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


Sen. Karen McConnaughay

Filed: 4/17/2018





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2    AMENDMENT NO. ______. Amend Senate Bill 2773 by replacing
3everything after the enacting clause with the following:
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.



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1    "Authority" means the Illinois Finance Authority.
2    "PACE area" means an area within the jurisdictional
3boundaries of a local unit of government created by an
4ordinance or resolution of the local unit of government to
5provide financing for energy projects under a property assessed
6clean energy program. A local unit of government may create
7more than one PACE area under the program, and PACE areas may
8be separate, overlapping, or coterminous.
9    "Energy efficiency improvement" means equipment, devices,
10or materials intended to decrease energy consumption or promote
11a more efficient use of electricity, natural gas, propane, or
12other forms of energy on property, including, but not limited
13to, all of the following:
14        (1) insulation in walls, roofs, floors, foundations,
15    or heating and cooling distribution systems;
16        (2) storm windows and doors, multi-glazed windows and
17    doors, heat-absorbing or heat-reflective glazed and coated
18    window and door systems, and additional glazing,
19    reductions in glass area, and other window and door system
20    modifications that reduce energy consumption;
21        (3) automated energy control systems;
22        (4) high efficiency heating, ventilating, or
23    air-conditioning and distribution system modifications or
24    replacements;
25        (5) caulking, weather-stripping, and air sealing;
26        (6) replacement or modification of lighting fixtures



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1    to reduce the energy use of the lighting system;
2        (7) energy controls or recovery systems;
3        (8) day lighting systems; and
4        (8.1) any energy efficiency project, as defined in
5    Section 825-65 of the Illinois Finance Authority Act; and
6        (9) any other installation or modification of
7    equipment, devices, or materials approved as a utility
8    cost-savings measure by the governing body.
9    "Energy project" means the installation or modification of
10an alternative energy improvement, energy efficiency
11improvement, or water use improvement, or the acquisition,
12installation, or improvement of a renewable energy system that
13is affixed to a stabilized existing property (including not new
15    "Governing body" means the county board or board of county
16commissioners of a county, the city council of a city, or the
17board of trustees of a village.
18    "Local unit of government" means a county, city, or
20    "Permitted assignee" means (i) any body politic and
21corporate, (ii) any bond trustee, or (iii) any warehouse
22lender, or any other assignee of a local unit of government
23designated in an assessment contract.
24    "Person" means an individual, firm, partnership,
25association, corporation, limited liability company,
26unincorporated joint venture, trust, or any other type of



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1entity that is recognized by law and has the title to or
2interest in property. "Person" does not include a local unit of
3government or a homeowner's or condominium association, but
4does include other governmental entities that are not local
5units of government.
6    "Program administrator" means a for-profit entity or
7not-for profit entity that will administer a program on behalf
8of or at the discretion of the local unit of government. It or
9its affiliates, consultants, or advisors shall have done
10business as a program administrator or capital provider for a
11minimum of 18 months and shall be responsible for arranging
12capital for the acquisition of bonds issued by the local unit
13of government or the Authority to finance energy projects.
14    "Property" means privately-owned commercial, industrial,
15non-residential agricultural, or multi-family (of 5 or more
16units) real property located within the local unit of
17government, but does not include property owned by a local unit
18of government or a homeowner's or condominium association.
19    "Property assessed clean energy program" or "program"
20means a program as described in Section 10.
21    "Record owner" means the person who is the titleholder or
22owner of the beneficial interest in property.
23    "Renewable energy resource" includes energy and its
24associated renewable energy credit or renewable energy credits
25from wind energy, solar thermal energy, photovoltaic cells and
26panels, biodiesel, anaerobic digestion, and hydropower that



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1does not involve new construction or significant expansion of
2hydropower dams. For purposes of this Act, landfill gas
3produced in the State is considered a renewable energy
4resource. The term "renewable energy resources" does not
5include the incineration or burning of any solid material.
6    "Renewable energy system" means a fixture, product,
7device, or interacting group of fixtures, products, or devices
8on the customer's side of the meter that use one or more
9renewable energy resources to generate electricity, and
10specifically includes any renewable energy project, as defined
11in Section 825-65 of the Illinois Finance Authority Act.
12    "Warehouse fund" means any fund established by a local unit
13of government, body politic and corporate, or warehouse lender.
14    "Warehouse lender" means any financial institution
15participating in a PACE area that finances an energy project
16from lawfully available funds in anticipation of issuing bonds
17as described in Section 35.
18    "Water use improvement" means any fixture, product,
19system, device, or interacting group thereof for or serving any
20property that has the effect of conserving water resources
21through improved water management or efficiency.
22(Source: P.A. 100-77, eff. 8-11-17.)
23    (50 ILCS 50/10)
24    Sec. 10. Property assessed clean energy program; creation.
25    (a) Pursuant to the procedures provided in Section 15, a



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1local unit of government may establish a property assessed
2clean energy program and, from time to time, create a PACE area
3or areas under the program.
4    (b) Under a program, the local unit of government may enter
5into an assessment contract with the record owner of property
6within a PACE area to finance or refinance one or more energy
7projects on the property. The assessment contract shall provide
8for the repayment of the cost of an energy project through
9assessments upon the property benefited. The financing or
10refinancing may include any and all of the following: the cost
11of materials and labor necessary for installation, permit fees,
12inspection fees, application and administrative fees, bank
13fees, and all other fees that may be incurred by the record
14owner pursuant to the installation and the issuance of bonds on
15a specific or pro rata basis, as determined by the local unit
16of government and may also include a prepayment premium.
17    (b-5) A local unit of government may sell or assign, for
18consideration, any and all assessment contracts; the permitted
19assignee of the assessment contract shall have and possess the
20same powers and rights at law or in equity as the applicable
21local unit of government and its tax collector would have if
22the assessment contract had not been assigned with regard to
23(i) the precedence and priority of liens evidenced by the
24assessment contract, (ii) the accrual of interest, and (iii)
25the fees and expenses of collection. The permitted assignee
26shall have the same rights to enforce such liens as any private



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1party holding a lien on real property, including, but not
2limited to, foreclosure. Costs and reasonable attorney's fees
3incurred by the permitted assignee as a result of any
4foreclosure action or other legal proceeding brought pursuant
5to this Section and directly related to the proceeding shall be
6assessed in any such proceeding against each record owner
7subject to the proceedings. Such costs and fees may be
8collected by the assignee at any time after demand for payment
9has been made by the permitted assignee.
10    (c) A program may be administered by one or more a program
11administrators administrator or the local unit of government.
12(Source: P.A. 100-77, eff. 8-11-17.)
13    (50 ILCS 50/15)
14    Sec. 15. Program established.
15    (a) To establish a property assessed clean energy program,
16the governing body of a local unit of government shall adopt a
17resolution or ordinance that includes all of the following:
18        (1) a finding that the financing of energy projects is
19    a valid public purpose;
20        (2) a statement of intent to facilitate access to
21    capital (which may be from one or more a program
22    administrators) administrator to provide funds for energy
23    projects, which will be repaid by assessments on the
24    property benefited with the agreement of the record owners;
25        (3) a description of the proposed arrangements for



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1    financing the program, which may be through one or more a
2    program administrators administrator;
3        (4) the types of energy projects that may be financed;
4        (5) a description of the territory within the PACE
5    area;
6        (6) reference to a report on the proposed program as
7    described in Section 20; and
8        (7) the time and place for a any public hearing to be
9    held by the local unit of government if required for the
10    adoption of the proposed program by resolution or
11    ordinance;
12        (8) matters required by Section 20 to be included in
13    the report; for this purpose, the resolution or ordinance
14    may incorporate the report or an amended version thereof by
15    reference; and
16        (9) a description of which aspects of the program may
17    be amended without a new public hearing and which aspects
18    may be amended only after a new public hearing is held.
19    (b) A property assessed clean energy program may be amended
20by resolution or ordinance of the governing body. Adoption of
21the resolution or ordinance shall be preceded by a public
22hearing if required.
23(Source: P.A. 100-77, eff. 8-11-17; revised 10-3-17.)
24    (50 ILCS 50/20)
25    Sec. 20. Report. The report on the proposed program



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1required under Section 15 shall include all of the following:
2        (1) a form of assessment contract between the local
3    unit of government and record owner governing the terms and
4    conditions of financing and assessment under the program.
5        (2) identification of an official authorized to enter
6    into an a assessment contract on behalf of the local unit
7    of government;
8        (3) a maximum aggregate annual dollar amount for all
9    financing to be provided by the applicable program
10    administrator under the program;
11        (4) an application process and eligibility
12    requirements for financing energy projects under the
13    program;
14        (5) a method for determining interest rates on
15    assessment installments, repayment periods, and the
16    maximum amount of an assessment;
17        (6) an explanation of how assessments will be made and
18    collected;
19        (7) a plan to raise capital to finance improvements
20    under the program pursuant to the sale of bonds, subject to
21    this Act or the Special Assessment Supplemental Bond and
22    Procedures Act, or alternatively, through the sale of bonds
23    by the Authority pursuant to subsection (d) of Section
24    825-65 of the Illinois Finance Authority Act to a program
25    administrator;
26        (8) information regarding all of the following, to the



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1    extent known, or procedures to determine the following in
2    the future:
3            (A) any revenue source or reserve fund or funds to
4        be used as security for bonds described in paragraph
5        (7); and
6            (B) any application, administration, or other
7        program fees to be charged to record owners
8        participating in the program that will be used to
9        finance costs incurred by the local unit of government
10        as a result of the program;
11        (9) a requirement that the term of an assessment not
12    exceed the useful life of the energy project paid for by
13    the assessment; provided that the local unit of government
14    may allow projects that consist of multiple improvements
15    with varying lengths of useful life to have a term that is
16    no greater than the improvement with the longest useful
17    life;
18        (10) a requirement for an appropriate ratio of the
19    amount of the assessment to the assessed value of the
20    property or market value of the property as determined by a
21    recent appraisal no older than 12 months;
22        (11) a requirement that the record owner of property
23    subject to a mortgage obtain written consent from the
24    mortgage holder before participating in the program;
25        (12) provisions for marketing and participant
26    education;



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1        (13) provisions for an adequate debt service reserve
2    fund, if any; and
3        (14) quality assurance and antifraud measures.
4(Source: P.A. 100-77, eff. 8-11-17.)
5    (50 ILCS 50/25)
6    Sec. 25. Contracts with record owners of property.
7    (a) After creation of a program and PACE area, a record
8owner of property within the PACE area may apply with the local
9unit of government or its program administrator or
10administrators for funding to finance an energy project.
11    (b) A local unit of government may impose an assessment
12under a property assessed clean energy program only pursuant to
13the terms of a recorded assessment contract with the record
14owner of the property to be assessed.
15    (c) Before entering into an assessment contract with a
16record owner under a program, the local unit of government
17shall verify all of the following:
18        (1) that the property is within the PACE area;
19        (2) that there are no delinquent taxes, special
20    assessments, or water or sewer charges on the property;
21        (3) that there are no delinquent assessments on the
22    property under a property assessed clean energy program;
23        (4) there are no involuntary liens on the property,
24    including, but not limited to, construction or mechanics
25    liens, lis pendens or judgments against the record owner,



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1    environmental proceedings, or eminent domain proceedings;
2        (5) that no notices of default or other evidence of
3    property-based debt delinquency have been recorded and not
4    cured;
5        (6) that the record owner is current on all mortgage
6    debt on the property, the record owner has not filed for
7    bankruptcy in the last 2 years, and the property is not an
8    asset to a current bankruptcy.
9        (7) all work requiring a license under any applicable
10    law to make a qualifying improvement shall be performed by
11    a registered contractor that has agreed to adhere to a set
12    of terms and conditions through a process established by
13    the local unit of government.
14        (8) the contractors to be used have signed a written
15    acknowledgement that the local unit of government will not
16    authorize final payment to the contractor until the local
17    unit of government has received written confirmation from
18    the record owner that the improvement was properly
19    installed and is operating as intended; provided, however,
20    that the contractor retains all legal rights and remedies
21    in the event there is a disagreement with the owner;
22        (9) that the amount of the assessment in relation to
23    the greater of the assessed value of the property or the
24    appraised value of the property, as determined by a
25    licensed appraiser, does not exceed 25%; and
26        (10) a requirement that an assessment of the existing



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1    water or energy use and a modeling of expected monetary
2    savings have been conducted for any proposed project.
3    (d) At least 30 days before entering into an assessment
4contract agreement with the local unit of government, the
5record owner shall provide to the holders or loan servicers of
6any existing mortgages encumbering or otherwise secured by the
7property a notice of the record owner's intent to enter into an
8assessment contract with the local unit of government, together
9with the maximum principal amount to be financed and the
10maximum annual assessment necessary to repay that amount, along
11with a request that the holders or loan servicers of any
12existing mortgages consent to the record owner subjecting the
13property to the program. A verified copy or other proof of
14those notices and the written consent of the existing mortgage
15holder for the record owner to enter into the assessment
16contract and acknowledging that the existing mortgage will be
17subordinate to the financing and assessment agreement and that
18the local unit of government or its permitted assignee can
19foreclose the property if the assessment is not paid shall be
20provided to the local unit of government.
21    (e) A provision in any agreement between a local unit of
22government and a public or private power or energy provider or
23other utility provider is not enforceable to limit or prohibit
24any local unit of government from exercising its authority
25under this Section.
26    (f) The record owner has signed a certification that the



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1local unit of government has complied with the provisions of
2this Section, which shall be conclusive evidence as to
3compliance with these provisions, but shall not relieve any
4contractor, or local unit of government, from any potential
6    (g) This Section is additional and supplemental to county
7and municipal home rule authority and not in derogation of such
8authority or limitation upon such authority.
9    (h) The imposition of any assessment pursuant to this Act
10shall be exempt from any other statutory procedures or
11requirements that condition the imposition of assessments or
12other taxes against a property, except as set forth in this
14(Source: P.A. 100-77, eff. 8-11-17.)
15    (50 ILCS 50/30)
16    Sec. 30. Assessments constitute a lien; billing.
17    (a) An assessment imposed under a property assessed clean
18energy program pursuant to an assessment contract, including
19any interest on the assessment and any penalty, shall, upon
20recording of the assessment contract in the county in which the
21PACE area is located, constitute a lien against the property on
22which the assessment is imposed until the assessment, including
23any interest or penalty, is paid in full. The lien of the
24assessment contract shall run with the property until the
25assessment is paid in full and a satisfaction or release for



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1the same has been recorded with the local unit of government
2and shall have the same priority and status as other property
3tax and assessment liens. The local unit of government (or any
4permitted assignee) shall have all rights and remedies in the
5case of default or delinquency in the payment of an assessment
6as it does with respect to delinquent property taxes. When the
7assessment, including any interest and penalty, is paid, the
8lien shall be removed from the property.
9    (a-5) The assessment shall be imposed by the local unit of
10government against each lot, block, track and parcel of land
11within the PACE area to be assessed in accordance with an
12assessment roll setting forth: (i) a description of the method
13of spreading the assessment; (ii) a list of lots, blocks,
14tracts and parcels of land in the PACE area; and (iii) the
15amount assessed on each parcel. The assessment roll shall be
16filed with the county clerk of the county in which the PACE
17area is located for use in establishing the lien and collecting
18the assessment.
19    (b) Installments of assessments due under a program may be
20included in each tax bill issued under the Property Tax Code
21and may be collected at the same time and in the same manner as
22taxes collected under the Property Tax Code. Alternatively,
23installments may be billed and collected as provided in a
24special assessment ordinance of general applicability adopted
25by the local unit of government pursuant to State law or local
26charter. In no event will partial payment of an assessment be



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2(Source: P.A. 100-77, eff. 8-11-17.)
3    (50 ILCS 50/35)
4    Sec. 35. Bonds.
5    (a) A local unit of government may issue bonds under this
6Act or the Special Assessment Supplemental Bond and Procedures
7Act, or the Authority may issue bonds under subsection (d) of
8Section 825-65 of the Illinois Finance Authority Act upon
9assignment of the assessment contracts securing such bonds by
10the local unit of government to the Authority, in either case
11to finance energy projects under a property assessed clean
12energy program. Interim financing prior to the issuance of
13bonds authorized by this Section may be provided only by a
14warehouse fund, except that warehouse funds established by a
15warehouse lender may only hold assessment contracts for 36
16months or less.
17    (b) Bonds issued under subsection (a) shall not be general
18obligations of the local unit of government or the Authority,
19but shall be secured by the following as provided by the
20governing body in the resolution or ordinance approving the
22        (1) payments of assessments on benefited property
23    within the PACE area or areas specified; and
24        (2) if applicable, revenue sources or reserves
25    established by the local unit of government or the



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



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1be retained to give a bond opinion in connection with any bond
2issued under this Act for the benefit of the program
3administrator or bond purchaser.
4    (i) Bonds issued by the Authority under this Act and
5pursuant to subsection (d) of Section 825-65 of the Illinois
6Finance Authority Act shall not be entitled to the benefits of
7Section 825-75 of the Illinois Finance Authority Act.
8(Source: P.A. 100-77, eff. 8-11-17.)".