AGENDA ITEM 4E
April 19,2016
Introduction
MEMORANDUM
April 15, 2016
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
Attome~)P
Introduction:
Bill 18-16, Commercial Property Assessed Clean Energy Program ­
Amendments
Bill 18-16, Commercial Property Assessed Clean Energy Program - Amendments, sponsored by
Lead Sponsor Council President on behalf of the County Executive, is scheduled to be introduced
on April 19, 2016. A public hearing is tentatively scheduled for June 14 at 1:30 p.m.
Bill 18-16 would:
• amend the defmition for commercial property;
• require a third-party lender to record the loan in the County land records;
• modify certain eligibility requirements for a loan under the program; and
• generally amend County law regarding the Commercial Property Assessed Clean Energy
Program.
This packet contains:
Bill 18-16
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statements
Circle
#
1
5
7
8
F:\LAW\BILLS\l618 Commercial PACE-Amendments\Intro Memo.Docx
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Bill No. _ _ _
---!.!18:!...-...!..!16~
_ _ __
Concerning: Commercial
Property
Assessed Clean Energy Program ­
Amendments
Revised: 4/14/2016
Draft No. 1
April 19, 2016
Introduced:
Expires:
October 19, 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ---'...:.No::<,: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 brackets]]
* * *
Heading or defined term.
Added to 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)
2
3
4
5
Definitions.
In
this Section, the following words have the meanings
indicated:
6
7
8
9
Certified General Real Estate Appraiser
means an individual who is
certified as
~
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
l O i s either not designed for or intended for human habitation, or that is used
11
for human habitation as a multi-family dwelling of [[4 or]] more than
~
rental units.
12
13
*
*
*
*
*
14
15
18A-34. Commercial Property Assessed Clean Energy Program established.
*
(b)
16
17
18
Third-party lender.
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
19
20
21
22
23
24
25
26
27
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BILL NO. 18-16
28
program manager or, if there is no County designated program
manager,
to
the Department no later than April 1 of each year.
29
30
31
32
33
34
35
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.
36
37
38
*
18A-35. Eligibility.
*
*
(a)
Eligibility.
39
*
(4)
criteria:
(A)
*
*
40
41
42
43
44
45
The loan amount under this Program
must
meet the following
The loan amount must be at least $5,000 and [no] not more
than 20% ofeither the full cash value or the appraised value
of the qualified property. The full cash value is determined
by the Maryland State Department of Assessments and
Taxation:. The appraised value
must
be
determined
Qy
~
Certified General Real Estate Appraiser and must have been
certified no more than 12 months before the date ofthe loan
application[; and]:.
46
47
48
49
50
51
(B)
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.
52
53
54
(b)
Property Assessed Clean Energy Surcharge.
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BILL No.
18-16
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
Nancy Floreen, President, County Council
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
Estate
Appraiser
if
the
12x
~
Certified General Real
requirement
eligibility
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
lID
Director deems necessary.
*
*
*
Date
71
72
Approved:
Isiah Leggett, County Executive
73
This is a correct copy ofCouncil action.
Date
74
Linda M. Lauer, Clerk ofthe Council
Date
G
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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 l8A 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 determined by the State
Department of Assessments and Taxation ot 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 Bill 6-15 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 of4 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 violation 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 specia1lien status of the 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 offederal and State Constitutions,
and enhances access to the C-PACE program for loan applicants.
Department of Finance
Office ofManagement and Budget
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
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ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE·
ELSE~RE:
Department ofFinance
n/a
n/a
SOURCE OF
INFORMATION:
David Crow, Department ofFinance (7-8859)
APPLICATION
WflHIN
MUNICIP
ALtrIES:
n/a
PENALTIES:
n/a
j.
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OFFICE OF THE COUNfY EXECUTIVE
ROCKVILLE, MARYLAND 20850
,
'".
"
Isiab Leggett
County Executive
MEMORANDUM
April 11, 2016
TO:
FROM:
SUBJECT:
Nancy Floreen, President
Montgomery County Council
Isiah
Leggett,
County
Executive
--P
~
-;
,£::)
Amended Legislation - Commercial Property Assessed Clean Energy
Program
I am hereby submitting legislation for your consideration and County
Council action. The legislation amends the County Code that established a Commercial
Property Assessed Clean Energy (C-PACE) Program.
With the adoption of Bill 6-15 on April 8, 2015 Montgomery County
established the Commercial PACE Program. This amended legislation makes three
changes to the County Code by (1) correcting the defmition 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 special lien 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 of the property as detennined by the
State Department of Assessments and Taxation or the appraised value of the property as
detennined 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
i"
Attachments: Expedited Legislation; Legislative Request Report; Fiscal Impact
Statement; Economic Impact Statement
.._
....'3U.'.. .773...... TTY
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I
I··
Fiscal Impact Statement
Bill XX-16, Commercial Property Assessed
Clean Energy'Progrun - Amended'
1. Legislative Summary.
..i
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 of
the
property
as
determined by
a
Certified
General
Real Estate Appraiser.
2.
An
estimate of changes in County revenues and expenditures regardless ofwhether 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 that
will
not result
in
a
net
charigein revenues or expenditures
to
the
County.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Please see number 2.
4. An actuarial analysis through the entire amortization period for each bill that would
affect retiree
pe~ion
or group insurance costs.
. Not Applicable.
S. Later actions that may affect future revenue and expenditures
if
the bill 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. Ranges 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.
12. Other fiscal impacts or comments.
Not Applicable.
13. The following contributed to and concurred
with
this analysis:
Robert Hagedoom and David Crow. Department ofFinance
Jane Mukira, Office ofManagement anc;i Budget
4i4/1b
D~
1
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Economic Impact Statement
Bill XX-16, Commercial Property Assessed Clean Energy Program - Amended
Background:
1ms legislation would correct the definition for commercial property to make it
consistent with State Law authorizing a COID)llercial 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 of the property as determined
by the State Department of Assessments and Taxation or the appraised value ofthe
property as determined by a Certifie4 General Real Estate Appraiser.
1. The sources of information, assumptions, and methodologies used.
This Bill makes technical corrections
to
County Law and thet: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.
1ms 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.
1ms 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.
If
a Bill is likely to have no economic impact, why is that the case?
Please see item
#3
5. The foDowing contributed to and concurred
with
this analysis:
David Platt, David
Crow, and Robert Hagedoorn, Department of Finance.
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