ventilating, or air-conditioning and distribution

 

system modifications or replacements.

 

     (v) Caulking, weather-stripping, and air sealing.

 

     (vi) Replacement or modification of lighting fixtures to reduce

 

the energy use of the lighting system.

 

     (vii) Energy recovery systems.

 

     (viii) Day lighting systems.

 

     (ix) Installation or upgrade of electrical wiring or outlets to

 

charge a motor vehicle that is fully or partially powered by

 

electricity.

 

     (x) Measures to reduce the usage of water or increases

 

increase the efficiency of water usage.

 

     (xi) Any other installation or modification of equipment,

 

devices, or materials approved as a utility cost-savings measure by

 

the governing body.

 

     (c) "Energy project" means the installation or modification of

 

an energy efficiency improvement or the acquisition, installation,

 

or improvement of a renewable energy system.

 

     (d) "Governing body" means the county board of commissioners

 

of a county, the township board of a township, or the council or

 

other similar elected legislative body of a city or village.

 

     (e) "Local unit of government" means a county, township, city,

 

or village.

 

     (f) "Person" means an individual, firm, partnership,

 

association, corporation, unincorporated joint venture, or trust,

 

organized, permitted, or existing under the laws of this state or

 

any other state, including a federal corporation, or a combination

 

thereof. However, person does not include a local unit of

 

government.

 

     (g) "Property" means privately owned commercial or industrial

 

real property located within the local unit of government.

 

     (h) "Property assessed clean energy program" or "program"

 

means a program as described in section 5(2).

 

     (i) "Record owner" means the person or persons possessed of

 

the most recent fee title or land contract vendee's interest in

 

property as shown by the records of the county register of deeds.

 

     (j) "Renewable energy resource" means a resource that

 

naturally replenishes over a human, not rather than a geological,

 

time frame, and that is ultimately derived from solar power, water

 

power, or wind power. Renewable energy resource does not include

 

petroleum, nuclear, natural gas, or coal. A renewable energy

 

resource comes from the sun or from thermal inertia of the earth,

 

and minimizes the output of toxic material in the conversion of the

 

which to a usable form of energy and includes, minimizes the output

 

of toxic materials. Renewable energy resource does not include

 

petroleum, nuclear material, natural gas, or coal. Renewable energy

 

resource includes, but is not limited to, all of the following:

 

     (i) Biomass.

 

     (ii) Solar and solar thermal energy.

 

     (iii) Wind energy.

 

     (iv) Geothermal energy.

 

     (v) Methane gas captured from a landfill.

 

     (k) "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 1 or more renewable

 

energy resources to generate electricity. Renewable energy system

 

includes a biomass stove but does not include an incinerator or

 

digester.

 

     Sec. 9. (1) The Before establishing a property assessed clean

 

energy program, a local unit of government shall prepare a report

 

on the proposed program. required under section 7 The report shall

 

include all of the following:

 

     (a) A form of contract between the local unit of government

 

and record owner governing the terms and conditions of financing

 

and assessment under the program.

 

     (b) Identification of an official authorized to enter into a

 

program contract on behalf of the local unit of government.

 

     (c) A maximum aggregate annual dollar amount for all financing

 

to be provided by the local unit of government under the program.

 

     (d) An application process and eligibility requirements for

 

financing energy projects under the program.

 

     (e) A method for determining interest rates on assessment

 

installments, repayment periods, and the maximum amount of an

 

assessment.

 

     (f) Explanation of how assessments will be made and collected

 

consistent with section 13(2).

 

     (g) A plan for raising capital to finance improvements under

 

the program. The plan may include any of the following:

 

     (i) The sale of bonds or notes, subject to the revised

 

municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

 

     (ii) Amounts to be advanced by the local unit of government

 

through funds available to it from any other source.

 

     (iii) Owner-arranged financing from a commercial lender. Under

 

owner-arranged financing, the local unit of government may impose

 

an assessment pursuant to under section 11 and forward payments to

 

the commercial lender or the record owner may pay the commercial

 

lender directly.

 

     (h) Information regarding all of the following, to the extent

 

known, or procedures to determine the following in the future:

 

     (i) Any reserve fund or funds to be used as security for bonds

 

or notes described in subdivision (g).

 

     (ii) 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.

 

     (i) A requirement that the term of an assessment not exceed

 

the useful life of the energy project paid for by the assessment.

 

     (j) A requirement for an appropriate ratio of the amount of

 

the assessment to the assessed value of the property.

 

     (k) A requirement that the record owner of property subject to

 

a mortgage obtain written consent from the mortgage holder before

 

participating in the program.

 

     (k) (l) Provisions for marketing and participant education.

 

     (l) (m) Provisions for an adequate debt service reserve fund.

 

     (m) (n) Quality assurance and antifraud measures.

 

     (n) (o) A requirement that a baseline energy audit be

 

conducted before an energy project is undertaken, to establish

 

future energy savings. After the energy project is completed, the

 

local unit of government shall obtain verification that the

 

renewable energy system or energy efficiency improvement was

 

properly installed and is operating as intended.

 

     (o) (p) For an energy project financed with more than

 

$250,000.00 in assessments, both of the following:

 

     (i) A requirement for ongoing measurements that establish the

 

savings realized by the record owner from the energy project.

 

     (ii) A requirement that, in the contract for installation of

 

the energy project, the contractor guarantee to the record owner

 

that the energy project will achieve a savings-to-investment ratio

 

greater than 1 and agree to pay the record owner, on an annual

 

basis, any shortfall in savings below this level.

 

     (2) The local unit of government shall make the report

 

available for review on the local unit of government's website or

 

at the office of the clerk or the official authorized to enter

 

contracts on behalf of the local unit of government under the

 

property assessed clean energy program.

 

     Sec. 15. (1) A local unit of government may issue bonds or

 

notes to finance energy projects under a property assessed clean

 

energy program.

 

     (2) Bonds or notes issued under subsection (1) shall not be

 

general obligations of the local unit of government, but shall be

 

secured by 1 or more of the following as provided by the governing

 

body in the resolution or ordinance approving the bonds or notes:

 

     (a) Payments of assessments on benefited property within the

 

district or districts specified.

 

     (b) Reserves established by the local unit of government from

 

grants, bond or note proceeds, or other lawfully available funds.

 

     (c) Municipal bond insurance, lines or letters of credit,

 

public or private guaranties, standby bond purchase agreements,

 

collateral assignments, mortgages, and any other available means of

 

providing credit support or liquidity, including, but not limited

 

to, arrangements described in section 315 of the revised municipal

 

finance act, 2001 PA 34, MCL 141.2315.

 

     (d) Tax increment revenues that may be lawfully available for

 

such purposes.

 

     (e) Any other amounts lawfully available for such purposes.

 

     (3) A pledge of assessments, funds, or contractual rights made

 

by a governing body in connection with the issuance of bonds or

 

notes 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.

 

     (4) Bonds or notes of 1 series issued under this act may be

 

secured on a parity with bonds or notes 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.

 

     (5) A local unit of government may issue its general

 

obligation bonds or notes under this act for any of the following

 

purposes:

 

     (a) Establishing a reserve fund to secure bonds or notes

 

issued under subsection (1).

 

     (b) Paying the costs associated with creating a property

 

assessed clean energy program, including, but not limited to, legal

 

fees, the cost of preparing forms for contracts, the cost of

 

establishing procedures and regulations, the cost of preparing the

 

report described in section 9(1), and the cost of conducting

 

preliminary energy audits within the local unit of government.

 

     (6) (5) Bonds or notes issued under this act are subject to

 

the revised municipal finance act, 2001 PA 34, MCL 141.2101 to

 

141.2821.

 

     (7) (6) Bonds or notes issued under this act, and interest

 

payable on such these bonds and notes, are exempt from all taxation

 

by this state and its political subdivisions.

 

     (8) (7) Bonds or notes 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.