HOUSE OF REPRESENTATIVES
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO CLEAN ENERGY BONDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the initial capital investment required by property owners to install renewable energy systems and energy efficiency improvements on residential and commercial properties is a significant barrier to reaching the State's clean energy targets. Increased activity in residential and commercial projects is essential for the State to reach energy efficiency and clean energy goals. Employing innovative financing to remove known barriers and stimulate enterprise in the clean energy sector is beneficial to the public.
A Hawaii clean energy bond is a federal taxable, state tax-exempt, general obligation reimbursable bond to fund property assessed clean energy that is in the public interest. The bond proceeds will be deposited into the clean energy bond loan revolving fund under the direction of the department of business, economic development, and tourism, which will make loans to commercial and residential property owners for energy efficiency improvements and small renewable energy systems. The loans will be repaid through a special assessment of real property taxes on the borrower's property by the participating counties and remitted to the department under cooperative agreements. The liability to repay the bonds is attached to the borrower's property, rather than to the borrower.
Assisting renewable energy projects and investments in Hawaii can provide jobs, as well as long-term energy, environmental, and economic benefits. Moreover, this Act is compatible with the goals and objectives of the Hawaii clean energy initiative.
The legislature finds that the Hawaii clean energy bond loan program:
(1) Supports energy efficiency and renewable energy projects for residential and commercial structures;
(2) Provides another source of financing energy projects;
(3) Fosters energy savings;
(4) Stimulates job growth; and
(5) Is in the public interest and for the public health, safety, and general welfare of the State.
The purpose of this Act is to establish a Hawaii clean energy bond loan program.
SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
HAWAII CLEAN ENERGY BOND LOAN PROGRAM
§ -1 Definitions. As used in this chapter:
"Department" means the department of business, economic development, and tourism.
"Director" means the director of business, economic development, and tourism.
"Energy efficiency improvements":
(1) Means installation or physical modifications to property designed to reduce energy consumption;
(2) For the purposes of this chapter, do not include fixtures specific to a certain trade or appliances such as washing machines, dryers, dishwashers, non-centralized air-conditioning units, and all similar appliances; and
(3) Shall include but not be limited to the following:
(A) Air sealing and ventilation;
(C) Space heating and cooling;
(D) Solar hot water systems;
(E) Hardwired lighting;
(H) Doors and skylights;
(I) Reflective roofs; and
(J) Energy efficiency improvements to pool equipment and landscaping.
"Loan program" means the Hawaii clean energy bond loan program.
"Property owner" means the person who holds title to or is in possession of the subject real property, or the person's lessee or agent.
"Renewable energy system":
(1) Means a system that produces thermal or electrical energy from renewable sources, including units with an electrical back-up component, intended for use within the residential or commercial property on which it is located; and
(2) Shall include but not be limited to the following systems:
(A) Solar photovoltaic systems;
(B) Small wind systems with capacity to generate no more than fifty kilowatts of electricity; and
(C) Biogas systems.
§ -2 Hawaii clean energy bond loan program. Notwithstanding section 39-112, there is established the Hawaii clean energy bond loan program which shall be administered by the director.
§ -3 Hawaii clean energy bond loan revolving fund. (a) There is established the Hawaii clean energy bond loan revolving fund, into which shall be deposited:
(1) Proceeds from the issuance of general obligation reimbursable bonds that are deposited into the revolving fund;
(2) Repayments of moneys loaned from the revolving fund and interest earned on those moneys;
(3) Moneys received from the operation of the loan program;
(4) Appropriations made by the legislature to the revolving fund;
(5) Interest earned from the investment of moneys in the revolving fund; and
(6) Any moneys received from grants.
(b) Moneys in the Hawaii clean energy bond loan revolving fund shall be used for the following purposes:
(1) To make loans to residential and commercial property owners for energy efficiency improvements and renewable energy systems;
(2) To repay any debt service on the general obligation reimbursable bonds, the proceeds of which are deposited into the revolving fund; and
(3) For administrative expenses relating to the operation of the fund and the loan program.
§ -4 Powers. The director may:
(1) Enter into contracts relating to the operation of the loan program including administering the loan program; and
(2) Perform all functions necessary to effectuate the purposes of this chapter.
§ -5 Rules. The department shall adopt rules pursuant to chapter 91 to carry out the purposes of this chapter, including the following:
(1) Prescribing the qualifications for eligibility of applicants for loans;
(2) Establishing preferences and priorities in determining eligibility for loans;
(3) Establishing the conditions, consistent with the purposes of this chapter, for the granting of or for the continuance of a grant of a loan;
(4) Providing for inspection at reasonable hours of the structures, equipment, books, and records of the entity that has applied for or has been granted a loan, and requiring the submission of reports as may be requested by the department; and
(5) Establishing rates and charges for the operation of the loan program.
§ -6 Loans. (a) The department may make loans to qualifying commercial and residential property owners for energy efficiency improvements and small renewable energy systems in a participating county. A participating county is a county that has agreed to take part in the loan program by taking the legal action as is necessary under its real property tax system to levy upon a property benefited by the loan a special assessment of an amount necessary to repay each loan financed under the loan program. The participating county shall remit the moneys to the Hawaii clean energy bond loan revolving fund and shall receive reasonable compensation for its services.
(b) The loan repayment charge may include the amount of the loan, interest on the loan, and the costs incurred by the department to implement and administer the loan program.
(c) The loans shall be subject to the terms and conditions specified in rules adopted by the department.
(d) The department shall record a lien on the property benefited by the loan. The lien shall attach to the property on which the installation or improvements pursuant to this chapter were made.
(e) Notwithstanding any law to the contrary, if the director determines that the department is unable to issue a sufficient number of loans to offset the reasonable cost to the department of operating the loan program, the director may delay or suspend the loan program in one or more participating counties or may delay or suspend any feature of the loan program.
§ -7 Liens. The lien recorded pursuant to section -6(d) shall relate to and take effect from the date of completion of all contracted improvements, installations, and operations undertaken by the property owner in accordance with this chapter."
SECTION 3. Purpose. This part shall govern, with respect to the Hawaii clean energy bond loan program, the practice and procedure before the State, program administrator, department of business, economic development, and tourism, and the department of budget and finance and shall be construed to promote increased activity in residential and commercial renewable energy projects, stimulate the State's clean energy sector, reach energy efficiency and clean energy goals, increase energy security, encourage economic diversification, provide increased career opportunities for Hawaii residents, and attract funding and investment into the State. The Hawaii clean energy bond loan program shall begin on July 1, 2010 and no loans will be issued after December 31, 2030. The purpose of this part is to clarify the role of the program administrator and the program application processes for counties and applicants.
SECTION 4. Definitions. In addition to the definitions contained in part II of this Act, the following definitions shall apply to this part:
"Commercial properties" and "residential properties" mean those properties as defined by the county code for the particular county in which the property is located and do not fall under the category of facilities.
"Days" means business days.
SECTION 5. Program administrator. The powers and duties of the program administrator or "administrator" are as contained in this part. The administrator shall be selected through a competitive bidding process pursuant to chapter 103D, Hawaii Revised Statutes. The administrator shall have the authority to hire private subcontractors for the purposes of energy inspections and audits. The administrator shall:
(1) Establish criteria and procedures for the qualification of technologies and systems, perform energy inspections and audits, including identifying the energy efficiency improvements and renewable energy systems that qualify for the loan program financing, and develop appropriate procedures for the qualification of these improvements and systems;
(2) Calculate a property's current energy consumption and energy costs when an application is submitted by the property owner, and estimate the potential cost benefits that could be realized through energy efficiency improvements or installation of renewable energy systems on the subject property;
(3) Provide education and training on energy efficiency improvements to applicants, including education and training on the selection and use of improvements to maximize energy efficiency;
(4) Prescribe loan repayment periods and provide projected property tax assessment estimates when the applicant opts to take advantage of the financing made available under this Act, including establishing deadlines for loan repayments and providing applicant property owners the projected property tax assessment estimates that will be due and collected along with the ad valorem property tax bill; provided that the length of time allowed for the property owner to repay the assessment shall not exceed the life expectancy of the systems or improvements; provided further that where multiple systems or improvements have been installed, the length of time shall not exceed the average lifetime of all projects, weighted by cost;
(5) Assist the counties with administrative duties related to the execution of this Act, including:
(A) Initiation and authorship of any and all written agreements between participating property owners and the counties or funding institutions;
(B) Public outreach and program promotion within the counties, including community informational briefings and making available information related to the program; and
(C) Any revision to existing county documents and systems needed to efficiently collect property tax assessment payments from property owners;
(6) Distribute state bond proceeds appropriated for this program to participating property owners, private contractors, or funding institutions, including responsibility for ensuring loan repayment to the State from revenues generated by participating county property tax assessments under this part; and
(7) Collect, compile, and report all data and information relating to the loan program to the State, department, and the department of budget and finance; provided that the criteria, qualifications and procedures, and lifetimes of projects described in paragraphs (1) and (3) shall be determined with approval from the department.
SECTION 6. Program application requirements for counties. (a) Local ordinance requirement. For a county to access funding generated by the sale of bonds issued by the State, the county shall voluntarily agree to participate in the State's loan program by enacting an ordinance or other legally binding action. Subsequently, county officials shall develop a report, which shall be submitted to the department for approval.
(b) County report. County reports shall include:
(1) A draft contract agreement between participating property owners and the county government;
(2) A list of eligible distributed renewable energy systems;
(3) A list of eligible energy-efficiency improvements;
(4) A designated county official who is authorized to enter into contractual assessments on behalf of the county;
(5) A maximum aggregate dollar amount for any contractual assessments;
(6) A method for prioritizing applications or requests in the event that applications exceed the authorization amount;
(7) A plan for dispersing the capital amount required to pay for work performed pursuant to contractual assessments; and
(8) An accounting of any costs incidental to the financing, administration, and collection of the contractual assessment for the county.
(c) Real property assessments and payments to the State. The applicable portion of property assessment payments from the affected properties within the participating county or counties, upon agreement between the State and the county or counties, shall be applied to service the State debt on the bonds issued pursuant to this Act.
SECTION 7. Program application process for property owners. (a) Properties with existing public liens are not eligible for the loan program. The department may grant exemptions to this restriction on a case-by-case basis upon request from the applicant. Properties that are valued at less than the total amount owed to the mortgage lender are not eligible for the loan program. All subsequent liens placed on the subject property after loan funds have been dispersed pursuant to this Act shall be subordinate. The loan applicant shall possess title for the subject property as well as documentation to prove timely mortgage payments if applicable.
(b) Loan application prerequisites. The department, in consultation with the administrator, shall establish eligibility criteria for site inspections and individuals or entities wishing to conduct site inspections. An onsite energy inspection to determine total monthly energy consumption and estimated potential energy savings is required for projects valued at more than five per cent of the total value of the subject property in order to participate in the program. Onsite energy inspections or audits may be performed by private contractors subcontracted by the administrator or by persons employed by the administrator; provided that they meet the criteria established by the department. The department retains the authority to conduct onsite energy inspections for any and all applications if deemed necessary by the director.
(c) Loan application review process. The administrator, or in the case of projects valued at $100,000 or more, the department, shall accept the loan application so long as it is complete and complies with the loan application prerequisites and application process of this part. If the loan application is accepted, the loan application reviewer shall notify the applicant of acceptance in writing within thirty days. If the loan application does not meet the requirements of this part, the loan application reviewer shall provide the applicant with a written report of the reasons why the loan application is incomplete not more than thirty days from the submission of the loan application. The loan application shall be approved or denied not more than ninety days from the date of acceptance, and the loan applicant shall be informed of the action in writing not more than thirty days from the day the action is taken on the loan application.
(d) Loan disbursement. Once a loan is approved, the loan applicant will have thirty days upon receipt of the acceptance to either agree or reject the terms of the loan. If the loan applicant agrees to the terms of the loan then the financial institution handling the applicable loan program funds will disburse the appropriate amount to the businesses hired to perform contractually agreed upon services.
(e) Loan repayment. Loans are repaid through a special assessment on real property tax bills. The liability to repay the loan is attached to the property as an assessment on real property. The participating county in which the assessed property is located is responsible for repayment to the State, but shall not be held liable in the event of default on said loans. Loans for amounts over $5,000 may be repaid over a period of ten to twenty years, at the program administrator's discretion. The length of time allowed for the property owner to repay the assessment shall not exceed the life expectancy of the systems or improvements. Where multiple systems or improvements have been installed, the length of time for the property owner to repay the loan shall not exceed the average lifetime of all projects, weighted by cost. Projects valued at $100,000 or more shall require approval by the department. A loan pursuant to this Act shall not exceed $250,000.
(f) Loan re-application. If a loan application is denied, the applicant may re-apply for the denied loan only if the problems that were grounds for denial under the preceding loan application have been remedied.
SECTION 8. The director of finance is authorized to issue general obligation reimbursable bonds in the sum of $50,000,000 or so much thereof as may be necessary and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2010-2011 for deposit into the Hawaii clean energy bond loan revolving fund.
The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.
SECTION 9. This Act does not in any way prohibit or limit the counties' authority to institute a similar financing program for and within their respective county, independent of State partnership or involvement.
SECTION 10. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
SECTION 11. This Act shall take effect on July 1, 2010; provided that part III shall be repealed upon the adoption of administrative rules in accordance with chapter 91, Hawaii Revised Statutes, by the department of business, economic development, and tourism to effectuate part II of this Act.
Bond Loan; Clean Energy
Establishes a clean energy bond loan program for renewable energy systems and energy efficiency improvements on residential and commercial properties; authorizes the issuance of general obligation reimbursable bonds to finance the program; establishes laws to implement the program which shall be repealed upon the adoption of administrative rules. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.