1.1                          A bill for an act 
  1.2             relating to energy conservation; providing for 
  1.3             replacement heating systems and related energy 
  1.4             conservation measures in cities discontinuing district 
  1.5             heating systems; proposing coding for new law in 
  1.6             Minnesota Statutes, chapter 451. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  [451.10] [DISTRICT HEATING SYSTEM.] 
  1.9      Subdivision 1.  [APPLICATION.] Sections 451.10 to 451.17 
  1.10  apply to a city that: 
  1.11     (1) owns and operates a district heating system either 
  1.12  directly by the city council or by a utility board or utility 
  1.13  commission of the city; and 
  1.14     (2) has taken action under law or charter to discontinue 
  1.15  the operation of the district heating system in whole or in part.
  1.16     Subd. 2.  [SUPERSEDES OTHER LAW.] Sections 451.10 to 451.17 
  1.17  apply to the cities described in subdivision 1 notwithstanding a 
  1.18  contrary provision in a city charter or in any other law 
  1.19  including section 451.09. 
  1.20     Subd. 3.  [SUPPLEMENTAL TO OTHER LAW.] The powers granted 
  1.21  by sections 451.10 to 451.17 are supplemental and additional to 
  1.22  other powers granted by law or charter. 
  1.23     Sec. 2.  [451.11] [POLICY; PURPOSE.] 
  1.24     Subdivision 1.  [FINDINGS.] The legislature finds that it 
  1.25  is in the public interest that cities owning and operating a 
  1.26  district heating system that have determined to discontinue the 
  2.1   system in whole or in part be authorized to establish and 
  2.2   conduct a program to provide replacement heating and related 
  2.3   equipment to the owners of property whose district heating 
  2.4   service is discontinued.  The legislature also finds that the 
  2.5   cities should be authorized to adopt and implement programs to 
  2.6   provide for the installation of energy conservation equipment 
  2.7   and measures to enhance the efficient and economical use of 
  2.8   energy in buildings and structures served by a district heating 
  2.9   system and in which replacement heating systems are installed 
  2.10  under sections 451.10 to 451.17. 
  2.11     Subd. 2.  [PUBLIC PURPOSE.] The legislature further finds 
  2.12  that expenditures made by cities for a purpose in sections 
  2.13  451.10 to 451.17 are expenditures for a public purpose. 
  2.14     Sec. 3.  [451.12] [DEFINITIONS.] 
  2.15     Subdivision 1.  [APPLICATION.] In sections 451.10 to 451.17 
  2.16  the definitions in this section apply. 
  2.17     Subd. 2.  [CITY.] "City" means a city, however organized, 
  2.18  acting through its city council or through a public utilities 
  2.19  commission duly created by law or charter. 
  2.20     Subd. 3.  [REPLACEMENT HEATING SYSTEM IMPROVEMENT.] 
  2.21  "Replacement heating system improvement" means and includes 
  2.22  furnaces, boilers, and similar heat generating and exchanging 
  2.23  equipment together with related equipment, duct work, and 
  2.24  control mechanisms that are installed to provide heating, 
  2.25  ventilating, and air conditioning services in a building or 
  2.26  structure whose district heating service has been discontinued 
  2.27  by a city. 
  2.28     Subd. 4.  [ENERGY CONSERVATION IMPROVEMENT.] (a) "Energy 
  2.29  conservation improvement" means and includes, but is not limited 
  2.30  to, the following devices, methods, and materials, if 
  2.31  recommended by an energy audit approved in a program and having 
  2.32  a maximum cost of $20,000, that increase the efficiency of the 
  2.33  use of energy in a building or structure: 
  2.34     (1) insulation and ventilation; 
  2.35     (2) storm windows, thermal windows, and storm doors; 
  2.36     (3) caulking and weatherstripping; 
  3.1      (4) heating system modifications; and 
  3.2      (5) thermostats or lighting controls. 
  3.3      (b) The term does include a device or method that creates, 
  3.4   converts, or actively uses energy from renewable resources such 
  3.5   as wind, solar, photovoltaic cell, or biomass. 
  3.6      Subd. 5.  [PROGRAM.] "Program" means a statement of goals, 
  3.7   procedures, standards of eligibility, and methods of financing 
  3.8   for the installation of heating replacement system improvements 
  3.9   and energy conservation improvements. 
  3.10     Subd. 6.  [IMPROVEMENT.] "Improvement" includes replacement 
  3.11  heating system improvements and energy conservation improvements.
  3.12     Sec. 4.  [451.13] [PROGRAM.] 
  3.13     Subdivision 1.  [AFTER NOTICE AND HEARING.] A program may 
  3.14  be adopted by resolution of the city council of a city after 
  3.15  reasonable notice and hearing provided for by the city council. 
  3.16     Subd. 2.  [ELEMENTS.] The program must contain at least the 
  3.17  following elements: 
  3.18     (1) a description of the kinds of property eligible for 
  3.19  assistance with heating replacement improvements and energy 
  3.20  conservation improvements; 
  3.21     (2) procedures for accomplishing the improvements by the 
  3.22  city or private contractors; 
  3.23     (3) methods of financing the installation of the heating 
  3.24  replacement and energy conservation improvements; and 
  3.25     (4) the administrative agency of the city responsible for 
  3.26  conducting the program. 
  3.27     Subd. 3.  [DELEGATION.] The city council may by resolution 
  3.28  delegate the responsibility for the conduct of the program to a 
  3.29  public utilities commission or public utilities board of the 
  3.30  city. 
  3.31     Sec. 5.  [451.14] [INSTALLING THE IMPROVEMENTS.] 
  3.32     Subdivision 1.  [METHODS.] The program may provide for the 
  3.33  methods of installing the improvements set out in this 
  3.34  subdivision. 
  3.35     (a) The city may contract with one or more contractors to 
  3.36  perform work and furnish materials for the improvements. 
  4.1      (b) The owner of a building or structure eligible for an 
  4.2   improvement may contract for the installation of the 
  4.3   improvement, subject to approval by the city as provided in the 
  4.4   program. 
  4.5      (c) The city may contract with a property owner for the 
  4.6   installation of an improvement by the property owner, but no 
  4.7   payment under section 451.15 may be made for the property 
  4.8   owner's labor. 
  4.9      Subd. 2.  [INSPECTION AND CERTIFICATION.] The program must 
  4.10  provide a method by which a city official or employee may 
  4.11  inspect and is to certify the completed installation of the 
  4.12  improvement to ensure compliance with city codes and ordinances 
  4.13  and other standards specified in the program.  
  4.14     Subd. 3.  [COMPETITIVE BIDS.] Contracts entered into under 
  4.15  subdivision 1, paragraph (a), are subject to competitive bidding 
  4.16  requirements of law. 
  4.17     Sec. 6.  [451.15] [PAYMENTS; FINANCING.] 
  4.18     Subdivision 1.  [FINANCING.] The program may include one or 
  4.19  more of the methods described in this section for financing the 
  4.20  cost of the installation of improvements. 
  4.21     Subd. 2.  [CASH.] The city may contract with a property 
  4.22  owner for the payment in cash of the cost of the installation of 
  4.23  the improvements upon completion of the installation of the 
  4.24  improvements.  The payment must be secured by: 
  4.25     (1) a deposit with the city of 90 percent of the contract 
  4.26  price; or 
  4.27     (2) a written commitment from a bank or other financial 
  4.28  institution approved in the program to lend the property owner 
  4.29  the full amount of the contract price for payment to the city.  
  4.30     Subd. 3.  [PROMISSORY NOTE.] The city may accept payment of 
  4.31  the contract price by a promissory note from the property owner 
  4.32  delivered at the time of entering into the contract payable at 
  4.33  such times, not exceeding ten years, and in the amounts and at 
  4.34  the interest rate specified in the program. 
  4.35     Subd. 4.  [LIEN AS SECURITY.] The balance of payments due 
  4.36  under subdivision 2 and the entire principal of and interest on 
  5.1   a promissory note delivered under subdivision 3 are secured by a 
  5.2   lien created by this subdivision on the real property on which 
  5.3   the improvements are made.  If payment is not made according to 
  5.4   the terms of the program, or the note, the chief financial 
  5.5   officer of the city may certify the entire amount so due to the 
  5.6   county auditor for collection as other taxes are collected. 
  5.7      Subd. 5.  [SPECIAL ASSESSMENTS.] The program may provide 
  5.8   that at the request of the property owner the unpaid cost of the 
  5.9   installation of an improvement is to be specially assessed 
  5.10  against the real property on which the improvement is installed 
  5.11  in the manner provided by section 429.101, except that: 
  5.12     (1) the adoption of an ordinance is not required; and 
  5.13     (2) obligations issued to finance the improvements must 
  5.14  mature not later than ten years from the date of their issuance. 
  5.15     Sec. 7.  [451.16] [FINANCING; OBLIGATIONS.] 
  5.16     Subdivision 1.  [BONDS; OTHER OBLIGATIONS.] In addition to 
  5.17  the authority to issue obligations under section 429.101, a city 
  5.18  may issue its bonds or other obligations to finance the cost of 
  5.19  the installation of improvements as provided in this section. 
  5.20     Subd. 2.  [REVENUE OBLIGATIONS.] A city may issue and sell 
  5.21  its revenue obligations payable solely from the revenues derived 
  5.22  or to be derived from assessments and payments from property 
  5.23  owners under section 451.15, which revenues must be pledged to 
  5.24  the payment of the obligations.  Obligations issued under this 
  5.25  subdivision are considered to be payable wholly from the income 
  5.26  of a revenue producing convenience within the meaning of 
  5.27  sections 475.51 and 475.58. 
  5.28     Subd. 3.  [GENERAL OBLIGATIONS.] A city may issue and sell 
  5.29  its general obligations under chapter 475, payable from the 
  5.30  revenues and assessments derived or to be derived from property 
  5.31  owners under section 451.15, which revenues must be pledged to 
  5.32  the payment of the obligations.  General obligations must not be 
  5.33  issued unless the pledged revenues are estimated to equal at 
  5.34  least 105 percent of the amount necessary to pay when due the 
  5.35  principal of and interest on the obligations.  Obligations 
  5.36  issued under this subdivision are considered to be payable 
  6.1   wholly from the income of a revenue producing convenience within 
  6.2   the meaning of sections 475.51 and 475.58. 
  6.3      Sec. 8.  [451.17] [CITY OF VIRGINIA.] 
  6.4      The city of Virginia is considered to have complied with 
  6.5   section 451.09, notwithstanding section 451.09, subdivision 4. 
  6.6      Sec. 9.  [NO LOCAL APPROVAL; EFFECTIVE DATE.] 
  6.7      (a) This act does not require local approval as it fits 
  6.8   within the exception in section 645.023, subdivision 1, clause 
  6.9   (a). 
  6.10     (b) This act is effective the day after its final enactment.