2013 -- H 6019 SUBSTITUTE A

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LC02321/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - PROPERTY ASSESSED CLEAN

ENERGY - RESIDENTIAL PROGRAM

     Introduced By: Representative Arthur Handy

     Date Introduced: April 24, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 39 of the General Laws entitled "PUBLIC UTILITIES AND

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CARRIERS" is hereby amended by adding thereto the following chapter:

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     CHAPTER 26.5

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PROPERTY ASSESSED CLEAN ENERGY - RESIDENTIAL PROGRAM

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     39-26.5-1. Legislative findings. -- It is hereby found and declared:

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     (1) Investing in energy efficiency and renewable energy improvements is financially

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beneficial over time, as well as good for the environment;

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     (2) Upfront costs are a barrier to investments in major energy improvements;

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     (3) There are few financing options available that combine easy qualification, an

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attractive interest rate, and a relatively long repayment term;

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     (4) Property-Assessed Clean Energy, hereinafter referred to as PACE, is a voluntary

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financing mechanism which allows homeowners to access affordable, long-term financing for

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energy upgrades to their property;

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     (5) PACE financing offers incremental special assessment payments that are low and

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fixed for up to twenty (20) years, with no upfront costs; the PACE special assessment fees

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transfer to the new owner when a property is sold, or the assessment obligation can be paid in full

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at transfer; and electricity and fuel bills are lower than they would be without the improvements;

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and

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     (6) PACE financing will allow Rhode Island cities and towns to contribute in order to

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help meet community sustainability, greenhouse gas emissions reductions, and energy goals and

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will provide a valuable service to the citizens of their communities.

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     39-26.5-2. Definitions. – As used in this chapter, the following definitions apply:

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     (1) "Dwelling" means a residential structure or mobile home which contains one to four

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(4) family housing units, or individual units of condominiums or cooperatives.

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     (2) "Eligible net metering system" means a facility generating electricity as defined in

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section 39-26.4-2.

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     (3) "Eligible renewable energy resources" means resources as defined in section 39-26-5.

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     (4) "Energy efficiency projects" means those projects that are eligible under section 39-1-

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27.7 or projects that have been defined as eligible in the PACE rules and regulations.

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     (5) "Loan loss reserve fund (LRF)" means funds set aside to cover losses in the event of

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loan defaults.

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     (6) "Municipality and towns and cities" means any Rhode Island town or city with

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powers set forth in title 45 of the general laws.

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     (7) "Net metering" means using electricity as defined in section 39-26.4-2.

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     (8) "Office of energy resources" or "office" means the Rhode Island office of energy

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resources within the department of administration.

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     (9) "PACE assessment" means the special assessment placed on a PACE property in

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accordance with section 39-26.5-4.

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     (10) "PACE municipality" means a municipality voluntarily designated by its city or

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town council as a property-assessed clean energy municipality.

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     (11) "PACE property" means any property which is the subject of a written agreement

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entered into pursuant to section 39-26.5-4.

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     (12) "Project" means a distinct installation of an eligible energy efficiency system or

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eligible renewable energy net metering system.

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     (13) "Property-Assessed Clean Energy" is a means for qualifying homeowners to finance

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energy efficiency and renewable energy improvements to their property.

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     39-26.5-3. Property-assessed clean energy municipality. -- A town or city council by

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resolution may designate the municipality as a property-assessed clean energy municipality, also

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referred to as a "PACE municipality."

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     39-26.5-4. Written agreements, consent of dwelling owners, energy savings analysis.

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-- After January 1, 2014, a PACE municipality may enter into a written agreement with any

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dwelling owner within the municipality who has:

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     (1) An energy savings analysis approved by the office or an analysis performed under

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plans approved by the commission pursuant to section 39-1-27.7;

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     (2) An energy efficiency and/or renewable energy project description approved by the

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office; and

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     (3) A commitment from a financial institution to provide funds to complete the project.

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     The agreement will require the dwelling owner to consent to be subject to the terms of the

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lien as set forth in section 39-26.5-6.

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     39-26.5-5. Rights of dwelling owners. -- A dwelling owner who has entered into a

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written agreement with a municipality under section 39-26.5-4 may enter into a contract for the

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installation or construction of a project relating to renewable energy as defined in section 39-26-

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5, or relating to energy efficiency as defined in section 39-1-27.7 or as defined by the office under

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subsection 39-26.5-8(a).

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     39-26.5-6. Priority of PACE assessment lien. -- (a) A lien for a PACE assessment shall

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be: subordinate to all liens on the property in existence at the time the lien for the assessment is

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filed; subordinate to a first mortgage on the property recorded after such filing; and superior to

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any other lien on the property recorded after such filing. This subsection shall not affect the status

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or priority of any other municipal or statutory lien;

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     (b) At the time of a transfer of property ownership, including foreclosure, the past due

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balances of any special assessment under this chapter shall be due for payment. In the event of a

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foreclosure action, the past due balances shall include all payments on a PACE assessment that

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are due and unpaid as of the date of the foreclosure. Unless otherwise agreed, all payments on the

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PACE assessment that become due after the date of transfer by foreclosure or otherwise shall

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remain a lien on the PACE property and shall be the responsibility of the transferee.

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     39-26.5-7. Loan loss reserve fund. -- (a) The office shall contract with an approved

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financial institution to create a Loan Loss Reserve Fund, (LRF).

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     (b) In the event that there is a foreclosure of a PACE property and the proceeds resulting

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from a foreclosure are insufficient to pay the past due balances on the PACE assessment, after all

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superior liens have been satisfied, then payment from the LRF shall be made from the LRF in the

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amount of the past due balances on the PACE assessment. The LRF shall be administered by the

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financial institution selected by the office, with the office providing oversight of the LRF.

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     39-26.5-8. Assistance to municipalities. -- The office shall:

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     (1) Commencing on/or before July 1, 2014 and thereafter, publish on its website a list of

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the types of eligible energy efficiency and renewable energy projects; and

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     (2) Provide information concerning implementation of this chapter to each municipality

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that requests such information;

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     (3) Offer administrative and technical assistance to and offer to manage the PACE

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program on behalf of any PACE municipality that voluntarily participates in the PACE program;

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and

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     (4) Develop and offer informational resources to help residents make best use of the

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PACE program.

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     39-26.5-9. Monitoring, reporting, compliance, underwriting criteria. -- The office

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shall determine compliance with the underwriting criteria, standards, and procedures established

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within this chapter and shall include an accounting of the PACE program in the annual report due

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on April 15th of each year to the general assembly under subsection 39-2-1.2(k). The report shall

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describe the implementation and operation of the PACE program including program receipts,

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disbursements, and earnings.

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     39-26.5-10. Operations. -- The PACE program shall operate in accordance with all

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generally accepted banking practices and real estate practices, except as specifically stated within.

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     39-26.5-11. Rules and regulations. -- The office is authorized to promulgate necessary

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rules and regulations in order to assure that PACE programs shall be successfully instituted in

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Rhode Island; such rules should ensure that the PACE program does not adversely affect the

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implementation of any other energy program in whose coordination the office is involved.

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     SECTION 2. This act shall take effect upon passage.

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LC02321/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - PROPERTY ASSESSED CLEAN

ENERGY - RESIDENTIAL PROGRAM

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     This act would establish a new financing program which would allow homeowners to

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access affordable, long-term financing for energy upgrades to their property.

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     This act would take effect upon passage.

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LC02321/SUB A

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