Illinois General Assembly - Full Text of SB2773
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Full Text of SB2773  100th General Assembly



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1    AN ACT concerning government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Property Assessed Clean Energy Act is
5amended by changing Sections 5, 10, 15, 20, 25, 30, and 35 as
7    (50 ILCS 50/5)
8    Sec. 5. Definitions. As used in this Act:
9    "Alternative energy improvement" means the installation or
10upgrade of electrical wiring, outlets, or charging stations to
11charge a motor vehicle that is fully or partially powered by
13    "Assessment contract" means a voluntary written contract
14between the local unit of government (or a permitted assignee)
15and record owner governing the terms and conditions of
16financing and assessment under a program.
17    "Authority" means the Illinois Finance Authority.
18    "PACE area" means an area within the jurisdictional
19boundaries of a local unit of government created by an
20ordinance or resolution of the local unit of government to
21provide financing for energy projects under a property assessed
22clean energy program. A local unit of government may create
23more than one PACE area under the program, and PACE areas may



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1be separate, overlapping, or coterminous.
2    "Energy efficiency improvement" means equipment, devices,
3or materials intended to decrease energy consumption or promote
4a more efficient use of electricity, natural gas, propane, or
5other forms of energy on property, including, but not limited
6to, all of the following:
7        (1) insulation in walls, roofs, floors, foundations,
8    or heating and cooling distribution systems;
9        (2) storm windows and doors, multi-glazed windows and
10    doors, heat-absorbing or heat-reflective glazed and coated
11    window and door systems, and additional glazing,
12    reductions in glass area, and other window and door system
13    modifications that reduce energy consumption;
14        (3) automated energy control systems;
15        (4) high efficiency heating, ventilating, or
16    air-conditioning and distribution system modifications or
17    replacements;
18        (5) caulking, weather-stripping, and air sealing;
19        (6) replacement or modification of lighting fixtures
20    to reduce the energy use of the lighting system;
21        (7) energy controls or recovery systems;
22        (8) day lighting systems; and
23        (8.1) any energy efficiency project, as defined in
24    Section 825-65 of the Illinois Finance Authority Act; and
25        (9) any other installation or modification of
26    equipment, devices, or materials approved as a utility



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1    cost-savings measure by the governing body.
2    "Energy project" means the installation or modification of
3an alternative energy improvement, energy efficiency
4improvement, or water use improvement, or the acquisition,
5installation, or improvement of a renewable energy system that
6is affixed to a stabilized existing property (including not new
8    "Governing body" means the county board or board of county
9commissioners of a county, the city council of a city, or the
10board of trustees of a village.
11    "Local unit of government" means a county, city, or
13    "Permitted assignee" means (i) any body politic and
14corporate, (ii) any bond trustee, or (iii) any warehouse
15lender, or any other assignee of a local unit of government
16designated in an assessment contract.
17    "Person" means an individual, firm, partnership,
18association, corporation, limited liability company,
19unincorporated joint venture, trust, or any other type of
20entity that is recognized by law and has the title to or
21interest in property. "Person" does not include a local unit of
22government or a homeowner's or condominium association, but
23does include other governmental entities that are not local
24units of government.
25    "Program administrator" means a for-profit entity or
26not-for profit entity that will administer a program on behalf



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1of or at the discretion of the local unit of government. It or
2its affiliates, consultants, or advisors shall have done
3business as a program administrator or capital provider for a
4minimum of 18 months and shall be responsible for arranging
5capital for the acquisition of bonds issued by the local unit
6of government or the Authority to finance energy projects.
7    "Property" means privately-owned commercial, industrial,
8non-residential agricultural, or multi-family (of 5 or more
9units) real property located within the local unit of
10government, but does not include property owned by a local unit
11of government or a homeowner's or condominium association.
12    "Property assessed clean energy program" or "program"
13means a program as described in Section 10.
14    "Record owner" means the person who is the titleholder or
15owner of the beneficial interest in property.
16    "Renewable energy resource" includes energy and its
17associated renewable energy credit or renewable energy credits
18from wind energy, solar thermal energy, photovoltaic cells and
19panels, biodiesel, anaerobic digestion, and hydropower that
20does not involve new construction or significant expansion of
21hydropower dams. For purposes of this Act, landfill gas
22produced in the State is considered a renewable energy
23resource. The term "renewable energy resources" does not
24include the incineration or burning of any solid material.
25    "Renewable energy system" means a fixture, product,
26device, or interacting group of fixtures, products, or devices



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1on the customer's side of the meter that use one or more
2renewable energy resources to generate electricity, and
3specifically includes any renewable energy project, as defined
4in Section 825-65 of the Illinois Finance Authority Act.
5    "Warehouse fund" means any fund established by a local unit
6of government, body politic and corporate, or warehouse lender.
7    "Warehouse lender" means any financial institution
8participating in a PACE area that finances an energy project
9from lawfully available funds in anticipation of issuing bonds
10as described in Section 35.
11    "Water use improvement" means any fixture, product,
12system, device, or interacting group thereof for or serving any
13property that has the effect of conserving water resources
14through improved water management or efficiency.
15(Source: P.A. 100-77, eff. 8-11-17.)
16    (50 ILCS 50/10)
17    Sec. 10. Property assessed clean energy program; creation.
18    (a) Pursuant to the procedures provided in Section 15, a
19local unit of government may establish a property assessed
20clean energy program and, from time to time, create a PACE area
21or areas under the program.
22    (b) Under a program, the local unit of government may enter
23into an assessment contract with the record owner of property
24within a PACE area to finance or refinance one or more energy
25projects on the property. The assessment contract shall provide



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1for the repayment of the cost of an energy project through
2assessments upon the property benefited. The financing or
3refinancing may include any and all of the following: the cost
4of materials and labor necessary for installation, permit fees,
5inspection fees, application and administrative fees, bank
6fees, and all other fees that may be incurred by the record
7owner pursuant to the installation and the issuance of bonds on
8a specific or pro rata basis, as determined by the local unit
9of government and may also include a prepayment premium.
10    (b-5) A local unit of government may sell or assign, for
11consideration, any and all assessment contracts; the permitted
12assignee of the assessment contract shall have and possess the
13same powers and rights at law or in equity as the applicable
14local unit of government and its tax collector would have if
15the assessment contract had not been assigned with regard to
16(i) the precedence and priority of liens evidenced by the
17assessment contract, (ii) the accrual of interest, and (iii)
18the fees and expenses of collection. The permitted assignee
19shall have the same rights to enforce such liens as any private
20party holding a lien on real property, including, but not
21limited to, foreclosure. Costs and reasonable attorney's fees
22incurred by the permitted assignee as a result of any
23foreclosure action or other legal proceeding brought pursuant
24to this Section and directly related to the proceeding shall be
25assessed in any such proceeding against each record owner
26subject to the proceedings. Such costs and fees may be



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1collected by the assignee at any time after demand for payment
2has been made by the permitted assignee.
3    (c) A program may be administered by one or more a program
4administrators administrator or the local unit of government.
5(Source: P.A. 100-77, eff. 8-11-17.)
6    (50 ILCS 50/15)
7    Sec. 15. Program established.
8    (a) To establish a property assessed clean energy program,
9the governing body of a local unit of government shall adopt a
10resolution or ordinance that includes all of the following:
11        (1) a finding that the financing of energy projects is
12    a valid public purpose;
13        (2) a statement of intent to facilitate access to
14    capital (which may be from one or more a program
15    administrators) administrator to provide funds for energy
16    projects, which will be repaid by assessments on the
17    property benefited with the agreement of the record owners;
18        (3) a description of the proposed arrangements for
19    financing the program, which may be through one or more a
20    program administrators administrator;
21        (4) the types of energy projects that may be financed;
22        (5) a description of the territory within the PACE
23    area;
24        (6) reference to a report on the proposed program as
25    described in Section 20; and



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1        (7) the time and place for a any public hearing to be
2    held by the local unit of government if required for the
3    adoption of the proposed program by resolution or
4    ordinance;
5        (8) matters required by Section 20 to be included in
6    the report; for this purpose, the resolution or ordinance
7    may incorporate the report or an amended version thereof by
8    reference; and
9        (9) a description of which aspects of the program may
10    be amended without a new public hearing and which aspects
11    may be amended only after a new public hearing is held.
12    (b) A property assessed clean energy program may be amended
13by resolution or ordinance of the governing body. Adoption of
14the resolution or ordinance shall be preceded by a public
15hearing if required.
16(Source: P.A. 100-77, eff. 8-11-17; revised 10-3-17.)
17    (50 ILCS 50/20)
18    Sec. 20. Report. The report on the proposed program
19required under Section 15 shall include all of the following:
20        (1) a form of assessment contract between the local
21    unit of government and record owner governing the terms and
22    conditions of financing and assessment under the program.
23        (2) identification of an official authorized to enter
24    into an a assessment contract on behalf of the local unit
25    of government;



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1        (3) a maximum aggregate annual dollar amount for all
2    financing to be provided by the applicable program
3    administrator under the program;
4        (4) an application process and eligibility
5    requirements for financing energy projects under the
6    program;
7        (5) a method for determining interest rates on
8    assessment installments, repayment periods, and the
9    maximum amount of an assessment;
10        (6) an explanation of how assessments will be made and
11    collected;
12        (7) a plan to raise capital to finance improvements
13    under the program pursuant to the sale of bonds, subject to
14    this Act or the Special Assessment Supplemental Bond and
15    Procedures Act, or alternatively, through the sale of bonds
16    by the Authority pursuant to subsection (d) of Section
17    825-65 of the Illinois Finance Authority Act to a program
18    administrator;
19        (8) information regarding all of the following, to the
20    extent known, or procedures to determine the following in
21    the future:
22            (A) any revenue source or reserve fund or funds to
23        be used as security for bonds described in paragraph
24        (7); and
25            (B) any application, administration, or other
26        program fees to be charged to record owners



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1        participating in the program that will be used to
2        finance costs incurred by the local unit of government
3        as a result of the program;
4        (9) a requirement that the term of an assessment not
5    exceed the useful life of the energy project paid for by
6    the assessment; provided that the local unit of government
7    may allow projects that consist of multiple improvements
8    with varying lengths of useful life to have a term that is
9    no greater than the improvement with the longest useful
10    life;
11        (10) a requirement for an appropriate ratio of the
12    amount of the assessment to the assessed value of the
13    property or market value of the property as determined by a
14    recent appraisal no older than 12 months;
15        (11) a requirement that the record owner of property
16    subject to a mortgage obtain written consent from the
17    mortgage holder before participating in the program;
18        (12) provisions for marketing and participant
19    education;
20        (13) provisions for an adequate debt service reserve
21    fund, if any; and
22        (14) quality assurance and antifraud measures.
23(Source: P.A. 100-77, eff. 8-11-17.)
24    (50 ILCS 50/25)
25    Sec. 25. Contracts with record owners of property.



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1    (a) After creation of a program and PACE area, a record
2owner of property within the PACE area may apply with the local
3unit of government or its program administrator or
4administrators for funding to finance an energy project.
5    (b) A local unit of government may impose an assessment
6under a property assessed clean energy program only pursuant to
7the terms of a recorded assessment contract with the record
8owner of the property to be assessed.
9    (c) Before entering into an assessment contract with a
10record owner under a program, the local unit of government
11shall verify all of the following:
12        (1) that the property is within the PACE area;
13        (2) that there are no delinquent taxes, special
14    assessments, or water or sewer charges on the property;
15        (3) that there are no delinquent assessments on the
16    property under a property assessed clean energy program;
17        (4) there are no involuntary liens on the property,
18    including, but not limited to, construction or mechanics
19    liens, lis pendens or judgments against the record owner,
20    environmental proceedings, or eminent domain proceedings;
21        (5) that no notices of default or other evidence of
22    property-based debt delinquency have been recorded and not
23    cured;
24        (6) that the record owner is current on all mortgage
25    debt on the property, the record owner has not filed for
26    bankruptcy in the last 2 years, and the property is not an



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1    asset to a current bankruptcy.
2        (7) all work requiring a license under any applicable
3    law to make a qualifying improvement shall be performed by
4    a registered contractor that has agreed to adhere to a set
5    of terms and conditions through a process established by
6    the local unit of government.
7        (8) the contractors to be used have signed a written
8    acknowledgement that the local unit of government will not
9    authorize final payment to the contractor until the local
10    unit of government has received written confirmation from
11    the record owner that the improvement was properly
12    installed and is operating as intended; provided, however,
13    that the contractor retains all legal rights and remedies
14    in the event there is a disagreement with the owner;
15        (9) that the amount of the assessment in relation to
16    the greater of the assessed value of the property or the
17    appraised value of the property, as determined by a
18    licensed appraiser, does not exceed 25%; and
19        (10) a requirement that an assessment of the existing
20    water or energy use and a modeling of expected monetary
21    savings have been conducted for any proposed project.
22    (d) At least 30 days before entering into an assessment
23contract agreement with the local unit of government, the
24record owner shall provide to the holders or loan servicers of
25any existing mortgages encumbering or otherwise secured by the
26property a notice of the record owner's intent to enter into an



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1assessment contract with the local unit of government, together
2with the maximum principal amount to be financed and the
3maximum annual assessment necessary to repay that amount, along
4with a request that the holders or loan servicers of any
5existing mortgages consent to the record owner subjecting the
6property to the program. A verified copy or other proof of
7those notices and the written consent of the existing mortgage
8holder for the record owner to enter into the assessment
9contract and acknowledging that the existing mortgage will be
10subordinate to the financing and assessment agreement and that
11the local unit of government or its permitted assignee can
12foreclose the property if the assessment is not paid shall be
13provided to the local unit of government.
14    (e) A provision in any agreement between a local unit of
15government and a public or private power or energy provider or
16other utility provider is not enforceable to limit or prohibit
17any local unit of government from exercising its authority
18under this Section.
19    (f) The record owner has signed a certification that the
20local unit of government has complied with the provisions of
21this Section, which shall be conclusive evidence as to
22compliance with these provisions, but shall not relieve any
23contractor, or local unit of government, from any potential
25    (g) This Section is additional and supplemental to county
26and municipal home rule authority and not in derogation of such



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1authority or limitation upon such authority.
2    (h) The imposition of any assessment pursuant to this Act
3shall be exempt from any other statutory procedures or
4requirements that condition the imposition of assessments or
5other taxes against a property, except as set forth in this
7(Source: P.A. 100-77, eff. 8-11-17.)
8    (50 ILCS 50/30)
9    Sec. 30. Assessments constitute a lien; billing.
10    (a) An assessment imposed under a property assessed clean
11energy program pursuant to an assessment contract, including
12any interest on the assessment and any penalty, shall, upon
13recording of the assessment contract in the county in which the
14PACE area is located, constitute a lien against the property on
15which the assessment is imposed until the assessment, including
16any interest or penalty, is paid in full. The lien of the
17assessment contract shall run with the property until the
18assessment is paid in full and a satisfaction or release for
19the same has been recorded with the local unit of government
20and shall have the same priority and status as other property
21tax and assessment liens. The local unit of government (or any
22permitted assignee) shall have all rights and remedies in the
23case of default or delinquency in the payment of an assessment
24as it does with respect to delinquent property taxes. When the
25assessment, including any interest and penalty, is paid, the



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1lien shall be removed from the property.
2    (a-5) The assessment shall be imposed by the local unit of
3government against each lot, block, track and parcel of land
4within the PACE area to be assessed in accordance with an
5assessment roll setting forth: (i) a description of the method
6of spreading the assessment; (ii) a list of lots, blocks,
7tracts and parcels of land in the PACE area; and (iii) the
8amount assessed on each parcel. The assessment roll shall be
9filed with the county clerk of the county in which the PACE
10area is located for use in establishing the lien and collecting
11the assessment.
12    (b) Installments of assessments due under a program may be
13included in each tax bill issued under the Property Tax Code
14and may be collected at the same time and in the same manner as
15taxes collected under the Property Tax Code. Alternatively,
16installments may be billed and collected as provided in a
17special assessment ordinance of general applicability adopted
18by the local unit of government pursuant to State law or local
19charter. In no event will partial payment of an assessment be
21(Source: P.A. 100-77, eff. 8-11-17.)
22    (50 ILCS 50/35)
23    Sec. 35. Bonds.
24    (a) A local unit of government may issue bonds under this
25Act or the Special Assessment Supplemental Bond and Procedures



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1Act, or the Authority may issue bonds under subsection (d) of
2Section 825-65 of the Illinois Finance Authority Act upon
3assignment of the assessment contracts securing such bonds by
4the local unit of government to the Authority, in either case
5to finance energy projects under a property assessed clean
6energy program. Interim financing prior to the issuance of
7bonds authorized by this Section may be provided only by a
8warehouse fund, except that warehouse funds established by a
9warehouse lender may only hold assessment contracts for 36
10months or less.
11    (b) Bonds issued under subsection (a) shall not be general
12obligations of the local unit of government or the Authority,
13but shall be secured by the following as provided by the
14governing body in the resolution or ordinance approving the
16        (1) payments of assessments on benefited property
17    within the PACE area or areas specified; and
18        (2) if applicable, revenue sources or reserves
19    established by the local unit of government or the
20    Authority from bond proceeds or other lawfully available
21    funds.
22    (c) A pledge of assessments, funds, or contractual rights
23made by a governing body in connection with the issuance of
24bonds by a local unit of government under this Act constitutes
25a statutory lien on the assessments, funds, or contractual
26rights so pledged in favor of the person or persons to whom the



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1pledge is given, without further action by the governing body.
2The statutory lien is valid and binding against all other
3persons, with or without notice.
4    (d) Bonds of one series issued under this Act may be
5secured on a parity with bonds of another series issued by the
6local unit of government or the Authority pursuant to the terms
7of a master indenture or master resolution entered into or
8adopted by the governing body of the local unit of government
9or the Authority.
10    (e) Bonds issued under this Act are subject to the Bond
11Authorization Act and the Registered Bond Act.
12    (f) Bonds issued under this Act further essential public
13and governmental purposes, including, but not limited to,
14reduced energy costs, reduced greenhouse gas emissions,
15economic stimulation and development, improved property
16valuation, and increased employment.
17    (g) A program administrator can assign its rights to
18purchase the bonds to a third party (the "bond purchaser").
19    (h) A program administrator shall retain a law firm shall
20be retained to give a bond opinion in connection with any bond
21issued under this Act for the benefit of the program
22administrator or bond purchaser.
23    (i) Bonds issued by the Authority under this Act and
24pursuant to subsection (d) of Section 825-65 of the Illinois
25Finance Authority Act shall not be entitled to the benefits of
26Section 825-75 of the Illinois Finance Authority Act.



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1(Source: P.A. 100-77, eff. 8-11-17.)