Bill Summary – FastDemocracy

67th Legislature                                                                                            SB 147.1
                                                 SENATE BILL NO. 147
                                            INTRODUCED BY M. MCNALLY
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   A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING LAWS RELATED TO CAPITAL
   ENHANCEMENT PROGRAMS TO PROMOTE ENERGY CONSERVATION MEASURES; AUTHORIZING
   LOCAL GOVERNMENTS TO ADOPT COMMERCIAL PROPERTY-ASSESSED CAPITAL ENHANCEMENTS
   PROGRAMS THROUGH DISTRICTS TO PROMOTE ENERGY CONSERVATION MEASURES;
   ESTABLISHING THE COMMERCIAL PROPERTY-ASSESSED CAPITAL ENHANCEMENTS ACT OF
   MONTANA; PROVIDING FOR THE ADMINISTRATION OF COMMERCIAL PROPERTY-ASSESSED CAPITAL
   ENHANCEMENTS PROGRAMS THROUGH THE MONTANA FACILITY FINANCE AUTHORITY AND LOCAL
   GOVERNMENTS; PROVIDING COMMERCIAL PROPERTY-ASSESSED CAPITAL ENHANCEMENTS
   PROGRAM PLANNING REQUIREMENTS; ESTABLISHING PROCEDURES FOR LOCAL GOVERNMENT
   DEVELOPMENT OF COMMERCIAL PROPERTY-ASSESSED CAPITAL ENHANCEMENTS PROGRAMS;
   ALLOWING FOR VOLUNTARY ASSESSMENTS; PRESCRIBING THE POWERS AND DUTIES OF THE
   GOVERNING BODIES OF LOCAL GOVERNMENTS AND THE AUTHORITY RELATED TO COMMERCIAL
   PROPERTY-ASSESSED CAPITAL ENHANCEMENTS PROGRAMS; ESTABLISHING CONTRACT AND
   LABOR REQUIREMENTS FOR CONTRACTS; ALLOWING LOCAL GOVERNMENTS TO JOINTLY
   ESTABLISH COMMERCIAL PROPERTY-ASSESSED CAPITAL ENHANCEMENTS PROGRAMS;
   PROVIDING RULEMAKING AUTHORITY; PROVIDING DEFINITIONS; AMENDING SECTIONS 90-7-202 AND
   90-7-211, MCA; AND PROVIDING A DELAYED EFFECTIVE DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              NEW SECTION. Section 1. Short title. [Sections 1 through 8] may be cited as the "Commercial
   Property-Assessed Capital Enhancements Act of Montana".
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              NEW SECTION. Section 2. Definitions. As used in [sections 1 through 8], unless the context
   requires otherwise, the following definitions apply:
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              (1) "Authority" means the Montana facility finance authority created in 2-15-1815.
              (2) "Commercial property-assessed capital enhancements program" or "program" means a program
   established in accordance with [sections 1 through 8].
              (3) "District" means a district that is established under [sections 1 through 8] by a local government
   and that lies within the local government's jurisdictional boundaries. A local government may create more than
   one district under a program.
              (4) "Energy conservation measure" means a permanent cost-effective energy improvement fixed to
   real property, including new construction, and intended to decrease energy or water consumption and demand,
   including a product, device, or interacting group of products or devices on the customer's side of the meter that
   uses energy technology to generate electricity, provide thermal energy, or regulate temperature. The term
   includes but is not limited to:
              (a) insulation in walls, roofs, floors, foundations, or heating and cooling distribution systems;
              (b) storm windows and doors, including multiglazed windows and doors, heat-absorbing or heat-
   reflective glazed windows, coated window and door systems, additional glazing, reductions in glass area, and
   other window and door system modifications that reduce energy consumption;
              (c)   automated energy control systems;
              (d) heating, ventilating, or air-conditioning and distribution system modifications or replacements;
              (e) caulking, weather-stripping, or air sealing;
              (f) replacement or modification of lighting fixtures to reduce the energy use of the lighting system;
              (g) energy recovery systems;
              (h) daylighting systems;
              (i)   installation or upgrades of electrical wiring or outlets to charge a motor vehicle that is fully or
   partially powered by electricity;
              (j)   fuel source changes that result in cost savings;
              (k)   measures to reduce the usage of water or to increase the efficiency of water usage; and
              (l) any other installation or modification of equipment, devices, or materials approved as a utility cost-
   saving measure by the governing body.
              (5) "Energy conservation project" means the installation or modification of an energy conservation
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   measure or the acquisition, installation, or improvement of a renewable energy system.
              (6) "Governing body" means the legislative authority of a local government.
              (7) "Local government" means a county, city, town, or a consolidated city-county.
              (8) (a) "Person" means an individual, firm, partnership, association, corporation, unincorporated joint
   venture, or trust that is organized, permitted, or existing under the laws of this state or any other state, including
   a federal corporation, or a combination of individuals, firms, partnerships, associations, corporations,
   unincorporated joint ventures, or trusts.
              (b) The term does not include a local government.
              (9) "Real property" means a privately owned commercial or industrial facility, covered multifamily
   housing accommodation as defined in 49-2-305(6), or agricultural property.
              (10) "Record owner" means the person or persons possessing the most recent fee title as shown by
   the records of the county clerk and recorder.
              (11) "Renewable energy" has the meaning provided in 15-24-3102.
              (12) "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 uses one or more forms of renewable energy to
   generate electricity or to reduce the use of nonrenewable energy. The term includes a biomass stove but does
   not include an incinerator or a digester.
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              NEW SECTION. Section 3. Duties of authority related to community property-assessed capital
   enhancements program -- rulemaking. (1) As resources allow, the authority shall provide administrative
   support to local governments for the administration of the commercial property-assessed capital enhancements
   program and establish a plan in accordance with [section 5].
              (2) If the authority adopts rules in accordance with 90-7-202 to administer the commercial property-
   assessed capital enhancements program, the authority shall consult with local and county governments and the
   commercial lending industry, including bank and credit union representatives, on the content of the rules.
              (3) The authority shall provide a report to the legislature in accordance with 5-11-210 describing the
   fees related to the program, administrative costs, the number of properties that are part of a commercial
   property-assessed capital enhancements program, and the scope of projects in the program:
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              (a) in 2024; and
              (b) every 5 years after the report is initially provided in subsection (3)(a).
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              NEW SECTION. Section 4. Program authorized -- contracts. (1) In accordance with [sections 5
   and 6], a governing body may establish a commercial property-assessed capital enhancements program and
   may create a district or districts under the program.
              (2) (a) The governing body may enter into a contract with a record owner of real property within a
   district to finance one or more energy conservation projects on the real property included in a district in
   accordance with [sections 1 through 8].
              (b) The contract may provide for the repayment of the cost of an energy conservation project through
   an assessment in accordance with [section 7] on real property. The financing to be repaid through assessments
   must be provided by a third party.
              (c)   Financing may include the cost of materials and labor necessary for the installation or modification
   of energy conservation projects, permit fees, inspection fees, application and administrative fees, bank fees,
   and all other fees incurred by the record owner for the energy conservation project on a specific or pro rata
   basis, as determined by the governing body.
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              NEW SECTION. Section 5. Elements of program plan -- contract requirements. (1) Prior to
   establishing a program in accordance with [section 6], the authority shall prepare a program plan. Subject to
   subsections (2) through (4), the program plan must include:
              (a) provisions for marketing the program and providing participant education;
              (b) the types of energy conservation projects that may be financed under the program;
              (c)   options for raising capital to finance energy conservation projects under the program. Options may
   include but are not limited to owner-arranged financing from a commercial lender. If owner-arranged financing
   is used, the governing body may impose an assessment pursuant to [section 7] and make payments to the
   authority, and the authority will distribute those payments to the commercial lender.
              (d) quality assurances and antifraud measures;
              (e) minimum requirements for a contractor to complete an energy conservation project;
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              (f) clearly defined work standards for contractors;
              (g) contractor management systems and procedures designed to monitor contractor performance and
   to manage, track, and resolve consumer complaints; and
              (h) a description of the proposed financial arrangement and contract terms between the local
   government and record owners pursuant to subsection (3).
              (2) (a) A program plan for energy conservation projects must include an energy analysis completed
   by a third party to determine cost and energy savings.
              (b) Energy savings calculations and analysis completed in accordance with subsection (2)(a) must be
   completed by a licensed or certified building professional approved by the authority.
              (c) When an energy conservation project is completed, the contractor who completed the project shall
   submit written verification to the authority that the energy conservation project was properly installed and is
   operating as intended.
              (3) A proposed financial arrangement must be included in a program plan in accordance with
   subsection (1)(c) and must include:
              (a) application, administration, or other program fees that will be charged to record owners
   participating in the program that will be used to finance costs incurred by the authority, local government, or
   both as a result of the program;
              (b) a requirement that a contract between the governing body and a record owner is invalid and
   unenforceable unless the holder of a mortgage, trust indenture beneficiary, or loan servicer provides the
   governing body with each of the following:
              (i) an executed subordination agreement, properly notarized and executed within 3 months prior to
   the application for a contract;
              (ii) a record of the subordination agreement from the office of the county clerk and recorder in the
   county where the property is located; and
              (iii) a secretary's certificate or substantially similar certification that the person who executed the
   subordination agreement is authorized to sign such an agreement on behalf of the mortgage holder, trust
   indenture beneficiary, or loan servicer; and
              (c)   a model contract between a governing body and a record owner containing the terms and
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   conditions of financing and an assessment that meets the requirements of [section 7] under the program. The
   model contract must include full disclosure of costs, including the effective interest rate of the assessment in
   accordance with [section 7], any administrator fees, the estimated payment schedule, and the placement of a
   lien on the real property.
              (4) (a) Prior to a local government and a record owner for a commercial property-assessed capital
   enhancements project entering into a contract under a program established pursuant to [section 6], the
   authority shall obtain independent verification from the record owner that the record owner understands and
   accepts the terms of the contract and shall make the verification available to the local government.
              (b) The contract must allow the record owner to cancel the contract within 3 business days of signing
   the contract.
              (c)   The contract must include full disclosure that by entering into the contract, the record owner may
   incur a property tax lien on the real property included under the contract.
              (5) The contract must include requirements that contractors and any subcontractors use a skilled and
   trained workforce. Contracts signed must require contractors and subcontractors to give preference to the
   employment of bona fide Montana residents, as defined in 18-2-401, in the performance of the projects, if the
   Montana residents have substantially equal qualifications to those of nonresidents.
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              NEW SECTION. Section 6. Establishment of program. (1) To establish a commercial property-
   assessed capital enhancements program, a governing body shall:
              (a) adopt a resolution of intent that includes:
              (i) a statement of intent to establish a commercial property-assessed capital enhancements program
   describing the role of the governing body and the role of the authority in administering the program;
              (ii) the types of energy conservation projects that may be included in the program;
              (iii) a reference to the program plan required by [section 5] and a location where the plan is available
   for public inspection; and
              (iv) the time and place for a public hearing on the proposed program;
              (b) hold a public hearing at which the public may comment on the proposed program and the program
   plan required by [section 5]; and
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              (c)   adopt a resolution establishing the program and setting the terms and conditions of the program,
   including:
              (i) how the governing body will meet the program plan requirements established by the authority in
   [section 5]. To meet the requirement of this subsection (1)(c)(i), the resolution may incorporate a program plan
   or an amended version of a program plan by reference.
              (ii) a description of the aspects of the program that may be changed without a public hearing and the
   aspects that may be changed only after a public hearing;
              (iii) identification of an official authorized to enter into a program contract on behalf of the program with
   entities providing funding for the program; and
              (iv) identification of an official authorized to enter into a program contract on behalf of the governing
   body with record owners.
              (2) A commercial property-assessed capital enhancements program may be changed by resolution of
   the governing body. Adoption of the resolution must be preceded by a public hearing if required pursuant to
   subsection (1)(c)(ii).
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              NEW SECTION. Section 7. Assessments. (1) (a) A local government may impose an assessment
   under a commercial property-assessed capital enhancements program pursuant to a written contract with the
   record owner of the real property to be assessed.
              (b) The term of the assessment may not exceed the useful life of an energy conservation project paid
   for by the assessment.
              (2) Before entering into a contract with a record owner under a program, the local government shall
   verify that:
              (a) delinquent taxes, special assessments, or water or sewer charges are not due on the real
   property; and
              (b) delinquent assessments on the real property under a commercial property-assessed capital
   enhancements program are not due.
              (3) (a) An assessment imposed