Bill Text: NH HB576 | 2023 | Regular Session | Amended
Bill Title: Relative to administration of a commercial property assessed clean energy (C-PACE) program in a clean energy efficiency and clean energy district.
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Passed) 2023-06-21 - Signed by Governor Sununu 06/20/2023; Chapter 91; Eff:08/19/2023 [HB576 Detail]
Download: New_Hampshire-2023-HB576-Amended.html
HB 576-FN-A-LOCAL - AS AMENDED BY THE HOUSE
14Feb2023... 0162h
2023 SESSION
23-0399
06/10
HOUSE BILL 576-FN-A-LOCAL
SPONSORS: Rep. Mangipudi, Hills. 11; Rep. Darby, Hills. 11; Rep. McWilliams, Merr. 30; Rep. Preece, Hills. 17; Sen. Watters, Dist 4; Sen. Altschiller, Dist 24
COMMITTEE: Science, Technology and Energy
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AMENDED ANALYSIS
This bill clarifies the use of a commercial property assessed clean energy (C-PACE) model in a clean energy efficiency and clean energy district under RSA 53-F. The bill also provides for senior lien status for clean energy efficiency and clean energy districts and for the lien of the assessment contract to run with the property until the assessment is paid in full.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
14Feb2023... 0162h 23-0399
06/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Three
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Authority; Energy Efficiency and Clean Energy Districts; C-PACE Programs. Amend RSA 53-F:3 by inserting after paragraph VI the following new paragraph:
VII. Adoption of a clean energy efficiency and clean energy district shall include a commercial property assessed clean energy (C-PACE) model implemented according to the most recent U.S. Department of Energy (DOE) released best practice guidelines for PACE financing programs.
2 Energy Efficiency and Clean Energy Districts; Priority Lien and Collection. Amend RSA 53-F:8 to read as follows:
53-F:8 Priority; Collection and Enforcement. Collection of special assessments under this chapter shall be made by the tax collector or other official responsible for property tax or municipal service charge collection. A municipality shall commit bills for amounts due on the special assessments, including interest and any charges, to the tax collector with a warrant signed by the appropriate municipal officials requiring the tax collector to collect them. Each year bills for amounts due on the special assessments shall coincide with bills for property taxes or municipal service charges. [Each special assessment on the property of a participating property owner shall create a lien on the property pursuant to RSA 80:19, except that the lien shall be junior to existing liens of record at the time the bill for the assessment is mailed to the participating property owner. Enforcement powers for nonpayment shall be those provided under RSA 80 relative to property tax collection, including RSA 80:19; provided, however, a tax sale of the property shall not extinguish prior liens of record. At the time of enforcement, only the past due balances of the special assessment under this chapter, including all interest, charges, and penalties, shall be due for payment. Notwithstanding any other provision of law, in the event of a transfer of property ownership through foreclosure or a sheriff's sale by a senior mortgagee or lienholder which has consented to the making of a loan by a private lender under the provisions of this chapter, the lien of the municipality shall not be extinguished, and the net proceeds of the sale, if any, after payment of all prior obligations to mortgagees and lienholders, costs and expenses of foreclosure or sheriff's sale, shall be first applied to the payment of any past due balances of the loan and then any excess shall be applied against the remaining balance of the loan. If a senior mortgagee or lienholder has not given its consent to the loan, a foreclosure or sheriff's sale by the mortgagee or lienholder shall extinguish all junior mortgages and liens.] Each special assessment imposed under a clean energy efficiency and clean energy district program pursuant to an assessment contract, including any interest on the assessment and any penalty, shall, upon recording of the assessment contract in the county in which the district area is located, 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 by the town, city, or district or its program administrator and shall have the same lien priority and status as other property tax and special assessment liens as provided in RSA 80. The town, city, or district, or any permitted assignee, 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 and other delinquent special assessments as set forth in RSA 80.
3 Effective Date. This act shall take effect 60 days after its passage.
23-0399
1/9/23
HB 576-FN-A-LOCAL- FISCAL NOTE
AS INTRODUCED
FISCAL IMPACT: [ X ] State [ ] County [ X ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2023 | FY 2024 | FY 2025 | FY 2026 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
Expenditures | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
Funding Source: | [ X ] General [ ] Education [ ] Highway [ X ] Other - Energy Conservation Project Fund and PACE Reserve Fund | |||
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LOCAL: |
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
The Legislative Budget Assistant Office is still awaiting information from the Department of Energy. The Department was originally contacted on December 12, 2022.
METHODOLOGY:
This bill establishes a state energy conservation loan program and an energy conservation project fund. This bill also establishes the state PACE reserve fund.
The State Treasury indicates this bill would increase state revenues and expenditures by an indeterminable amount. The bill establishes a state energy conservation loan program, an energy conservation project fund, and the state PACE reserve fund. The Treasurer is authorized to make loans or enter into other financing arrangements directly with eligible borrowers for eligible projects or, in the case of eligible projects under the municipal PACE program, fund loans made by municipalities to property owners. Such loans would be funded from energy project bonds issued by the Treasurer or from amounts held in the Energy Conservation Project Fund. Loan repayments would be pledged to the repayment of the related energy project bonds. The Treasurer would be granted a statutory first priority lien in all or a portion of the System Benefit Charge (“SBC”) as set forth in financing orders from the New Hampshire Public Utilities Commission. The bill establishes the energy conservation project fund in the State Treasury. All energy project bond proceeds, together with any other moneys made available to the Fund to make loans, would be credited to the loan accounts within the Fund. The purpose of the loan accounts within the fund would be to make loans to finance eligible projects. Amounts transferred to the Treasurer that are not needed to pay debt service on energy project bonds or direct costs and expenses of the Treasurer associated with the issuance of energy bonds would be held in the reserve account within the Fund or in a reserve fund created under the financing document as a reserve securing the energy project bonds. Any amounts in excess of the required reserve would be transferred to the Public Utilities Commission.
The bill permits the Treasurer, upon approval of the State Treasurer and Commission, to issue energy project bonds on behalf of the Fund. Energy project bonds issued would be issued as revenue bonds and shall be recourse only to the related loan repayments by eligible borrowers and other moneys available in the reserve account within the Fund or held under related financing documents. Energy project bonds would not be general obligations of the state of New Hampshire. A financing order would specify that all or a portion of the amounts collected pursuant to the mandatory charges should be allocated first to the energy project bonds, and should be paid over to the Treasurer upon receipt, and second to other projects financed. Financing orders would not constitute a debt or liability of the state of New Hampshire or of any political subdivision, but would be payable solely from the funds provided. The bill also allows the State Treasurer to be reimbursed from the loan accounts within the Fund for all reasonable and necessary expenses such as bond issuance costs, administration, management, and operation of the funds.
The bill would expand the Municipal PACE Program by adding the newly established energy conservation loan program. To the extent that cities or towns receive funds, they would enter into a loan agreement with the property owner that is approved by the State Treasurer, and would pledge such loan agreement and all amounts received. In the event of a payment default by a property owner, the city or town would enforce its rights under any betterments or other security granted under the applicable loan agreement. All amounts realized of any such enforcement would be transferred to the State Treasurer.
The bill also establishes a reserve fund under the Municipal PACE Program for the purpose of paying past due balances of an assessment in the event there is a foreclosure upon a property subject to an assessment and the proceeds from the foreclosure are insufficient to pay such balances. The reserve fund would be funded by participating property owners at a level sufficient to provide for the payment of past due balances in the event of a foreclosure upon a participating property. The contributions of each participating property owner to the reserve fund would be included in the special assessment. The Commissioner of the Department of Revenue Administration is required to determine the appropriate contribution to the reserve fund. The fund would be capitalized to cover expected foreclosures and fund administration costs. Interest earned would remain in the fund. The administrator of the reserve fund would invest and reinvest the moneys in the fund in accordance with the standard of care established by the prudent investor rule. The reserve fund is to be administered by a special purpose entity and their costs of administering the reserve fund would be considered costs of operating.
In addition, the bill establishes a State PACE Reserve Fund in the State Treasury for the purpose of reducing the risk faced by an investor making an agreement with a municipality to finance a clean energy district. The Treasurer may invest moneys in the fund as provided by law, with interest received on such investments being credited to the PACE reserve fund. The State Treasurer would submit an annual report to the general court containing an accounting of the PACE reserve fund. The obligation of the fund would be to fund 90% of a remaining past due balance, upon presentation of a claim and application acceptable to the Treasurer and the Administrator, provided that the total amount of all such funding from the fund would not exceed the lesser of $1,000,000; the moneys deposited in the fund; or 5% of the total of all assessments in the districts that participate in the loss reserve fund administered by the entity.
The State Treasury indicates the bill would increase the expenditures and revenues of the Treasury by an indeterminable amount. The Treasury does not have the infrastructure or staff needed to administer a Loan Program as the one described in this legislation. At a minimum, the Treasury would require a credit underwriter to perform risk and credit analyses of potential borrowers, a legal counsel to perform legal work, and an accountant or administrator to coordinate the program. The Treasury also notes that any revenue bonds issued under this program would likely be issued as taxable bonds.
The Department of Revenue Administration (DRA) indicates the bill establishes a reserve fund to pay past due balances of an assessment issued for the participation in energy conservation and efficiency improvement or clean energy improvements under RSA 53-F, when such property is under foreclosure. This reserve fund shall be funded by property owners participating in the energy efficiency and clean energy districts and made through the special assessment applicable to the property. The DRA assumes the assessments are to be included in the property tax bills of the applicable property. A special purpose entity established and authorized by the State Treasurer shall be appointed to administer the reserve fund with the contribution amount being determined periodically by the Commissioner. In addition, the fund shall be capitalized in accordance with standards and procedures approved by the Commissioner. Because the energy project bonds shall not be general obligations of the State and exempted from New Hampshire taxation, including the income from transfers of these bonds, the DRA expects the fiscal impact of the tax exemption to be revenue neutral. The Commissioner of the DRA is required to calculate the contribution amount and provide advance information to interested property owners via municipalities. The DRA expects that such calculations would require, at the very least, the gathering of information on the loans made to the property owners, the amount and value of assessments that are past due, and any expectations of new assessments that may become delinquent. The DRA assumes it could administer the provisions of this bill without additional administrative costs that could not be absorbed in the DRA operating budget.
The New Hampshire Municipal Association states proposed Property-Assessed Clean Energy (PACE) financing would allow property owners to borrow money from a local government to pay for energy improvements. Under current law, PACE financing can only be provided through private entities. This bill expands the role of the municipality in the creation of energy efficiency and clean energy districts. The amount borrowed would be repaid via a special assessment on the property. Owners of appropriately zoned private property may opt into an energy financing district after such a district has been created and may obtain funding for a broad array of energy efficiency upgrades or renewable energy investments. If a municipality votes to establish this district it will have an administrative role in the assessment of energy improvement, entering into loan agreements with qualified property owners, be required to participate in a reserve fund, calculate and disclose the amount the property owners are required to pay into the reserve fund, and in the event of foreclosure direct a disbursement of funds for the past due assessment. In the event of a foreclosure, it is possible that the municipality may not be able to recover 100% of the due balance. The Association indicates there would be an indeterminable increase in local expenditures.
It is assumed that any fiscal impact would occur after FY 2023.
AGENCIES CONTACTED:
State Treasury, Departments of Energy and Revenue Administration and New Hampshire Municipal Association
