House Bill 1389-Second Edition

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2009

H 2

HOUSE BILL 1389

Committee Substitute Favorable 7/6/09

Short Title: Finance Energy Improvement With Assessments.		(Public)
Sponsors:
Referred to:

April 13, 2009

A BILL TO BE ENTITLED

AN ACT TO AUTHORIZE any CITy and any county TO DESIGNATE AN AREA WITHIN THE CITY and the county respectively WITHIN WHICH DESIGNATED AREA local government OFFICIALS AND FREE AND WILLING PROPERTY OWNERS MAY ENTER INTO loan agreements whereby the loans are to be repaid by CONTRACTUAL ASSESSMENTS, TO FINANCE THE INSTALLATION OF DISTRIBUTED GENERATION RENEWABLE ENERGY SOURCES OR ENERGY EFFICIENCY IMPROVEMENTS THAT ARE PERMANENTLY AFFIXED TO REAL PROPERTY.

Whereas, there now exists a unique opportunity for cities and counties to obtain federal funds under the American Recovery and Reinvestment Act of 2009, P.L. 111‑5 (ARRA), during the 2009‑2011 biennium to finance a program for cities and counties to provide loans to property owners for the upfront costs of installing renewable energy sources or the upfront costs of making residential, commercial, industrial, or other real property more energy efficient; and

Whereas, cities and counties need authority to provide for the repayment of these loans by contractual assessments; Now, therefore,

The General Assembly of North Carolina enacts:

SECTION 1. Chapter 160A of the General Statutes is amended by adding a new Article to read:

"Article 10B.

"Contractual Assessments for Renewable Energy and Energy Efficiency Improvements to Real Property.

"§ 160A‑239.10. Intent; scope of Article.

(a) It is the intent of the General Assembly that this Article authorize cities to establish programs to finance the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to residential, commercial, industrial, or other real property.

(b) This Article shall not be used to finance the purchase or installation of appliances that are not permanently fixed to residential, commercial, industrial, or other real property. Assessments may be levied pursuant to this Article only with the free and willing consent of the owner of each lot or parcel on which an assessment is levied at the time the assessment is levied.

"§ 160A‑239.11. Findings.

(a) The General Assembly finds all of the following:

(1) To promote the development of renewable energy and energy efficiency, the General Assembly established the Renewable Energy and Energy Efficiency Portfolio Standard (REPS) in G.S. 62‑133.8. Accordingly, renewable energy and energy efficiency serve the public interest in all of the following ways:

a. By contributing to the availability of an adequate and reliable supply of electric power to the people of North Carolina.

b. By diversifying the resources used to reliably meet the energy needs of consumers in cities.

c. By providing greater energy security to city residents through the use of indigenous energy resources available within cities.

d. By encouraging private investment in renewable energy and energy efficiency.

e. By providing improved air quality and other benefits to energy consumers and citizens of cities.

f. By helping cities reduce air pollution in order to attain air quality standards in nonattainment areas under the federal Clean Air Act.

g. By reducing the consumption of fossil fuels and reducing our dependence on foreign energy sources, thereby protecting our national security.

h. By decreasing the likelihood of experiencing electric power blackouts or brownouts in cities, thereby increasing public safety in cities.

(2) Expanding renewable energy sources and energy efficiency improvements to residential, commercial, industrial, or other real property in cities contributes to the creation of green jobs.

(3) Under existing law, cities have an integral role in promoting the efficient and wise use of energy within their jurisdictional boundaries.

(4) The upfront cost of renewable energy sources or of making residential, commercial, industrial, or other real property more energy efficient prevents many property owners in cities from making those improvements. Authorizing an alternative procedure to authorize cities to extend loans to be repaid through contractual assessments to finance the upfront cost of renewable energy sources and energy efficiency improvements will make those improvements more affordable, thereby promoting the installation of those improvements.

(b) The General Assembly declares that, in addition to the public interests served by renewable energy sources and energy efficiency under subdivision (1) of subsection (a) of this section, the public interest further will be served by establishing a contractual assessment program that provides the governing body of any city with the authority to finance the installation of distributed generation renewable energy sources and energy efficiency improvements that are permanently fixed to residential, commercial, industrial, or other real property.

"§ 160A‑239.12. Designation of area within city.

(a) The governing body of any city may determine that it would be convenient, advantageous, and in the public interest to designate an area within the city, which may encompass the entire city or a lesser portion, consisting of contiguous or noncontiguous areas, within which authorized city officials may enter into loan agreements with property owners to be repaid through contractual assessments to finance the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property pursuant to this Article.

(b) The governing body shall make the determination under subsection (a) of this section by adopting a resolution indicating its intention to do so. The resolution of intention shall include a statement that the city proposes to make contractual assessment financing available to property owners, shall identify the kinds of distributed generation renewable energy sources or energy efficiency improvements that may be financed, shall describe the boundaries of the area within which contractual assessments may be entered into, and shall briefly describe the proposed arrangements for financing the program. The resolution of intention shall state that it is in the public interest to finance loans to property owners for the installation of distributed generation renewable energy sources or energy efficiency improvements, or both, under subsection (a) of this section, and that these loans shall be repaid through contractual assessments imposed on the property. The resolution shall state that a public hearing shall be held at which interested persons may object to or inquire about the proposed program or any of its particulars and shall state the time and place of the hearing. The resolution shall direct an appropriate city official to prepare a report pursuant to G.S. 160A‑239.15 and to enter into consultations with the county assessor in order to reach agreement on what additional fees, if any, will be charged for collecting the proposed contractual assessments with the ad valorem taxes of the city on real property.

(c) As used in this Article, 'renewable energy source' has the same meaning as 'renewable energy resource' in G.S. 62‑133.8.

"§ 160A‑239.13. Financing of renewable energy and energy efficiency improvements to real property.

A city may advance its unrestricted revenue to finance the program for the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property by extending loans to property owners for the purchase of renewable energy and energy efficiency improvements under this Article, the principal and interest for which would be repaid by contractual assessments. The city shall set forth the process for financing the program and for entering into a loan agreement under this section in the city resolution forming the district under G.S. 160A‑239.12. A city also may use grant monies it receives from the United States, the State, or any other source to finance the program.

"§ 160A‑239.14. City official may authorize owner to purchase renewable energy and energy efficiency improvements.

Upon the written consent of an authorized city official, the proposed loan agreement for financing the program for the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property under G.S. 160A‑239.13 may authorize the property owner to purchase directly the related equipment and materials for the installation of distributed generation renewable energy sources or energy efficiency improvements and to contract directly for the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to the property owner's residential, commercial, industrial, or other real property.

"§ 160A‑239.15. Assessment report prepared by city official.

The report required under G.S. 160A‑239.12 shall contain all of the following:

(1) A map showing the boundaries of the territory within which contractual assessments are proposed to be offered.

(2) A draft contract specifying the terms and conditions that would be agreed to by a property owner within the contractual assessment area and the city.

(3) A statement of city policies concerning contractual assessments including all of the following:

a. Identification of the types of distributed generation renewable energy sources or energy efficiency improvements that may be financed by loans through the use of contractual assessments.

b. Identification of a city official authorized to enter into loan agreements and contractual assessments on behalf of the city.

c. A maximum aggregate dollar amount of the contractual assessments.

d. A method for setting requests from property owners for financing through loans repaid by contractual assessments in priority order in the event that requests appear likely to exceed the authorized maximum aggregate dollar amount of the contractual assessments.

e. Criteria for determining a property owner's eligibility to participate in the program, which may include a means to determine the property owner's credit worthiness.

(4) A plan for raising a capital amount required to pay for work performed pursuant to contractual assessments. The plan may include amounts to be advanced by the city through funds available to it from unrestricted revenue or grant funds. The plan shall include a statement of or method for determining the interest rate and time period during which contracting property owners would pay any assessment. The plan shall provide for any reserve funds. The plan shall provide for the apportionment of all or any portion of the costs incidental to the administration of the contractual assessment program among the consenting property owners and the city.

(5) A report on the results of the consultations with the county assessor concerning the additional fees, if any, that will be charged for collecting the proposed contractual assessments with the ad valorem taxes of the city on real property and a plan for financing the payment of those fees.

"§ 160A‑239.16. Notice of public hearing.

A notice of the hearing required under G.S. 160A‑239.12 shall be published in a newspaper having general circulation in the city in which an area is being proposed for a designation under G.S. 160A‑239.12 in the same manner provided by Rule 4(j1) of the Rules of Civil Procedure, Chapter 1A of the General Statutes, for the service of a summons on a party that cannot otherwise be served. The first publication shall occur not later than 20 days before the date of the hearing.

"§ 160A‑239.17. Public hearing.

At the time of the public hearing on the proposed program, the report under G.S. 160A‑239.15 shall be summarized, and the governing board of the city shall afford all persons who are present an opportunity to comment upon, object to, or present evidence with regard to the proposed contractual assessment program, the extent of the area proposed to be included within the program, the terms and conditions of the draft contract, or the proposed financing provisions. At the conclusion of the hearing, the governing board of the city may adopt a resolution confirming the report or may direct its modification in any respect and thereafter may adopt a resolution confirming the report as modified, or the governing board of the city may abandon the proceedings. The governing board of the city shall not increase the area within which contractual assessments would be offered without providing notice of the proposed increase in area pursuant to G.S. 160A‑239.16. The hearing may be continued from time to time not exceeding a total of 180 days.

"§ 160A‑239.18. Levy of contractual assessments for renewable energy and energy efficiency improvements to real property.

Assessments levied pursuant to this Article, and the interest and any penalties thereon, shall constitute a lien against the lots and parcels of land on which they are made until they are paid. Article 10 of this Chapter applies to the levy and collection of assessments levied pursuant to this Article, insofar as those provisions are not in conflict with the provisions of this Article, including, but not limited to, the collection of assessments in the same manner and at the same time as the ad valorem taxes of the city on real property are payable and any penalties and remedies and lien priorities in the event of delinquency and default.

"§ 160A‑239.19. Recording of contractual assessments for renewable energy and energy efficiency improvements to real property.

The governing board of the city shall direct its clerk to record a notice of the existence and amount of each contractual assessment with the register of deeds of the county in which the lot or parcel is located. The register of deeds shall accept those filings and may charge the clerk a fee for recording those documents pursuant to G.S. 161‑10. The failure of the clerk or register of deeds to perform the filings shall not subject the local agency or any of its officers or employees to civil liability."

SECTION 2. Chapter 153A of the General Statutes is amended by adding a new Article to read:

"Article 9B.

"Contractual Assessments for Renewable Energy and Energy Efficiency Improvements to Real Property.

"§ 153A‑210.10. Intent; scope of Article.

(a) It is the intent of the General Assembly that this Article authorize counties to establish programs to finance the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to residential, commercial, industrial, or other real property.

"§ 153A‑210.11. Findings.

(a) The General Assembly finds all of the following:

a. By contributing to the availability of an adequate and reliable supply of electric power to the people of North Carolina.

b. By diversifying the resources used to reliably meet the energy needs of consumers in counties.

c. By providing greater energy security to county residents through the use of indigenous energy resources available within counties.

d. By encouraging private investment in renewable energy and energy efficiency.

e. By providing improved air quality and other benefits to energy consumers and citizens of counties.

f. By helping counties reduce air pollution in order to attain air quality standards in nonattainment areas under the federal Clean Air Act.

g. By reducing the consumption of fossil fuels and reducing our dependence on foreign energy sources, thereby protecting our national security.

h. By decreasing the likelihood of experiencing electric power blackouts or brownouts in counties, thereby increasing public safety in counties.

(2) Expanding renewable energy sources and energy efficiency improvements to residential, commercial, industrial, or other real property in counties contributes to the creation of green jobs.

(3) Under existing law, counties have an integral role in promoting the efficient and wise use of energy within their jurisdictional boundaries.

(4) The upfront cost of renewable energy sources or of making residential, commercial, industrial, or other real property more energy efficient prevents many property owners in counties from making those improvements. Authorizing an alternative procedure to authorize counties to extend loans to be repaid through contractual assessments to finance the upfront cost of renewable energy sources and energy efficiency improvements will make those improvements more affordable, thereby promoting the installation of those improvements.

(b) The General Assembly declares that, in addition to the public interests served by renewable energy sources and energy efficiency under subdivision (1) of subsection (a) of this section, the public interest further will be served by establishing a contractual assessment program that provides the governing body of any county with the authority to finance the installation of distributed generation renewable energy sources and energy efficiency improvements that are permanently fixed to residential, commercial, industrial, or other real property.

"§ 153A‑210.12. Designation of area within county.

(a) The governing body of any county may determine that it would be convenient, advantageous, and in the public interest to designate an area within the county, which may encompass the entire county or a lesser portion, consisting of contiguous or noncontiguous areas, within which authorized county officials may enter into loan agreements with property owners to be repaid through contractual assessments to finance the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property pursuant to this Article.

(b) The governing body shall make the determination under subsection (a) of this section by adopting a resolution indicating its intention to do so. The resolution of intention shall include a statement that the county proposes to make contractual assessment financing available to property owners, shall identify the kinds of distributed generation renewable energy sources or energy efficiency improvements that may be financed, shall describe the boundaries of the area within which contractual assessments may be entered into, and shall briefly describe the proposed arrangements for financing the program. The resolution of intention shall state that it is in the public interest to finance loans to property owners for the installation of distributed generation renewable energy sources or energy efficiency improvements, or both, under subsection (a) of this section, and that these loans shall be repaid through contractual assessments imposed on the property. The resolution shall state that a public hearing shall be held at which interested persons may object to or inquire about the proposed program or any of its particulars and shall state the time and place of the hearing. The resolution shall direct an appropriate county official to prepare a report pursuant to G.S. 153A‑210.15 and to enter into consultations with the county assessor in order to reach agreement on what additional fees, if any, will be charged for collecting the proposed contractual assessments with the ad valorem taxes of the county on real property.

(c) Territory lying within the corporate limits of a city shall not be included within the area designated under subsection (a) of this section unless the governing body of the city agrees by resolution to being included in the area within which authorized county officials and property owners may enter into contractual assessments under this Article.

(d) As used in this Article, 'renewable energy source' has the same meaning as 'renewable energy resource' in G.S. 62‑133.8.

"§ 153A‑210.13. Financing of renewable energy and energy efficiency improvements to real property.

A county may advance its unrestricted revenue to finance the program for the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property by extending loans to property owners for the purchase of renewable energy and energy efficiency improvements under this Article, the principal and interest for which would be repaid by contractual assessments. The county shall set forth the process for financing the program and for entering into a loan agreement under this section in the county resolution forming the district under G.S. 153A‑210.12. A county also may use grant monies it receives from the United States, the State, or any other source to finance the program.

"§ 153A‑210.14. County official may authorize owner to purchase renewable energy and energy efficiency improvements.

Upon the written consent of an authorized county official, the proposed loan agreement for financing the program for the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property under G.S. 153A‑210.13 may authorize the property owner to purchase directly the related equipment and materials for the installation of distributed generation renewable energy sources or energy efficiency improvements and to contract directly for the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to the property owner's residential, commercial, industrial, or other real property.

"§ 153A‑210.15. Assessment report prepared by county official.

The report required under G.S. 153A‑210.12 shall contain all of the following:

(1) A map showing the boundaries of the territory within which contractual assessments are proposed to be offered.

(2) A draft contract specifying the terms and conditions that would be agreed to by a property owner within the contractual assessment area and the county.

(3) A statement of county policies concerning contractual assessments including all of the following:

a. Identification of the types of distributed generation renewable energy sources or energy efficiency improvements that may be financed by loans through the use of contractual assessments.

b. Identification of a county official authorized to enter into loan agreements and contractual assessments on behalf of the county.

c. A maximum aggregate dollar amount of the contractual assessments.

e. Criteria for determining a property owner's eligibility to participate in the program, which may include a means to determine the property owner's credit worthiness.

(4) A plan for raising a capital amount required to pay for work performed pursuant to contractual assessments. The plan may include amounts to be advanced by the county through funds available to it from unrestricted revenue or grant funds. The plan shall include a statement of or method for determining the interest rate and time period during which contracting property owners would pay any assessment. The plan shall provide for any reserve funds. The plan shall provide for the apportionment of all or any portion of the costs incidental to the administration of the contractual assessment program among the consenting property owners and the county.

(5) A report on the results of the consultations with the county assessor concerning the additional fees, if any, that will be charged for collecting the proposed contractual assessments with the ad valorem taxes of the county on real property and a plan for financing the payment of those fees.

"§ 153A‑210.16. Notice of public hearing.

A notice of the hearing required under G.S. 153A‑210.12 shall be published in a newspaper having general circulation in the county in which an area is being proposed for a designation under G.S. 153A‑210.12 in the same manner provided by Rule 4(j1) of the Rules of Civil Procedure, Chapter 1A of the General Statutes, for the service of a summons on a party that cannot otherwise be served. The first publication shall occur not later than 20 days before the date of the hearing.

"§ 153A‑210.17. Public hearing.

At the time of the public hearing on the proposed program, the report under G.S. 153A‑210.15 shall be summarized, and the governing board of the county shall afford all persons who are present an opportunity to comment upon, object to, or present evidence with regard to the proposed contractual assessment program, the extent of the area proposed to be included within the program, the terms and conditions of the draft contract, or the proposed financing provisions. At the conclusion of the hearing, the governing board of the county may adopt a resolution confirming the report or may direct its modification in any respect and thereafter may adopt a resolution confirming the report as modified, or the governing board of the county may abandon the proceedings. The governing board of the county shall not increase the area within which contractual assessments would be offered without providing notice of the proposed increase in area pursuant to G.S. 153A‑210.16. The hearing may be continued from time to time not exceeding a total of 180 days.

"§ 153A‑210.18. Levy of contractual assessments for renewable energy and energy efficiency improvements to real property.

Assessments levied pursuant to this Article, and the interest and any penalties thereon, shall constitute a lien against the lots and parcels of land on which they are made until they are paid. Article 9 of this Chapter applies to the levy and collection of assessments levied pursuant to this Article, insofar as those provisions are not in conflict with the provisions of this Article, including, but not limited to, the collection of assessments in the same manner and at the same time as the ad valorem taxes of the county on real property are payable and any penalties and remedies and lien priorities in the event of delinquency and default.

"§ 153A‑210.19. Recording of contractual assessments for renewable energy and energy efficiency improvements to real property.

The governing board of the county shall direct its clerk to record a notice of the existence and amount of each contractual assessment with the register of deeds of the county in which the lot or parcel is located. The register of deeds shall accept those filings and may charge the clerk a fee for recording those documents pursuant to G.S. 161‑10. The failure of the clerk or register of deeds to perform the filings shall not subject the local agency or any of its officers or employees to civil liability."

SECTION 3. This act is effective when it becomes law.