Bill Summary – FastDemocracy

HOUSE BILL NO. 5118
     October 10, 2023, Introduced by Reps. Hood, Rheingans, Morgan, Byrnes and Brixie and referred
       to the Committee on Energy, Communications, and Technology.
          A bill to amend 2010 PA 270, entitled
    "Property assessed clean energy act,"
    (MCL 460.931 to 460.949) by amending the title, by designating
    section 1 as part 1 and sections 3 to 19 as part 2, and by adding
    part 3.
                     THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
                                             TITLE
       An act to authorize local units of government to adopt
 property assessed clean energy assessment programs and to create
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 districts to promote the use of renewable energy systems, and
 energy efficiency improvements, water usage and sewage treatment
 improvements, air quality improvements, and environmental hazard
 projects by owners of certain real property owners; to provide for
 the financing of such programs through voluntary property
 assessments, commercial lending, and other means; to authorize a
 local unit units of government to issue bonds, notes, and other
 evidences of indebtedness and to pay the cost of renewable energy
 systems, and energy efficiency improvements, water usage and sewage
 treatment improvements, air quality improvements, and environmental
 hazard projects from the proceeds thereof; to provide for the
 repayment of bonds, notes, and other evidences of indebtedness; to
 authorize certain fees; to prescribe the powers and duties of
 certain governmental officers and entities; and to provide for
 remedies.
                                PART 1
                          GENERAL PROVISIONS
                                PART 2
                  COMMERCIAL AND INDUSTRIAL PROPERTY
                                PART 3
                 NONCOMMERCIAL, NONINDUSTRIAL PROPERTY
       Sec. 20. As used in this part:
       (a) "Administrator" means a person authorized by a local unit
 of government under section 28(1) to administer a property assessed
 clean energy program on behalf of and at the discretion of the
 local unit of government.
       (b) "Anaerobic digester" means a facility that uses
 microorganisms to break down biodegradable material in the absence
 of oxygen, producing methane and an organic product.
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       (c) "Anaerobic digester energy system" means an anaerobic
 digester and the devices used to generate electricity or heat from
 methane produced by the anaerobic digester or to store the methane
 for the future generation of electricity or heat.
       (d) "District" means a district created by a local unit of
 government under a property assessed clean energy program that lies
 within the local unit of government's jurisdictional boundaries. A
 local unit of government may create more than 1 district under the
 program, and districts may be separate, overlapping, or
 coterminous.
       (e) "Energy efficiency improvement" means the acquisition,
 installation, replacement, or modification of equipment, devices,
 or materials intended to decrease energy consumption, including,
 but not limited to, any of the following:
       (i) Insulation in walls, roofs, floors, foundations, or heating
 and cooling distribution systems.
       (ii) Storm windows and doors; multi-glazed windows and doors;
 heat-absorbing or heat-reflective glazed and coated window and door
 systems; and additional glazing, reductions in glass area, and
 other window and door system modifications that reduce energy
 consumption.
       (iii) Automated energy control systems.
       (iv) Heating, ventilating, or air-conditioning and distribution
 systems.
       (v) Caulking, weather-stripping, or air sealing.
       (vi) Lighting fixtures.
       (vii) Energy recovery systems.
       (viii) Day lighting systems.
       (ix) Electrical wiring or outlets to charge a motor vehicle
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 that is fully or partially powered by electricity.
         (x) Any other equipment, devices, or materials approved as a
 utility cost-savings measure by the governing body.
         (f) "Energy project" means any of the following:
         (i) An energy efficiency improvement.
         (ii) The acquisition, installation, replacement, or
 modification of a renewable energy system or anaerobic digester
 energy system.
         (g) "Environmental hazard project" means the acquisition,
 installation, replacement, or modification of equipment, devices,
 or materials intended to address environmental hazards, including,
 but not limited to, measures to do any of the following:
         (i) Mitigate lead, heavy metal, or polyfluoroalkyl substance
 (PFAS) contamination in potable water systems.
         (ii) Mitigate the effects of floods or drought.
         (iii) Increase the resistance of property against severe
 weather.
         (iv) Mitigate lead paint contamination in housing built before
 1978.
         (v) Reduce emissions to outdoor or indoor air or control
 indoor humidity.
         (vi) Replace or improve an on-site septic sewage system,
 including either of the following:
         (A) Conversion to a central sewage system.
         (B) Repairs or modifications to the on-site septic sewage
 system or to a lateral connection to a central sewage system.
         (h) "Governing body" means any of the following:
         (i) The county board of commissioners of a county.
         (ii) The township board of a township.
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       (iii) The council or other similar elected legislative body of a
 city or village.
       (iv) The governing body of a separate legal entity created
 pursuant to section 7 of the urban cooperation act of 1967, 1967
 (Ex Sess) PA 7, MCL 124.507.
       (i) "Local unit of government" means a county, township, city,
 or village or a separate legal entity created pursuant to section 7
 of the urban cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL
 124.507.
       (j) "New construction energy project" means an energy project
 to which either of the following applies:
       (i) It occurs at a newly constructed building or other
 structure.
       (ii) It consists of significant modifications to an existing
 building or other structure.
       (k) "Person" means an individual, firm, partnership,
 association, corporation, unincorporated joint venture, or trust,
 organized, permitted, or existing under the laws of this state or
 any other state, a federal corporation, or a combination thereof.
 However, person does not include a local unit of government.
       (l) "Project" means any of the following:
       (i) An environmental hazard project.
       (ii) An energy project.
       (iii) Measures to reduce the usage of water or increase the
 efficiency of water usage.
       (m) "Property" means privately owned real property used for
 residential purposes located within the local unit of government.
 However, property does not include multifamily residential property
 with 5 or more dwelling units.
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       (n) "Property assessed clean energy program" or "program"
 means a program as described in section 21(2).
       (o) "Record owner" means the person or persons possessed of
 the most recent fee title or land contract vendee's interest in
 property as shown by the records of the county register of deeds.
       (p) "Renewable energy resource" means a resource that
 naturally replenishes over a human, rather than a geological, time
 frame and that is ultimately derived from solar power, water power,
 or wind power. Renewable energy resource does not include
 petroleum, nuclear, natural gas, or coal. A renewable energy
 resource comes from the sun or from thermal inertia of the earth,
 minimizes the output of toxic material in the conversion of the
 energy, and includes, but is not limited to, all of the following:
       (i) Biomass.
       (ii) Solar and solar thermal energy.
       (iii) Wind energy.
       (iv) Geothermal energy.
       (v) Methane gas captured from a landfill.
       (q) "Renewable energy system" means a fixture, product,
 device, or interacting group of fixtures, products, or devices on
 the customer's side of the meter that use 1 or more renewable
 energy resources to generate electricity. Renewable energy system
 includes a biomass stove but does not include an incinerator or
 digester.
       Sec. 21. (1) Pursuant to section 22, a local unit of
 government may establish a property assessed clean energy program
 and may create a district or districts under the program.
       (2) Under a property assessed clean energy program, the local
 unit of government may enter into a written contract with the
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 record owner of property within a district to finance or refinance
 1 or more projects on the property. The contract may provide for
 the repayment of the cost of a project through assessments on the
 property benefited. The financing or refinancing may include the
 cost of materials and labor necessary for installation and of
 permit fees, inspection fees, application and administrative fees,
 bank fees, or any other fees that may be incurred by the record
 owner for the installation on a specific or pro rata basis, as
 determined by the local unit of government.
       Sec. 22. (1) To establish a property assessed clean energy
 program, a governing body shall take the following actions in the
 following order:
       (a) Adopt a resolution of intent that includes all of the
 following:
       (i) A finding that financing projects is a valid public
 purpose.
       (ii) A statement of intent to provide funds for projects, which
 may be repaid by assessments on the property benefited, with the
 agreement of the record owner.
       (iii) A description of the proposed arrangements for financing
 the property assessed clean energy program.
       (iv) The types of projects that may be financed.
       (v) Reference to a report on the proposed property assessed
 clean energy program as described in section 23(1) and where the
 report is available pursuant to section 23(2).
       (vi) The time and place for a public hearing on the proposed
 property assessed clean energy program.
       (b) Hold a public hearing at which the public may comment on
 the proposed property assessed clean energy program, including the
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 report required by subdivision (a)(v).
       (c) Adopt a resolution establishing the property assessed
 clean energy program and setting forth its terms and conditions,
 including, but not limited to, all of the following:
       (i) Matters required by section 23(1) to be included in the
 report. For this purpose, the resolution may incorporate the report
 or an amended version of the report by reference.
       (ii) A description of aspects of the program that may be
 amended without holding a new public hearing and aspects that may
 be amended only after a new public hearing is held.
       (d) Offer a workshop by an organization knowledgeable about
 property assessed clean energy program financing, to provide
 information about the program to realtors and other interested
 persons. The workshop shall be offered each year during the first 3
 years of the program.
       (2) A governing body that establishes a property assessed
 clean energy program shall prohibit the administrator, a project
 contractor, or a third party hired by the administrator or project
 contractor to solicit program financing from describing program
 financing as government assistance or as free of charge.
       (3) The governing body may amend a property assessed clean
 energy program by resolution. Before adopting the resolution, the
 governing body shall hold a public hearing if required by the
 resolution under subsection (1)(c).
       Sec. 23. (1) The report on the proposed property assessed
 clean energy program required under section 22 shall include all of
 the following:
       (a) A form of contract between the local unit of government
 and the record owner governing the terms and conditions of
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 financing and assessment under the program.
       (b) The identity of an official authorized to enter into a
 program contract on behalf of the local unit of government.
       (c) A maximum aggregate annual dollar amount for all financing
 to be provided by the local unit of government under the program.
       (d) An application process and eligibility requirements for
 financing projects under the program.
       (e) A method for determining repayment periods, the maximum
 amount of an assessment, and interest rates on assessment
 installments.
       (f) An explanation of how assessments will be made and
 collected consistent with section 25(3).
       (g) A plan for raising capital to finance improvements under
 the program. The plan may include any of the following:
       (i) The sale of bonds or notes, subject to section 26.
       (ii) Amounts to be advanced by the local unit of government
 through funds available to it from any other source.
       (iii) Owner-arranged financing from a commercial lender. Under
 owner-arranged financing, the local unit of government may impose
 an assessment pursuant to section 24 and forward payments to the
 commercial lender or the record owner may pay the commercial lender
 directly.
       (h) Information regarding both of the following, to the extent
 known, or procedures to determine the following in the future:
       (i) Any reserve fund or funds to be used as security for bonds
 or notes described in subdivision (g).
       (ii) Any application, administration, or other fees to be
 charged to record owners participating in the program that will be
 used to finance costs incurred by the local unit of government as a
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 result of the program.
       (i) A requirement that the term of an assessment not exceed
 the useful life of the project paid for by the assessment.
       (j) A requirement that the total amount of the assessments
 under the program not exceed 20% of the current value of the
 property.
       (k) A requirement that the total amount of the assessments
 under the program on a property, plus all existing mortgage debt on
 the property, not exceed the current value of the property.
       (l) A requirement that the total amount of the annual
 assessment under the program on a property not exceed 10% of the
 annual income of the record owner.
       (m) Provisions for marketing and participant education,
 including a requirement that before a record owner signs a program
 financing agreement, the administrator provide the record owner
 with a program guide, written in plain language, describing all of
 the following:
       (i) How the program operates.
       (ii) How to understand program disclosure documents.
       (iii) How property tax and escrow increases operate.
       (iv) How to understand quotes from project contractors.
       (v) Other standard types of financing compared to financing
 under the program.
       (vi) Applicable federal grant programs, such as the United
 States Department of Energy's weatherization assistance program,
 available to qualifying low-income record owners.
       (n) Provisions for an adequate debt service reserve fund.
       (o) Quality assurance and antifraud provisions.
       (p) For an energy project financed with more than $250,000.00
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 in assessments, both of the following:
         (i) A requirement for ongoing calculation of the savings
 realized by the record owner from the energy project.
         (ii) A requirement that a project contractor guarantee to the
 record owner that the energy project will achieve a savings-to-
 investment ratio greater than 1 and agree to pay the record owner,
 on an annual basis, any shortfall in savings below this level. This
 subparagraph does not apply to a new construction energy project.
         (q) A requirement that a new construction energy project meet
 the applicable