HSB 602 (LSB 5241XD (5) 83)

SENATE/HOUSE FILE _____

BY  (PROPOSED OFFICE OF ENERGY INDEPENDENCE BILL)

A BILL FOR

An Act relating to the utilization of energy by authorizing the establishment of an energy finance program to finance certain energy improvements, and providing a penalty.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 331.441, subsection 2, paragraph b, Code Supplement 2009, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (20)  The establishment or funding of an energy finance program to finance energy improvements in a county pursuant to chapter 385.
    Sec. 2.  Section 384.24, subsection 3, Code Supplement 2009, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  y.  The establishment or funding of an energy finance program to finance energy improvements within a city pursuant to chapter 385.
    Sec. 3.  NEW SECTION.  385.1  Legislative findings —— purpose.

   The general assembly finds all of the following:

   1.  Renewable energy production and energy efficiency improvements to residential, commercial, and industrial real property, are necessary to address the issue of energy bill stabilization.
   2.  The initial investment required to make residential, commercial, or industrial real property more energy-efficient or to utilize renewable energy prevents many property owners from making such improvements. To make energy improvements more affordable and to promote their installation, it is necessary to authorize an alternative procedure for owners of a residence or business to finance such improvements.
   3.  The general assembly declares that a public purpose shall be served by authorizing cities and counties to establish energy finance programs and authorizing the governing body of any city or county to assist property owners in financing the installation of renewable energy improvements and energy efficiency improvements by offering financial terms that are beneficial to the property owner.
    Sec. 4.  NEW SECTION.  385.2  Definitions.

   As used in this chapter, unless the context otherwise requires:

   1.  “Energy analysis” means a written report summarizing the results of a physical inspection of a residential, commercial, or industrial building conducted by a public utility or other agency or entity approved by the office. The report shall document deficiencies in energy efficiency operation and recommend specified energy improvements.
   2.  “Energy improvement” means the installation of one or more appliances or heating and cooling systems, physical alteration to a building, or installation of a renewable energy production facility which has been identified in an energy analysis as improving the energy-efficient operation of a building or as decreasing the amount of energy consumed by that building, or both.
   3.  “Office” means the office of energy independence established in section 469.2.
    Sec. 5.  NEW SECTION.  385.3  Energy finance program established.
   1.  A city or county may adopt an ordinance establishing an energy finance program in order to allow the city or county to offer to assess to residential, commercial, or industrial property within the city or county the cost of purchasing or installing energy improvements. The office shall advise cities and counties in administering the program.
   2.  An energy finance program shall be limited to energy improvements that will be permanently affixed to real property that has already been developed or upon which buildings have already been constructed. Property owners participating in the program may receive funding for the improvements in advance of installation, or as a reimbursement of amounts expended by the property owner for completed installations. However, the amount advanced or reimbursed shall not exceed the total amount identified in the petition submitted by the property owner pursuant to section 385.6.
   3.  Petitions for participation in an energy finance program adopted by a city or county may be submitted, considered, and approved or denied either individually or aggregated by neighborhood, district, region, or other basis.
    Sec. 6.  NEW SECTION.  385.4  Resolution of intent.
   1.  The governing body of a city or county may not consider an ordinance establishing an energy finance program until after the governing body has adopted a resolution of intent indicating or including the following:
   a.  That the city or county considers it in the public interest to finance the installation of energy improvements.
   b.  That the city or county proposes to make special assessment financing or other financing available to property owners seeking to install or make energy improvements.
   c.  A nonexclusive list of examples of energy improvements which may be included in the proposed ordinance and financed pursuant to the program.
   d.  A brief description of the proposed arrangements for financing the program.
   2.  The city or county shall hold a public hearing on the resolution at which interested persons may inquire about or object to the proposed program. Notice of the hearing shall be published as provided in section 331.305 or 362.3, as applicable.
    Sec. 7.  NEW SECTION.  385.5  Program requirements —— ordinance.
   1.  An ordinance establishing an energy finance program shall include the following regarding implementation of the program:
   a.  A schedule for packaging assessments for program finance purposes and city council or board of supervisors approval.
   b.  A method for prioritizing approved applications in the event the number of applications received for a year exceeds program funds.
   c.  Energy analysis requirements.
   2.  After adoption of an ordinance establishing an energy finance program, a plan for raising a capital amount required to pay for work performed pursuant to contractual assessments shall be established by a city or county. A city or county shall be authorized to advance funds available to it from any source, including the sale of bonds as provided in section 385.11 and in section 331.441 or 384.24, as applicable. The plan shall specify the source of financing contemplated by the city or county. The plan shall also provide for a reserve fund and for apportionment of all or any portion of the costs incidental to financing, administration, and collection of the special assessments between or among property owners and the city or county.
   3.  The ordinance establishing an energy finance program shall provide for the establishment of an energy finance program fund into which bond proceeds and other funds to be utilized in administering the program shall be deposited.
   4.  If a county has adopted a countywide ordinance, a city cannot adopt an ordinance establishing an energy finance program applicable to that portion of the city located within the county.
    Sec. 8.  NEW SECTION.  385.6  Petition by property owners.
   1.  The office shall develop and make available to a city or county that has established an energy finance program petitions for distribution to prospective program participants.
   2.  Program participation shall be initiated solely by petition of the property owner, or by a representative of several related or adjoining lots or parcels who has obtained written permission and a copy of an energy analysis from each owner. If a property is in the name of more than one owner, the petition shall be signed by each owner.
   3.  The petition shall state that a copy of a completed energy analysis shall be required for participation in the program and must be attached to the petition. The petition shall contain space for the printed name, signature, and address of the petitioner. For each petitioner, the petition shall contain space for identification of energy improvements identified in the energy analysis for which energy finance program financing is sought, a cost estimate for each improvement so identified, and a proposed time frame within which the improvements shall be undertaken and completed.
   4.  Within thirty days following submission of a petition and accompanying energy analysis, a petitioner shall receive notification from the city or county of approval pending adoption of a resolution pursuant to section 385.7 by the city council or county board of supervisors, or of denial of the petition. Following adoption of a resolution, an approved petitioner shall receive notification from the city or county regarding funding amounts, authorization to purchase directly any equipment and materials for the installation of energy improvements and to contract directly for such installation, and verification requirements regarding completion of improvements.
   5.  Special assessments for energy improvements shall be levied only upon the free and willing consent of the owner of each lot or parcel on which an assessment is levied at the time of levy.
    Sec. 9.  NEW SECTION.  385.7  Resolution and filing.
   1.  Approved petitions, whether submitted on an individual or aggregate basis, shall be grouped either by date of approval or property location, identified by legal description, and submitted to a city council or county board of supervisors in the form of a resolution for approval by majority vote.
   2.  An adopted resolution shall be forwarded to the city clerk, or the county auditor in the case of a county, along with a schedule including a description and parcel number of each lot, the name of the property owner, and the total amount to be assessed to each lot. In counties in which taxes are collected in two or more places, certification shall be to the office of county treasurer where the special assessments are collected. The county treasurer shall preserve the resolution and schedule as a part of the records of the office until the city clerk or county auditor certifies the final assessment schedule as provided in section 385.8 or certifies that the petition has been abandoned.
    Sec. 10.  NEW SECTION.  385.8  Adoption of schedule.
   1.  Within ten days after filing of the resolution and schedule pursuant to section 385.7, a city council or county board of supervisors shall meet, consider, and adopt or amend and adopt, by resolution, a final assessment schedule. The resolution must:
   a.  Confirm and levy assessments.
   b.  State the number of annual installments, not exceeding fifteen, into which assessments of one hundred dollars or more are divided.
   c.  Provide for interest on all unpaid installments at a rate not exceeding that permitted by chapter 74A.
   d.  State the time when assessments are payable.
   e.  Direct the city clerk or county auditor, as appropriate, to certify the final schedule to the treasurer of each county in which the assessed property is located.
   2.  The city clerk or county auditor shall send written notice by regular mail to each property owner whose petition has been approved and whose property has been included on the schedule. The notice shall contain all the information and statements required to be included in notices under section 384.60, subsection 2.
   3.  The county treasurer shall enter on the county system the amounts to be assessed against each lot, as certified.
    Sec. 11.  NEW SECTION.  385.9  Installments due —— lien created.
   1.  Special assessments levied by a city or county pursuant to this chapter shall be levied and collected in the same manner as provided in section 384.65 for public improvement special assessments levied by a city.
   2.  From the date of filing of certification of the resolution and schedule pursuant to section 385.7, the special assessments with all interest become and remain a lien on the benefited property until paid, and have equal precedence with ordinary taxes, and are not divested by any judicial sale.
    Sec. 12.  NEW SECTION.  385.10  Payment to county treasurer.

   Assessments levied and certified under this chapter, including installments and interest, are payable at the office of the county treasurer of the county where the property assessed is located, except that assessments may be paid in full or in part and without interest within thirty days after the date of certification, at the office of the county treasurer, if the property being assessed is located in an unincorporated area, or the city clerk, if the property being assessed is located in an incorporated area.
    Sec. 13.  NEW SECTION.  385.11  Bonds issued.
   1.  After certification of the final assessment schedule, a city or county may, by resolution, authorize and issue bonds in anticipation of the collection of unpaid special assessments. However, the total principal amount of bonds issued may not exceed the total amount of unpaid special assessments.
   2.  All special assessment bonds are negotiable, must state on their face that they are issued under the provisions of this chapter, and are payable as to both principal and interest from the proceeds of the special assessments. Such bonds may bear interest at a rate not exceeding that permitted by chapter 74A payable annually or semiannually, must mature serially on December 1 of the years in which any of the principal is scheduled to become due, and may contain a provision that the city or county reserves the right and option of calling and redeeming any or all of the bonds prior to maturity on any interest payment date or within forty-five days thereafter upon the terms specified therein. Such bonds must be called “improvement bonds”, must designate the general type of improvement or improvements for which issued, and may be issued in any denomination. The bonds must be named in a way to distinguish them from other improvement bonds of the city or county, and to designate the property specially assessed for the improvement. Improvement bonds issued for any one levy must bear the same date and be divided into as many series as there are years in which installments of the special assessment mature, and each series must be as nearly equal in amount as practicable.
   3.  The proceeds of the special assessments and interest collected thereon must be used and applied by the city or county to the payment of the interest on the bonds and to the retirement of the principal as rapidly as proceeds are collected. Such bonds and coupons do not make the city or county liable in any way, except for the proper application of special assessments. If interest becomes due on any of the bonds when there is no fund from which to pay it, the council or board of supervisors may make a temporary loan for payment of the interest, which loan must be repaid from the special assessments and interest pledged to secure the bonds, but in case of purchase by the city or county at tax sale of the property on which a special assessment under this chapter is levied, from the general fund.
   4.  Special assessment bonds issued under this section must be sold at public or private sale in the manner provided by chapter 75, and may not be sold for less than par value with accrued interest from date to the time of delivery. The proceeds of the sale must be applied to the payment of the cost of financing the energy improvements approved under this chapter.
   5.  Any excess of proceeds from special assessments remaining after all of the bonds have been paid with interest may be credited to the energy finance program fund established pursuant to ordinance or returned to the applicable property owners on a proportionate basis.
   6.  Cities or counties may issue refunding bonds to pay off and take up special assessment bonds issued pursuant to this chapter, or to refund any part thereof, as follows:
   a.  Refunding bonds must substantially conform to the provisions of this chapter, and the face value is limited to the amount of the unpaid special assessments with the interest thereon of the particular issue of bonds to be refunded.
   b.  Refunding bonds or their proceeds may be used only to pay improvement bonds taken up.
   c.  The expense of refunding bonds must be paid out of the energy finance program fund of the city or county.
   d.  When refunding bonds are issued to pay improvement bonds, all special assessments and sinking funds applicable to the payment of the improvement bonds previously issued must be applied in the same manner and to the same extent to the payment of the refunding bonds, and all the powers and duties to levy and to carry special assessments and taxes, to create liens upon property, and to establish sinking funds in respect to the bonds previously issued continue until refunding bonds are paid.
   e.  The city or county shall collect the special assessment out of which the refunding bonds are payable and hold the proceeds in trust for the payment of the refunding bonds, but it is not liable except for the proper application of the assessments.
   7.  No action shall be brought questioning the legality of the bonds authorized by this section from and after sixty days from the date the bonds are ordered issued by the city or county.
    Sec. 14.  NEW SECTION.  385.12  Verification —— penalty.
   1.  The office shall determine an inspection procedure to be utilized by a city or county upon completion of an energy improvement financed pursuant to the energy finance program.
   2.  The city council or board of supervisors may impose a civil penalty against a property owner for failure to complete an energy improvement for which a petition was submitted by the property owner and approved and financing was received. The penalty may be in an amount up to but not exceeding the amount of financing received.
    Sec. 15.  NEW SECTION.  385.13  Report.

   The results of the program including but not limited to the number of petitions received, the number of petitions approved, types of energy improvements for which special assessments are sought, and average special assessment size, shall be submitted by a city or county participating in the program to the office by December 1 annually. The office shall make available on its internet site all information received under this subsection.
    Sec. 16.  Section 403.19, subsection 2, Code 2009, is amended to read as follows:
   2.  That portion of the taxes each year in excess of such amount shall be allocated to and when collected be paid into a special fund of the municipality to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise, including bonds issued under the authority of section 403.9, subsection 1, incurred by the municipality to finance or refinance, in whole or in part, an urban renewal project within the area, and to provide assistance for low and moderate income family housing as provided in section 403.22, and to provide funding for an energy finance program adopted pursuant to chapter 385 with regard to property within the urban renewal area, except that taxes for the regular and voter-approved physical plant and equipment levy of a school district imposed pursuant to section 298.2 and taxes for the payment of bonds and interest of each taxing district must be collected against all taxable property within the taxing district without limitation by the provisions of this subsection. However, all or a portion of the taxes for the physical plant and equipment levy shall be paid by the school district to the municipality if the auditor certifies to the school district by July 1 the amount of such levy that is necessary to pay the principal and interest on bonds issued by the municipality to finance an urban renewal project, which bonds were issued before July 1, 2001. Indebtedness incurred to refund bonds issued prior to July 1, 2001, shall not be included in the certification. Such school district shall pay over the amount certified by November 1 and May 1 of the fiscal year following certification to the school district. Unless and until the total assessed valuation of the taxable property in an urban renewal area exceeds the total assessed value of the taxable property in such area as shown by the last equalized assessment roll referred to in subsection 1, all of the taxes levied and collected upon the taxable property in the urban renewal area shall be paid into the funds for the respective taxing districts as taxes by or for the taxing districts in the same manner as all other property taxes. When such loans, advances, indebtedness, and bonds, if any, and interest thereon, have been paid, all moneys thereafter received from taxes upon the taxable property in such urban renewal area shall be paid into the funds for the respective taxing districts in the same manner as taxes on all other property. In those instances where a school district has entered into an agreement pursuant to section 279.64 for sharing of school district taxes levied and collected from valuation described in this subsection and released to the school district, the school district shall transfer the taxes as provided in the agreement.
EXPLANATION
   This bill authorizes cities and counties to establish an energy finance program to finance energy improvements for the benefit of property owners within the city or county.
   The bill defines an “energy improvement” as the installation of one or more appliances or heating and cooling systems, physical alteration to a building, or installation of a renewable energy production facility which has been identified in an energy analysis as improving the energy-efficient operation of a building or as decreasing the amount of energy consumed by that building, or both. The bill defines an “energy analysis” as a written report summarizing the results of a physical inspection of a residential, commercial, or industrial building conducted by a public utility or other agency or entity approved by the office of energy independence documenting deficiencies in energy efficiency operation and recommending specified energy improvements.
   Pursuant to the program, a city or county may offer to assess to residential, commercial, or industrial property within the city or county the cost of purchasing or installing energy improvements. The office of energy independence shall serve in an advisory capacity. The bill states that the program shall be limited to energy improvements that will be permanently affixed to real property which has already been developed or upon which buildings have already been constructed, and that property owners participating in the program may receive advance funding for the improvements or reimbursement after the fact.
   The bill provides that the governing body of a city or county initiates participation in the program by adopting a resolution of intent indicating that it is in the public interest to finance the installation of energy improvements, that special assessment financing or other financing shall be available to property owners, examples of energy improvements which may be financed and a brief description of financing arrangements. The bill provides for notice regarding the time and place of a public hearing on the resolution.
   The bill directs a city or county wishing to establish an energy finance program to adopt an ordinance which shall include a schedule for packaging assessments for program finance purposes and city council or county board of supervisors approval, a method for prioritizing approved applications, and energy analysis requirements. After adoption of the ordinance, the city or county is also directed to establish a plan for raising the capital to pay for work performed pursuant to the special assessments and shall be authorized to advance funds available to it from any source. The bill states that if a county has adopted a countywide ordinance, a city cannot adopt an ordinance in that portion of the city located within the county.
   The bill provides that the office shall develop petitions for use by property owners applying for the program, informing the property owner of the need to complete an energy analysis, containing space for property owner identifying information and for a listing of energy improvements and cost estimates for which a special assessment is sought, and requesting a proposed time frame within which the improvements shall be undertaken and completed. Program participation shall be initiated solely by petition of the property owner or by a representative of several related or adjoining lots or parcels who has obtained written permission, a petition signature, and a copy of an energy analysis from each owner. The bill provides that within 30 days following submission of a petition and accompanying energy analysis, a petitioner shall receive notification from the city or county of approval or denial, and that if approved the petitioner shall receive subsequent notification regarding funding amounts, authorization to purchase directly any equipment and materials for the installation of energy improvements and to contract directly for such installation, and verification requirements regarding completion of improvements.
   The bill provides that approved petitions, whether submitted on an individual or aggregate basis, shall be grouped either by date of approval or property location, identified by legal description, and submitted to a city council or county board of supervisors in the form of a resolution for approval by majority vote. The bill directs a city council or county board of supervisors to forward an approved resolution to the city clerk or county auditor, along with a schedule including a description and parcel number of each lot, the name of the property owner, the valuation of each lot as determined by the council, and the total amount proposed to be assessed to each lot.
   The bill then specifies procedures for adoption of the schedule by the city council or county board of supervisors, certification to the county treasurer, and property owner notification provisions. The bill provides that the special assessments shall be levied and collected in the same manner as provided in Code section 384.65 for public improvement special assessments levied by a city. Bonding provisions are set forth which closely correspond to provisions applicable to special assessment bonds authorized in Code section 384.68.
   The bill authorizes utilization of tax increment financing moneys to fund special assessments under the program for property in an urban renewal area, and includes the establishment of the energy finance program within the definition of “essential corporate purpose” and “essential county purpose” contained in Code chapters 384 and 331, respectively, and applicable to the issuance of general obligation bonds.
   The bill requires the office of energy independence to determine an inspection procedure to verify completion of an energy improvement financed pursuant to the program. The office is also required to make available on its internet site the results of the program based upon information required to be submitted on an annual basis by a city or county participating in the program.
   The bill provides that a city or county may impose a civil penalty in an amount not to exceed the amount financed for failure to complete an energy improvement for which a petition was submitted and approved and financing was received.