Agenda Item 5C
June 28, 2016
Action
MEMORANDUM
June 24, 2016
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
AttorneYl'-~r~~hifJ
Action: Bill
18~
16, Commercial Property Assessed Clean Energy Program
Amendments
Transportation, Infrastructure, Energy and Environment Committee recommendation
(3-0): enact Bill 18-16.
Bill 18-16, Commercial Property Assessed Clean Energy Program - Amendments, sponsored by
Lead Sponsor Council President on behalf of the County Executive, was introduced on April 19,
2016. A public hearing was held on June 14; a representative from the Executive was the only
speaker (©11).
Bill 18-16 would amend the definition for commercial property, require a third-party lender to
record the loan in the County land records, and modify certain eligibility requirements for a loan
under the program. Committee recommendation (3-0): At its worksession on June 23, the
Transportation, Infrastructure, Energy and Environment Committee recommended enactment of
Bi1118-16.
This packet contains:
Bill 18-16
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statements
County Executive testimony
F:\LAW\BILLS\1618 Commercial PACE-Amendments\Action Memo_Docx
Circle #
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5
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Bill No.
18-16
Concerning: Commercial
Prooertv
Assessed Clean Energy Program ­
Amendments
Draft No.
Revised:
4/14/2016
Introduced:
April 19, 2016
Expires:
October 19,2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date:
~N~o::!.n!:::.e
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN
ACT to:
(1)
amend the definition for commercial property;
(2) require a third-party lender to record the loan
in
the County land records;
(3) modify certain eligibility requirements for a loan under the program; and
(4) generally amend County law regarding the Commercial Property Assessed Clean Energy
Program.
By amending
Montgomery County Code
Chapter
18A~
Environmental Sustainability
Article
5
Sections 18A-33, 18A-34, and 18A-35
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsD
* * *
Heading or defined term.
Addedto existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The
County Council for Montgomery County, Maryland approves thefollowing Act:
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BILL
No.
18-16
1
Sec. 1. Sections 18A-33, 18A-34, and 18A-35 are amended as follows:
Article 5. Commercial Property Assessed Clean Energy Program
18A-33. Definitions.
(a)
Definitions.
In
this Section, the following words have the meanings
2
3
4
5
6
7
indicated:
Certified General Real Estate Appraiser
means an individual who is
certified as
f!
certified real estate appraiser for general real estate under
Title 16 of the Business Occupations Article ofthe Maryland Code.
Commercial property
means any real property located in the County that
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9
10
11
is either not designed for or intended for human habitation, or that is used
for human habitation as a multi-family dwelling of [[4 or]] more than
~
rental units.
12
13
14
15
16
*
*
(b)
Third-party lender.
*
*
18A-34. Commercial Property Assessed Clean Energy program established.
*
*
17
18
19
ill
The Director may enter into an agreement with a third-party lender
that is either a County designated lender or a private lender that
funds a loan for an improvement. The agreement must provide for
the repayment of the loan for the improvement and any cost of
administering the Program through a surcharge on the qualified
property. The loan may include the cost of materials and labor
necessary for installation, any permit fee, any inspection fee, any
application or administrative fee, any bank or lender fee, and any
other fee that the property owner may incur for the installation of
the improvement. The third-party lender must submit a request for
collection of each surcharge amount to the County designated
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24
25
26
27
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BILL
No.
16-16
28
29
30
program manager or, if there is no County designated program
manager, to the Department no later than April 1 of each year.
ill
The third-party lender must record
!!
document among the land
records ofMontgomery County within 30 days ofthe time the loan
is funded, which provides notice of the Commercial Property
Assessed Clean Energy loan associated with the property and that
the surcharge
will
be collected and have lien status like all other
real property taxes.
31
32
33
34
35
36
*
18A-35. Eligibility.
*
*
37
38
39
(a)
Eligibility.
*
(4)
criteria:
*
*
40
41
42
43
44
45
The loan amount under this Program must meet the following
(A)
The loan amount must be at least $5,000 and [no] not more
than 20% ofeither the full cash value or the appraised value
oflhe qualified property. The full cash value is determined
by the Maryland State Department of Assessments and
Taxation~
46
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50
The appraised value must be determined by
!!
Certified General Real Estate Appraiser and must have been
certified no more than 12 months before the date ofthe loan
application[;
(B)
and]~
The loan amount, together with the outstanding balance of
the mortgage or deed oftrust, must be no more than 90% of
either the full cash value or the appraised value of the
qualified property.
51
52
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54
(b)
Property Assessed Clean Energy Surcharge.
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BILL
No.
18-16
55
56
57
58
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66
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70
Nancy Floreen, President, County Council
71
Approved:
Approved:
*
(3)
*
*
As a condition for entering into an agreement under the Program,
the County designated lender or private lender must provide the
County designated program manager and the Department a copy
ofthe loan documents and documents that verify:
(F)
appraised value of the qualified property as certified
in
the
appraisal report submitted
Qy
!!
Certified General Real
Estate
Appraiser if the
eligibility
requirement
in
18A-35(a)(4) is based on the appraised value of the
qualified property;
[F]
[G]
(G)
loan to value documentation; and
any other financial or program document that the
(ill
Director deems necessary.
*
*
*
Date
72
Isiah Leggett, County Executive
73
This is a correct copy o/Council action.
Date
74
Linda M. Lauer, Clerk ofthe Council
Date
G
.
F:\LAW\BILLS\1618 Conunercial PACE-Amendments\BiIll.Docx
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LEGISLATIVE REQUEST REPORT
Recommended Bill, Commercial Property Assessed Clean Energy Program - Amended
DESCRIPTION:
The requested legislation amends Article 5, Sections 33, 34 and
~5
of
Chapter 18A of the Montgomery County Code. The amended sections
correct a definition for commercial property to make it consistent with
State Law authorizing a Commercial Property Assessed Clean Energy (C­
PACE) Program;
add
a loan recordation requirement for the third-party
lender to ensure that subsequent lenders 'are given notice of the special
lien status of a C-PACE loan on the property; and modify the eligibility
requirement for a loan under this program by allowing the loan applicant
to use either the full cash value ofthe property as detennined by the State
Department of Assessments and Taxation or the appraised value of the
property as determined by a Certified General Real Estate Appraiser.
County Law governing the C-PACE program in Montgomery County was
adopted with Bi116-15 following passage of Maryland SB 186.
County Law defines that a commercial property. means a property that
is
either not designed for or intended for human habitation, or that
is
used
for human habitation as a multi-family dwelling of 4 or more rental units.
State Law requires a multi-family dwelling of more than 4 rental units.
This Bill makes that correction. The Attorney General ofMaryland noted
in an April 28, 2014 opinion on SB 186, that the lack of notification for
subsequent lenders of the special lien status of a C-PACE loan on the
property. may constitute a vjolation of both federal and Maryland
Constitutions. That opinion recommended
that
any local ordinance or
resolution implementing a C-PACE program include a notification
requirement ofthe special lien status ofthe C-PACE loan on that property
in the County's land record.
This
Bill includes that AG recommendation.
There was a concern expressed by several commercial entities interested
in participating in the County C-PACE program
that
the
full
cash value is
lower than the appraised value and thus limits their ability to take
full
advantage of the C-PACE loan program. This Bill
adds
an option for the
applicant to use either the full cash value or the appraised value of their
property.
To make the Montgomery County C-PACE program fully consistent with
.State Law, remedies possible violations of federal and State Constitutions,
and enhances access
to
the C-PACE program for loan applicants.
Deparbnent of Finance
Office of Management and Budget
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
®
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ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
Department
of
Finance
nJa
nJa
David Crow, Department
of
Finance (7-8859)
APPUCATION
WITHIN
MUNICIPALITIES:
nJa
PENALTIES:
nJa
,
.
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVlLLB, MARYLAND 20850
,
"
'
Isiah Leggett
County Executive
MEMORANDUM
April 11,2016
TO:
FROM:
SUBJECT:
Nancy Floreen, President
Montgomery County Council
Isiab
Leggett,
County Executive
-P
~
"7
~
Amended Legislation - Commercial Property Assessed Clean Energy
Program
I am hereby submitting legislation for your consideration and County
CotUlcil action. The legislation amends the County Code that established a Commercial
Property Assessed Clean Energy (C-PACE) Program.
With the adoption of Bil1 6-15 on April 8, 20] 5 Montgomery County
established the Commercial PACE Program. This amended legislation makes three
changes to the County Code by (1) correcting the definition for commercial property
to
make it consistent with State Law authorizing a Commercial PACE program, (2) adding a
loan recordation requirement for the third-party lender to ensure that subsequent lenders
are given notice of the specialJien status of a Commercial PACE loan on the property,
and (3) modifying the eligibility requirement for a loan under this program by allowing
the loan applicant to use either the full cash value ofthe property as determined by the
State Department of Assessments and Taxation or the appraised value of the property as
determined by a Certified General Real Estate Appraiser.
I urge the Council to support this legislation. My staff are available to
respond to any questions you may have on this amendment or provide clarification.
cc:
Timothy Firestine, Chief Administrative Officer
Marc Hansen, County Attorney
Joseph Beach, Director of Finance
Jennifer Hughes, Director, Office of Management and Budget
Bonnie Kirkland, Assistant Chief Administrative Officer
Attachments: Expedited Legislation; Legislative Request Report; Fiscal Impact
Statement; Economic Impact Statement
montgomeryc:ountymd.gov/311
' '
3
:~,.
'.
240-773-3556
TrY
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Fiscal Impact Statement
Bill XX-16, Commercial Property Assessed
Clean Energy Program - Amended'
..i
1.
Legislative Summary.
This legislation would correct the definition for commercial property to make it consistent
with State Law authorizing a Commercial Property Assessed Clean Energy Program; add a
loan recordation requirement
for
the third-party lender to ensure that subsequent lenders are
given notice ofthe special lien
status
of a Commercial Property Assessed Clean Energy loan
on the property; and modifies the eligibility requirement for a loan under
this
program
to
use
either the
full
cash
value ofthe property
as
detennined by
the
State
Department of
Assessments
and Taxation
or
the appraised
value
ofthe property
as
determined
by
a
Certified
General
Real Estate Appraiser.
2.
An
estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed
in
the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
This legislation makes
technical.
corrections
to
County
Law
1hat
will
not result in a net
charige.
in
revenues
or
expenditures
to
the
County.
3.
Revenue and expenditure estimates covering at least the nen
6
fiscal
years.
Please see number 2.
4.
An
actuarial analysis through the entire amortization period
tor
each bill that would
affect retiree
pe~ion
or group insurance costs.
Not Applicable.
5.
Later actions
that
may affect
future
revenue and expenditures
if
the bnI authorizes
future
spending.
Not Applicable.
6.
An estimate of the staff time needed to implement the bilL
Not Applicable.
7.
An
explanation of how the addition of new staff responsibilities would affect other
duties.
Not Applicable.
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8.
An
estimate
of costs
when
an
additional appropriation
is
needed.
Not Applicable.
9. A description of any variable that could affect revenue and 'cost estimates.
Not Applicable.
10.
R2lnges
of
revenue or expenditures that
are uncertain
or difficult
to
project.,
Not Applicable.
11.
If
a
bill
is
likely
to 'have
no
fiscal
impact,
why
that
is
the
case.
Not Applicable.
U.
Other
fiscal
impacts
or comments.
Not Applicable.
13. The following contributed
to
and concurred with
this
analysis:
Robert Ragedoom
and
David Crow, Department ofFinance
Jane Mukira, Office ofManagement
an4
Budget
Dat~
ofMap.agement
and
Budget
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Economic Impact Statement
Bill XX-16, Commercial Property Assessed Clean Energy Program - Amended
Background:
This
legislation would correct the definition for commercial property to make it
consistent with State Law authorizing a Com.mercial Property Assessed Clean Energy
Program;
add
a loan recordation requirement for the third-party lender to ensure that
subsequent lenders
are
given notice of the special lien status of a Commercial Property
Assessed Clean Energy loan on the property; and modifies the eligibility requirement for
a loan under this program to use either the full cash value ofthe property as determined
by the State Department of Assessments and Taxation or the appraised value of the
property as determined by a Certifie<J. General Real Estate Appraiser.
1.
The sources of information, assumptions, and methodologies used.
This
Bill
makes technical corrections to County Law and the:t:e are no sources of
information,
assumptions~
and methodologies used that
are
applicable.
. 2. A
description of any variable that could affect the economic impact estimates.
This
Bill
makes technical corrections to County Law and there are no variables that
could affect the economic impact.
3.
The Bill's positive or negative effect,
if
any on employment, spending, saving,
investment, incomes, and property values in the County.
This
Bill
makes technical corrections to County Law and has no positive or negative
effect on employment, spending, saving, investment, incomes, and property values in
the County.
4. H
a Bill
is
likely to have no economic impact, why
is
that the case?
Please see item
#3
5.
The following contributed to and concurred with this analysis: David Platt, David
Crow, and Robert Hagedoorn, Department of Finance.
Page lofl
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TESTIMONY ON BEHALF OF COUNTY EXECUTIVE ISIAH LEGGETT
BILL 18-16 - COMMERCIAL PACE
June 14, 2016
My name is David Crow, Fiscal Projects Manager, Department of Finance, and I am here
to testify on behalf of County Executive Isiah Leggett in support of Bill 18-16.
This bill provides technical amendments to the County's Commercial Property Assessed
Clean Energy (C-PACE) program, which was established under bill 6-15, and are needed
to correct and improve the current structure of the C-PACE program. This program is
designed to assist qualifying commercial property owners with making energy
improvements and to have the annual C-PACE loan repayment collected as a surcharge
on the property owner's property tax bill.
Bill 18-16 will enhance the C-PACE program and strengthen this important
environmental initiative for the County. Thank you for allowing me this opportunity to
testify today.
®