Revision: March 19, 2010, midnight
HB 1554 – AS AMENDED BY THE HOUSE
18Mar2010… 0951h
2010 SESSION
09/10
HOUSE BILL 1554
AN ACT allowing municipalities to establish energy efficiency and clean energy districts.
SPONSORS: Rep. Pastor, Graf 9; Rep. Borden, Rock 18; Rep. F. Holden, Hills 4; Rep. R. Read, Rock 16; Rep. Rappaport, Coos 1; Sen. Fuller Clark, Dist 24; Sen. Merrill, Dist 21; Sen. Houde, Dist 5; Sen. Reynolds, Dist 2
COMMITTEE: Municipal and County Government
This bill allows municipalities to establish energy efficiency and clean energy districts.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
18Mar2010… 0951h
10-2202
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT allowing municipalities to establish energy efficiency and clean energy districts.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Findings and Purpose. The general court finds that:
I. Energy conservation and efficiency and clean energy improvements to residential, commercial, industrial, and other buildings and facilities are necessary to:
(a) Protect the economic and social well-being of New Hampshire communities by reducing the cost of fuel oil, electricity, natural gas, propane, and other forms of energy, and the risks associated with future escalation in energy prices;
(b) Protect the economic and social well-being of New Hampshire communities by encouraging investment in the development and implementation of energy conservation and efficiency and clean energy improvements; and
(c) Address the threat of global climate change.
II. The upfront cost of energy conservation and efficiency and clean energy improvements prevents many property owners from making such improvements.
III. To achieve the public benefits of reducing the cost of energy use and the risks associated with future escalation in energy prices, encouraging investment in the development and implementation of energy conservation and efficiency and clean energy improvements, and addressing the threat of global climate change, it is necessary to authorize a procedure for enabling property owners, on a voluntary basis, to finance such improvements and make repayments in the form of special assessments on their property tax bills or municipal service bills.
IV. The purposes of this chapter are to authorize municipalities to establish such a procedure and to set forth requirements to ensure that its use will achieve the intended purposes of improving the social and economic well-being of New Hampshire communities and reducing greenhouse gas emissions.
2 New Chapter; Energy Efficiency and Clean Energy Districts. Amend RSA by inserting after chapter 53-E the following new chapter:
CHAPTER 53-F
ENERGY EFFICIENCY AND CLEAN ENERGY DISTRICTS
53-F:1 Definitions. In this chapter:
I. “Clean energy improvement” means the installation of any system on the property for producing electricity for, or meeting heating, cooling, or water heating needs of the property, using either renewable energy sources, combined heat and power systems, or district energy systems using wood biomass (but not construction and demolition waste) or natural gas. Such improvements include but are not limited to solar photovoltaic, solar thermal, wood biomass, wind, and geothermal systems, provided that, to be covered by an agreement with a property owner and financed under this chapter, such improvements shall be qualifying improvements under RSA 53-F:6.
II. “District” means an energy efficiency and clean energy district established under this chapter.
III. “Energy conservation and efficiency improvements” means measures to reduce consumption, through conservation or more efficient use, of electricity, fuel oil, natural gas, propane, or other forms of energy on the property, including but not limited to air sealing, installation of insulation, installation of heating, cooling, or ventilation systems meeting or exceeding ENERGY STAR standards, building modifications to increase the use of daylighting, replacement of windows with units meeting or exceeding ENERGY STAR standards, installation of energy controls or energy recovery systems, and installation of efficient lighting equipment, provided that, to be covered by an agreement with a property owner and financed under this chapter, all such improvements must be permanently affixed to a building or facility that is part of the property and shall be qualifying improvements under RSA 53-F:6.
IV. “Municipality” means any city, town, or village district.
V. “Property owner” means the owner of record of real property within the boundaries of the district, whether zoned or used for residential, commercial, industrial, or other uses.
VI. “Third party lender” means a lender selected by the municipality to provide funds to finance energy conservation and efficiency and clean energy improvements by participating property owners under this chapter. The lender shall be licensed under state laws and regulations. The municipality shall be responsible for ensuring compliance by the third party lender with applicable provisions of this chapter.
53-F:2 Adoption By Municipality. A town or city may adopt the provisions of this chapter in the following manner:
I. In a town, other than a town that has adopted a charter pursuant to RSA 49-D, the question shall be placed on the warrant of an annual meeting only by the governing body, and not pursuant to RSA 39:3.
II. In a city or a town that has adopted a charter pursuant to RSA 49-C or RSA 49-D, the legislative body may consider and act upon the question in accordance with its normal procedures for passage of resolutions, ordinances, and other legislation. In the alternative, the legislative body of any such municipality may vote to place the question on the official ballot for any regular municipal election.
III. The language of the question shall designate an energy efficiency and clean energy district, which may cover all or a portion of the area within the municipality, or may designate all or a portion of the area within the municipality as part of an energy efficiency and clean energy district that encompasses all or portions of multiple municipalities.
IV. A municipality may vote to rescind its action in the same manner as it may vote to adopt, provided that all agreements entered into with property owners, liens established, and other legal obligations created prior to its vote to rescind shall remain in effect.
53-F:3 Authority. To achieve the public benefits of protecting the economic and social well-being by reducing energy costs in the community and risks to the community associated with future escalation in energy prices, and addressing the threat of global climate change, any municipality which has adopted the provisions of this chapter and established an energy efficiency and clean energy district may, upon a finding by the executive body of the municipality, after notice and hearing, that the energy conservation and efficiency and clean energy improvements the municipality will finance pursuant to this chapter will serve the public purposes as set forth in this chapter and not primarily be for the benefit of private persons or uses even though such private benefits and uses may incidentally result, do the following:
I. Incur debt for the purpose of providing financing to property owners within the district, including through issuance of municipal bonds, Qualified Energy Conservation Bonds or Clean Renewable Energy Bonds. Any such debt shall constitute a pledge of the municipality’s full faith and credit, and except as may be otherwise provided in this chapter, shall be subject to the provisions of RSA 33.
II. Establish a revolving fund pursuant to RSA 31:95-h using general municipal revenues, bond funds, federal Energy Efficiency and Conservation Block Grant funds, or grant funds from any federal, state, private, or other source, provided that the use of general municipal revenues shall be pursuant to an appropriation by special warrant article in accordance with RSA 32 and the municipality’s appropriation procedures.
III. Finance qualifying improvements by eligible property owners through any other means authorized by state law.
IV. Collect from property owners and remit to third-party lenders payments on assessments used to finance qualifying improvements.
V. Establish reserve accounts.
VI. Participate in state or federal programs providing support for municipal energy efficiency and clean energy finance programs such as those authorized by this chapter, including guarantee, loss reserve, revolving fund, or other state or federal support programs.
VII. Enter into agreements with property owners in which the property owners consent to make energy conservation and efficiency improvements or clean energy improvements to their property and to have the municipality add a special assessment to their property tax bills, or add a surcharge to their bills for water or sewer service or another municipal service, provided that such agreements shall not affect the tax liability or municipal services charges of other participating or nonparticipating property owners in the district.
VIII. Collect charges from participating property owners, third-party lenders, or both, to cover the cost of administration for the district.
IX. Otherwise administer a program for promoting and financing energy efficiency and clean energy improvements within a district in accordance with this chapter, enter into an agreement with a public or private entity to administer such a program on its behalf in accordance with this chapter, and enter into an agreement with one or more other municipalities to share services and otherwise cooperate in the administration of a district or districts in accordance with this chapter.
53-F:4 Agreements with Property Owners.
I.(a) A municipality may make an assessment under this chapter only pursuant to an agreement entered into with the free and willing consent of the owner of the property to which the assessment applies. The assessment shall be included as a separate item on the tax bill for the property sent to the owner pursuant to RSA 76. Any payment of the tax bill shall be applied first to the taxes on the property and any interest, charges or penalties thereon, and the balance shall be applied to the assessment. In the case of any property with multiple owners, an agreement under this chapter shall be signed by all owners.
(b) An agreement with a property owner shall provide that the owner shall contract for qualifying improvements with one or more qualified contractors, purchase materials to be used in making qualified improvements, or both, and that, upon submission of documentation required by the municipality, the municipality shall disburse funds to those contractors and vendors in payment for the qualifying improvements or materials used in making qualified improvements. An agreement with a property owner shall require that the property owner report post-installation energy use data for program evaluation purposes over a period determined by the municipality.
II. The municipality shall disclose to participating property owners the risks associated with participating in the program, including risks related to their failure to make payments and the risk of enforcement of the liens imposed under the agreements.
III. At least 30 days prior to entering into an agreement with a municipality under this chapter, the property owner shall provide to the holders of any existing mortgages on the property notice of his or her intent to enter into the agreement.
IV. An agreement with a participating property owner under this chapter shall be filed by the municipality for recording in the county registry of deeds and shall be disclosed to potential buyers prior to transfer of property ownership.
V. Any personal financial information provided to a municipality or an entity administering a program under this chapter on behalf of a municipality by a participating property owner or potential participating property owner shall be confidential and shall not be disclosed to any person except as required to administer the program and only on a need-to-know basis.
53-F:5 Eligibility of Property Owners.
I. A municipality may enter into an agreement under this chapter only with the legal owner of real property.
II. Prior to entering into an agreement with a property owner, the municipality shall determine that all property taxes and any other assessments levied with property taxes are current and have been current for 3 years or the property owner’s period of ownership, whichever is less; that there are no involuntary liens such as mechanic’s liens on the property; and that no notices of default or other evidence of property-based debt delinquency have been recorded during the past 3 years or the property owner’s period of ownership, whichever is less; and that the property owner is current on all mortgage debt on the property. The municipality shall adopt additional criteria, appropriate to property-assessed clean energy finance programs, for determining the creditworthiness of property owners.
53-F:6 Qualifying Improvements.
I. Improvements financed pursuant to an agreement under this chapter shall be based upon an audit performed by a person who has been certified as a building analyst by the Building Performance Institute or who has obtained other appropriate certification as determined by the public utilities commission or another appropriate New Hampshire-based entity. The audit shall identify recommended energy conservation and efficiency and clean energy improvements; provide the estimated energy cost savings, useful life, benefit-cost ratio, and simple payback or return on investment for each improvement; and provide the estimated overall difference in annual energy costs with and without recommended improvements. Financed improvements shall be consistent with the audit recommendations. The cost of the audit may be included in the total amount financed under this chapter.
II. Improvements shall be permanently affixed to an existing building or facility that is part of the property. An agreement between a municipality and a qualifying property owner may not cover projects in buildings or facilities under new construction.
III. Improvements shall be made by a contractor or contractors, which may include a cooperative or not-for-profit organization, determined by the municipality to be qualified to make the energy efficiency or clean energy improvements in the agreement. A municipality may accept a designation of contractors as qualified made by an electric or gas utility program or another appropriate New Hampshire-based entity. Any work requiring a license under any applicable law shall be performed by an individual holding such license. A municipality may elect to permit the financing pursuant to an agreement under this chapter of improvements made by the owner of the property, but shall not permit the value of the owner’s labor to be included in the amount financed.
IV. A municipality shall require, prior to disbursement of final payments to any contractor or vendor pursuant to an agreement with a property owner, submission by the property owner in a form acceptable to the municipality of:
(a) A post-installation report, based on an independent inspection acceptable to the municipality, certifying that improvements have been installed properly and verifying that they are performing satisfactorily; and
(b) Documentation of all costs to be financed and copies of any required permits.
53-F:7 Financing Terms.
I. Improvements shall be financed pursuant to an agreement under this chapter only on terms such that the property owner experiences a positive cash flow impact during the first year and the total energy cost savings realized by the property owner and the property owner’s successors during the useful lives of the improvements are expected to exceed the total cost to the property owner and the property owner’s successors of the improvements. In determining the amount that may be financed pursuant to an agreement under this chapter, the total amount of all rebates, tax credits, grants, and other financial assistance received by the owner on account of the improvements shall be deducted from the cost of the improvements.
II. Financing for improvements in a district may be provided either by a municipality or by a third-party lender and shall in either case meet the requirements of this chapter. A municipality that provides financing shall establish a loss reserve account and maintain funds in such account at a level that meets generally accepted standards for property-assessed clean energy finance programs.
III. The total amount of assessments for a property under this chapter shall not be less than $5,000 and shall not exceed $35,000 in the case of a single-family residential property or $60,000 in the case of a commercial, industrial, or multifamily residential property, or 15 percent of the assessed value of the property multiplied by the municipality’s current equalization ratio, whichever is less. The combined amount of assessments under this chapter, any outstanding mortgage obligations for the property, and any other outstanding debt attached to the property shall not exceed 85 percent of the assessed value of the property multiplied by the municipality’s current equalization ratio. A property owner who escrows property taxes with the holder of a mortgage on a property subject to an agreement under this chapter may be required by the holder to escrow amounts due under the agreement and the mortgage holder shall remit such amounts to the municipality in the same manner that property taxes are escrowed and remitted.
IV. The maximum term of finance provided pursuant to an agreement under this chapter shall be 20 years. The term shall in no case exceed 85 percent of the average expected useful life of all improvements, weighted by cost. Expected useful lives used for all calculations under this chapter shall be consistent with the expected useful lives of energy conservation and efficiency and clean energy measures approved by the public utilities commission for utility or other programs.
53-F:8 Liens.
I. An assessment levied pursuant to this chapter, and the interest and any charges or penalties thereon, shall constitute a lien against the property on which it is made until it is paid. The lien shall be evidenced by the agreement recorded in the registry of deeds for the county under this chapter. Except as otherwise provided in paragraph IV, payment of a past due balance from the loss reserve established under this chapter shall not relieve a participating property owner from the obligation to pay that amount or cause the lien against the property to be modified or released.
II. A municipality shall release a participating property of the lien on the property against which the assessment under this chapter is made upon full payment of the value of the assessment. Notice of the release of the lien shall be filed by the municipality for recording in the county registry of deeds.
III. Except as otherwise provided in paragraph IV, in the event of a delinquency in payments due pursuant to an agreement under this chapter, the municipality may enforce the lien as otherwise provided by law for collection of overdue property taxes pursuant to RSA 80 or the municipality may defer the collection of past due balances until the time of a transfer of property ownership; provided that, in the case of a delinquency in payments on a property subject to a mortgage that was in effect at the time the lien was placed on record at the county registry of deeds, the tax collector of the municipality shall be paid from the loss reserve account under this chapter and shall exercise the right to collect the delinquent amounts under RSA 80 only if and to the extent that the balance in the loss reserve account is insufficient to cover such amounts. In any case, at the time of collection, only the past due balances of the assessment under this chapter, together with any interest, charges, or penalties, shall be due for payment and future payments shall continue as a lien on the property. Except as otherwise provided in paragraph IV, but notwithstanding any other provision of law, in the event of a transfer of property ownership through foreclosure, collection by the municipality shall be limited to any past due balances and future payments shall continue as a lien and shall neither be accelerated nor extinguished by foreclosure.
IV. In the event of foreclosure on a mortgage on a property subject to an agreement under this chapter that was in effect at the time the lien was placed on record at the county registry of deeds, upon demand by the holder of the mortgage, the municipality shall pay from the loss reserve account established under this chapter the amount of any delinquent balance due on the assessment. If funds in the loss reserve account are insufficient to pay the delinquent balance, and the property is sold at the foreclosure sale to a third party, all proceeds from the foreclosure sale shall be applied, first, to overdue property taxes and any municipal assessments other than assessments under this chapter as provided by RSA 80 or other applicable law; second, to the obligations due to the holders of mortgages in effect at the time the lien was placed on record at the county registry of deeds; and third, to any delinquent amounts under the assessment under this chapter, whether owed to the collector of taxes or the loss reserve account. If a holder of such a mortgage purchases the property at the foreclosure sale and sells the property for an amount that is more than the amount of the obligation due to it under the mortgage and its out-of-pocket expenses incurred in owning, maintaining, and selling the property, it shall report the sale to the municipality and, to the extent of the excess proceeds, pay the collector of taxes or the loss reserve account any remaining delinquent amounts due under the assessment. If, following a foreclosure sale to a third party or a purchase by the holder of a mortgage under this paragraph and subsequent sale to a third party, any delinquent amount remains unpaid to the collector of taxes or loss reserve account under this paragraph, the municipality shall file a notice in the county registry of deeds waiving its right to payment of such past due balance and the lien under this chapter shall remain in effect to secure only future amounts due under the assessment under this chapter.
3 Financing of Energy Conservation and Efficiency and Clean Energy Improvements by Property Owners. Amend RSA 31:95-h, I(d) and (e) to read as follows:
(d) Creating affordable housing and facilitating transactions relative thereto; [or]
(e) Providing cable access for public, educational, or governmental use[.]; or
(f) Financing of energy conservation and efficiency and clean energy improvements by participating property owners in an energy efficiency and clean energy district established pursuant to RSA 53-F.
4 Effective Date. This act shall take effect 60 days after its passage.