Texas 2019 - 86th Regular

Texas Senate Bill SB1281 Compare Versions

Version 1 (Old)

Version 2 (New)

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1	1		By: Birdwell S.B. No. 1281
	2	+	(In the Senate - Filed February 28, 2019; March 7, 2019,
	3	+	read first time and referred to Committee on Natural Resources &
	4	+	Economic Development; April 8, 2019, reported adversely, with
	5	+	favorable Committee Substitute by the following vote: Yeas 8,
	6	+	Nays 1; April 8, 2019, sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR S.B. No. 1281 By: Birdwell
2	9
3	10
4	11		A BILL TO BE ENTITLED
5	12		AN ACT
6	13		relating to assessments for water and energy improvements in
7	14		certain municipalities and counties.
8	15		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	16		SECTION 1. The heading to Chapter 399, Local Government
10	17		Code, is amended to read as follows:
11	18		CHAPTER 399. MUNICIPAL AND COUNTY WATER AND ENERGY IMPROVEMENT
12	19		PROPERTY ASSESSMENTS [REGIONS]
13	20		SECTION 2. Section 399.002, Local Government Code, is
14	21		amended by adding Subdivisions (1-a) and (2-a) and amending
15	22		Subdivision (2) to read as follows:
16	23		(1-a) "Office" means the state energy conservation
17	24		office.
18	25		(2) "Program" means the [a] program established under
19	26		this chapter.
20	27		(2-a) "Program administrator" means the third party
21	28		selected by the office to administer the program.
22	29		SECTION 3. Chapter 399, Local Government Code, is amended
23	30		by adding Sections 399.0023, 399.0025, 399.0027, and 399.0029 to
24	31		read as follows:
25	32		Sec. 399.0023. RULES. The office shall adopt rules to
26	33		administer the program.
27	34		Sec. 399.0025. PROGRAM ADMINISTRATOR. (a) The office
28	35		shall administer the program through a third-party administrator
29	36		selected under this section.
30	37		(b) In selecting the program administrator, the office
31	38		shall select the candidate that demonstrates:
32	39		(1) best practices in program design;
33	40		(2) compliance with applicable ethics requirements;
34	41		and
35	42		(3) appropriate underwriting and technical standards.
36	43		(c) The program administrator shall oversee program
37	44		elements, including implementing:
38	45		(1) guidelines;
39	46		(2) documentation, underwriting, and technical
40	47		standards; and
41	48		(3) administrative protocols as described by Section
42	49		399.0027.
43	50		Sec. 399.0027. ADMINISTRATION. (a) The office shall
44	51		review and either approve or request revision of administrative
45	52		protocols developed under this section.
46	53		(b) The program administrator shall develop:
47	54		(1) a form contract between the local government and
48	55		the property owner specifying the terms of:
49	56		(A) assessment under the program; and
50	57		(B) financing provided by a third party or the
51	58		local government, as appropriate;
52	59		(2) if the proposed program provides for third-party
53	60		financing, a form contract between the local government and the
54	61		third party regarding the servicing of the debt through
55	62		assessments;
56	63		(3) a description of types of qualified projects that
57	64		may be subject to contractual assessments;
58	65		(4) a method for ranking requests from property owners
59	66		for financing through contractual assessments in priority order if
60	67		requests appear likely to exceed the amount authorized for funding
61	68		by a local government;
62	69		(5) a method for determining:
63	70		(A) the interest rate and period during which
64	71		contracting owners would pay an assessment; and
65	72		(B) the maximum amount of an assessment;
66	73		(6) a method for ensuring that the period of the
67	74		contractual assessment does not exceed the useful life of the
68	75		qualified project that is the basis for the assessment;
69	76		(7) a description of the application process and
70	77		eligibility requirements for financing qualified projects to be
71	78		repaid through contractual assessments under the program;
72	79		(8) a method for ensuring that property owners
73	80		requesting to participate in the program demonstrate the financial
74	81		ability to fulfill financial obligations to be repaid through
75	82		contractual assessments;
76	83		(9) the manner in which property will be assessed and
77	84		assessments will be collected;
78	85		(10) the lender notice required by Section 399.010;
79	86		(11) the review required by Section 399.011;
80	87		(12) marketing and participant education services to
81	88		be provided for the program;
82	89		(13) quality assurance and antifraud measures;
83	90		(14) procedures for collecting the proposed
84	91		contractual assessments; and
85	92		(15) any other item necessary for the administration
86	93		of the program or as directed by the office.
87	94		Sec. 399.0029. DEMONSTRATION OF FINANCIAL ABILITY. The
88	95		method for ensuring a demonstration of financial ability under
89	96		Section 399.0027(b)(8) must be based on appropriate underwriting
90	97		factors, including:
91	98		(1) providing for verification that:
92	99		(A) the property owner requesting to participate
93	100		under the program:
94	101		(i) is the legal owner of the benefited
95	102		property;
96	103		(ii) is current on mortgage and property
97	104		tax payments; and
98	105		(iii) is not insolvent or in bankruptcy
99	106		proceedings; and
100	107		(B) the title of the benefited property is not in
101	108		dispute; and
102	109		(2) requiring an appropriate ratio of the amount of
103	110		the assessment to the assessed value of the property.
104	111		SECTION 4. Section 399.003, Local Government Code, is
105	112		amended to read as follows:
106	113		Sec. 399.003. EXERCISE OF POWERS BY LOCAL GOVERNMENT.
107	114		(a) In addition to the authority provided by Chapter 376 for
108	115		municipalities, the governing body of a local government that
109	116		participates in the [establishes a] program [in accordance with the
110	117		requirements provided by Section 399.008] may exercise powers
111	118		granted under the program [this chapter].
112	119		(b) Participation in the program [The establishment and
113	120		operation of a program under this chapter] by a local government is
114	121		a governmental function for all purposes.
115	122		SECTION 5. Section 399.004(a), Local Government Code, is
116	123		amended to read as follows:
117	124		(a) An assessment under this chapter may be imposed to repay
118	125		the financing of qualified projects on real property located in the
119	126		territory of a local government participating in the program
120	127		[region designated under this chapter]. Property located in a
121	128		municipality's extraterritorial jurisdiction may be included in
122	129		the municipality's territory for the purposes of participation in
123	130		the program.
124	131		SECTION 6. Chapter 399, Local Government Code, is amended
125	132		by adding Section 399.0045 to read as follows:
126	133		Sec. 399.0045. AUTHORIZED USER FEE. (a) The program
127	134		administrator may collect a user fee imposed on each contract
128	135		entered into under the program.
129	136		(b) Fees collected under this section may be used only to
130	137		pay the costs of administering the program.
131	138		SECTION 7. The heading to Section 399.006, Local Government
132	139		Code, is amended to read as follows:
133	140		Sec. 399.006. LOCAL GOVERNMENT PARTICIPATION IN
134	141		[ESTABLISHMENT OF] PROGRAM.
135	142		SECTION 8. Sections 399.006(a), (b), and (e), Local
136	143		Government Code, are amended to read as follows:
137	144		(a) The governing body of a local government may determine
138	145		that it is convenient and advantageous to participate in
139	146		[establish] a program under this chapter.
140	147		(b) An authorized representative of the local government
141	148		that participates in the [establishes a] program may enter into a
142	149		written contract with a record owner of real property in the
143	150		territory of the local government [a region designated under this
144	151		chapter] to impose an assessment to repay the owner's financing of a
145	152		qualified project on the owner's property. The financing to be
146	153		repaid through assessments may be provided by a third party or, if
147	154		authorized by the program, by the local government.
148	155		(e) The financing for which assessments are imposed may
149	156		include:
150	157		(1) the cost of materials and labor necessary for
151	158		installation or modification of a qualified improvement;
152	159		(2) permit fees;
153	160		(3) inspection fees;
154	161		(4) lender's fees;
155	162		(5) program application and administrative fees;
156	163		(6) project development and engineering fees;
157	164		(7) third-party review fees, including verification
158	165		review fees, under Section 399.011; [and]
159	166		(8) a user fee authorized under Section 399.0045; and
160	167		(9) any other fees or costs that may be incurred by the
161	168		property owner incident to the installation, modification, or
162	169		improvement on a specific or pro rata basis, as determined by the
163	170		office [local government].
164	171		SECTION 9. The heading to Section 399.008, Local Government
165	172		Code, is amended to read as follows:
166	173		Sec. 399.008. PROCEDURE FOR PARTICIPATION IN
167	174		[ESTABLISHMENT OF] PROGRAM.
168	175		SECTION 10. Section 399.008, Local Government Code, is
169	176		amended by amending Subsections (a), (b), and (d) and adding
170	177		Subsection (f) to read as follows:
171	178		(a) Except as provided by Subsection (f), to participate in
172	179		the [To establish a] program [under this chapter], the governing
173	180		body of a local government must [take the following actions in the
174	181		following order:
175	182		[(1)] adopt a resolution [of intent] that includes:
176	183		(1) [(A)] a finding that[, if appropriate,] financing
177	184		qualified projects through contractual assessments is a valid
178	185		public purpose;
179	186		(2) [(B)] a statement that the local government
180	187		intends to make contractual assessments to repay financing for
181	188		qualified projects available to property owners;
182	189		(3) [(C)] a description of the types of qualified
183	190		projects that may be subject to contractual assessments;
184	191		(4) [(D) a description of the boundaries of the
185	192		region;
186	193		[(E)] a description of any proposed arrangements
187	194		for third-party financing to be available or any local government
188	195		financing to be provided for qualified projects;
189	196		(5) [(F)] a description of local government debt
190	197		servicing procedures if third-party financing will be provided and
191	198		assessments will be collected to service a third-party debt;
192	199		(6) [(G)] a reference to the report on the proposed
193	200		program prepared as provided by Section 399.009 and a statement
194	201		identifying the location where the report is available for public
195	202		inspection;
196	203		[(H) a statement of the time and place for a public
197	204		hearing on the proposed program;] and
198	205		(7) [(I)] a statement identifying the appropriate
199	206		representative of the local government and the appropriate
200	207		assessor-collector for purposes of consulting regarding collecting
201	208		the proposed contractual assessments imposed on the assessed
202	209		property[;
203	210		[(2) hold a public hearing at which the public may
204	211		comment on the proposed program, including the report required by
205	212		Section 399.009; and
206	213		[(3) adopt a resolution establishing the program and
207	214		the terms of the program, including:
208	215		[(A) each item included in the report under
209	216		Section 399.009; and
210	217		[(B) a description of each aspect of the program
211	218		that may be amended only after another public hearing is held].
212	219		(b) For purposes of Subsection (a)(1) [(a)(3)(A)], the
213	220		resolution may incorporate the report required by Section 399.009
214	221		[or the amended version of the report], as appropriate, by
215	222		reference.
216	223		(d) A local government may:
217	224		(1) hire and set the compensation of staff necessary
218	225		to participate in the program [a program administrator and program
219	226		staff]; or
220	227		(2) contract for professional services necessary to
221	228		participate in the [administer a] program.
222	229		(f) A local government that established a program under this
223	230		chapter before September 1, 2019, may participate in the program by
224	231		passing a resolution stating that the local government is
225	232		participating. The resolution is not required to meet the
226	233		requirements of Subsection (a) or to include the report described
227	234		by Section 399.009.
228	235		SECTION 11. The heading to Section 399.009, Local
229	236		Government Code, is amended to read as follows:
230	237		Sec. 399.009. REPORT REGARDING PROGRAM [ASSESSMENT].
231	238		SECTION 12. Sections 399.009(a) and (c), Local Government
232	239		Code, are amended to read as follows:
233	240		(a) Before adopting a resolution under Section 399.008 to
234	241		join the program, a local government must prepare a [The] report,
235	242		consistent with guidelines adopted by the program administrator,
236	243		that includes [for a proposed program required by Section 399.008
237	244		must include]:
238	245		(1) the items described by Section 399.0027(b) [a map
239	246		showing the boundaries of the proposed region];
240	247		(2) [a form contract between the local government and
241	248		the property owner specifying the terms of:
242	249		[(A) assessment under the program; and
243	250		[(B) financing provided by a third party or the
244	251		local government, as appropriate;
245	252		[(3) if the proposed program provides for third-party
246	253		financing, a form contract between the local government and the
247	254		third party regarding the servicing of the debt through
248	255		assessments;
249	256		[(4) a description of types of qualified projects that
250	257		may be subject to contractual assessments;
251	258		[(5)] a statement identifying a local government
252	259		representative authorized to enter into written contracts on behalf
253	260		of the local government;
254	261		(3) [(6)] a plan for ensuring sufficient capital for
255	262		third-party financing and, if appropriate, raising capital for
256	263		local government financing for qualified projects; and
257	264		(4) [(7)] if bonds will be issued to provide capital
258	265		to finance qualified projects as part of the program as provided by
259	266		Section 399.016,[:
260	267		[(A)] a maximum aggregate annual dollar amount
261	268		for financing through contractual assessments to be provided by the
262	269		local government under the program[;
263	270		[(B) a method for ranking requests from property
264	271		owners for financing through contractual assessments in priority
265	272		order if requests appear likely to exceed the authorization amount;
266	273		and
267	274		[(C) a method for determining:
268	275		[(i) the interest rate and period during
269	276		which contracting owners would pay an assessment; and
270	277		[(ii) the maximum amount of an assessment;
271	278		[(8) a method for ensuring that the period of the
272	279		contractual assessment does not exceed the useful life of the
273	280		qualified project that is the basis for the assessment;
274	281		[(9) a description of the application process and
275	282		eligibility requirements for financing qualified projects to be
276	283		repaid through contractual assessments under the program;
277	284		[(10) a method as prescribed by Subsection (b) for
278	285		ensuring that property owners requesting to participate in the
279	286		program demonstrate the financial ability to fulfill financial
280	287		obligations to be repaid through contractual assessments;
281	288		[(11) a statement explaining the manner in which
282	289		property will be assessed and assessments will be collected;
283	290		[(12) a statement explaining the lender notice
284	291		requirement provided by Section 399.010;
285	292		[(13) a statement explaining the review requirement
286	293		provided by Section 399.011;
287	294		[(14) a description of marketing and participant
288	295		education services to be provided for the program;
289	296		[(15) a description of quality assurance and antifraud
290	297		measures to be instituted for the program; and
291	298		[(16) the procedures for collecting the proposed
292	299		contractual assessments].
293	300		(c) The local government shall make the report available for
294	301		public inspection[:
295	302		[(1)] on the local government's Internet website[; and
296	303		[(2) at the office of the representative designated to
297	304		enter into written contracts on behalf of the local government
298	305		under the program].
299	306		SECTION 13. Section 399.010, Local Government Code, is
300	307		amended to read as follows:
301	308		Sec. 399.010. NOTICE TO MORTGAGE HOLDER REQUIRED FOR
302	309		PARTICIPATION. Before a local government may enter into a written
303	310		contract with a record owner of real property to impose an
304	311		assessment to repay the financing of a qualified project under this
305	312		chapter:
306	313		(1) the holder of any mortgage lien on the property
307	314		must be given written notice of the owner's intention to
308	315		participate in the [a] program [under this chapter] on or before the
309	316		30th day before the date the written contract for assessment
310	317		between the owner and the local government is executed; and
311	318		(2) a written consent from the holder of the mortgage
312	319		lien on the property must be obtained.
313	320		SECTION 14. Section 399.011(a), Local Government Code, is
314	321		amended to read as follows:
315	322		(a) The [A] program [established under this chapter] must
316	323		require for each proposed qualified project:
317	324		(1) a review of water or energy baseline conditions
318	325		and the projected water or energy savings to establish the
319	326		projected water or energy savings; and
320	327		(2) a verification that a proposed qualified
321	328		improvement meets the requirements of a qualified project.
322	329		SECTION 15. Section 399.013(a), Local Government Code, is
323	330		amended to read as follows:
324	331		(a) The program administrator shall file on behalf of a [A]
325	332		local government that authorizes financing through contractual
326	333		assessments under this chapter [shall file] written notice of each
327	334		contractual assessment in the real property records of the county
328	335		in which the property is located.
329	336		SECTION 16. Section 399.016(b), Local Government Code, is
330	337		amended to read as follows:
331	338		(b) Bonds or notes issued under this section may not be
332	339		general obligations of the local government. The bonds or notes
333	340		must be secured by one or more of the following as provided by the
334	341		governing body of the local government in the resolution or
335	342		ordinance approving the bonds or notes:
336	343		(1) payments of contractual assessments on benefited
337	344		property [in one or more specified regions designated under this
338	345		chapter];
339	346		(2) reserves established by the local government from
340	347		grants, bonds, or net proceeds or other lawfully available funds;
341	348		(3) municipal bond insurance, lines of credit, public
342	349		or private guaranties, standby bond purchase agreements,
343	350		collateral assignments, mortgages, or any other available means of
344	351		providing credit support or liquidity; and
345	352		(4) any other funds lawfully available for purposes
346	353		consistent with this chapter.
347	354		SECTION 17. Section 399.018, Local Government Code, is
348	355		amended to read as follows:
349	356		Sec. 399.018. PROHIBITED ACTS. A local government that
350	357		participates in the program [establishes a region under this
351	358		chapter] may not:
352	359		(1) make the issuance of a permit, license, or other
353	360		authorization from the local government to a person who owns
354	361		property in the territory of the local government [region]
355	362		contingent on the person entering into a written contract to repay
356	363		the financing of a qualified project through contractual
357	364		assessments under this chapter; or
358	365		(2) otherwise compel a person who owns property in the
359	366		territory of the local government [region] to enter into a written
360	367		contract to repay the financing of a qualified project through
361	368		contractual assessments under this chapter.
362	369		SECTION 18. Section 399.019, Local Government Code, is
363	370		amended to read as follows:
364	371		Sec. 399.019. NO PERSONAL LIABILITY. The members of the
365	372		governing body of a local government, other elected officials of a
366	373		local government, employees of a local government, [and] board
367	374		members, executives, employees, and employees of the office or the
368	375		program administrator [and contractors of a third party who enter
369	376		into a contract with a local government to provide administrative
370	377		services for a program under this chapter] are not personally
371	378		liable as a result of exercising any rights or responsibilities
372	379		granted under this chapter.
373	380		SECTION 19. The following provisions of Chapter 399, Local
374	381		Government Code, are repealed:
375	382		(1) Section 399.002(6);
376	383		(2) Section 399.007;
377	384		(3) Sections 399.008(c) and (e);
378	385		(4) Section 399.009(b); and
379	386		(5) Section 399.017.
380	387		SECTION 20. (a) A local government that has established a
381	388		program for assessments for water and energy improvements under
382	389		Chapter 399, Local Government Code, as it existed before the
383	390		effective date of this Act, may continue the program only as
384	391		necessary for the fulfillment of contractual obligations. A local
385	392		government may not extend a contractual obligation in lieu of
386	393		satisfying the requirements for participation in the program for
387	394		assessments for water and energy improvements under Section
388	395		399.006, Local Government Code, as amended by this Act.
389	396		(b) A contract entered into under Chapter 399, Local
390	397		Government Code, as it existed before the effective date of this
391	398		Act, continues in effect until the term specified in the contract is
392	399		complete and is governed by the law in effect on the date the
393	400		contract was executed, and the former law is continued for that
394	401		purpose.
395	402		(c) The changes in law made by this Act do not invalidate or
396	403		otherwise affect bonds issued under Chapter 399, Local Government
397	404		Code, as it existed before the effective date of this Act, for the
398	405		purpose of financing a contract made under that chapter.
399	406		SECTION 21. This Act takes effect September 1, 2019.
	407	+	* * * * *