BILL REQ. #:  H-1900.1 

READ FIRST TIME 02/16/09.   

     AN ACT Relating to creating a sustainable energy trust; amending RCW 43.180.020; adding new sections to chapter 43.180 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature intends to promote the development of renewable energy technologies and the application of energy efficiency measures by establishing a sustainable energy trust bond that can be used to finance renewable energy and energy efficiency project costs. The legislature finds that by providing access to low-cost capital to finance renewable energy and energy efficiency projects, a key barrier is eliminated.

Sec. 2   RCW 43.180.020 and 1990 c 167 s 1 are each amended to read as follows:
     ((Unless the context clearly requires otherwise,)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Bonds" means the bonds, notes, or other evidences of indebtedness of the commission, the interest paid on which may or may not qualify for tax exemption.
     (2) "Center" means the Washington climate and rural energy development center at Washington State University, established under RCW 28B.30.642.
     (3) "Certified application" means a certified improvement and vendors approved by the center.
     (4) "Code" means the federal internal revenue code of 1954, as now or hereafter amended, and the regulations and rulings promulgated thereunder.
     (((3))) (5) "Commission" means the Washington state housing finance commission or any board, body, commission, department, or officer succeeding to the principal functions thereof or to whom the powers conferred upon the commission shall be given by law.
     (((4))) (6) "Costs of housing" means all costs related to the development, design, acquisition, construction, reconstruction, leasing, rehabilitation, and other improvements of housing, as determined by the commission.
     (((5))) (7) "Eligible person" means a person or family eligible in accordance with standards promulgated by the commission. Such persons shall include those persons whose income is insufficient to obtain at a reasonable cost, without financial assistance, decent, safe, and sanitary housing in the area in which the person or family resides, and may include such other persons whom the commission determines to be eligible.
     (((6))) (8) "Energy efficiency improvement" means an installation or modification that is designed to reduce energy consumption in residential or commercial buildings. The term includes, but is not limited to: Insulation; storm windows and doors; automatic energy control systems; heating, ventilating, or air conditioning and distribution system modifications or replacements in buildings or central plants; caulking and weather stripping; energy recovery systems; and day lighting systems.
     (9) "Financing document" means a loan agreement or other agreement for the purpose of providing funds to pay or secure debt service on sustainable energy trust bonds.
     (10) "Housing" means specific new, existing, or improved residential dwellings within this state or dwellings to be constructed within this state. The term includes land, buildings, and manufactured dwellings, and improvements, furnishings, and equipment, and such other nonhousing facilities, furnishings, equipment, and costs as may be incidental or appurtenant thereto if in the judgment of the commission the facilities, furnishings, equipment and costs are an integral part of the project. Housing may consist of single-family or multifamily dwellings in one or more structures located on contiguous or noncontiguous parcels or any combination thereof. Improvements may include such equipment and materials as are appropriate to accomplish energy efficiency within a dwelling. The term also includes a dwelling constructed by a person who occupies and owns the dwelling, and nursing homes licensed under chapter 18.51 RCW.
     (((7))) (11) "Improvement" means an energy efficiency improvement or a renewable energy improvement.
     (12) "Mortgage" means a mortgage, mortgage deed, deed of trust, security agreement, or other instrument securing a mortgage loan and constituting a lien on or security interest in housing. The property may be held in fee simple or on a leasehold under a lease having a remaining term, at the time the mortgage is acquired, of not less than the term of repayment of the mortgage loan secured by the mortgage. The property may also be housing which is evidenced by an interest in a cooperative association or corporation if ownership of the interest entitles the owner of the interest to occupancy of a dwelling owned by the association or corporation.
     (((8))) (13) "Mortgage lender" means any of the following entities which customarily provide service or otherwise aid in the financing of housing and which are approved as a mortgage lender by the commission: A bank, trust company, savings bank, national banking association, savings and loan association, building and loan association, mortgage banker, mortgage company, credit union, life insurance company, or any other financial institution, governmental agency, municipal corporation, or any holding company for any of the entities specified in this subsection.
     (((9))) (14) "Mortgage loan" means an interest-bearing loan or a participation therein, made to a borrower, for the purpose of financing the costs of housing, evidenced by a promissory note, and which may or may not be secured (a) under a mortgage agreement, (b) under any other security agreement, regardless of whether the collateral is personal or real property, or (c) by insurance or a loan guarantee of a third party. However, an unsecured loan shall not be considered a mortgage loan under this definition unless the amount of the loan is under two thousand five hundred dollars.
     (15) "Project costs" means costs of: (a) The construction of improvements; (b) architectural, engineering, consulting, accounting, and legal costs related directly to the development, financing, and construction of improvements; (c) finance costs, including discounts, if any, the costs of issuing sustainable energy trust bonds, and costs incurred in carrying out any trust agreement; (d) the refunding of any outstanding obligations incurred for any of the costs outlined in this subsection; and (e) other costs incidental to any of the costs listed in this subsection.
     (16) "Renewable energy improvement" means a fixture, product, system, device, or interacting group of devices installed behind the meter of any residential or commercial building that produces energy from renewable resources. The term includes, but is not limited to: Photovoltaic systems; solar thermal systems; small wind systems; biomass systems; and geothermal systems.
     (17) "Sustainable energy trust bond" means a taxable or tax-exempt nonrecourse revenue bond, nonrecourse revenue note, or other nonrecourse revenue obligation issued for the purpose of providing financing to a nonprofit corporation on an interim or permanent basis.
     (18) "Sustainable energy trust fund" means a debt service fund.
     (19) "User" means one or more persons acting as lessee, purchaser, mortgagor, or borrower under a financing document and may include a party who transfers the right of use and occupancy to another party by lease, sublease, or otherwise.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.180 RCW to read as follows:
     The commission must allow property owners within the state to receive an energy efficiency improvement or renewable energy improvement for their property. The commission must contract with property owners with a certified application under section 4 of this act for the installation or placement of improvements for their property. In order for the vendor to commence work on improvements, the commission must issue a purchase order to the vendor who has provided the binding fixed bid price for the improvement in the certified application. Upon notification by the property owner that the work to install or place the improvement is complete, the commission shall pay the vendor the value of the binding fixed bid price.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.180 RCW to read as follows:
     (1) To receive a certified application from the center, a property owner must obtain a binding fixed bid price from a vendor for the energy efficiency improvement or renewable energy improvement on a property owner's property. The binding fixed bid price must be provided to the center as part of the application process in this section.
     (2) A property owner shall submit to the center an application in a form and manner prescribed by the center that includes, but is not limited to, the following information:
     (a) The name and address of the property owner and location of where the energy efficiency improvement or renewable energy improvement will be installed;
     (b) The name and address of the vendor of the energy efficiency improvement or renewable energy improvement; and
     (c) A copy of the invoice from the vendor to the property owner that details the energy efficiency improvement or renewable energy improvement to be made and the binding fixed bid price of the energy efficiency improvement or renewable energy improvement.
     (3) The center shall collect an application fee from the property owner in order to cover the cost to certify an application.
     (4) Within thirty days of receipt of the application the center shall (a) advise the property owner in writing whether the energy efficiency improvement or renewable energy improvement qualifies as a certified application and (b) provide the commission with a copy of the certified application.
     (5) The commission has the following powers with respect to providing energy efficiency improvements and renewable energy improvements for property owners including all powers incidental or necessary for the performance of these activities:
     (a) To make secured loans to property owners with certified applications for the purpose of providing the financing of all or part of the project cost of any energy efficiency improvement or renewable energy improvement. The period of such loans is twenty-five years for renewable energy improvements and ten years for energy efficiency improvements. The commission may administer the loan payments upon such terms and conditions as it considers advisable that are not in conflict with this chapter;
     (b) To issue sustainable energy trust bonds for the purpose of financing improvement project costs and to secure the payment of the sustainable energy trust bonds as provided in this chapter;
     (c) To execute financing documents incidental to the powers enumerated in this section;
     (d) To accept grants and gifts for the purposes of this chapter;
     (e) To provide a fixed cost payment to vendors for completed energy efficiency improvements or renewable energy improvements related to the certified applications;
     (f) To establish special funds with any financial institution providing fiduciary services within or without the state as it deems necessary and appropriate and deposit money in the fund; and
     (g) To recover costs associated with executing the responsibilities under this act through the issuance of sustainable energy trust bonds.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.180 RCW to read as follows:
     The commission has the following powers with respect to providing energy efficiency improvements and renewable energy improvements for property owners including all powers incidental or necessary for the performance of these activities:
     (1) To make secured loans to certified applicants for the purpose of providing the financing of all or part of the project cost of any energy efficiency improvement or renewable energy improvement. The period of such loans shall be twenty-five years renewable energy improvements and ten years for energy efficiency improvements. The commission may administer the loan payments upon such terms and conditions as it considers advisable that are not in conflict with this chapter;
     (2) To issue sustainable energy trust bonds for the purpose of financing fixed project costs of energy efficiency improvements and renewable energy improvements and to secure the payment of the sustainable energy trust bonds as provided in this chapter;
     (3) To execute financing documents incidental to the powers enumerated in this section;
     (4) To accept grants and gifts for the purposes of this chapter;
     (5) To provide fixed payments to vendors for projects with certified applications;
     (6) To establish special funds with any financial institution providing fiduciary services within or without the state as it deems necessary and appropriate and deposit money in the fund; and
     (7) To recover costs associated with executing the responsibilities of the commission under this act through the issuance of bonds.

NEW SECTION.  Sec. 6   A new section is added to chapter 43.180 RCW to read as follows:
     (1) The proceeds of the sustainable energy trust bonds of each issue must be used solely for the purposes set forth in this chapter and must be disbursed in such a manner and under such restrictions, if any, provided in the resolution authorizing the issuance of the sustainable energy trust bonds or in the trust agreement securing the bonds. If the proceeds of the sustainable energy trust bonds of any series issued with respect to any improvements exceed the cost of the improvements for which the bonds are issued, the surplus must be deposited to the credit of the sustainable energy trust fund for the sustainable energy trust bonds or used to purchase the sustainable energy trust bonds in the open market.
     (2) The commission may issue interim notes in the manner provided for the issuance of sustainable energy trust bonds to fund improvements prior to issuing other sustainable energy trust bonds to fund such improvements. The commission may issue sustainable energy trust bonds to fund improvements that are exchangeable for other sustainable energy trust bonds, when these other sustainable energy trust bonds are executed and available for delivery.
     (3) The principal and interest on any sustainable energy trust bonds issued by the commission must be secured by a pledge of unexpended bond proceeds and the revenues and receipts derived from property owner payments for improvements pursuant to financing documents. The resolution under which the sustainable energy trust bonds are authorized to be issued and any financing document may contain agreements and provisions respecting the maintenance or use of the property owner's covered thereby, loan payments, the creation and maintenance of special funds from such revenues or from sustainable energy trust bond proceeds, the rights and remedies available in the event of default, and other provisions relating to the security for the bonds, as the commission considers advisable.
     (4) All sustainable energy trust bonds issued under this chapter and any interest coupons applicable thereto are negotiable instruments within the meaning of Article 8 of the Uniform Commercial Code, Title 62A RCW, regardless of form or character.
     (5) Notwithstanding subsection (1) of this section, such bonds and interim notes may be issued and sold in accordance with chapter 39.46 RCW.

NEW SECTION.  Sec. 7   A new section is added to chapter 43.180 RCW to read as follows:
     Any sustainable energy trust bonds issued under this chapter may be secured by a trust agreement between the commission and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state. The trust agreement may evidence a pledge or assignment of the financing documents and loan revenues to be received from a borrower with respect to property owners for the payment of principal and interest and any premium on the bonds as the same shall become due and payable and may provide for creation and maintenance of reserves for these purposes. A trust agreement or resolution providing for the issuance of the sustainable energy trust bonds may contain such provisions for protecting and enforcing the rights and remedies of the bond owners as may be reasonable and proper and not in violation of law, including covenants setting forth the duties in relation to the acquisition of property and the construction, improvement, maintenance, use, repair, operation, and insurance of the property owner for which the bonds are authorized, and the custody, safeguarding, and application of all money. Any bank or trust company incorporated under the laws of the state which may act as depository of the proceeds of sustainable energy trust bonds or of revenues may furnish such indemnifying bonds or pledge such securities as may be required by the commission. A trust agreement may set forth the rights and remedies of the bond owners and of the trustee and may restrict the individual right of action by bond owners as is customary in trust agreements or trust indentures securing bonds and debentures of private corporations. In addition, a trust agreement may contain such provisions as the commission considers reasonable and proper for the security of the bond owners which are not in conflict with this chapter.

NEW SECTION.  Sec. 8   A new section is added to chapter 43.180 RCW to read as follows:
     The proceedings authorizing any sustainable energy trust bonds under this chapter or any financing document securing the sustainable energy trust bonds may provide that if there is a default in the payment of the principal and interest of the bonds or in the performance of any agreement contained in the proceedings or financing document, the payment and performance may be enforced by mandamus or by the appointment of a receiver in equity with power to charge and collect loan repayments, and to apply the revenues from the property owner in accordance with the proceedings or provisions of the financing document. Any financing document entered into under this chapter may also provide that if there is a default in the payment thereof or a violation of any agreement contained in the financing document, the property owner may be foreclosed and sold under proceedings in equity or in any other manner now or hereafter permitted by law. Any financing document may also provide that any trustee under the financing document or the holder of any sustainable energy trust bonds secured thereby may become the purchaser at any foreclosure sale if it is the highest bidder.