HF 2124 (LSB 5226YH (1) 88)

HOUSE FILE 2124

BY  ISENHART

A BILL FOR

An Act authorizing cities and counties to establish energy investment districts and district boards and providing for financing of energy investments.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  385.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Board” means an energy investment district board appointed pursuant to this chapter.
   2.  “Energy investment” means an acquisition, installation, or modification benefitting private property, except residential property with fewer than three residential units, that is intended to reduce energy consumption or energy costs, or both, or is intended to provide or allow for the use of alternate and renewable energy. The term includes but is not limited to the following measures:
   a.  Insulating walls, roofs, attics, floors, foundations, and heating and cooling distribution systems.
   b.  Repairing, replacing, or installing storm windows and doors, multiglazed windows and doors, heat-absorbing or heat-reflective windows and doors, and other window and door improvements designed to reduce energy consumption.
   c.  Constructing or reconstructing roofs designed to reduce energy consumption or support additional loads necessitated by other energy investments. 
   d.  Installing energy control and measurement devices.
   e.  Heating, ventilating, or air conditioning distribution system modifications and replacements.
   f.  Caulking and weatherstripping.
   g.  Installing lighting fixtures that result in increased energy efficiency of the lighting system.
   h.  Installing water heating systems, elevators, and escalators that result in increased energy efficiency.
   i.  Repairing, replacing, or installing energy recovery systems.
   j.  Repairing, replacing, or installing daylighting systems.
   k.  Repairing, replacing, or installing energy systems that provide energy from alternate or renewable energy, including solar, wind, biomass, geothermal, or cogeneration.
   l.  Repairing, replacing, or installing facilities or fixtures providing for water conservation or pollutant control.
   m.  Repairing, replacing, or installing an energy investment related item so long as the cost of the energy investment related item does not exceed twenty-five percent of the total cost of the project.
   3.  “Energy investment related item” means a repair, replacement, improvement, or modification to real property that is necessary or desirable in conjunction with an energy investment. The term includes but is not limited to structural support improvements and the repair or replacement of any building components, paved surfaces, or fixtures disrupted or altered by the installation of an energy investment.
   4.  “Project” means one or more energy investments to be installed on a property. 
    Sec. 2.  NEW SECTION.  385.2  Energy investment district created.
   1.  A county or city may create an energy investment district pursuant to this chapter in order to provide financing for energy investment projects to benefit real property in the district.
   2.  One or more counties and one or more cities within those counties may create, by chapter 28E agreement, an energy investment district pursuant to this chapter in order to provide financing for energy investment projects to benefit real property in the district. The agreement creating the energy investment district shall specify the geographic boundaries of the district.
    Sec. 3.  NEW SECTION.  385.3  Energy investment district board —— membership —— powers.
   1.  The governing bodies of the counties and cities participating in an energy investment district shall appoint a board to manage and administer the energy investment district. An energy investment district board shall consist of at least three members, but if the district is created pursuant to section 385.2, subsection 2, in no case shall there be fewer members than the number of participating cities and counties. The agreement creating the energy investment district shall set the term length of board members. 
   2.  A board shall have and may exercise the powers and duties necessary for management and administration of the energy investment district as such powers and duties are described in the agreement, including but not limited to the following express powers and duties:
   a.  To adopt, amend, and repeal bylaws consistent with the provisions of this chapter.
   b.  To adopt an official seal.
   c.  To sue and be sued in all courts. 
   d.  To make and enter into contracts with public and private entities.
   e.  To accept grants, guarantees, and donations of property, labor, services, and other items of value from a public or private source. 
   f.  To employ or contract for such managerial, legal, technical, clerical, accounting, or other assistance it deems advisable. However, the board shall not enter into any arrangement that results in an exclusive lender, underwriter, or other funding partner for all projects funded by the board.
   g.  To finance projects under assessment contracts. 
   h.  To levy and collect special assessments under an assessment contract with a property owner.
   i.  To borrow money from a public or private source and issue bonds and provide security for the repayment of such bonds.
   j.  To charge and collect fees pursuant to section 385.5.
   k.  To invest funds not required for immediate disbursement, subject to section 28E.5, subsection 2. 
   3.  A board shall exist for a minimum duration necessary to finance any assessment contracts that the board enters into pursuant to section 385.4.
    Sec. 4.  NEW SECTION.  385.4  Project financing requirements —— assessment contracts.
   1.  A board may finance a project if the following criteria are met:
   a.  There are sufficient resources to complete the project. 
   b.  The estimated monetary benefit, as determined by the board after consultation with an outside expert, and including but not limited to energy cost savings, maintenance, and other property operating savings expected from the project during the financing period is equal to or greater than the principal and interest cost of the project, including special assessments and any applicable fees. 
   c.  The project complies with the ordinances and regulations of the county or city where the property is located, including but not limited to such ordinances and regulations concerning zoning, subdivision of property, building, fire safety, and historic or architectural review. 
   2.  A board shall finance a project under an assessment contract. An assessment contract shall be executed by the board and the property owner or owners and shall include the following components:
   a.  A description of the project, including the estimated cost of the project and a description of the estimated savings, prepared in accordance with standards accepted by the board.
   b.  A mechanism for verifying the final costs of the project upon its completion and ensuring that any amounts advanced, financed, or otherwise provided by the board will not exceed the final cost of the project. 
   c.  An agreement by the property owner to pay special assessments and any applicable fees for a period not to exceed the weighted average useful life of the project, as specified in the assessment contract. 
   d.  An assessment schedule adopted by the board by resolution, stating the number of annual installments due, stating the time when assessments and any applicable fees are payable, and providing for interest on all unpaid installments and fees at a rate not exceeding that permitted by chapter 74A.
   e.  A statement that the obligations provided in the assessment contract, including the obligation to pay special assessments and any applicable fees charged, are a covenant that shall run with the land and be obligations upon future owners of such property. 
   f.  An acknowledgment that the subdivision of property subject to the assessment contract shall require the assessment contract or an amendment to the contract to divide the total special assessment and any applicable fees charged due between the newly subdivided parcels in proportion to the benefit realized by each subdivided parcel. 
   g.  An acknowledgment from all entities holding mortgages on the real property, or the contract seller under a real estate contract, to be assessed under the assessment contract that such interest holders have consented to the levy and collection of the special assessments and any applicable fees charged, as described in the assessment contract. 
   3.  a.  A board shall provide a copy of a signed assessment contract to the county or city assessor, as appropriate, and to the county auditor of the county where the property is located and shall file for recording a copy of the assessment contract with the county recorder.
   b.  The city clerk or county auditor, as appropriate, shall certify the assessment schedule to the treasurer of each county where the property is located. The county treasurer shall enter on the county system the amounts to be assessed against the property, as certified.
   4.  A board may enter into more than one assessment contract with respect to a single parcel of real property, so long as each assessment contract relates to a separate project. 
   5.  A board shall determine an inspection procedure to be utilized upon completion of an energy investment financed pursuant to this chapter.
    Sec. 5.  NEW SECTION.  385.5  Special assessments —— fees —— delinquency.
   1.  The total special assessments levied by a board under an assessment contract shall not exceed the sum of the cost of the project, including any energy audits or inspections or portions thereof financed by the board, plus interest.
   2.  In addition to special assessments provided under subsection 1, a board may also charge a fee of up to one percent of the total cost of a project, which fee may not exceed twenty thousand dollars per project. Such fee shall be charged in connection with administration of the assessment contract and with any technical, consultative, or project assistance services required. A fee charged under this subsection shall be included in an assessment contract provided under section 385.4.
   3.  Special assessments levied and any applicable fees charged by a board under an assessment contract shall be levied, charged, and collected in the manner as provided in the assessment contract and with the same priority as ad valorem property taxes.
   4.  a.  If special assessments and any applicable fees are not paid within the time period set forth in the assessment contract, such special assessments and fees shall be considered delinquent. Delinquent special assessments and fees shall become a lien on the property against which the special assessments were levied and the fees charged. A board may collect delinquent special assessments and fees as if the board were a county treasurer pursuant to sections 445.3 and 445.4, except that the property shall not be subject to sale for delinquent taxes under chapter 446.
   b.  Special assessments and any applicable fees that are not delinquent shall not be accelerated as part of any action or proceeding to collect delinquent special assessments or fees. Upon the sale of the real property subject to an assessment contract, any remaining special assessments and applicable fees shall be collected for the remainder of the assessment contract term from a subsequent owner of the real property, including an owner that is the state or any political subdivision of the state.
    Sec. 6.  NEW SECTION.  385.6  Bonds issued.
   1.  A board may, by resolution, authorize and issue bonds payable from the proceeds of the special assessments and any other revenues collected. Such bonds may bear dates, bear interest at rates not exceeding those permitted by chapter 74A, mature in one or more installments, be in either coupon or registered form, carry registration and conversion privileges, be payable as to principal and interest at times and places, be subject to terms of redemption prior to maturity with or without premium, and be in one or more denominations, all as provided by the resolution of the board authorizing their issuance. 
   2.  Bonds issued under this section shall not constitute a debt of the state or of the city or county where the property is located, and the form of such bonds shall contain a statement to that effect.
    Sec. 7.  NEW SECTION.  385.7  Annual reporting.
   A board shall submit to the governing body of each participating county and city an annual report for the preceding calendar year that includes the following information:
   1.  A description of each project completed, including the physical address of the benefitted property, the name or names of the property owners, an itemized list of the costs incurred under the project, and the name of any contractors used to complete the project.
   2.  For each project in subsection 1, the amount of special assessments due and the amount collected for the fiscal year ending during the preceding calendar year.
   3.  A summary of the public benefits resulting from the projects listed in subsection 1, including, without limitation, estimated cumulative energy savings resulting from the projects.
   4.  A description of each assessment contract entered into by the board, including a description of the project and a summary of the assessment schedule.
   5.  The amount of administrative costs incurred by the board.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill authorizes a county or city, or one or more counties and one or more cities within those counties to create an energy investment district to finance energy investment projects for the benefit of property within the district.
   The bill defines an “energy investment” to mean an acquisition, installation, or modification benefitting private property, except residential property with fewer than three residential units, that is intended to reduce energy consumption or energy costs, or both, or to allow for the use of alternate and renewable energy. The bill specifies measures that are considered energy investments. 
   The bill requires the governing bodies of the counties and cities participating in an energy investment district to appoint an energy investment district board to manage and administer the district. The board must consist of at least three members, but in no case fewer than the number of participating cities and counties, and the agreement creating the district must set the term length of board members. 
   The bill authorizes a board to exercise all powers and duties necessary to manage and administer the energy investment district, as provided in the agreement, including the power to adopt bylaws, adopt an official seal, sue and be sued, make and enter into contracts with public and private entities, employ staff, levy and collect special assessments, borrow money from a public or private source and issue bonds, finance energy investment projects, collect fees, and invest funds. A board must exist for a minimum duration necessary to finance any assessment contracts that the board enters into. 
   The bill requires a board to enter into an assessment contract with a property owner to finance a project if the board finds that there are sufficient resources for the project, the estimated monetary benefit, as determined by the board after consulting with an outside expert, is equal to or greater than the total cost of the project, and the project complies with all applicable ordinances and regulations in the county or city where the property is located. An assessment contract executed between a board and a property owner must include a description of the project, a mechanism for verifying the final costs of the project and ensuring that financing provided does not exceed the final costs of the project, an agreement by the property owner to pay special assessments and any applicable fees for a specified period and a schedule of assessments, a statement that the obligations provided in the assessment contract are a covenant that run with the land, an acknowledgment that subdividing property subject to the contract requires the contract or an amendment to the contract to divide the total special assessments due, and written consent to the levy and collection of special assessments and any applicable fees charged from all entities holding mortgages on the property or contract sellers of the property. 
   The bill requires a board to provide a copy of a signed assessment contract to the local assessor and county auditor of the county where the property is located, as well as filing the agreement with the county recorder. A board is authorized to enter into more than one assessment contract for a single property so long as each contract relates to a separate project. A board shall determine an inspection procedure for completed energy investments financed pursuant to the bill.
   The bill provides that the total special assessments levied by a board cannot exceed the sum of the cost of the project, including all incidental costs and fees. A board may also charge a fee of up to 1 percent of the total cost of the project, not to exceed $20,000. A board must levy and collect special assessments in the manner as provided in the assessment contract and with the same priority as real property taxes. Special assessments and fees not paid within the time period set forth in the assessment contract are delinquent and become a lien on the property. A board may collect such delinquent assessments and fees in the manner of property taxes pursuant to Code sections 445.3 and 445.4.
   The bill authorizes a board to issue bonds payable from the special assessments. The board must authorize an issuance of bonds by resolution and may determine the form of the bonds, so long as any interest rates do not exceed those permitted by Code chapter 74A. The bonds do not constitute a debt of the state or of the city or county where the property is located, and must contain a statement to that effect.
   The bill requires a board to submit an annual report to the governing body of each participating county and city in the district, which must include, for the preceding year, a description of each project completed, the amount of special assessments due and the amount collected for the fiscal year ending during the preceding year, a summary of the public benefits resulting from the projects completed, a description of assessment contracts entered into, and the amount of administrative costs incurred by the board.