BILL NUMBER: AB 2693 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 2, 2016
AMENDED IN SENATE JUNE 22, 2016
AMENDED IN SENATE JUNE 6, 2016
AMENDED IN ASSEMBLY MAY 10, 2016
AMENDED IN ASSEMBLY APRIL 28, 2016
AMENDED IN ASSEMBLY APRIL 11, 2016
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Dababneh
(Coauthors: Assembly Members Travis Allen, Hadley, and Linder)
FEBRUARY 19, 2016
An act to amend Section 53328.1 of the Government Code, and to
amend Section 5898.15 of, to amend, renumber, and add Section 5898.16
of, and to add Section 5898.17 to, the Streets and Highways Code,
relating to property improvements.
LEGISLATIVE COUNSEL'S DIGEST
AB 2693, as amended, Dababneh. Financing requirements: property
improvements.
(1) Existing law authorizes the legislative body of a public
agency, as defined, to determine that it would be convenient,
advantageous, and in the public interest to designate an area within
which authorized public agency officials and property owners may
enter into voluntary contractual assessments to finance certain
improvements, including the installation of distributed generation
renewable energy sources or energy or water efficiency improvements
that are permanently fixed to real property, as specified.
Existing law prohibits a public agency from permitting a property
owner to participate in any program established pursuant to these
provisions if the owner's participation would result in the total
amount of any annual property taxes and assessments exceeding 5% of
the property's market value, as determined at the time of approval of
the owner's contractual assessment.
This bill would also prohibit a public agency from permitting a
property owner to participate in a program pursuant to these
provisions unless the property owner satisfies certain conditions and
the property owner is given the right to cancel the contractual
assessment at any time prior to midnight on the 3rd business day
after certain events occur without penalty or obligation, consistent
with certain requirements. The bill would require a financing
estimate document or a substantially equivalent document to be
completed and delivered to a property owner at least 3 business days
before the property owner consummates a voluntary contractual
assessment pursuant to one of these programs. The bill would prohibit
a public agency or other party to a voluntary contractual assessment
pursuant to one of these programs to make any representations to a
property owner regarding the effect the financed improvements will
have on the market value of the property unless the public agency or
other party derives its estimates of market value using specified
methods.
This bill would limit these provisions to a property owner who
seeks to participate in a program established to finance the
installation of distributed generation renewable energy sources or
energy or water efficiency improvements that are permanently fixed to
real property pursuant to these provisions for a residential
property with 4 or fewer units.
(2) The Mello-Roos Community Facilities Act of 1982 specifies the
requirements for the establishment of a community facilities
district, including, among other things, a petition, a hearing, the
establishment of the boundaries of the community facilities district,
and an election on the question. Existing law authorizes a community
facilities district formed pursuant to an alternative procedure
under which the district initially consists solely of territory
proposed for annexation to the community facilities district in the
future and territory is annexed and subjected to special taxes only
upon unanimous approval of the owners, to finance and refinance the
acquisition, installation, and improvement of energy efficiency,
water conservation, and renewable energy improvements.
This bill would require a legislative body to comply with the
requirements described above prior to the annexation of a parcel or
parcels to a community facilities district formed pursuant to the
alternative procedure. The bill would prohibit a parcel or parcels
from being annexed to a community facilities district formed pursuant
to the alternative procedure unless the parcel satisfies specified
conditions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares all of the
following:
(1) The Property Assessed Clean Energy program has been promoted
in California widely as an innovative and alternative form of
financing for environmental improvements for the benefit of the
public and California's environment.
(2) The promotion of the Property Assessed Clean Energy financing
is now a popular and widespread form of alternative financing for
consumers seeking solar energy, water conservation, energy
efficiency, and earthquake retrofitting improvements to the benefit
of all Californians.
(3) The consumer obligation to repay voluntary contractual
assessments created by the Property Assessed Clean Energy program is
sometimes misunderstood and may affect the consumer's ability to
refinance their loan or sell their property.
(4) Making residential real estate secured loans to consumers
through Property Assessed Clean Energy financing for home
improvements has grown rapidly, raising questions as to whether the
Property Assessed Clean Energy program is adequately supported by
government regulation.
(5) The passage of this act is essential to promote standardized
disclosures and protections for consumers to ensure that the Property
Assessed Clean Energy program can continue to be widely used to
offset the adverse impacts of years of climate change.
(b) This act shall be known, and may be cited, as the PACE
Preservation and Consumer Protections Act.
SEC. 2. Section 53328.1 of the Government Code is amended to read:
53328.1. (a) As an alternate and independent procedure for
forming a community facilities district, the legislative body may
form a community facilities district that initially consists solely
of territory proposed for annexation to the community facilities
district in the future, with the condition that a parcel or parcels
within that territory may be annexed to the community facilities
district and subjected to the special tax only with the unanimous
approval of the owner or owners of the parcel or parcels at the time
that the parcel or parcels are annexed. In that case, the legislative
body shall follow the procedures set forth in this article for the
formation of a community facilities district, with the following
exceptions:
(1) The legislative body shall not be obligated to specify the
rate or rates of special tax in the resolution of intention or the
resolution of formation, provided that both of the following are met:
(A) The resolution of intention and the resolution of formation
include a statement that the rate shall be established in an amount
required to finance or refinance the authorized improvements and to
pay the district's administrative expenses.
(B) The maximum rate of special tax applicable to a parcel or
parcels shall be specified in the unanimous approval described in
this section relating to the parcel or parcels.
(2) The legislative body shall not be obligated to specify in the
resolution of intention the conditions under which the obligation to
pay the specified special tax may be prepaid and permanently
satisfied. Instead, a prepayment provision may be included in the
unanimous approval of the owner or owners of each parcel or parcels
at the time that the parcel or parcels are annexed to the community
facilities district.
(3) In lieu of approval pursuant to an election held in accordance
with the procedures set forth in Sections 53326, 53327, 53327.5, and
53328, the appropriations limit for the community facilities
district, the applicable rate of the special tax and the method of
apportionment and manner of collection of that tax, and the
authorization to incur bonded indebtedness for the community
facilities district shall be specified and be approved by the
unanimous approval of the owner or owners of each parcel or parcels
at the time that the parcel or parcels are annexed to the community
facilities district. No additional hearings or procedures are
required, and the unanimous approval shall be deemed to constitute a
unanimous vote in favor of the appropriations limit for the community
facilities district, the authorization to levy the special tax on
the parcel or parcels, and the authorization to incur bonded
indebtedness for the community facilities district.
(4) Notwithstanding Section 53324, this paragraph establishes the
applicable protest provisions in the event a local agency forms a
community facilities district pursuant to the procedures set forth in
this section. If 50 percent or more of the registered voters, or six
registered voters, whichever is more, residing within the territory
proposed to be annexed to the community facilities district in the
future, or if the owners of one-half or more of the area of land
proposed to be annexed in the future and not exempt from the special
tax, file written protests against establishment of the community
facilities district, and protests are not withdrawn so as to reduce
the protests to less than a majority, no further proceedings to form
the community facilities district shall be undertaken for a period of
one year from the date of decision of the legislative body on the
issues discussed at the hearing. If the majority protests of the
registered voters or of the landowners are only against the
furnishing of a specified type or types of facilities or services
within the district, or against levying a specified special tax,
those types of facilities or services or the specified special tax
shall be eliminated from the resolution of formation.
(5) The legislative body shall not record a notice of special tax
lien against any parcel or parcels in the community facilities
district until the owner or owners of the parcel or parcels have
given their unanimous approval of the parcel's or parcels' annexation
to the community facilities district, at which time the notice of
special tax lien shall be recorded against the parcel or parcels as
set forth in Section 53328.3.
(b) Notwithstanding the provisions of Section 53340, after
adoption of the resolution of formation for a community facilities
district described in subdivision (a), the legislative body may, by
ordinance, provide for the levy of the special taxes on parcels that
will annex to the community facilities district at the rate or rates
to be approved unanimously by the owner or owners of each parcel or
parcels to be annexed to the community facilities district and for
apportionment and collection of the special taxes in the manner
specified in the resolution of formation. No further ordinance shall
be required even though no parcels may then have annexed to the
community facilities district.
(c) The local agency may bring an action to determine the validity
of any special taxes levied pursuant to this chapter and authorized
pursuant to the procedures set forth in this section pursuant to
Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the
Code of Civil Procedure. Notwithstanding Section 53359, if an action
is brought by an interested person pursuant to Section 863 of the
Code of Civil Procedure to determine the validity of any special
taxes levied against a parcel pursuant to this chapter and authorized
pursuant to the procedures set forth in this section, the action
shall be brought pursuant to Chapter 9 (commencing with Section 860)
of Title 10 of Part 2 of the Code of Civil Procedure, but shall,
notwithstanding the time limits specified in Section 860 of the Code
of Civil Procedure, be commenced within 15 days after the date on
which the notice of special tax lien is recorded against the parcel.
Any appeal from a judgment in any action or proceeding described in
this subdivision shall be commenced within 30 days after entry of
judgment.
(d) A community facilities district formed pursuant to this
section may only finance facilities pursuant to subdivision (l) of
Section 53313.5.
(e) (1) The legislative body shall comply with the requirements
specified in Sections 5898.16 and 5898.17 of the Streets and Highways
Code prior to the annexation of a parcel or parcels to a community
facilities district formed pursuant to this section.
(2) A parcel or parcels shall not be annexed to a community
facilities district formed pursuant to this section unless the parcel
complies with the conditions specified in subdivision (a) of Section
26063 of the Public Resources Code and in subdivision (b) of Section
10081 of Title 4 of the California Code of Regulations.
(f) In connection with formation of a community facilities
district and annexation of a parcel or parcels to the community
facilities district pursuant to this section, and the conduct of an
election on the proposition to authorize bonded indebtedness pursuant
to the alternate procedures set forth in Section 53355.5, the local
agency may, without additional hearings or procedures, designate a
parcel or parcels as an improvement area within the community
facilities district. After the designation of a parcel or parcels as
an improvement area, all proceedings for approval of the
appropriations limit, the rate and method of apportionment and manner
of collection of special tax and the authorization to incur bonded
indebtedness for the parcel or parcels shall apply only to the
improvement area.
(g) In connection with a community facilities district formed
under this section, as an alternate and independent procedure for
making the changes described in Section 53330.7, the changes may be
made with the unanimous approval of the owner or owners of the parcel
or parcels that will be affected by the change and with the written
consent of the local agency. No additional hearings or procedures are
required, and the unanimous approval shall be deemed to constitute a
unanimous vote in favor of the proposed changes. If the proceeds of
a special tax are being used to retire any debt incurred pursuant to
this chapter and the unanimous approval relates to the reduction of
the special tax rate, the unanimous approval shall recite that the
reduction or termination of the special tax will not interfere with
the timely retirement of that debt.
SEC. 3. Section 5898.15 of the Streets and Highways Code is
amended to read:
5898.15. (a) A public agency shall not permit a property owner to
participate in any program established pursuant to this chapter if
the owner's participation would result in the total amount of any
annual property taxes and assessments exceeding 5 percent of the
property's market value, as determined at the time of approval of the
owner's contractual assessment.
(b) Nothing in this chapter shall be construed to void or
otherwise release a property owner from the contractual obligations
incurred by a contractual assessment on a property, particularly in
the event that the total amount of annual property taxes and
assessments exceeds 5 percent of a property's market value after the
property owner has entered into a contractual assessment pursuant to
this chapter.
(c) This section applies to a property owner who seeks to
participate in a program established pursuant to this chapter for
types of property not subject to the requirements of Sections 5898.16
and 5898.17.
SEC. 4. Section 5898.16 of the Streets and Highways Code is
amended and renumbered to read:
5898.18. All references to financing in this chapter shall be
deemed to also refer to refinancing, except that with respect to
refinancing, the legislative body shall conclude that providing the
refinancing will result in an increased adoption of the improvements
authorized to be financed by this chapter. This section does not
constitute a change in, but is declaratory and a clarification of
existing law.
SEC. 5. Section 5898.16 is added to the Streets and Highways Code,
to read:
5898.16. (a) A public agency shall not permit a property owner to
participate in any program established pursuant to this chapter for
the purposes specified in paragraph (2) of subdivision (a) of Section
5898.20 if any of the following apply:
(1) The property owner's participation would result in the total
amount of the annual property taxes and assessments exceeding 5
percent of the property's market value, as determined at the time of
approval of the property owner's contractual assessment.
(2) The property does not comply with the conditions specified in
subdivision (a) of Section 26063 of the Public Resources Code and in
subdivision (b) of Section 10081 of Title 4 of the California Code of
Regulations.
(b) A public agency shall not permit the property owner to
participate in any program established pursuant to this chapter for
the purposes specified in paragraph (2) of subdivision (a) of Section
5898.20 unless the property owner is given the right to cancel the
contractual assessment without penalty or obligation, consistent with
the following:
(1) The property owner shall receive two copies of the right to
cancel document set forth below or a substantially similar document
that displays the same information in a substantially similar format.
Right to Cancel
Property Owner: ____________________________
(Owner Full Name), (Phone),
________
(Email)
Property Address: ____________________
(Property Address)
Your Right to Cancel:
You are entering into a contractual assessment
with __________ for financing that will result
(Provider)
in a lien on the property at __________________
(Property Address)
. You may cancel this transaction, without cost,
until midnight on the third business day after
whichever of the following events occurs last:
(1) The date on which you signed the contractual
assessment.
(2) The date you received your Financing
Estimate and Disclosure.
(3) The date you received this notice of your
right to cancel.
If you cancel the transaction, __________,
(Provider)
within 20 calendar days after __________
(Provider)
receives notice of cancellation, must take the
steps necessary to reflect the fact that, if
recorded, the lien on your property has
been discharged and removed from the tax rolls,
been discharged or reconveyed, and __________
must return to you
any money you
(Provider)
(Provider)
must return to you any money you have given in
have given in connection with your application,
not including
not including the application processing fee.
After
After __________ has done the things mentioned
above,
(Provider)
above, you must return any money paid to you or
on your
on your behalf, whether to your contractor or any
other
other person. All money must be returned to the
address
address below.
If you cancel the transaction:
46 You will not be charged a
cancellation fee; and
46 You will be refunded any money you
have given, excluding application and
processing fees as applicable.
To cancel this transaction, you may submit this
form to __________ in writing at:
(Provider)
Provider: __________
Attn: Right to Cancel Notification
Email: __________
Fax number: __________
Address: __________
Deadline to Cancel:
If you want to cancel this transaction, you must
submit this form on or before (Insert date).
You may use any written statement that is signed
and dated by you and states your intention to
cancel, or you may use this notice by dating and
signing below. If you cancel by mail, fax, or
email, you must send the notice no later than
midnight of the third business day following the
date on which you signed the contractual
assessment. If you send or deliver your written
notice to cancel some other way, it must be
delivered to the above address no later
than the da t im e indicated above.
I WISH TO CANCEL
________________ _____
Property Owner Date
(2) The property owner is deemed to have given notice of
cancellation at the moment that the property owner sends the notice
by mail, email, or fax or at the moment that the property owner
otherwise delivers the notice, as applicable.
(c) This section only applies to a property owner who seeks to
participate in a program established pursuant to this chapter for the
purposes specified in paragraph (2) of subdivision (a) of Section
5898.20 for a residential property with four or fewer units.
(d) For the purposes of this section, "property owner" shall
include all persons listed on the title to the property.
owners of record.
SEC. 6. Section 5898.17 is added to the Streets and Highways Code,
to read:
5898.17. (a) The disclosure set forth below, or a substantially
equivalent document that displays the same information in a
substantially similar format, shall be completed and delivered to a
property owner at least three business days before the property owner
consummates a voluntary contractual assessment described in this
chapter for purposes specified in paragraph (2) of subdivision (a) of
Section 5898.20 or a special tax described in Section 53328.1 of the
Government Code. The disclosure shall be provided to the property
owner as a printed copy, if requested by the property owner. A sample
of the disclosure set forth below shall be maintained on a public
Internet Web site available to property owners.
(b) This section only applies to disclosure to a property owner
who seeks to participate in a program established pursuant to this
chapter for the purposes specified in paragraph (2) of subdivision
(a) of Section 5898.20 for a residential property with four or fewer
units.
Financing Estimate and Disclosure
Notice to Property Owner: You have the right to
request that a hard copy of this document be
provided to you before and after reviewing and
signing. The financing arrangement described below
will result in an assessment against your property
which will be collected along with your
property taxes and will result in a lien on your
property. You should read and review the terms
carefully, and if necessary, consult with a tax
professional or attorney.
Customer Service Toll-Free telephone number and
email:
In the event you have a consumer complaint,
questions about your financing obligations related
to the contractual assessment or your contractual
rights under the terms of this contract, you can
contact either this toll-free telephone number or
email address provided below and receive a
response within 24 hours or one business day.
Toll-Free telephone number: ___________
Customer service email address: ___________
Products and Costs
Product costs
(including
labor/installation
) $________
Description
1.
2.
3.
Financing Costs
Application fees $________
and costs $________
Prepaid Interest $________
Other Costs $________
Total Amount
Financed
Annual Percentage Rate (APR) ______%
Simple Interest Rate ______%
Total Annual Principal, $______
Interest, and
Administrative Fees
Note: If your property taxes are paid through an
impound account, your lender may apportion the
amount and add it to your monthly payment.
See ""Other important considerations,'' below
Total Amount you
will have paid
over the life of
the lo fin an
cing $________
Other Costs
Appraisal Fees
Bond related costs
Annual Administrat
ive fees $________
Estimated closing $________
costs $________
Credit Reporting $________
Fees $________
Recording Fees $________
Total Financing
Costs and Closing
Costs $________
Estimated Cash
(out of pocket)
to close $________
Other Terms
Prepayment fee
Assumable by new ( ) No ( ) Yes ______
owner ( ) No ( ) Yes ______
Additional Information About These Financing
Comparisons (Use this information to compare to
other financing options)
------------------
$________ Principal you will
have paid off.
$________ Amount of
Over the
term interest you
have paid.
In 10 years $________ Amount of financing
of the financing $________ Amount of financing
and other costs
you will have paid.
$________ Total you will have
paid.
------------------
Annual Percentage ______%
Rate
+
--------------------------------
+
Total Interest Paid (as a
percentage of all the payments ______%
you have made)
Other Important Considerations
Assumption ( ) Yes - Allowed
by New Buyer on original terms
( ) No - Not
Allowed on
original terms
I understand that if I refinance my home, my
I understand that my mortgage company may require
me to pay off the full remaining balance of this
obligation before I can refinance my home. If I
sell my home, the buyer or their mortgage company
m ortgage company m ay require me to pay off the
full remaining
full remaining balance of this obligation, unless
I request that the lien be subordinated to an
existing mortgage and the holder of the lien
agrees to subordinate (allow the mortgage lien to
take a higher priority). If I sell my home, the
buyer or their mortgage company may require me to
pay off the full remaining balance of this
obligation.
balance of this obligation before the home may be
sold. You should consider consulting with your
mortgage company or an attorney.
_______________
(Borrower
initials)
Monthly Mortgage Payments
Your payments will be added to your property tax
bill. Whether you pay your property taxes through
your mortgage payment, using an impound account,
or if you pay them directly to the tax collector,
you will need to save an estimated $_______ for
your first tax installment. If you pay your taxes
through an impound account you should notify your
lender, so that your monthly mortgage payment can
be adjusted by your lender to cover your increased
property tax bill.
_______________
(Borrower
initials)
Tax Benefits: Consult your tax advisor regarding
tax credits, credits and deductions, tax
deductibility, and other tax benefits available.
Making an appropriate application for the benefit
is your responsibility.
_______________
(Borrower
initials)
Statutory Penalties: If your
property tax payment is late,
the amount due will be subject
to a 10% penalty, late fees,
and 1.5% per month interest
penalty as established by state
law, and your property may be
subject to foreclosure.
_______________
(Borrower
initials)
Three Day Right to Cancel
You, the property owner, may cancel the contract
at any time prior to midnight on the third
business day after the date of the transaction to
enter into the agreement without any penalty or
obligation. To cancel this transaction, you may
mail or deliver a signed and dated copy of
the contract with notice of cancellation to:
___________ (name of business) at
___________ (address)
You may also cancel the contract by sending
notification of cancellation by email to the
following email address: _________________(email
address of business).
_______________
(Borrower initials)
Confirmation of Receipt
This confirms the receipt of the information
in this form. You do not have to accept this
financing just because you acknowledge that you
have received or signed this form, and it is NOT a
contract.
__________________________ __________________
(Property Owner Signature - ________
Date) (Property Owner
Signature - Date)
(c) A public agency or other party to a voluntary contractual
assessment described in this chapter for the purposes specified in
paragraph (2) of subdivision (a) of Section 5898.20 or a special tax
described in Section 53328.1 of the Government Code shall not make
any representations to a property owner regarding the effect the
financed improvements will have on the market value of the property
unless that public agency or other party derives its estimates of the
market value using one of the following:
(1) An automated valuation model, which is a computerized property
valuation system that is used to derive a real property value.
(2) A broker's price opinion conducted by a real estate broker
licensed pursuant to Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code.
(3) An appraisal conducted by a state licensed real estate
appraiser licensed pursuant to Part 3 (commencing with Section 11300)
of Division 4 of the Business and Professions Code.
(d) For the purposes of this section, "property owner" shall
include all persons listed on the title to the property.
owners of record.