Florida is keeping pace: House Bill 7179.

• Author: Friedman, Chad S.
• Position: City, County and Local Government Law - Reprint

As the ceremonial handkerchiefs fell and the dust settled on a busy sine die in Tallahassee, a bright piece of legislation emerged: House Bill 7179. The very last bill passed this legislative session, HB 7179 may have the rather innocuous title of an "act relating to qualifying improvements," but it is a ground breaking piece of legislation establishing Florida's Property Assessment Clean Energy (PACE) program.

This legislation, which was initiated and proposed by the Town of Cutler Bay and subsequently championed by Senator Michael S. Bennett and Representative Adam Hasner, is modeled on a similar program that was originally adopted by the City of Berkeley, California. The concept is so popular that it has since been adopted by 16 different states around the country in one form or another. This article explains the various provisions of HB 7179, legal issues surrounding the creation and implementation of a PACE program, and other potential challenges.

Eligible Improvements and Establishment of PACE

HB 7179 creates F.S. [section]163.08, which provides, in part, that local governments (1) may levy non-ad valorem assessments to fund "qualifying improvements." Qualifying improvements are defined as 1) energy conservation and efficiency improvements (e.g., installation of energy efficient cooling systems); 2) renewable energy improvements (e.g., installation of solar panels); and 3) wind-resistant improvements (e.g., hurricane shutters).

These improvements are required to be installed by a properly certified or registered contractor pursuant to F.S. Ch. 489. Local governments will need to consider whether to create further rules and regulations regarding those entities that may be hired to perform the work under its program.

Under HB 7179, local governments can adopt either an ordinance or resolution to create a program that will allow local governments to provide the upfront funds to cover the financing costs for the qualifying improvements. Property owners that reside within the boundaries of a local governmental entity that creates such a program will have the opportunity to voluntarily apply to the local government to receive the funding. Each different type of use (residential, commercial, industrial, etc.) on a property is eligible to participate in a PACE program.

The local government's investment in the property will be secured by a non-ad valorem assessment along with a recorded financing agreement, which would constitute a lien on the property. This lien will have equal dignity to taxes, which means it will have super priority in the event of foreclosure of the property.

Satisfying the Special Benefits Test

Prior to HB 7179, there was no express grant of authority for local governments to assess properties to finance such qualifying improvements. However, local governments do have broad home rule powers granted by the Florida Constitution, which may implicitly permit such assessments, so long as it passes what is usually described in common law as the "special benefits test." In order to satisfy this test, the following two requirements must exist: 1)...