Texas 2013 - 83rd Regular

Texas Senate Bill SB385 Compare Versions

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1	1	83R19880 PAM-D
2	2	By: Carona S.B. No. 385
3	3	(Keffer)
4	4	Substitute the following for S.B. No. 385: No.
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to authorizing assessments for water and energy
10	10	improvements in regions designated by municipalities and counties;
11	11	imposing a fee.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Subtitle C, Title 12, Local Government Code, is
14	14	amended by adding Chapter 399 to read as follows:
15	15	CHAPTER 399. MUNICIPAL AND COUNTY WATER AND ENERGY IMPROVEMENT
16	16	REGIONS
17	17	Sec. 399.001. SHORT TITLE. This chapter may be cited as the
18	18	Property Assessed Clean Energy Act.
19	19	Sec. 399.002. DEFINITIONS. In this chapter:
20	20	(1) "Local government" means a municipality or county.
21	21	(2) "Program" means a program established under this
22	22	chapter.
23	23	(3) "Qualified improvement" means a permanent
24	24	improvement fixed to real property and intended to decrease water
25	25	or energy consumption or demand, including a product, device, or
26	26	interacting group of products or devices on the customer's side of
27	27	the meter that uses energy technology to generate electricity,
28	28	provide thermal energy, or regulate temperature.
29	29	(4) "Qualified project" means the installation or
30	30	modification of a qualified improvement.
31	31	(5) "Real property" means privately owned commercial
32	32	or industrial real property or residential real property with five
33	33	or more dwelling units.
34	34	(6) "Region" means a region designated under this
35	35	chapter.
36	36	Sec. 399.003. EXERCISE OF POWERS. In addition to the
37	37	authority provided by Chapter 376 for municipalities, the governing
38	38	body of a local government that establishes a program in accordance
39	39	with the requirements provided by Section 399.008 may exercise
40	40	powers granted under this chapter.
41	41	Sec. 399.004. AUTHORIZED ASSESSMENTS. (a) An assessment
42	42	under this chapter may be imposed to repay the financing of
43	43	qualified projects on real property located in a region designated
44	44	under this chapter.
45	45	(b) An assessment under this chapter may not be imposed to
46	46	repay the financing of:
47	47	(1) facilities for undeveloped lots or lots undergoing
48	48	development at the time of the assessment; or
49	49	(2) the purchase or installation of products or
50	50	devices not permanently fixed to real property.
51	51	Sec. 399.005. WRITTEN CONTRACT FOR ASSESSMENT REQUIRED. A
52	52	local government may impose an assessment under this chapter only
53	53	under a written contract with the record owner of the real property
54	54	to be assessed.
55	55	Sec. 399.006. ESTABLISHMENT OF PROGRAM. (a) The governing
56	56	body of a local government may determine that it is convenient and
57	57	advantageous to establish a program under this chapter.
58	58	(b) An authorized official of the local government that
59	59	establishes a program may enter into a written contract with a
60	60	record owner of real property in a region designated under this
61	61	chapter to impose an assessment to repay the owner's financing of a
62	62	qualified project on the owner's property. The financing to be
63	63	repaid through assessments may be provided by a third party or, if
64	64	authorized by the program, by the local government.
65	65	(c) If the program provides for third-party financing, the
66	66	authorized official of the local government that enters into a
67	67	written contract with a property owner under Subsection (b) must
68	68	also enter into a written contract with the party that provides
69	69	financing for a qualified project under the program to service the
70	70	debt through assessments.
71	71	(d) If the program provides for local government financing,
72	72	the written contract described by Subsection (b) must be a contract
73	73	to finance the qualified project through assessments.
74	74	(e) The financing for which assessments are imposed may
75	75	include:
76	76	(1) the cost of materials and labor necessary for
77	77	installation or modification of a qualified improvement;
78	78	(2) permit fees;
79	79	(3) inspection fees;
80	80	(4) lender's fees;
81	81	(5) program application and administrative fees;
82	82	(6) project development and engineering fees;
83	83	(7) third-party review fees, including verification
84	84	review fees, under Section 399.011; and
85	85	(8) any other fees or costs that may be incurred by the
86	86	property owner incident to the installation, modification, or
87	87	improvement on a specific or pro rata basis, as determined by the
88	88	local government.
89	89	Sec. 399.007. DESIGNATION OF REGION. (a) The governing
90	90	body of a local government may determine that it is convenient and
91	91	advantageous to designate an area of the local government as a
92	92	region within which authorized local government officials and
93	93	record owners of real property may enter into written contracts to
94	94	impose assessments to repay the financing by owners of qualified
95	95	projects on the owners' property and, if authorized by the local
96	96	government program, finance the qualified project.
97	97	(b) An area designated as a region by the governing body of a
98	98	local government under this section:
99	99	(1) may include the entire local government; and
100	100	(2) must be located wholly within the local
101	101	government's jurisdiction.
102	102	(c) For purposes of determining a municipality's
103	103	jurisdiction under Subsection (b)(2), the municipality's
104	104	extraterritorial jurisdiction may be included.
105	105	(d) A local government may designate more than one region.
106	106	If multiple regions are designated, the regions may be separate,
107	107	overlapping, or coterminous.
108	108	Sec. 399.008. PROCEDURE FOR ESTABLISHMENT OF PROGRAM. (a)
109	109	To establish a program under this chapter, the governing body of a
110	110	local government must take the following actions in the following
111	111	order:
112	112	(1) adopt a resolution of intent that includes:
113	113	(A) a finding that, if appropriate, financing
114	114	qualified projects through contractual assessments is a valid
115	115	public purpose;
116	116	(B) a statement that the local government intends
117	117	to make contractual assessments to repay financing for qualified
118	118	projects available to property owners;
119	119	(C) a description of the types of qualified
120	120	projects that may be subject to contractual assessments;
121	121	(D) a description of the boundaries of the
122	122	region;
123	123	(E) a description of any proposed arrangements
124	124	for third-party financing to be available or any local government
125	125	financing to be provided for qualified projects;
126	126	(F) a description of local government debt
127	127	servicing procedures if third-party financing will be provided and
128	128	assessments will be collected to service a third-party debt;
129	129	(G) a reference to the report on the proposed
130	130	program prepared as provided by Section 399.009 and a statement
131	131	identifying the location where the report is available for public
132	132	inspection;
133	133	(H) a statement of the time and place for a public
134	134	hearing on the proposed program; and
135	135	(I) a statement identifying the appropriate
136	136	local official and the appropriate assessor-collector for purposes
137	137	of consulting regarding collecting the proposed contractual
138	138	assessments with property taxes imposed on the assessed property;
139	139	(2) hold a public hearing at which the public may
140	140	comment on the proposed program, including the report required by
141	141	Section 399.009; and
142	142	(3) adopt a resolution establishing the program and
143	143	the terms of the program, including:
144	144	(A) each item included in the report under
145	145	Section 399.009; and
146	146	(B) a description of each aspect of the program
147	147	that may be amended only after another public hearing is held.
148	148	(b) For purposes of Subsection (a)(3)(A), the resolution
149	149	may incorporate the report or the amended version of the report, as
150	150	appropriate, by reference.
151	151	(c) Subject to the terms of the resolution establishing the
152	152	program as referenced by Subsection (a)(3)(B), the governing body
153	153	of a local government may amend a program by resolution.
154	154	(d) A local government may:
155	155	(1) hire and set the compensation of a program
156	156	administrator and program staff; or
157	157	(2) contract for professional services necessary to
158	158	administer a program.
159	159	(e) A local government may impose fees to offset the costs
160	160	of administering a program. The fees authorized by this subsection
161	161	may be assessed as:
162	162	(1) a program application fee paid by the property
163	163	owner requesting to participate in the program;
164	164	(2) a component of the interest rate on the assessment
165	165	in the written contract between the local government and the
166	166	property owner; or
167	167	(3) a combination of Subdivisions (1) and (2).
168	168	Sec. 399.009. REPORT REGARDING ASSESSMENT. (a) The report
169	169	for a proposed program required by Section 399.008 must include:
170	170	(1) a map showing the boundaries of the proposed
171	171	region;
172	172	(2) a form contract between the local government and
173	173	the property owner specifying the terms of:
174	174	(A) assessment under the program; and
175	175	(B) financing provided by a third party or the
176	176	local government, as appropriate;
177	177	(3) if the proposed program provides for third-party
178	178	financing, a form contract between the local government and the
179	179	third party regarding the servicing of the debt through
180	180	assessments;
181	181	(4) a description of types of qualified projects that
182	182	may be subject to contractual assessments;
183	183	(5) a statement identifying a local government
184	184	official authorized to enter into written contracts on behalf of
185	185	the local government;
186	186	(6) a plan for ensuring sufficient capital for
187	187	third-party financing and, if appropriate, raising capital for
188	188	local government financing for qualified projects;
189	189	(7) if bonds will be issued to provide capital to
190	190	finance qualified projects as part of the program as provided by
191	191	Section 399.016:
192	192	(A) a maximum aggregate annual dollar amount for
193	193	financing through contractual assessments to be provided by the
194	194	local government under the program;
195	195	(B) a method for ranking requests from property
196	196	owners for financing through contractual assessments in priority
197	197	order if requests appear likely to exceed the authorization amount;
198	198	and
199	199	(C) a method for determining:
200	200	(i) the interest rate and period during
201	201	which contracting owners would pay an assessment; and
202	202	(ii) the maximum amount of an assessment;
203	203	(8) a method for ensuring that the period of the
204	204	contractual assessment does not exceed the useful life of the
205	205	qualified project that is the basis for the assessment;
206	206	(9) a description of the application process and
207	207	eligibility requirements for financing qualified projects to be
208	208	repaid through contractual assessments under the program;
209	209	(10) a method as prescribed by Subsection (b) for
210	210	ensuring that property owners requesting to participate in the
211	211	program demonstrate the financial ability to fulfill financial
212	212	obligations to be repaid through contractual assessments;
213	213	(11) a statement explaining the manner in which
214	214	property will be assessed and assessments will be collected;
215	215	(12) a statement explaining the lender notice
216	216	requirement provided by Section 399.010;
217	217	(13) a statement explaining the review requirement
218	218	provided by Section 399.011;
219	219	(14) a description of marketing and participant
220	220	education services to be provided for the program;
221	221	(15) a description of quality assurance and antifraud
222	222	measures to be instituted for the program; and
223	223	(16) the procedures for collecting the proposed
224	224	contractual assessments.
225	225	(b) The method for ensuring a demonstration of financial
226	226	ability under Subsection (a)(10) must be based on appropriate
227	227	underwriting factors, including:
228	228	(1) providing for verification that:
229	229	(A) the property owner requesting to participate
230	230	under the program:
231	231	(i) is the legal owner of the benefited
232	232	property;
233	233	(ii) is current on mortgage and property
234	234	tax payments; and
235	235	(iii) is not insolvent or in bankruptcy
236	236	proceedings; and
237	237	(B) the title of the benefited property is not in
238	238	dispute; and
239	239	(2) requiring an appropriate ratio of the amount of
240	240	the assessment to the assessed value of the property.
241	241	(c) The local government shall make the report available for
242	242	public inspection:
243	243	(1) on the local government's Internet website; and
244	244	(2) at the office of the official designated to enter
245	245	into written contracts on behalf of the local government under the
246	246	program.
247	247	Sec. 399.010. NOTICE TO MORTGAGE HOLDER REQUIRED FOR
248	248	PARTICIPATION. Before a local government may enter into a written
249	249	contract with a record owner of real property to impose an
250	250	assessment to repay the financing of a qualified project under this
251	251	chapter:
252	252	(1) the holder of any mortgage lien on the property
253	253	must be given written notice of the owner's intention to
254	254	participate in a program under this chapter on or before the 30th
255	255	day before the date the written contract for assessment between the
256	256	owner and the local government is executed; and
257	257	(2) a written consent from the holder of the mortgage
258	258	lien on the property must be obtained.
259	259	Sec. 399.011. REVIEW REQUIRED. (a) A program established
260	260	under this chapter must require for each proposed qualified project
261	261	a review of water or energy baseline conditions and the projected
262	262	water or energy savings to establish the projected water or energy
263	263	savings.
264	264	(b) After a qualified project is completed, the local
265	265	government shall obtain verification that the qualified project was
266	266	properly completed and is operating as intended.
267	267	(c) A baseline water or energy review or verification review
268	268	under this section must be conducted by an independent third party.
269	269	Sec. 399.012. DIRECT ACQUISITION BY OWNER. The proposed
270	270	arrangements for financing a qualified project may authorize the
271	271	property owner to:
272	272	(1) purchase directly the related equipment and
273	273	materials for the installation or modification of a qualified
274	274	improvement; and
275	275	(2) contract directly, including through lease, power
276	276	purchase agreement, or other service contract, for the installation
277	277	or modification of a qualified improvement.
278	278	Sec. 399.013. RECORDING OF NOTICE OF CONTRACTUAL ASSESSMENT
279	279	REQUIRED. (a) A local government that authorizes financing
280	280	through contractual assessments under this chapter shall file
281	281	written notice of each contractual assessment in the real property
282	282	records of the county in which the property is located.
283	283	(b) The notice under Subsection (a) must contain:
284	284	(1) the amount of the assessment;
285	285	(2) the legal description of the property;
286	286	(3) the name of each property owner; and
287	287	(4) a reference to the statutory assessment lien
288	288	provided under this chapter.
289	289	Sec. 399.014. LIEN. (a) A contractual assessment under
290	290	this chapter and any interest or penalties on the assessment:
291	291	(1) is a first and prior lien against the real property
292	292	on which the assessment is imposed from the date on which the notice
293	293	of contractual assessment is recorded as provided by Section
294	294	399.013 and until the assessment, interest, or penalty is paid; and
295	295	(2) has the same priority status as a lien for any
296	296	other ad valorem tax.
297	297	(b) The lien runs with the land, and that portion of the
298	298	assessment under the assessment contract that has not yet become
299	299	due is not eliminated by foreclosure of a property tax lien.
300	300	(c) The assessment lien may be enforced by the local
301	301	government in the same manner that a property tax lien against real
302	302	property may be enforced by the local government to the extent the
303	303	enforcement is consistent with Section 50, Article XVI, Texas
304	304	Constitution.
305	305	(d) Delinquent installments of the assessments incur
306	306	interest and penalties in the same manner as delinquent property
307	307	taxes.
308	308	(e) A local government may recover costs and expenses,
309	309	including attorney's fees, in a suit to collect a delinquent
310	310	installment of an assessment in the same manner as in a suit to
311	311	collect a delinquent property tax.
312	312	Sec. 399.015. COLLECTION OF ASSESSMENTS. The governing
313	313	body of a local government may contract with the governing body of
314	314	another taxing unit, as defined by Section 1.04, Tax Code, or
315	315	another entity, including a county assessor-collector, to perform
316	316	the duties of the local government relating to collection of
317	317	assessments imposed by the local government under this chapter.
318	318	Sec. 399.016. BONDS OR NOTES. (a) A local government may
319	319	issue bonds or notes to finance qualified projects through
320	320	contractual assessments under this chapter.
321	321	(b) Bonds or notes issued under this section may not be
322	322	general obligations of the local government. The bonds or notes
323	323	must be secured by one or more of the following as provided by the
324	324	governing body of the local government in the resolution or
325	325	ordinance approving the bonds or notes:
326	326	(1) payments of contractual assessments on benefited
327	327	property in one or more specified regions designated under this
328	328	chapter;
329	329	(2) reserves established by the local government from
330	330	grants, bonds, or net proceeds or other lawfully available funds;
331	331	(3) municipal bond insurance, lines of credit, public
332	332	or private guaranties, standby bond purchase agreements,
333	333	collateral assignments, mortgages, or any other available means of
334	334	providing credit support or liquidity; and
335	335	(4) any other funds lawfully available for purposes
336	336	consistent with this chapter.
337	337	(c) A local government pledge of assessments, funds, or
338	338	contractual rights in connection with the issuance of bonds or
339	339	notes by the local government under this chapter is a first lien on
340	340	the assessments, funds, or contractual rights pledged in favor of
341	341	the person to whom the pledge is given, without further action by
342	342	the local government. The lien is valid and binding against any
343	343	other person, with or without notice.
344	344	(d) Bonds or notes issued under this chapter further an
345	345	essential public and governmental purpose, including:
346	346	(1) improvement of the reliability of the state
347	347	electrical system;
348	348	(2) conservation of state water resources consistent
349	349	with the state water plan;
350	350	(3) reduction of energy costs;
351	351	(4) economic stimulation and development;
352	352	(5) enhancement of property values;
353	353	(6) enhancement of employment opportunities; and
354	354	(7) reduction in greenhouse gas emissions.
355	355	Sec. 399.017. JOINT IMPLEMENTATION. (a) Any combination
356	356	of local governments may agree to jointly implement or administer a
357	357	program under this chapter.
358	358	(b) If two or more local governments implement a program
359	359	jointly, a single public hearing held jointly by the cooperating
360	360	local governments is sufficient to satisfy the requirement of
361	361	Section 399.008(a)(2).
362	362	(c) One or more local governments may contract with a third
363	363	party, including another local government, to administer a program.
364	364	Sec. 399.018. PROHIBITED ACTS. A local government that
365	365	establishes a region under this chapter may not:
366	366	(1) make the issuance of a permit, license, or other
367	367	authorization from the local government to a person who owns
368	368	property in the region contingent on the person entering into a
369	369	written contract to repay the financing of a qualified project
370	370	through contractual assessments under this chapter; or
371	371	(2) otherwise compel a person who owns property in the
372	372	region to enter into a written contract to repay the financing of a
373	373	qualified project through contractual assessments under this
374	374	chapter.
375	375	SECTION 2. This Act takes effect immediately if it receives
376	376	a vote of two-thirds of all the members elected to each house, as
377	377	provided by Section 39, Article III, Texas Constitution. If this
378	378	Act does not receive the vote necessary for immediate effect, this
379	379	Act takes effect September 1, 2013.