State of South Dakota
LEGISLATIVE ASSEMBLY, 2019
||HOUSE BILL NO. 1090 |
Introduced by: Representatives Johnson (David), Chase, Finck, Glanzer, McCleerey, and Smith (Jamie) and Senators Rusch, Heinert, Nesiba, Smith (VJ), and Steinhauer
FOR AN ACT ENTITLED, An Act to provide for the establishment of commercial property assessed clean energy programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That the code be amended by adding a NEW SECTION to read:
Terms used in this Act mean:
(1) "Energy improvement," any installation or modification of equipment, device, or materials intended to decrease energy consumption, reduce demand, promote more efficient use of water, electricity, natural gas, propane, or any other form of energy on property that is approved as a utility cost-savings measure by a county;
(2) "Renewable energy resource," energy and any associated renewable energy credits from wind energy, solar thermal energy, photovoltaic cells and panels, biodiesel, anaerobic digestion, geothermal, and hydropower that does not involve new construction or significant expansion of hydropower dams;
(3) "Renewable energy system," a fixture, product, device, or interacting group of
fixtures, products, or devices on the customer's side of the meter that use one or more renewable energy resources to generate energy including electricity, hot water, and steam.
Section 2. That the code be amended by adding a NEW SECTION to read:
A county may establish, in accordance with section 3 of this Act, a commercial property assessed clean energy program, to be administered by the county or by a third-party program administrator hired by the county, for any area the county designates within the jurisdictional boundaries of the county for the installation, construction, or modification of an energy improvement project. A county may designate more than one area under the program to be separate, overlapping, or coterminous, and may include the entire area of the county.
A county may, by ordinance, authorize a contract between or among the county, an owner of existing or newly constructed property, and a capital provider, which may include a private lender or any other source of funding authorized by the county, governing the terms and conditions of the assessment of the property and the financing of the energy improvement project under the program. The contract shall provide for repayment of the cost of an energy project through an assessment upon the property that is the subject of the contract.
The cost of an energy project may include, on a specific or pro rata basis as authorized by the county, any prepayment premium, any materials and labor for installation of the project, any permit fee, inspection fee, application and administrative fee, bank fee, interest reserve, and any other fee charged to the property owner for the installation of the energy project and to the capital provider.
Section 3. That the code be amended by adding a NEW SECTION to read:
To establish a program under section 2 of this Act, a county commission shall adopt an ordinance that includes:
(1) A statement of intent to facilitate access to capital to provide funding for energy projects that are repaid by assessments on the property that is the subject of a project;
(2) A statement designating the source of funding for work performed on a project;
(3) The types of any energy projects that may be financed under the proposed program;
(4) A description of the area designated by the county under the proposed program;
(5) A report on the proposed program in accordance with section 4 of this Act to be incorporated by reference into the ordinance;
(6) The time and place for any public hearing required for the adoption of the proposed program by ordinance; and
(7) Any aspect of the proposed program that may be and may not be amended without a public hearing.
Section 4. That the code be amended by adding a NEW SECTION to read:
The report on a proposed program, as required under section 3 of this Act, shall include:
(1) Any draft contract governing the terms and conditions of assessment and financing under the proposed program;
(2) A requirement that the term of an assessment may not exceed the useful life of the energy improvement project funded by the assessment. The county may allow the term of an assessment for any project consisting of multiple energy improvement projects to be no greater than the energy improvement project with the longest useful life;
(3) A requirement that the ratio of the amount of the assessment to the assessed value of the property or the market value of the property, as determined by an appraisal of the value of the property after completion of the energy improvement project that is no older than twelve months;
(4) A requirement that a property owner of property that is subject to a mortgage shall obtain written consent from any mortgage holder prior to participating in the program;
(5) Any provision to market the program and inform property owners and potential capital providers about the program; and
(6) Any quality assurance and antifraud measure required by the county.
Section 5. That the code be amended by adding a NEW SECTION to read:
An owner of any privately-owned commercial, industrial, agricultural, or multi-family property, provided the multi-family property includes at least five units, located within an area designated by a county under section 2 of this Act may submit an application, in accordance with procedures established by ordinance by the county, for approval of an energy improvement project.
Prior to entering into a contract under section 2 of this Act with a property owner, the county shall verify that:
(1) The property is within the area designated by the county under section 2 of this Act;
(2) There are no delinquent taxes, nor any special assessment against or water or sewer charge on the property;
(3) There is no delinquent assessment on the property under the program;
(4) There is no lien on the property, including any construction or mechanics lien, lis pendens, or judgment lien against the property owner, nor any pending environmental proceeding or eminent domain proceeding over the property;
(5) No notice of default or other evidence of property-based debt delinquency has been recorded and remains uncured;
(6) The property owner is current on any mortgage debt on the property, the property
owner has not filed for bankruptcy in the preceding two years, and the property is not an asset subject to a current bankruptcy filing;
(7) Any work on the energy improvement project that requires a license will be performed by a licensed contractor who agrees to comply with terms and conditions established by the county;
(8) Any contractor to be hired for the project signed a written acknowledgement that the capital provider will not authorize final payment to the contractor until the capital provider receives written confirmation from the property owner that the energy improvement was properly installed and works as intended;
(9) The amount of the assessment in relation to the greater of the assessed value of the property or the appraised value of the property after completion of the energy improvement project, as determined by a licensed appraiser, does not exceed twenty-five percent; and
(10) An estimation, including any projected monetary savings, has been provided for the existing water or energy use compared to the expected water or energy use following completion of the energy improvement project. For any proposed project that is new construction, major rehabilitation, or for which no existing usage data is available, modeling shall be used to ensure the estimated use meets or exceeds any minimum standards required by building code.
Section 6. That the code be amended by adding a NEW SECTION to read:
At least thirty days prior to entering into a contract under section 2 of this Act with a county, a property owner shall provide to a holder or loan servicer of any mortgage encumbering or otherwise secured by the property, notice of the property owner's intent to enter into the contract with the county. Notice under this section shall include the maximum principal amount to be
financed, the maximum annual assessment necessary to repay the amount, and a request that the holder or loan servicer consent to the property owner subjecting the property to the program. The property owner shall provide to the county proof of notice under this section and written consent of any existing holder or loan servicer acknowledging that any mortgage will be subordinate to the contract and that the county may foreclose on the property if the assessment is not paid.
Section 7. That the code be amended by adding a NEW SECTION to read:
This Act does not limit any home rule authority provided under chapter 6-12.
Section 8. That the code be amended by adding a NEW SECTION to read:
An assessment imposed under a program established by a county under section 2 of this Act, including any interest on the assessment and any penalty, constitutes a lien against the property on which the assessment is imposed until the assessment, including any interest or penalty, is paid in full and a satisfaction and release is recorded. The lien and summary of the contract shall be recorded with the register of deeds of the county in which the property is located. A lien under this section has the same priority and status as any other property tax and assessment lien. The county has all rights and remedies in the case of default or delinquency in the repayment of an assessment under this section as with delinquent property taxes under chapter 10-22.
Notwithstanding any other law, the portion of an assessment under a contract that has not become due is not accelerated or eliminated by foreclosure of a property tax lien. Any installment of an assessment under the program may be included in each tax bill and collected at the same time and in the same manner as property taxes under chapter 10-21 or collected by the capital provider by separate direct billing. Partial payment of an assessment under a program is not permitted.