Amendment #8 to H.4198
An Amendment to H. 4198
Ms. Walz of Boston move that the bill be amended adding the following sections:-
Section XX. Chapter 23G of the General Laws is hereby amended by inserting after section 44 the following section:-
Section 45. Energy Conservation Loan Program.
(a) It is in the best interest of the commonwealth to promote energy conservation projects within the commonwealth, undertaken by owners of privately-held real property, the commonwealth, cities or towns and non-profit institutions by facilitating the financing of the acquisition, design, construction, installation, renovation, repair or expansion of such energy conservation projects.
(b) As used in this section, the following terms shall, unless the context clearly requires otherwise, have the following meanings: --
“Agency”, the Massachusetts Development Finance Agency.
“Department”, the department of public utilities established under chapter 25.
“Eligible borrower”, the commonwealth and any body politic and corporate of the commonwealth, including any political subdivision or instrumentality thereof, a non-profit corporation, or the owner of privately-held real property, which may participate through the Municipal PACE program.
“Eligible Project”, the acquisition, design, construction, repair, renovation, rehabilitation or other capital improvement or deferred maintenance of an energy conservation project undertaken by an eligible borrower, and in the case of owners of privately-held real property, shall include, but not be limited to, energy conservation projects eligible under section 53¾ of chapter 44.
“Energy Project Bonds”, bonds, notes, certificates of participation or beneficial interest, or other evidences of indebtedness or ownership, issued pursuant to an executed indenture, financing document or other agreement of the financing entity, the proceeds of which are used to finance Loans for Eligible Projects, and that are payable from Loan Repayments, and are further secured by system benefit charges.
“Financing entity”, (i) the agency or (ii) any special purpose entity.
“Financing order”, an order of the department issued in accordance with section 19 of said chapter 25 which shall provide for a first priority lien on all or a portion of the system benefit charges to further secure Energy Project Bonds.
“Fund”, the Massachusetts Energy Conservation Project Fund created hereunder and held by the agency, within which the agency shall create a loan account and a reserve account.
“Loan”, a direct loan of monies from the agency to an eligible borrower to finance all or a portion of an eligible project.
“Municipal PACE program”, a program implemented and administered by a city or town under section 53E¾ 3of chapter 44.
“System benefit charge”, the mandatory charge imposed under said section 19 of said chapter 25.
“Special purpose entity”, any partnership, limited partnership, association, corporation, limited liability corporation, or other entity established and authorized by the agency to issue energy project bonds, subject to approval by the agency as provided by the agency in its resolution authorizing the special purpose entity to issue energy project bonds.
(c) As set forth in this section, the agency shall make loans directly to eligible borrowers for eligible projects or, in the case of eligible projects under the Municipal PACE program, shall fund loans made by municipalities to property owners in accordance with such program. Such loans shall be funded from energy project bonds issued by the agency or a special purpose entity in accordance with this section and this chapter or from amounts held in the fund. The agency shall pledge loan repayments received directly from eligible borrowers, or from cities and towns on behalf of real-property owners pursuant to the Municipal PACE program to the repayment of the related energy project bonds issued by the agency or by a special purpose entity, as applicable. As further security for any such bonds or debt obligations, the department shall issue one or more financing orders in accordance with said section 19 of said chapter 25, granting a statutory first priority lien in all or a portion of the system benefit charges as set forth in such financing order.
(d) There shall be the Massachusetts Energy Conservation Project Fund under the control of the agency, and all energy project bond proceeds of the agency or a special purpose entity, together with any other monies lawfully made available to the fund in order to make loans, shall be credited to the loan account within the fund. The purpose of the loan account within the fund shall be to make loans to finance eligible projects. The agency may make loans to eligible borrowers for eligible projects from amounts on deposit or credited to the loan account within the fund. The agency shall hold the fund in a separate account, segregated from all other agency funds. Except as hereinafter provided, the agency may invest and reinvest the loan account within the fund and the income thereon: (i) in making loans to eligible borrowers for eligible projects; (ii) in investing funds not required for immediate disbursement in the purchase of such securities as may be lawful investments for fiduciaries in the commonwealth.
(e) Each loan shall be made pursuant to a loan agreement between the agency and the eligible borrower. In the case of the Municipal PACE program, the agency may accept loan agreements entered into by the municipality and the property owner. All loan agreements, including those entered into under the Municipal PACE program, shall specify the security for such loan, and the repayment and other terms of such loan.
(f) Pursuant to the financing order, the agency has been granted a first priority lien on all or a portion of the system benefit charges to provide additional security for any energy project bonds it issues or that are issued by the special purpose entity. Amounts transferred to the agency pursuant to such financing order that are not needed to pay debt service on energy project bonds shall be held in the reserve account within the fund or in a reserve fund created under the financing documents, in either case, as a reserve securing the energy project bonds, in accordance with the provisions of the financing documents governing the energy project bonds. Any amounts in excess of such required reserve shall be transferred by the agency to the department in accordance with the provisions of the financing documents governing the energy project bonds. The agency shall hold the reserve account within the fund in a separate account, segregated from all other agency funds. The commonwealth does hereby pledge and agree with the holders of energy project bonds that the commonwealth shall not (i) alter the provisions of said section 19 of said chapter 25 which imposes the system benefit charges in a manner that limits or otherwise adversely affects the amount of system benefit charges pledged to secure any energy project bond in accordance with a financing order; or (ii) limit or alter the financing order and all rights thereunder until the energy project bonds, together with the interest thereon, are fully met and discharged.
(g) The exercise of the powers granted by this section shall be in all respects for the benefit of the people of the commonwealth by increasing the energy efficiency of buildings in the commonwealth. As the exercise of such powers shall constitute the performance of essential government functions, the financing entity shall not be required to pay any taxes or assessments upon the property acquired or used by the financing entity pursuant to the provisions of this section or upon the income therefrom. The energy project bonds issued pursuant to the provisions of this section, their transfer and the income therefrom, including any profit made on the sale thereof, shall at all times be free from taxation within the commonwealth.
(h) Upon the written approval of the secretary for administration and finance and the secretary for energy and environmental affairs, the agency or the special purpose entity may issue energy project bonds on behalf of the fund. Proceeds of energy project bonds shall be used for the purposes authorized by this section. Any such agency energy project bonds shall be issued as revenue bonds and shall be recourse only to the related loan repayments by eligible borrowers and other monies available in the reserve account within the fund or held under the related financing documents. The agency’s energy project bonds shall not be general obligations of the agency or the commonwealth. The agency’s energy project bonds shall be issued in accordance with the provisions of section 8 of said chapter 25, except that the agency shall not be required to make the findings set forth in said section 8(a) or 8(b) of said chapter 25. Agency bonds issued in furtherance of this section shall not be subject to, or otherwise included in, the principal amount of debt obligations issued under section 29 of said chapter 25.
(i) The agency shall be reimbursed from the loan account within the fund for all reasonable and necessary direct costs and expenses incurred in any fiscal year associated with its bond issuance, administration, management and operation of the funds, including reasonable staff time and out-of-pocket expenses and the reasonable and approved administrative costs incurred by any qualified organizations which the agency may contract for services. The agency is authorized to establish a minimum reserve to be maintained by the fund for the purpose of ensuring the satisfaction of the agency’s and its agents’ administrative costs.
(j) In accordance with applicable law, the agency may enter into contracts with one or more qualified organizations to manage some or all of the administrative aspects of managing the loan program on behalf of the agency, and on behalf of municipalities participating in the Municipal PACE program. Contracts executed pursuant to this section shall address, but shall not be limited to: proposed rules and guidelines for the funds, providing technical assistance to potential eligible borrowers and to municipalities in implementing and managing their Municipal PACE programs, reviewing and evaluating loan applications, providing findings and recommendations to the agency as to which loans should be approved and awarded, and serving such loans once they are awarded and funded.
Section XX. Section 3 of chapter 23J, as appearing in the 2010 Official Edition, is hereby amended by inserting after the last paragraph the following paragraph:-
(32) with the approval of the secretary of administration and finance and the secretary of energy and environmental affairs, to borrow and repay money by issuing bonds or notes of the center, to apply the proceeds thereof in furtherance of its purposes under this chapter and to pledge or assign or create security interests in any revenues, receipts or other assets or funds of the center to secure bonds or notes, including without limitation amounts received or held in the Massachusetts Renewable Energy Trust Fund established under section 9.
Section XX. Section 9 of chapter 23J, as so appearing, is hereby amended by striking out the last paragraph and inserting in place thereof the following paragraph:-
The amounts collected under section 20 of chapter 25 shall be impressed with a trust for the benefit of the trust fund. To facilitate the center’s ability to issue bonds and notes secured by amounts in the trust fund, the commonwealth shall covenant with the holders of such bonds and notes that the amounts collected under said section 20 of said chapter 25 shall not be diverted from the trust fund and that the rates of the mandatory charges under said section 20 of said chapter 25 shall not be reduced while any such bonds or notes are outstanding. In furtherance of the public purposes of the trust fund, income derived from the investment of amounts collected under said section 20 of said chapter 25 shall be expended by the center as provided in subsection (a) and, in the discretion of the center, in furtherance of the public purposes of the center and for such costs of departments and agencies that support or are otherwise consistent with the purposes of the trust fund.
Section XX. Chapter 23J of the General Laws is hereby amended by inserting after section 9 the following section:-
§9A. Bonds and notes; issuance.
(a) Subject to the provisions of section 3(a)(32), the board may provide by resolution for the issuance from time to time of bonds for any purpose of the center, which bonds may be issued as general obligations of the center or as special obligations payable solely from particular revenues or monies of the center. The bonds of each issue may be dated, may bear interest at such rate or rates, including rates variable from time to time, and may mature or otherwise be payable or redeemable at such times as the board may determine. The board shall determine the denominations of the bonds, the details of their execution and authentication and their places of payment within or without the commonwealth. Prior to initial issuance of each series of bonds, the board shall advise the finance advisory board of the terms of the bonds and the timing of their issuance. In case any officer whose signature appears on any bonds shall cease to be such officer before their delivery, the signature shall nevertheless be valid and sufficient as if the officer had remained in office until delivery. Bonds may be issued in certificated or uncertificated form, payable to bearer or registered owners, and if notes, may be made payable to bearer to order. The board may sell the bonds of the center at public or private sale at par or for such premium or discount price as it may determine. The board may by resolution delegate to any officer of the center the power to determine any of the matters set forth in this section.
(b) Bonds of the center may be secured by a trust agreement between the center and the bond owners or a corporate trustee which may be any trust company or bank having the powers of a trust company within or without the commonwealth. A trust agreement may pledge or assign, in whole or in part, funds and other assets or property held or to be received by the center, including without limitation, all monies and investments on deposit from time to time in the trust fund or any account thereof and any contract or other rights to receive the same, whether then existing or thereafter coming into existence and whether then held or thereafter acquired by the center and the proceeds thereof. A trust agreement may contain, without limitation, provisions for protecting and enforcing the rights, security and remedies of the bondholders, provisions defining defaults and establishing remedies, which may include acceleration and may also contain restrictions on remedies by individual bondholders. A trust agreement may also contain covenants of the center concerning the custody, investment and application of monies, the enforcement of loan agreements, the issue of additional or refunding bonds, the use of any surplus bond proceeds, the establishment of reserves and the regulation of other matters customarily treated in trust agreements.
(c) Bonds may be issued by the center in the form of lines of credit or other banking arrangements under terms and conditions determined by the board. In addition to other lawful security, bonds may be secured, in whole or in part, by financial guaranties, by insurance, by letters or lines of credit or by other credit enhancement issued to the center or to a trustee or other person, by any bank, trust company, insurance or surety company or other financial institution, within or without the commonwealth. The center may pledge or assign, in whole or in part, revenues, funds or other assets or property held or to be received by the center, and any contract or other rights to receive the same, whether then existing or thereafter coming into existence and whether then held or thereafter acquired by the center, and the proceeds thereof, as security for any such guaranties or insurance or for the reimbursement to any issuer of a line or letter of credit.
(d) Bonds issued by the center shall not be deemed to be a debt or a pledge of the faith and credit of the commonwealth or of any of its political subdivisions, but shall be payable solely from the revenues and monies of the trust fund and other monies and rights pledged to their payment. Bonds shall recite that neither the commonwealth nor any political subdivision thereof shall be obligated to pay the same and neither the faith and credit nor the taxing power of the commonwealth or any political subdivision is pledged to their payment. Every bond shall recite whether it is a general obligation of the center or a special obligation payable solely from particular revenues, funds, assets or other property.
(e) The center may by resolution provide for the issuance by the center of interim receipts or temporary bonds, exchangeable for definitive bonds when the bonds are executed and are available for delivery. The center may also provide for replacement of mutilated, destroyed or lost bonds. The center may purchase and invite offers to tender for purchase any outstanding bonds; provided, however, that no purchase by the center shall be made at a price, exclusive of accrued interest, if any, exceeding the principal amount of the bond or, if greater, the redemption price of the bond when next redeemable at the option of the center. The center may resell any bonds it purchases in such manner and for such price as it may determine.
(f) The center may also provide for issuance by the center of temporary notes in anticipation of bonds, grants, revenues or appropriations. The issuance of the notes shall be governed by this chapter relating to the issuance of bonds. The center may also issue refunding bonds of the center for the purpose of paying any bonds at or before maturity. Refunding bonds may be issued at any time at or before the maturity or redemption or purchase of the refunded bonds. Refunding bonds may be issued in sufficient amounts to pay or provide for payment of the principal of the bonds being refunded, together with any redemption premium thereon, any interest or discount accrued or to accrue to the date of payment, costs of issuance and other expenses and reserves reasonably necessary to achieve the refunding.
(g) Bonds of the center are securities in which public officers and agencies, insurance companies, financial institutions, investment companies, executors, administrators, trustees and others may properly invest funds including capital within their control and securities which may be deposited with any public officer or any agency for any purpose for which the deposit of bonds is authorized by law. Bonds of the center shall be considered to be investment securities under chapter 106.
(h) It shall be lawful for any bank or trust company to act as a depository or trustee under a trust agreement, provided it furnishes such indemnification and reasonable security as the center may require. Any assignment or pledge of revenues, funds or other assets or property made by the center shall be valid and binding and shall be deemed continuously perfected for the purposes of chapter 106 and other laws when made. The revenues, funds and other assets and property, rights therein and thereto and proceeds so pledged and then held or thereafter acquired or received by the center shall immediately be subject to the lien of the pledge without any physical delivery or segregation or further act, and the lien of the pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the center, whether or not the parties have notice thereof. The trust agreement by which a pledge is created need not be filed or recorded to perfect the pledge except in the records of the trustees and no filing need be made under said chapter 106. Any pledge or assignment made by the center is an exercise of its political and governmental powers, and revenues, funds, assets, property and contract or other rights to receive the same and the proceeds thereof which are subject to the lien of a pledge or assignment created under this chapter shall not be applied to any purposes not permitted by the pledge or assignment. Any holder of a bond and any trustee under a trust agreement, except to the extent its rights may be restricted by the trust agreement, may bring suit upon the bonds and may pursue any other legal action to protect and enforce its rights and compel performance of all duties required to be performed by the trustee and the center.
(i) The center and its existence shall continue until terminated by law, but no such law shall take effect so long as the center shall have bonds outstanding unless adequate provision has been made for the payment or satisfaction thereof. Upon termination of the center, the title to all properties of the center that remain after provision for the payment or satisfaction of all bonds of the center shall vest in the commonwealth. The obligations, debts and liabilities of the center shall be assumed by and imposed upon the commonwealth and shall be transferred to the state treasurer or to such other successor as may be provided by law.
Section XX. Section 19 of chapter 25, as so appearing, is hereby amended by inserting after subsection (a) the following subsection:-
(a½ ) Notwithstanding the foregoing, upon receiving notice from the Massachusetts Development Finance Agency that energy project bonds are to be issued in accordance with section 45 of chapter 23G, the department shall issue one or more financing orders, granting a first priority lien on the mandatory charge established by the first sentence of this section, and all or a portion of the amounts collected pursuant thereto, as set forth in such financing order to secure such energy project bonds. Upon the effective date of a financing order, unless otherwise directed by the department, there shall exist a first priority lien on all mandatory charges imposed by paragraph (a) of this section then existing or thereafter arising pursuant to the terms of the financing order. This lien shall arise by operation of this subsection automatically without any action on the part of the department, the agency, any such special purpose entity or any other person. This lien shall secure all obligations then existing or subsequently arising to the holders of such energy project bonds, the trustee or representative for such holders, and any other entity specified in the financing order. The persons for whose benefit this lien is established shall upon the occurrence of any defaults specified in the financing order, have all the rights and remedies of a secured party upon default under article 9 of chapter 106 and shall be entitled to foreclose or otherwise enforce this statutory lien in the mandatory charges. This lien shall attach to such mandatory charges regardless of who shall own, or shall subsequently be determined to own, the mandatory charges, including any electric distribution companies and municipal aggregators, any affiliate thereof, the agency or special purpose entity, or any other person. This lien shall be valid, perfected and enforceable against all third parties upon the effectiveness of the financing order without any further public notice; provided, however, that any person may, but, shall not be required to, file a financing statement. A perfected statutory lien in the mandatory charges shall be a continuously perfected lien in all revenues and proceeds arising with respect thereto, whether or not the revenues or proceeds have accrued.
The department may issue financing orders in accordance with this section to facilitate the financing or refinancing of energy projects, as defined in said section 45 of said chapter 23G. A financing order shall specify that amounts collected pursuant to the mandatory charges set forth in paragraph (a) of this section shall be allocated first to the energy project bonds, and shall be paid over to the agency upon receipt, and second to other projects financed in accordance with this section. Financing orders issued pursuant to the provisions of this section shall not constitute a debt or liability of the commonwealth or of any political subdivision thereof, and shall not constitute a pledge of the full faith and credit of the commonwealth or any of its political subdivisions, but, shall be payable solely from the funds provided therefore pursuant to the provisions of said section 45 of said chapter 23G and this subsection.
Section XX. Section 53E¾ of chapter 44, as so appearing, is hereby amended by inserting after paragraph (e)the following paragraph:-
In furtherance of the provisions of this section, a city or town may participate in the Massachusetts Development Finance Agency’s Energy Conservation Loan Program established pursuant to section 45 of chapter 23G for the purposes of obtaining funds to make loans in accordance with this section. To the extent that the city or town receives funds pursuant to such program, it shall enter into a loan agreement with the property owner that has been approved by the agency, and will pledge such loan agreement and all amounts received pursuant thereto to the agency. In the event of a payment default by the property owner, all amounts realized by the city or town pursuant to any betterments or other security granted under the loan agreement or as a result of this section shall also be immediately transferred to the agency.