House Study Bill 320 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act allowing local governments to establish economic 1 property assessed capital expenditure programs. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2505YC (2) 91 jm/md
H.F. _____ Section 1. LEGISLATIVE FINDING AND INTENT ECONOMIC 1 PROPERTY ASSESSED CAPITAL EXPENDITURE PROGRAM. 2 1. It is the intent of the general assembly to authorize 3 local governments to establish economic property assessed 4 capital expenditure programs, as defined in the section of this 5 Act enacting section 403B.1, to ensure that free and willing 6 owners of agricultural, commercial, industrial, or multifamily 7 residential property may obtain low-cost, long-term financing 8 for qualifying improvements. 9 2. The general assembly finds that the increase in economic 10 development, lower insurance costs, and lower disaster and 11 emergency response costs from implementing economic property 12 assessed capital expenditure programs serves as a valid public 13 purpose for permitting local governments to adopt the programs. 14 3. The general assembly further finds that economic 15 property assessed capital expenditure programs lead to 16 decreased energy and water costs and encourage water and energy 17 sustainability. 18 Sec. 2. NEW SECTION . 403B.1 Definitions. 19 For the purposes of this chapter: 20 1. Assessment agreement means a written contract between 21 an economic property owner and a local government with an 22 established E-PACE program that states the terms of the 23 property owners qualified project as required by this chapter. 24 2. Capital provider means a private third-party entity, 25 including its designee, successor, and assigns, that provides 26 or funds E-PACE financing, including refinancing qualified 27 projects, under a financing agreement. 28 3. E-PACE assessment means a voluntary assessment imposed 29 by a local government on real property located within the 30 boundaries of a region for the purpose of financing an E-PACE 31 program. 32 4. a. Economic property means any of the following: 33 (1) Privately owned commercial, industrial, or agricultural 34 real property. 35 -1- LSB 2505YC (2) 91 jm/md 1/ 22
H.F. _____ (2) Privately owned residential property consisting of five 1 or more dwelling units. 2 b. Economic property may include property owned by 3 nonprofit, charitable, or religious organizations, one or 4 more owner-occupied or rental condominium units affiliated 5 with a hotel, a leasehold of privately owned property, or a 6 leasehold of property owned by a governmental entity used for 7 the purposes of this chapter. 8 5. Economic property assessed capital expenditure program 9 or E-PACE program means an economic property assessed capital 10 expenditure program established pursuant to section 403B.4. 11 6. Financing agreement means a contract under which a 12 property owner agrees to repay a capital provider for E-PACE 13 financing, including but not limited to details of finance 14 charges, fees, debt servicing, accrual of interest and 15 penalties, and terms relating to treatment of prepayment and 16 partial payment billing, collection, and enforcement of E-PACE 17 financing. 18 7. Local government means a county, city, or other 19 political subdivision of this state. 20 8. Program administrator means a local government 21 department or individual designated to administer an E-PACE 22 program or a private independent third party designated by the 23 local government to administer an E-PACE program in conformance 24 with the administration procedures provided in this chapter. 25 9. Program guidebook means a comprehensive document that 26 illustrates the applicable program and establishes appropriate 27 guidelines, specifications, underwriting and approval 28 criteria, and standard application forms consistent with the 29 administration of an E-PACE program pursuant to this chapter. 30 A program guidebook shall include all of the following: 31 a. A form for an assessment contract between the local 32 government and a property owner for specifying the terms of an 33 E-PACE assessment, financing provided by a third party, and 34 remedies for default or foreclosure. 35 -2- LSB 2505YC (2) 91 jm/md 2/ 22
H.F. _____ b. A form for a notice of assessment to be used by the local 1 government. 2 c. A form for a notice of assignment of an assessment 3 between a local government and a capital provider. 4 10. Qualified improvement means a permanent improvement 5 installed and affixed to economic property and intended to do 6 one or more of the following: 7 a. Decrease energy consumption or demand through the use of 8 efficiency technologies, products, components, materials, or 9 activities. 10 b. Support the production of renewable energy, including the 11 use of a product, device, or interacting group of products or 12 devices that generates electricity, provides thermal energy, or 13 regulates temperature. 14 c. Decrease water consumption or demand and increase 15 water conservation and storage through the use of efficiency 16 technologies, products, or activities. 17 d. Reduce or eliminate lead from water that may be used for 18 drinking or cooking. 19 e. Increase water or wastewater resilience, including 20 through storm water management and flood mitigation. 21 f. Increase wind resistance, energy storage, off-grid 22 electricity production, or other improvements to reduce the 23 environmental impacts or land usage approved by the local 24 government that established the E-PACE program. 25 11. Qualified project means a project approved by the 26 administrator of an E-PACE program, involving the installation 27 or modification of a qualified improvement, including new 28 construction or the adaptive reuse of eligible property with a 29 qualified improvement. 30 Sec. 3. NEW SECTION . 403B.2 E-PACE assessments. 31 1. A local government may impose an E-PACE assessment to 32 repay the financing of a qualified project on economic property 33 located within the boundaries governed by the local government. 34 2. A local government shall not impose an E-PACE assessment 35 -3- LSB 2505YC (2) 91 jm/md 3/ 22
H.F. _____ to repay the financing of the purchase or installation of 1 products or devices not permanently affixed to economic 2 property. 3 3. A local government may impose an E-PACE assessment only 4 after the local government approves a project application 5 related to the property to be assessed pursuant to section 6 403B.6. The E-PACE assessment shall be created through an 7 assessment agreement between the local government and the owner 8 of the property to be assessed. 9 Sec. 4. NEW SECTION . 403B.3 Authorizations. 10 1. A local government may establish an E-PACE program in 11 accordance with this section. 12 2. A local government that establishes an E-PACE program may 13 enter into an assessment agreement with an economic property 14 owner to impose an E-PACE assessment on the owners property as 15 the means to repay the owners financing of a qualified project 16 on that property. 17 3. a. A local government may administer an E-PACE program 18 or delegate administration of the program pursuant to a third 19 party. 20 b. If a local government delegates administration of an 21 E-PACE program to a third party, then the contract delegating 22 administrative authority shall require the third party to 23 reimburse the local government for costs associated with 24 monitoring the program, imposing E-PACE assessments, and 25 billing and collecting payments on behalf of the third party. 26 4. The financing to pay for E-PACE assessments may include 27 but is not limited to one or more of the following: 28 a. The cost of materials and labor necessary for the 29 installation or modification of a qualified improvement. 30 b. Permit fees. 31 c. Inspection fees. 32 d. Lender fees. 33 e. E-PACE program application and administration fees. 34 f. Project development and engineering fees. 35 -4- LSB 2505YC (2) 91 jm/md 4/ 22
H.F. _____ g. Interest reserves. 1 h. Capitalized interest, in an amount determined by the 2 economic property owner and the third party providing financing 3 for an E-PACE programs qualified project. 4 i. Other fees or costs incurred by the property owner 5 incidental or ancillary to the installation, modification, or 6 improvement on a specific or pro rata basis, as determined by 7 the local government. 8 5. An assessment agreement constitutes written notice 9 to the economic property owner subject to the assessment 10 agreement that the owner may be responsible for the payment 11 of any remaining principal balance of the assessment upon 12 the refinance or sale of the property unless the remaining 13 principal balance is assumed by the acquiring property owner. 14 The local government shall require each economic property 15 owner entering into an assessment agreement to acknowledge, in 16 writing, the notice as part of the execution of the assessment 17 agreement. 18 Sec. 5. NEW SECTION . 403B.4 Procedures to establish an 19 E-PACE program. 20 1. To establish an E-PACE program, a local government must 21 do all of the following: 22 a. Adopt a resolution of intent that includes all of the 23 following: 24 (1) A statement that the local government intends to 25 authorize direct financing between property owners and capital 26 providers under a financing agreement as the means to finance 27 qualified projects. 28 (2) A statement that the local government intends to 29 authorize E-PACE assessments, entered into voluntarily by 30 a property owner with the local government by means of a 31 written contract, to repay the financing for qualified projects 32 available to property owners. 33 (3) A description of the types of projects that may qualify 34 for E-PACE assessments. 35 -5- LSB 2505YC (2) 91 jm/md 5/ 22
H.F. _____ (4) A description of the boundaries of the region. 1 (5) A description of the proposed arrangements for 2 administration of the E-PACE program according to the 3 provisions of this chapter. 4 (6) A statement of the time and place for a public hearing 5 on the proposed E-PACE program as required in paragraph b , of 6 this subsection. 7 (7) A statement designating the person or entity charged 8 with administering the E-PACE program and executing assessment 9 agreements. 10 b. Hold a hearing for the public to comment on the proposed 11 E-PACE program as outlined in the resolution of intent. If 12 two or more local governments have contracted to work together 13 on an E-PACE program, then only one local government shall be 14 required to hold a hearing for public comment on a proposed 15 E-PACE program. 16 c. Subsequent to holding a hearing pursuant to paragraph 17 b , adopt a resolution establishing the E-PACE program and its 18 terms. 19 d. Adopt a program guidebook consistent with the resolution 20 adopted pursuant to paragraph c . 21 2. a. Subject to the terms of the resolution establishing 22 the E-PACE program as provided in subsection 1, paragraph c , 23 of this section, the local government may amend an E-PACE 24 program by resolution. 25 b. If a local government amends an E-PACE program pursuant 26 to paragraph a , the local government shall amend its program 27 guidebook related to the E-PACE program accordingly. 28 c. The program administrator may amend the language in the 29 program guidebook that does not conflict with the resolution. 30 3. The enactment of a resolution establishing an E-PACE 31 program and its terms shall allow a local government to place 32 E-PACE assessments on property without any additional action 33 by the local government. 34 4. For the purposes of implementing and administering 35 -6- LSB 2505YC (2) 91 jm/md 6/ 22
H.F. _____ an E-PACE program, a local government may do either of the 1 following: 2 a. Designate a local government official to administer the 3 E-PACE program. 4 b. Delegate or contract for professional or administrative 5 services necessary to administer the program on a nonexclusive 6 basis. 7 5. A local government is authorized to impose service fees 8 to offset the actual and reasonable costs of administering an 9 E-PACE program. A fee of no more than five hundred dollars may 10 be charged at the time of a property owners application. In 11 addition, a one-time servicing fee for approved applications 12 may be calculated as one percent of the total amount financed, 13 not to exceed fifty thousand dollars. 14 Sec. 6. NEW SECTION . 403B.5 Program requirements. 15 1. Each property owner requesting to participate in an 16 E-PACE program shall provide a statement certifying all of the 17 following: 18 a. The property owner is the legal owner of the benefiting 19 property. 20 b. The property owner is not delinquent on any mortgage or 21 property tax payments that affect the benefiting property. 22 c. The property owner is not insolvent or in bankruptcy 23 proceedings. 24 d. The title of the benefiting property is not in dispute. 25 2. The total debt secured by a property participating 26 in a local governments E-PACE program, including any E-PACE 27 assessments from the E-PACE program, shall not exceed ninety 28 percent of the fair market value of the property as stabilized. 29 3. An assessment taken pursuant to an E-PACE program shall 30 not exceed thirty-five percent of the fair market value of the 31 property. 32 4. A determination of fair market value shall be established 33 by an appraisal completed no more than twenty-four months prior 34 to the time of a property owners application to an E-PACE 35 -7- LSB 2505YC (2) 91 jm/md 7/ 22
H.F. _____ program. 1 5. The term of an E-PACE assessment shall not exceed the 2 life of the longest lived qualifying improvement financed in 3 a project that is the basis for the E-PACE assessment. The 4 standards for determining a qualifying improvements useful 5 life shall be contained in the E-PACE programs program 6 guidebook. 7 6. Prior to approving any qualified projects for an E-PACE 8 program, a local government shall do all of the following: 9 a. Provide a description of each type of project that is 10 eligible for the E-PACE program. 11 b. Identify the person or entity that will be authorized to 12 enter into written contracts on behalf of the local government. 13 c. Provide a statement explaining the manner in which 14 property will be assessed and how assessments will be 15 collected. 16 d. Outline the procedures for billing and collecting E-PACE 17 assessments and remedies for enforcement of a delinquent E-PACE 18 assessment. 19 Sec. 7. NEW SECTION . 403B.6 Application and review. 20 1. A local government participating in an E-PACE program 21 shall establish the form and manner a person may apply 22 to commence a project under the E-PACE program, and shall 23 establish a review process to evaluate project applications for 24 E-PACE program financing. At a minimum, an application shall 25 require an applicant to do all of the following: 26 a. Demonstrate that the project is intended to provide one 27 or more of the following benefits to the public: 28 (1) Energy or water resource conservation. 29 (2) Reduced public health costs or risk. 30 (3) Reduced public emergency response cost or risk. 31 b. For an existing building, provide an analysis by a 32 licensed engineering firm, engineer, or other qualified 33 professional listed in the program guidebook. The author of 34 the analysis shall certify any of the following as applicable: 35 -8- LSB 2505YC (2) 91 jm/md 8/ 22
H.F. _____ (1) The proposed improvements are intended to result in 1 either more efficient use or conservation of energy or water or 2 the to address safe drinking water. 3 (2) The proposed improvements are intended to improve 4 resilience. 5 c. For new construction, provide certification by a licensed 6 engineering firm, engineer, or other qualified professional 7 listed in the program guidebook stating that the proposed 8 qualified improvements are designed to enable the project to 9 do any of the following: 10 (1) Exceed the current building codes requirements for 11 energy efficiency, water efficiency, renewable energy, or water 12 quality. 13 (2) Increase resilience for water, wastewater, storms, 14 storm water, wind, or other approved resilience projects, or 15 improve energy storage, microgrids, or reduce land use impacts. 16 (3) Satisfy other requirements listed in the program 17 guidebook to be considered eligible as a qualified improvement 18 as defined under this chapter. 19 d. Furnish a written statement, executed and acknowledged 20 by each holder of a mortgage or deed of trust securing 21 indebtedness on the property to be improved through the E-PACE 22 program, consenting to the E-PACE assessment, and indicating 23 that the E-PACE assessment shall not constitute a default under 24 the mortgage or deed of trust. 25 2. A local government shall do all of the following: 26 a. Establish a process for reviewing and approving 27 applications for financing. The local government may require 28 a capital provider to certify to the local government, in 29 accordance with a process approved by the local government, 30 that the property owner and the project meet the requirements 31 of this chapter and the program guidebook and qualify for 32 financing. 33 b. Execute and record each assessment agreement authorized 34 by the local governments program administrator. 35 -9- LSB 2505YC (2) 91 jm/md 9/ 22
H.F. _____ c. Execute and record each notice of assessment created 1 for a qualified project authorized by the local governments 2 program administrator. 3 d. Execute and record each assignment of an assessment 4 agreement to a capital provider and each notice of assignment 5 of assessment authorized by the local governments regional 6 administrator, with the county recorder where the property 7 subject to the assessment agreement is located. 8 3. Upon completion of a qualified project, the property 9 owner of the qualified project, or the owners legal 10 representative, shall provide written confirmation that the 11 qualified project was properly completed and is operating as 12 intended. 13 Sec. 8. NEW SECTION . 403B.7 Collections pursuant to E-PACE 14 program. 15 1. a. A local government shall do one of the following in 16 relation to E-PACE assessment liens for a qualified project: 17 (1) Bill, collect, and enforce an E-PACE assessment lien at 18 the same time and in the same manner as a property tax. 19 (2) Assign the rights to bill, collect, and enforce an 20 E-PACE assessment to a capital provider. 21 b. A local government shall not make an assignment pursuant 22 to paragraph a , subparagraph (2), after the execution of an 23 assessment agreement relating to the qualified project for 24 which the E-PACE assessment is being imposed. 25 c. A capital provider assigned the rights to bill, collect, 26 and enforce an E-PACE assessment may enforce the E-PACE 27 assessment in the same manner as prescribed in chapter 654 28 for a mortgage, except assessments not yet due may not be 29 accelerated or eliminated by foreclosure. 30 2. In any action to enforce an E-PACE assessment lien 31 by either a local government or a capital provider, any 32 outstanding and delinquent property taxes must be satisfied 33 prior to the delinquent amounts related to an E-PACE 34 assessment. 35 -10- LSB 2505YC (2) 91 jm/md 10/ 22
H.F. _____ Sec. 9. NEW SECTION . 403B.8 Limitations of liability. 1 A local government, the local governments employees, and 2 the local governments officers are not liable at law or equity 3 for actions taken pursuant to this chapter, except in cases of 4 gross negligence, recklessness, or willful misconduct. 5 Sec. 10. NEW SECTION . 403B.9 Financing E-PACE projects. 6 Financing for a qualified project may authorize a property 7 owner to do one or more of the following: 8 1. Directly purchase the equipment and materials necessary 9 for the qualified project. 10 2. Contract, including through a lease agreement, power 11 purchase agreement, or other service contract, for the 12 equipment and materials necessary for the qualified project. 13 Sec. 11. NEW SECTION . 403B.10 Required recording. 14 1. A local government that authorizes financing through 15 E-PACE assessments pursuant to this chapter shall file a 16 written notice of assessment in the recorders office of the 17 county in which the property subject to the E-PACE assessment 18 is located. The notice must contain all of the following: 19 a. The legal description of the property. 20 b. The name of each property owner. 21 c. The amount of the assessment. 22 d. The date on which the assessment was created. 23 e. The principal amount of the assessment. 24 f. The term of the assessment. 25 g. A copy of the assessment agreement. 26 h. A reference to this chapter authorizing the E-PACE 27 assessment on the property. 28 2. A local government shall file and record each executed 29 assignment of an assessment agreement and notice of assignment 30 of assessment. 31 3. A local government may delegate recording 32 responsibilities under subsection 1 for a qualified project to 33 a capital provider if the local government assigned its rights 34 to the E-PACE assignment related to that qualified project to 35 -11- LSB 2505YC (2) 91 jm/md 11/ 22
H.F. _____ the capital provider. 1 Sec. 12. NEW SECTION . 403B.11 Order of liens. 2 1. Notwithstanding contrary provisions of law: 3 a. An E-PACE assessment shall be considered a first and 4 prior lien against the property on which the E-PACE assessment 5 is imposed from the date on which the notice of assessment is 6 recorded until the assessment and all associated interest and 7 penalties are paid in full. 8 b. An E-PACE assessment shall be considered junior to any 9 local government property tax or ad valorem tax. 10 2. An E-PACE assessment shall run with the land, and any 11 portion of the E-PACE assessment under the assessment agreement 12 that is not yet due shall not be accelerated or eliminated by 13 foreclosure of a property tax lien or other foreclosure. 14 3. A provision of a deed of trust, mortgage, or other 15 agreement between a lienholder and a property owner providing 16 for the acceleration of any payment under the deed of trust, 17 mortgage, or agreement solely as the result of entering into 18 an agreement to finance an E-PACE assessment is unenforceable 19 as to an assessment agreement. 20 4. A lienholder or loan servicer may increase the monthly 21 amount held in escrow for an economic property as required to 22 annually pay an E-PACE assessment related to that property. 23 Sec. 13. NEW SECTION . 403B.12 Governmental entities 24 contracts joint administration. 25 1. A local government implementing an E-PACE program 26 pursuant to this chapter may contract with another local 27 government in accordance with chapter 28E, including a county 28 assessor, to perform the duties of the local government 29 relating to the billing, collection, enforcement, and 30 remittance of E-PACE assessments imposed pursuant to this 31 chapter. 32 2. A combination of local governments may agree in 33 accordance with chapter 28E to implement an E-PACE program 34 jointly. 35 -12- LSB 2505YC (2) 91 jm/md 12/ 22
H.F. _____ 3. A local government may contract with a third party on a 1 nonexclusive basis. 2 4. If a local government contracts with a third party 3 including but not limited to another local government to 4 administer an E-PACE program, then other third parties 5 shall be allowed to enter into a contract to administer the 6 E-PACE program on the same terms if the contracting local 7 government determines the E-PACE program requires a third-party 8 administrator in the future. 9 Sec. 14. NEW SECTION . 403B.13 Compulsion prohibited. 10 A local government that establishes an E-PACE program 11 shall not make the issuance of a permit, license, or other 12 authorization from the local government to a property owner 13 contingent on the person entering into an assessment agreement 14 to repay the financing of a qualified project pursuant to this 15 chapter, or otherwise compel a property owner to enter into an 16 assessment agreement. 17 Sec. 15. NEW SECTION . 403B.14 Full faith and credit. 18 The state and each local government shall not use public 19 funds to fund or repay a loan between a capital provider and 20 a property owner. This chapter shall not be construed to 21 pledge, offer, or encumber the full faith and credit of a local 22 government. A local government shall not pledge its full faith 23 and credit for a lien amount through an E-PACE program. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanations substance by the members of the general assembly. 27 This bill allows local governments to establish economic 28 property assessed capital expenditure (E-PACE) programs. 29 The bill declares the general assemblys intent to authorize 30 local governments to establish E-PACE programs to ensure 31 that free and willing owners of agricultural, commercial, 32 industrial, or multifamily residential property may obtain 33 low-cost, long-term financing for qualifying improvements. 34 The bill declares the general assemblys finding that the 35 -13- LSB 2505YC (2) 91 jm/md 13/ 22
H.F. _____ increase in economic development, lower insurance costs, and 1 lower disaster and emergency response costs from implementing 2 E-PACE programs serves as a valid public purpose for permitting 3 local governments to adopt the programs, and that E-PACE 4 programs lead to decreased energy and water costs and encourage 5 water and energy sustainability. 6 The bill defines assessment agreement, capital 7 provider, E-PACE assessment, economic property, economic 8 property assessed capital expenditure program or E-PACE 9 program, financing agreement, local government, program 10 administrator, program guidebook, qualified improvement, 11 and qualified project. 12 The bill authorizes a local government to establish E-PACE 13 programs. 14 The bill allows a local government to impose E-PACE 15 assessments on economic properties to repay the financing of 16 a qualified project on economic property located within the 17 boundaries governed by the local government. 18 The bill prohibits a local government from imposing an 19 E-PACE assessment to repay the financing of the purchase or 20 installation of products or devices not permanently affixed to 21 economic property. 22 The bill allows a local government to impose an E-PACE 23 assessment only after the local government approves a project 24 application related to the property to be assessed. The E-PACE 25 assessment shall be created through a written contract between 26 the local government and the owner of the property to be 27 assessed. 28 The bill allows a local government that establishes an 29 E-PACE program to enter into an assessment agreement with an 30 economic property owner to impose an E-PACE assessment on the 31 owners property as the means to repay the owners financing of 32 a qualified project on that property. 33 The bill allows a local government may administer an E-PACE 34 program or delegate administration of the program to a third 35 -14- LSB 2505YC (2) 91 jm/md 14/ 22
H.F. _____ party. 1 The bill requires, if a local government delegates 2 administration of an E-PACE program to a third party, the 3 contract delegating administrative authority to require 4 the third party to reimburse the local government for costs 5 associated with monitoring the program, imposing E-PACE 6 assessments, and billing and collecting payments on behalf of 7 the third party. 8 The bill allows financing to pay for E-PACE assessments 9 to include but not be limited to the cost of materials and 10 labor necessary for the installation or modification of a 11 qualified improvement; permit fees; inspection fees; lender 12 fees; E-PACE program application and administration fees; 13 project development and engineering fees; interest reserves; 14 capitalized interest, in an amount determined by the economic 15 property owner and the third party providing financing for an 16 E-PACE programs qualified project; and other fees or costs 17 incurred by the property owner incidental or ancillary to the 18 installation, modification, or improvement on a specific or pro 19 rata basis, as determined by the local government. 20 The bill provides that an assessment agreement constitutes 21 written notice to the economic property owner subject to the 22 assessment agreement that the owner may be responsible for the 23 payment of any remaining principal balance of the assessment 24 upon the refinance or sale of the property unless the remaining 25 principal balance is assumed by the acquiring property owner. 26 The bill requires each local government to require each 27 economic property owner entering into an assessment agreement 28 to acknowledge, in writing, the notice as part of the execution 29 of the assessment agreement. 30 The bill requires a local government, when establishing an 31 E-PACE program, to adopt a resolution of intent that includes a 32 statement that the local government intends to authorize direct 33 financing between property owners and capital providers as the 34 means to finance qualified projects; a statement that the local 35 -15- LSB 2505YC (2) 91 jm/md 15/ 22
H.F. _____ government intends to authorize E-PACE assessments, entered 1 into voluntarily by a property owner with the local government 2 by means of a written contract, to repay the financing for 3 qualified projects available to property owners; a description 4 of the types of projects that may qualify for E-PACE 5 assessments; a description of the boundaries of the region; a 6 description of the proposed arrangements for administration of 7 the E-PACE program; a statement of the time and place for a 8 public hearing on the proposed E-PACE program; and a statement 9 designating the person or entity charged with administering the 10 E-PACE program and executing assessment agreements. 11 The bill requires a local government establishing an 12 E-PACE program to hold a hearing for the public to comment 13 on the proposed E-PACE program as outlined in the resolution 14 of intent. The bill provides that if two or more local 15 governments have contracted to work together on an E-PACE 16 program, then only one local government shall be required to 17 hold a hearing for public comment on a proposed E-PACE program. 18 The bill requires a local government establishing an E-PACE 19 program to adopt a resolution establishing the E-PACE program 20 and its terms after holding a public hearing relating to the 21 establishment of the E-PACE program. 22 The bill requires a local government to adopt a program 23 guidebook that is consistent with the resolution establishing 24 the E-PACE program. 25 The bill allows a local government to amend an E-PACE 26 program by resolution, subject to the terms of the resolution 27 the local government adopted after holding a public hearing 28 relating to the establishment of the E-PACE program. The bill 29 requires a local government that amends an E-PACE program via 30 resolution to amend the program guidebook related to that 31 E-PACE program accordingly. However, the bill allows the 32 program administrator to amend the language in the program 33 guidebook that does not conflict with the resolution. 34 The bill allows a resolution establishing an E-PACE program 35 -16- LSB 2505YC (2) 91 jm/md 16/ 22
H.F. _____ and its terms to allow the local government to place voluntary 1 E-PACE assessments on property without any additional action 2 by the local government. 3 For the purposes of implementing and administering an E-PACE 4 program, the bill allows a local government to either designate 5 a local government official to administer the E-PACE program, 6 or delegate or contract for professional or administrative 7 services necessary to administer the E-PACE program on a 8 nonexclusive basis. 9 The bill authorizes local governments to impose service fees 10 to offset the actual and reasonable costs of administering an 11 E-PACE program. A one-time fee of no more than $500 may be 12 charged at the time of a property owners application. In 13 addition, a servicing fee for approved applications may be 14 calculated as one percent of the total amount financed, not to 15 exceed $50,000. 16 The bill requires each property owner requesting to 17 participate in an E-PACE program to provide a statement 18 certifying the property owner is the legal owner of the 19 benefiting property, the property owner is not delinquent 20 on any mortgage or property tax payments that affect the 21 benefiting property, the property owner is not insolvent or 22 in bankruptcy proceedings, and the title of the benefiting 23 property is not in dispute. 24 The bill prohibits the total debt secured by a property 25 participating in a local governments E-PACE program, including 26 any E-PACE assessments from the E-PACE program, from exceeding 27 90 percent of the fair market value of the property as 28 stabilized. 29 The bill prohibits an assessment taken pursuant to an E-PACE 30 program from exceeding 35 percent of the fair market value of 31 the property. 32 The bill requires a determination of fair market value to be 33 established by an appraisal completed no more than 24 months 34 prior to the time of a property owners application to an 35 -17- LSB 2505YC (2) 91 jm/md 17/ 22
H.F. _____ E-PACE program. 1 The bill prohibits the term of an E-PACE assessment from 2 exceeding the life of the longest lived qualifying improvement 3 financed in a project that is the basis for the E-PACE 4 assessment. The bill requires the standards for determining 5 a qualifying improvements useful life to be contained in the 6 E-PACE programs program guidebook. 7 The bill requires a local government, prior to approving 8 any qualified projects for an E-PACE program, to provide a 9 description of each type of project that is eligible for the 10 E-PACE program, identify the person or entity that will be 11 authorized to enter into written contracts on behalf of the 12 local government, provide a statement explaining the manner 13 in which property will be assessed and how assessments will 14 be collected, and outline the procedures for billing and 15 collecting E-PACE assessments and remedies for enforcement of a 16 delinquent E-PACE assessment. 17 The bill requires a local government participating in an 18 E-PACE program to establish the form and manner a person may 19 apply to commence a project under the E-PACE program, and to 20 establish a review process to evaluate project applications 21 for E-PACE program financing. The bill lists several 22 requirements for E-PACE program applicants that an E-PACE 23 program application must include. 24 The bill requires a local government to establish a process 25 for reviewing and approving applications for financing. The 26 local government may require a capital provider to certify to 27 the local government, in accordance with a process approved by 28 the local government, that the property owner and the project 29 meet statutory requirements and program guidebook requirements 30 and qualify for financing. 31 The bill requires a local government to execute and record 32 each assessment agreement authorized by the local governments 33 program administrator. 34 The bill requires a local government to execute and record 35 -18- LSB 2505YC (2) 91 jm/md 18/ 22
H.F. _____ each notice of assessment created for a qualified project 1 authorized by the local governments program administrator. 2 The bill requires a local government to execute and record 3 each assignment of an assessment agreement to a capital 4 provider and each notice of assignment of assessment authorized 5 by the local governments regional administrator, with the 6 county recorder where the property subject to the assessment 7 agreement is located. 8 The bill requires, upon completion of a qualified project, 9 the property owner who applied for the qualified project, 10 or the owners legal representative, to provide written 11 confirmation that the qualified project was properly completed 12 and is operating as intended. 13 The bill requires a local government, in relation to E-PACE 14 assessment liens for a qualified project, to either bill, 15 collect, and enforce an E-PACE assessment lien at the same time 16 and in the same manner as a property tax, or assign the rights 17 to bill, collect, and enforce an E-PACE assessment to a capital 18 provider. 19 The bill prohibits a local government from making an 20 assignment of the rights to bill, collect, and enforce an 21 E-PACE assessment after the execution of an assessment 22 agreement relating to the qualified project for which the 23 E-PACE assessment is being imposed. 24 The bill allows a capital provider who was assigned the 25 rights to bill, collect, and enforce an E-PACE assessment to 26 enforce the E-PACE assessment in the same manner as prescribed 27 in Code chapter 654 (foreclosure of real estate mortgages) 28 for a mortgage, except assessments not yet due may not be 29 accelerated or eliminated by foreclosure. 30 The bill requires any outstanding and delinquent property 31 taxes to be satisfied prior to the delinquent amounts related 32 to an E-PACE assessment. 33 The bill limits a local governments, the local governments 34 employees, and the local governments officers liability at 35 -19- LSB 2505YC (2) 91 jm/md 19/ 22
H.F. _____ law or equity for actions taken pursuant to E-PACE program 1 statutes, except in cases of gross negligence, recklessness, 2 or willful misconduct. 3 The bill allows financing for a qualified project to 4 authorize a property owner to directly purchase the equipment 5 and materials necessary for the qualified project; contract, 6 including through a lease agreement, power purchase agreement, 7 or other service contract, for the equipment and materials 8 necessary for the qualified project; or both. 9 The bill requires a local government that authorizes 10 financing through E-PACE assessments to file a written notice 11 of assessment in the recorders office of the county in which 12 the property subject to the E-PACE assessment is located. The 13 bill requires the notice to contain the legal description of 14 the property, the name of each property owner, the amount of 15 the assessment, the date on which the assessment was created, 16 the principal amount of the assessment, the term of the 17 assessment, a copy of the assessment agreement, and a reference 18 to the Code chapter authorizing the E-PACE assessment on the 19 property. 20 The bill requires a local government to file and record each 21 executed assignment of an assessment agreement and notice of 22 assignment of assessment. 23 The bill allows a local government to delegate recording 24 responsibilities for a qualified project to a capital provider 25 if the local government assigned its rights to the E-PACE 26 assignment related to that qualified project to the capital 27 provider. 28 The bill requires an E-PACE assessment to be considered a 29 first and prior lien against the property on which the E-PACE 30 assessment is imposed from the date on which the notice of 31 assessment is recorded until the assessment and all associated 32 interest and penalties are paid in full. 33 The bill requires an E-PACE assessment to be considered 34 junior to any local government property tax or ad valorem tax. 35 -20- LSB 2505YC (2) 91 jm/md 20/ 22
H.F. _____ The bill makes an E-PACE assessment run with the land, 1 and prohibits any portion of the E-PACE assessment under 2 the assessment agreement that is not yet due shall not be 3 accelerated or eliminated by foreclosure of a property tax lien 4 or other foreclosure. 5 The bill makes any provision of a deed of trust, mortgage, 6 or other agreement between a lienholder and a property owner 7 providing for the acceleration of any payment under the deed of 8 trust, mortgage, or agreement solely as the result of entering 9 into an agreement to finance an E-PACE assessment unenforceable 10 as to an assessment agreement. 11 The bill allows a lienholder or loan servicer to increase 12 the monthly amount held in escrow for an economic property as 13 required to annually pay the E-PACE assessment related to that 14 property. 15 The bill allows a local government implementing an E-PACE 16 program pursuant to this chapter may contract with another 17 local government in accordance with Code chapter 28E (joint 18 exercise of governmental powers), including a county assessor, 19 to perform the duties of the local government relating to the 20 billing, collection, enforcement, and remittance of E-PACE 21 assessments. 22 The bill allows a combination of local governments to agree 23 in accordance with Code chapter 28E to implement an E-PACE 24 program jointly. 25 The bill allows a local government to contract with a third 26 party on a nonexclusive basis. 27 If a local government contracts with a third party including 28 but not limited to another local government to administer an 29 E-PACE program, then the bill allows other third parties to 30 enter into a contract to administer the E-PACE program on the 31 same terms if the contracting local government determines it 32 requires a third-party administrator in the future. 33 The bill prohibits a local government that establishes an 34 E-PACE program from making the issuance of a permit, license, 35 -21- LSB 2505YC (2) 91 jm/md 21/ 22
H.F. _____ or other authorization from the local government to a property 1 owner contingent on the person entering into an assessment 2 agreement to repay the financing of a qualified project, or 3 otherwise compel a property owner to enter into an assessment 4 agreement. 5 The bill prohibits the state and each local government 6 from using public funds to fund or repay a loan between a 7 capital provider and a property owner. The bill prohibits 8 provisions being enacted in the bill from being construed to 9 pledge, offer, or encumber the full faith and credit of a 10 local government. The bill prohibits a local government from 11 pledging its full faith and credit for a lien amount through 12 an E-PACE program. 13 -22- LSB 2505YC (2) 91 jm/md 22/ 22