,i #aacth ,,congress #b;d ,session ,h4 ,r4 #dbhe ,,in ,,the ,,house ,,of ,,representatives ,march #bd1 #bjad ,mr4 ,thompson of ,california 7for himself1 ,mr4 ,king of ,new ,york1 ,mr4 ,sean ,patrick ,maloney of ,new ,york1 ,mr4 ,calvert1 ,ms4 ,matsui1 ,ms4 ,eshoo1 ,mr4 ,george ,miller of ,california1 ,mr4 ,schiff1 ,mr4 ,mc,nerney1 ,mr4 ,fitzpatrick1 and ,mr4 ,garamendi7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to facilitate ,state and local governmental entities in developing and implementing private sector job creating programs through local government financing of the installation of energy efficiency1 water conservation1 and renewable energy generation improvements on privately owned property with the financing to be repaid from assessments that may be levied on the local property tax bill1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,,pace ,assessment ,protection ,act of #bjad4 #b4 ,findings and purpose 7a7 ,congressional findings ,the ,congress finds that the legislatures of #ca ,states and the ,district of ,columbia have determined that there exist job creation benefits1 other economic benefits1 and significant other public benefits from the installation of improvements encouraged by local government finance programs1 and have therefore enacted legislation authorizing their ,state and local governments to develop and implement programs under which such ,state and local governments finance the installation of the improvements on private property and the property owners may pay the financing costs on the property tax bill4 ,such legislatures include ,arkansas1 ,california1 ,colorado1 ,connecticut1 ,florida1 ,georgia1 ,hawaii1 ,illinois1 ,louisiana1 ,maine1 ,maryland1 ,massachusetts1 ,michigan1 ,minnesota1 ,missouri1 ,nevada1 ,new ,hampshire1 ,new ,jersey1 ,new ,mexico1 ,new ,york1 ,north ,carolina1 ,ohio1 ,oklahoma1 ,oregon1 ,pennsylvania1 ,texas1 ,utah1 ,vermont1 ,virginia1 ,washington1 ,,dc1 ,wisconsin1 and ,wyoming4 7b7 ,purpose ,it is the purpose of this ,act to ensure that ,,pace programs which incorporate prudent programmatic safeguards to protect the interest of mortgage holders and property owners remain viable as a potential avenue for ,states and local governments to achieve the many public benefits associated with energy efficiency1 water efficiency1 and renewable energy retrofits4 ,in addition1 it is essential that the power and authority of ,state and local governments to exercise their longstanding and traditional powers to levy taxes for public purposes not be impeded4 #c4 ,definitions ,for purposes of this ,act the following definitions apply3 7#a7 ,the term local government includes counties1 cities1 boroughs1 towns1 parishes1 villages1 districts1 and other political subdivisions authorized under ,state laws to establish ,,pace programs4 7#b7 ,the term ,,pace agreement means an agreement between a local government and a property owner detailing the terms of financing for a ,,pace improvement4 7#c7 ,the term ,,pace assessment means a tax or assessment levied by a local government to provide financing for ,,pace improvements4 7#d7 ,the term ,,pace improvements means qualified clean energy improvements1 qualified energy conservation and efficiency improvements1 and qualified water conservation and efficiency improvements4 7#e7 ,the term ,,pace lien means a lien1 held by a local government1 that secures a ,,pace assessment1 which may be senior to the lien of pre-existing purchase money mortgages on the same property subject to the ,,pace lien4 7#f7 ,the term ,,pace program means a program implemented by a local government under ,state law to provide financing for ,,pace improvements by levying ,,pace assessments4 7#g7 ,the term residential property means a property with up to #d private residences4 7#h7 ,the term non-residential property means private property that is-- 7,a7 not used for residential purposes2 or 7,b7 residential property with #e or more residences4 7#i7 ,the term clean energy improvements means any system on privately owned property for producing electricity for1 or meeting heating1 cooling1 or water heating needs of the property1 using renewable energy sources1 combined heat and power systems1 or energy systems using wood biomass 7but not construction and demolition waste7 or natural gas4 ,such improvements include solar photovoltaic1 solar thermal1 wood biomass1 wind1 and geothermal systems4 ,such term includes the reasonable costs of a study undertaken by a property owner to analyze the feasibility of installing any of the improvements described in this paragraph and the cost of a warranty or insurance policy for such improvements4 7#aj7 ,the term energy conservation and efficiency improvements means measures to reduce consumption1 through conservation or more efficient use1 of electricity1 fuel oil1 natural gas1 propane1 or other forms of energy by the property1 including air sealing1 installation of insulation1 installation of heating1 cooling1 or ventilation systems1 building modification to increase the use of daylighting1 replacement of windows1 installation of energy controls or energy recovery systems1 installation of building management systems1 and installation of efficient lighting equipment1 provided that such improvements are permanently affixed to the property4 ,such term includes the reasonable costs of an audit undertaken by a property owner to identify potential energy savings that could be achieved through installation of any of the improvements described in this paragraph4 7#aa7 ,the term water conservation and efficiency improvements means measures to reduce consumption1 through conservation or more efficient use of water by the property1 including installation of low-flow toilets and showerheads1 installation of timer or timing system for hot water heaters1 and installation of rain catchment systems4 7#ab7 ,the term property owner means the owner of record of real property that is subject to a ,,pace assessment1 whether such property is zoned or used for residential1 commercial1 industrial1 or other uses4 7#ac7 ,the term qualified means1 with respect to ,,pace improvements1 that the improvements meet the criteria specified in section #e4 #d4 ,treatment of pace programs by ,,fnma and ,,fhlmc 7a7 ,lender guidance ,the ,director of the ,federal ,housing ,finance ,agency1 acting in the ,director's general supervisory capacity1 shall direct the ,federal ,national ,mortgage ,association and the ,federal ,home ,loan ,mortgage ,corporation to-- 7#a7 issue guidance1 within #cj days after the date of enactment of this ,act1 providing that the levy of a ,,pace assessment and the creation of a ,,pace lien do not constitute a default on any loan secured by a uniform instrument of ,federal ,national ,mortgage ,association or ,federal ,home ,loan ,mortgage ,corporation and do not trigger the exercise of remedies with respect to any provision of such uniform security instrument if the ,,pace assessment and the ,,pace lien meet the requirements of section #e2 7#b7 rescind any prior issued guidance or ,selling and ,servicing ,guides that are inconsistent with the provisions of paragraph 7#a72 and 7#c7 take all such other actions necessary to effect the purposes of this ,act4 7b7 ,prohibition of discrimination ,the ,director of the ,federal ,housing ,finance ,agency1 the ,comptroller of the ,currency1 the ,federal ,national ,mortgage ,association1 the ,federal ,home ,loan ,mortgage ,corporation1 the ,federal ,deposit ,insurance ,corporation1 the ,national ,credit ,union ,administration1 the ,board of ,governors of the ,federal ,reserve ,system1 and all ,federal agencies and entities chartered or otherwise established under ,federal law shall not discriminate in any manner against ,states or local governments implementing or participating in a ,,pace program1 or against any property that is obligated to pay a ,,pace assessment or is subject to a ,,pace lien1 including1 without limitation1 by-- 7#a7 prohibiting the origination1 lending1 purchasing1 or guaranteeing of loans on residential property within such jurisdiction or requiring more restrictive underwriting criteria for properties within such jurisdiction2 7#b7 except for the escrowing of funds as permitted by section #e7;g77#b71 requiring payment of ,,pace assessment amounts that are not due or that are not delinquent2 or 7#c7 applying more restrictive underwriting criteria to any property that is obligated to pay a ,,pace assessment and is subject to a ,,pace lien than any such entity would apply to such property in the event that such property were subject to a ,state or municipal tax or assessment that was not a ,,pace assessment4 #e4 ,,pace programs eligible for protection 7a7 ,in general ,a ,,pace program1 and any ,,pace assessment and ,,pace lien related to such program1 are entitled to the protections of this ,act only if the ,program meets all of the requirements under this section at the time of its establishment1 or1 in the case of any ,,pace program in effect upon the date of the enactment of this ,act1 not later than #fj days after such date of enactment4 7b7 ,consumer protections applicable to residential property ,a ,,pace program shall provide1 with respect to residential property1 for the following3 7#a7 ,property owner agreements 7,a7 ,,pace assessment ,the property owner shall agree in writing to a ,,pace assessment1 either pursuant to a ,,pace agreement or by voting in the manner specified by ,state law4 ,in the case of any property with multiple owners1 each owner or the owner's authorized representative shall execute a ,,pace agreement or vote in the manner specified by ,state law1 as applicable4 7,b7 ,payment schedule ,the property owner shall agree to a payment schedule that identifies the term over which ,,pace assessment installments will be due1 the frequency with which ,,pace assessment installments will be billed and amount of each installment1 and the annual amount due on the ,,pace assessment4 ,upon full payment of the amount of the ,,pace assessment1 including all outstanding interest and charges and any penalties that may become due1 the local government shall provide the participating property owner with a written statement certifying that the ,,pace assessment has been paid in full and the local government shall also satisfy all requirements of ,state law to extinguish the ,,pace lien4 7#b7 ,disclosures by local government ,the local government shall disclose to the participating property owner the costs and risks associated with participating in the ,,pace program1 including risks related to their failure to pay ,,pace assessments and the risk of enforcement of ,,pace liens4 ,the local government shall disclose to the property owner the effective interest rate of the ,,pace assessment1 including all program fees4 ,the local government shall clearly and conspicuously provide the property owner the right to rescind his or her decision to enter into a ,,pace assessment1 within #c days of the original transaction4 7#c7 ,confidentiality ,any personal financial information provided by a property owner to a local government or an entity administering a ,,pace program on behalf of a local government shall comply with applicable local1 ,state1 and ,federal laws governing the privacy of the information4 7c7 ,requirements applicable only to non-,residential property ,a ,,pace program shall provide1 with respect to non-residential property1 for the following3 7#a7 ,authorization by lienholders ,before entering into a ,,pace agreement with a local government or voting in favor of ,,pace assessments in the manner specified by ,state law1 the property owner shall obtain written authorization from the holders of the first mortgage on the property4 7#b7 ,,pace ,agreement 7,a7 ,terms ,the local government and the owner of the property to which the ,,pace assessment applies at the time of commencement of assessment shall enter into a written ,,pace agreement addressing the terms of the ,,pace improvement4 ,in the case of any property with multiple owners1 the ,,pace agreement shall be signed by all owners or their legally authorized representative or representatives4 7,b7 ,,pace improvements ,the property owner shall contract for ,,pace improvements1 purchase materials to be used in making such improvements1 or both1 and upon submission of documentation required by the local government1 the local government shall disburse funds to the property owner in payment for the ,,pace improvements or materials used in making such improvements4 7,c7 ,payment schedule ,the ,,pace agreement shall include a payment schedule showing the term over which payments will be due on the assessment1 the frequency with which payments will be billed and amount of each payment1 and the annual amount due on the assessment4 ,upon full payment of the amount of the assessment1 including all outstanding interest and charges and any penalties that may become due1 the local government shall provide the participating property owner with a written statement certifying that the assessment has been paid in full and the local government shall also satisfy all requirements of ,state law to extinguish the ,,pace lien4 7#c7 ,disclosures by local government ,the local government shall disclose to the participating property owners the costs and risks associated with participating in the program1 including risks related to their failure to make payments and the risk of enforcement of ,,pace liens4 7#d7 ,confidentiality ,any personal financial information provided by a property owner to a local government or an entity administering a ,,pace program on behalf of a local government shall comply with applicable local1 ,state1 and ,federal laws governing the privacy of the information4 7d7 ,public notice of ,,pace assessment ,the local government shall file a public notice of the ,,pace assessment in a manner sufficient to provide notice of the ,,pace assessment to potential lenders and potential purchasers of the property4 ,the notice shall consist of the following statement or its substantial equivalent3 ,this property is subject to a tax or assessment that is levied to finance the installation of qualifying energy and water conservation and efficiency improvements or clean energy improvements4 ,the tax or assessment may be secured by a lien that is senior to all private liens44 7e7 ,eligibility of residential property owners ,before levying a ,,pace assessment on a property1 the local government shall ensure that at least all of the following are true with respect to the property3 7#a7 ,all property taxes and any other public assessments are current4 7#b7 ,there are no involuntary liens1 such as mechanics liens1 on the property in excess of #a1jjj4 7#c7 ,no notices of default1 including property taxes and other public assessments1 have been recorded during the past three years or the property owner's period of ownership1 whichever is shorter4 7#d7 ,the property owner has not filed for or declared bankruptcy in the previous #c years4 7#e7 ,the property owner is current on all mortgage debt on the property and has not had more than one instance of property-based debt delinquency during the past #f months or the property owner's period of ownership1 whichever is shorter4 7#f7 ,the property owner or owners are the holders of record of the property4 7#g7 ,the property title is not subject to power of attorney1 easements1 or subordination agreements restricting the authority of the property owner to subject the property to a ,,pace lien4 7#h7 ,the property meets any geographic eligibility requirements established by the ,,pace program4 ,the local government may adopt additional criteria1 appropriate to ,,pace programs1 for determining whether to provide ,,pace financing to a property4 7f7 ,qualifying improvements and qualifying contractors for residential properties ,,pace improvements for residential properties shall be qualified if they meet the following criteria3 7#a7 ,u4,s4 ,department of ,energy energy star qualified products or other ,state governmental agencies qualified products ,for clean energy improvements and energy conservation and efficiency improvements1 products shall meet ,energy ,star guidelines or other similar guidelines provided by ,state governmental agencies of the applicable ,state4 7#b7 ,affixed for useful life ,the local government shall have determined the improvements are intended to be affixed to the property for the entire useful life of the improvements based on the expected useful lives of energy conservation1 efficiency1 and clean energy measures approved by the ,department of ,energy4 7#c7 ,owner improvements ,a local government may elect to provide financing for improvements made by the owner of the property1 but shall not permit the value of the owner's labor to be included in the amount financed4 7#d7 ,disbursement of payments ,a local government must require1 prior to disbursement of final payments for the financed improvements1 submission by the property owner in a form acceptable to the local government of-- 7,a7 a document signed by the property-owner requesting disbursement of funds2 7,b7 a certificate of completion1 certifying that improvements have been installed satisfactorily2 and 7,c7 documentation of all costs to be financed and copies of any required permits4 7g7 ,financing terms applicable only to residential property ,a ,,pace program shall provide1 with respect to residential property1 for the following3 7#a7 ,amount financed ,in determining the amount that may be financed by a ,,pace assessment1 the total amount of all rebates1 grants1 and other direct financial assistance received by the owner on account of the ,,pace improvements shall be deducted from the cost of the ,,pace improvements4 7#b7 ,,pace assessments ,the total amount of ,,pace assessments for a property shall not exceed #ae percent of the estimated value of the property4 ,a property owner who escrows property taxes with the holder of a mortgage on a property subject to ,,pace assessment may be required by the holder to escrow amounts due on the ,,pace assessment1 and the mortgage holder shall remit such amounts to the local government in the manner that property taxes are escrowed and remitted4 7#c7 ,owner equity ,as of the effective date of the ,,pace agreement or the vote required by ,state law1 the property owner shall have equity in the property of not less than #aj percent of the estimated value of the property calculated without consideration of the amount of the ,,pace assessment or the value of the ,,pace improvements4 7#d7 ,term of financing ,the maximum term of financing provided for a ,,pace improvement may be #be years4 ,the term shall in no case exceed the weighted average expected useful life of the ,,pace improvement or improvements4 ,expected useful lives used for all calculations under this paragraph shall be consistent with the expected useful lives of energy conservation and efficiency and clean energy measures approved by the ,department of ,energy or the ,internal ,revenue ,service4 7h7 ,collection and enforcement ,a ,,pace program shall provide that-- 7#a7 ,,pace assessments shall be collected in the manner specified by ,state law2 7#b7 ,,pace assessment installments that are not due may not be accelerated by foreclosure2 and 7#c7 payment of a ,,pace assessment installment from any loss reserve that may be established for a ,,pace program shall not relieve a participating property owner from the obligation to pay that amount4