HF 3688

3rd Engrossment - 90th Legislature (2017 - 2018) Posted on 05/09/2018 10:34am

A bill for an act
relating to energy; modifying the energy improvements program; providing
consumer protections for residential property assessed clean energy (PACE) loans;
providing remedies; amending Minnesota Statutes 2016, sections 45.011,
subdivision 1; 46.04, subdivision 1; 46.131, subdivisions 1, 2, 4; 216C.435,
subdivisions 1, 2, 3a, 6, 8, by adding subdivisions; 216C.436, subdivisions 1, 2,
5, 7, 8, 9, by adding a subdivision; 290B.03, subdivision 1; Minnesota Statutes
2017 Supplement, section 46.131, subdivision 11; proposing coding for new law
in Minnesota Statutes, chapter 216C; repealing Minnesota Statutes 2016, section
216C.435, subdivision 5.

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

Section 1.

Minnesota Statutes 2016, section 45.011, subdivision 1, is amended to read:

Subdivision 1.

Scope.

As used in chapters 45 to 80C, 80E to 83, 155A, new text begin 216C, new text end 332, 332A,
332B, 345, and 359, and sections 123A.21, subdivision 7, paragraph (a), clause (23);
123A.25; 325D.30 to 325D.42; 326B.802 to 326B.885; 386.62 to 386.78; 471.617; and
471.982, unless the context indicates otherwise, the terms defined in this section have the
meanings given them.

Sec. 2.

Minnesota Statutes 2016, section 46.04, subdivision 1, is amended to read:

Subdivision 1.

General.

The commissioner of commerce, referred to new text begin as the commissioner
new text end in chapters 46 to 59A, new text begin 216C, new text end 332A, and 332B deleted text begin as the commissioner deleted text end , is vested with all the
powers, authority, and privileges which, prior to the enactment of Laws 1909, chapter 201,
were conferred by law upon the public examiner, and shall take over all duties in relation
to state banks, savings banks, trust companies, savings associations, and other financial
institutions within the state which, prior to the enactment of chapter 201, were imposed
upon the public examiner. The commissioner of commerce shall exercise a constant
supervision, either personally or through the examiners herein provided for, over the books
and affairs of all state banks, savings banks, trust companies, savings associations, credit
unions, industrial loan and thrift companies, and other financial institutions doing business
within this state; and shall, through examiners, examine each financial institution at least
once every 24 calendar months. In satisfying this examination requirement, the commissioner
may accept reports of examination prepared by a federal agency having comparable
supervisory powers and examination procedures. With the exception of industrial loan and
thrift companies which do not have deposit liabilities and licensed regulated lenders, it shall
be the principal purpose of these examinations to inspect and verify the assets and liabilities
of each and so far investigate the character and value of the assets of each institution as to
determine with reasonable certainty that the values are correctly carried on its books. Assets
and liabilities shall be verified in accordance with methods of procedure which the
commissioner may determine to be adequate to carry out the intentions of this section. It
shall be the further purpose of these examinations to assess the adequacy of capital protection
and the capacity of the institution to meet usual and reasonably anticipated deposit
withdrawals and other cash commitments without resorting to excessive borrowing or sale
of assets at a significant loss, and to investigate each institution's compliance with applicable
laws and rules. Based on the examination findings, the commissioner shall make a
determination as to whether the institution is being operated in a safe and sound manner.
None of the above provisions limits the commissioner in making additional examinations
as deemed necessary or advisable. The commissioner shall investigate the methods of
operation and conduct of these institutions and their systems of accounting, to ascertain
whether these methods and systems are in accordance with law and sound banking principles.
The commissioner may make requirements as to records as deemed necessary to facilitate
the carrying out of the commissioner's duties and to properly protect the public interest.
The commissioner may examine, or cause to be examined by these examiners, on oath, any
officer, director, trustee, owner, agent, clerk, customer, or depositor of any financial
institution touching the affairs and business thereof, and may issue, or cause to be issued
by the examiners, subpoenas, and administer, or cause to be administered by the examiners,
oaths. In case of any refusal to obey any subpoena issued under the commissioner's direction,
the refusal may at once be reported to the district court of the district in which the bank or
other financial institution is located, and this court shall enforce obedience to these subpoenas
in the manner provided by law for enforcing obedience to subpoenas of the court. In all
matters relating to official duties, the commissioner of commerce has the power possessed
by courts of law to issue subpoenas and cause them to be served and enforced, and all
officers, directors, trustees, and employees of state banks, savings banks, trust companies,
savings associations, and other financial institutions within the state, and all persons having
dealings with or knowledge of the affairs or methods of these institutions, shall afford
reasonable facilities for these examinations, make returns and reports to the commissioner
of commerce as the commissioner may require; attend and answer, under oath, the
commissioner's lawful inquiries; produce and exhibit any books, accounts, documents, and
property as the commissioner may desire to inspect, and in all things aid the commissioner
in the performance of duties.

Sec. 3.

Minnesota Statutes 2016, section 46.131, subdivision 1, is amended to read:

Subdivision 1.

Examination fee authority.

Examination fees of the Department of
Commerce shall be assessed against financial institutions new text begin and residential PACE
administrators, as defined in section 216C.435, subdivision 10a, new text end in accordance with the
provisions of this section.

Sec. 4.

Minnesota Statutes 2016, section 46.131, subdivision 2, is amended to read:

Subd. 2.

Assessment authority.

Each bank, trust company, savings bank, savings
association, regulated lender, industrial loan and thrift company, credit union, motor vehicle
sales finance company, debt management services provider, debt settlement services provider,
deleted text begin and deleted text end insurance premium finance company new text begin , and residential PACE administrator, as defined
in section 216C.435, subdivision 10a, new text end organized under the laws of this state or required to
be administered by the commissioner of commerce shall pay into the state treasury its
proportionate share of the cost of maintaining the Department of Commerce.

Sec. 5.

Minnesota Statutes 2016, section 46.131, subdivision 4, is amended to read:

Subd. 4.

General assessment basis.

new text begin (a) new text end Assessments shall be made by the commissioner
against each institution within the industry on an equitable basis, according to the total assets
of each institution as of the end of the previous calendar year.

new text begin (b) Assessments against residential PACE administrators, as defined in section 216C.435,
subdivision 10a, must be made by the commissioner according to the total business volume
as of the end of the previous calendar year.
new text end

Sec. 6.

Minnesota Statutes 2017 Supplement, section 46.131, subdivision 11, is amended
to read:

Subd. 11.

Financial institutions account; appropriation.

(a) The financial institutions
account is created as a separate account in the special revenue fund. The account consists
of funds received from assessments under subdivision 7 deleted text begin and deleted text end new text begin , new text end examination fees under
subdivision 8 new text begin , and license and renewal fees under section 216C.437, subdivision 12 new text end . Earnings,
including interest, dividends, and any other earnings arising from account assets, must be
credited to the account.

(b) Funds in the account are annually appropriated to the commissioner of commerce
for activities under this section.

Sec. 7.

Minnesota Statutes 2016, section 216C.435, subdivision 1, is amended to read:

Subdivision 1.

Scope.

For the purposes of deleted text begin this section and section 216C.436 deleted text end new text begin sections
216C.435 to 216C.437 new text end , the new text begin following new text end terms deleted text begin defined in this section deleted text end have the meanings given
them.

Sec. 8.

Minnesota Statutes 2016, section 216C.435, subdivision 2, is amended to read:

Subd. 2.

Authority.

"Authority" means a housing and redevelopment authority or
economic development authority created pursuant to section 469.003, 469.004, or 469.091,
a port authority pursuant to section 469.049, 469.1082, or special law, or another entity
authorized by law to exercise the powers of an authority created pursuant to one of those
sections. new text begin Authority does not include a residential PACE administrator.
new text end

Sec. 9.

Minnesota Statutes 2016, section 216C.435, subdivision 3a, is amended to read:

Subd. 3a.

Cost-effective energy improvements.

"Cost-effective energy improvements"
mean deleted text begin energy improvements deleted text end new text begin :
new text end

new text begin (1) any renovation or retrofitting of:
new text end

new text begin (i) qualifying commercial real property to improve energy efficiency that is permanently
affixed to the property, results in a net reduction in energy consumption without altering
the principal source of energy, and has been identified in an energy audit as repaying the
purchase and installation costs in 20 years or less, based on the amount of future energy
saved and estimated future energy prices; or
new text end

new text begin (ii) qualifying residential real property that is permanently affixed to the property and
is eligible to receive an incentive through a program offered by the electric or natural gas
utility that provides service under section 216B.241 to the property or is otherwise determined
to be a cost-effective energy improvement by the commissioner under section 216B.241,
subdivision 1d, paragraph (a);
new text end

new text begin (2) permanent installation of new or upgraded electrical circuits and related equipment
to enable electrical vehicle charging; or
new text end

new text begin (3) a solar voltaic or solar thermal energy system attached to, installed within, or
proximate to a building that generates electrical or thermal energy from a renewable energy
source new text end that deleted text begin have deleted text end new text begin has new text end been identified in an energy audit or renewable energy system feasibility
study as repaying their purchase and installation costs in 20 years or less, based on the
amount of future energy saved and estimated future energy prices.

Sec. 10.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 3b. new text end

new text begin Commercial PACE loan program. new text end

new text begin "Commercial PACE loan program" means
a financing program established under section 216C.436.
new text end

Sec. 11.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 3c. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

Sec. 12.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 5a. new text end

new text begin Homeowner. new text end

new text begin "Homeowner" means an owner of qualifying residential real
property. Homeowner includes all the persons on the deed having a legal interest in the
property and all persons on the mortgage or note.
new text end

Sec. 13.

Minnesota Statutes 2016, section 216C.435, subdivision 6, is amended to read:

Subd. 6.

Implementing entity.

"Implementing entity" means the local government or
an authority designated by the local government by resolution to implement and administer
programs described in deleted text begin section deleted text end new text begin sections new text end 216C.436 new text begin and 216C.437. Implementing entity does
not include a residential PACE administrator new text end .

Sec. 14.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 7b. new text end

new text begin PACE. new text end

new text begin "PACE" means property assessed clean energy.
new text end

Sec. 15.

Minnesota Statutes 2016, section 216C.435, subdivision 8, is amended to read:

Subd. 8.

Qualifying new text begin commercial new text end real property.

"Qualifying new text begin commercial new text end real property"
means a deleted text begin single-family or deleted text end multifamily residential dwelling, or a commercial or industrial
building, that the implementing entity has determined, after review of an energy audit or
renewable energy system feasibility study, can be benefited by installation of cost-effective
energy improvements.

Sec. 16.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 8a. new text end

new text begin Qualifying residential real property. new text end

new text begin "Qualifying residential real property"
means a single-family residential dwelling, or other residential dwelling of four or fewer
units, that the implementing entity has determined can be benefited by installation of
cost-effective energy improvements.
new text end

Sec. 17.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 10a. new text end

new text begin Residential PACE administrator. new text end

new text begin "Residential PACE administrator" means
an entity with which the implementing entity contracts to administer all or part of a residential
PACE loan program. For purposes of this subdivision, "administer" includes, but is not
limited to, the performance of any or all of the following acts, whether directly or through
an agent:
new text end

new text begin (1) marketing, offering, selling, facilitating, or financing, in whole or in part, a residential
PACE loan;
new text end

new text begin (2) facilitating, arranging, or contracting for the installation of the cost-effective energy
improvements financed through a residential PACE loan; or
new text end

new text begin (3) offering any other service to an implementing entity in connection with the offering
or provision of a residential PACE loan or operating a residential PACE program.
new text end

Sec. 18.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 10b. new text end

new text begin Residential PACE loan contract. new text end

new text begin "Residential PACE loan contract" means
the legal agreement for the financing and installation of cost-effective energy improvements
under the residential PACE program.
new text end

Sec. 19.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 10c. new text end

new text begin Residential PACE contractor. new text end

new text begin "Residential PACE contractor" means a
person or entity that installs cost-effective energy improvements financed, in whole or in
part, by a PACE loan.
new text end

Sec. 20.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 10d. new text end

new text begin Residential PACE lien. new text end

new text begin "Residential PACE lien" means the encumbrance
on the qualifying residential real property created by the special assessment as provided in
section 216C.437, subdivision 28.
new text end

Sec. 21.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 10e. new text end

new text begin Residential PACE loan. new text end

new text begin "Residential PACE loan" means the extension of
financing that is offered to pay for the installation of cost-effective energy improvements
on a homeowner's qualifying residential real property and is repayable by the homeowner
through a special assessment as provided under section 216C.437, subdivision 28.
new text end

Sec. 22.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 10f. new text end

new text begin Residential PACE loan program. new text end

new text begin "Residential PACE loan program" means
the financing program established under section 216C.437.
new text end

Sec. 23.

Minnesota Statutes 2016, section 216C.435, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Vulnerable adult. new text end

new text begin "Vulnerable adult" means any person 18 years of age or
older who:
new text end

new text begin (1) receives services from a home care provider required to be licensed under sections
144A.43 to 144A.482, or from a person or organization that offers, provides, or arranges
for personal care assistance services under the medical assistance program as authorized
under section 256B.0625, subdivision 19a, 256B.0651, 256B.0653, 256B.0654, 256B.0659,
or 256B.85;
new text end

new text begin (2) possesses a physical or mental infirmity or other physical, mental, or emotional
dysfunction that impairs the individual's ability to provide adequately for the individual's
own care without assistance, including the provision of food, shelter, clothing, health care,
or supervision;
new text end

new text begin (3) possesses a physical or mental infirmity or other physical, mental, or emotional
dysfunction that impairs the individual's ability to knowingly contract or otherwise protect
the individual's own self-interest; or
new text end

new text begin (4) identifies as having dementia or Alzheimer's disease, or who exhibits behaviors that
a reasonable person would suspect indicates the adult has Alzheimer's disease or other
dementia.
new text end

Sec. 24.

Minnesota Statutes 2016, section 216C.436, subdivision 1, is amended to read:

Subdivision 1.

Program new text begin purpose and new text end authority.

An implementing entity may establish
a new text begin commercial PACE loan new text end program to finance new text begin cost-effective new text end energy improvements to enable
owners of qualifying new text begin commercial new text end real property to pay for new text begin the new text end cost-effective energy
improvements to the qualifying real property with the net proceeds and interest earnings of
revenue bonds authorized in this section. An implementing entity may limit the number of
qualifying new text begin commercial new text end real properties for which a property owner may receive program
financing. new text begin The program must serve a public purpose and not primarily be for the benefit of
private entities or private investors even though private benefit may result incidentally.
new text end

Sec. 25.

Minnesota Statutes 2016, section 216C.436, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Scope. new text end

new text begin Unless otherwise specified, this section applies only to programs
established under subdivision 1 that are offered to an owner of qualifying commercial real
property.
new text end

Sec. 26.

Minnesota Statutes 2016, section 216C.436, subdivision 2, is amended to read:

Subd. 2.

Program requirements.

A deleted text begin financing deleted text end new text begin commercial PACE loan new text end program must:

(1) impose requirements and conditions on financing arrangements to ensure timely
repayment;

(2) require an energy audit or renewable energy system feasibility study to be conducted
on the qualifying new text begin commercial new text end real property and reviewed by the implementing entity prior
to approval of the financing;

(3) require the inspection of all installations and a performance verification of at least
ten percent of the new text begin cost-effective new text end energy improvements financed by the program;

(4) not prohibit the financing of all cost-effective energy improvements not otherwise
prohibited by this section;

(5) require that all cost-effective energy improvements be made to a qualifying
new text begin commercial new text end real property prior to, or in conjunction with, an applicant's repayment of
financing for new text begin cost-effective new text end energy improvements for that property;

(6) have new text begin cost-effective new text end energy improvements financed by the program performed by
licensed contractors as required by chapter 326B or other law or ordinance;

(7) require disclosures to borrowers by the implementing entity of the risks involved in
borrowing, including the risk of foreclosure if a tax delinquency results from a default;

(8) provide financing only to those who demonstrate an ability to repay;

(9) not provide financing for a qualifying new text begin commercial new text end real property in which the owner
is not current on mortgage or real property tax payments;

(10) require a petition to the implementing entity by all owners of the qualifying
new text begin commercial new text end real property requesting collections of repayments as a special assessment under
section 429.101;

(11) provide that payments and assessments are not accelerated due to a default and that
a tax delinquency exists only for assessments not paid when due; and

(12) require that liability for special assessments related to the financing runs with the
qualifying new text begin commercial new text end real property.

Sec. 27.

Minnesota Statutes 2016, section 216C.436, subdivision 5, is amended to read:

Subd. 5.

Coordination with other programs.

A deleted text begin financing deleted text end new text begin commercial PACE loan new text end
program must include cooperation and coordination with the conservation improvement
activities of the utility serving the qualifying new text begin commercial new text end real property new text begin under section
216B.241 new text end and other public and private energy improvement programs.

Sec. 28.

Minnesota Statutes 2016, section 216C.436, subdivision 7, is amended to read:

Subd. 7.

Repayment.

An implementing entity that finances an energy improvement
under this section must:

(1) secure payment with a lien against the qualifying new text begin commercial new text end real property; and

(2) collect repayments as a special assessment as provided for in section 429.101 or by
charter, provided that special assessments may be made payable in up to 20 equal annual
installments.

If the implementing entity is an authority, the local government that authorized the
authority to act as implementing entity shall impose and collect special assessments necessary
to pay debt service on bonds issued by the implementing entity under subdivision 8, and
shall transfer all collections of the assessments upon receipt to the authority.

Sec. 29.

Minnesota Statutes 2016, section 216C.436, subdivision 8, is amended to read:

Subd. 8.

Bond issuance; repayment.

(a) An implementing entity may issue revenue
bonds as provided in chapter 475 for the purposes of this section new text begin and section 216C.437 new text end ,
provided the revenue bond must not be payable more than 20 years from the date of issuance.

(b) The bonds must be payable as to both principal and interest solely from the revenues
from the assessments established in subdivision 7 new text begin and section 216C.437, subdivision 28 new text end .

(c) No holder of bonds issued under this subdivision may compel any exercise of the
taxing power of the implementing entity that issued the bonds to pay principal or interest
on the bonds, and if the implementing entity is an authority, no holder of the bonds may
compel any exercise of the taxing power of the local government. Bonds issued under this
subdivision are not a debt or obligation of the issuer or any local government that issued
them, nor is the payment of the bonds enforceable out of any money other than the revenue
pledged to the payment of the bonds.

Sec. 30.

Minnesota Statutes 2016, section 216C.436, subdivision 9, is amended to read:

Subd. 9.

Supplemental funding sources.

(a) An implementing entity is authorized to
establish, acquire, and use additional or alternative funding sources for the purposes of this
section new text begin and section 216C.437 new text end .

(b) For the purposes of this subdivision new text begin and section 216C.437 new text end , additional or alternative
funding sources do not include issuance of general obligation bonds.

Sec. 31.

new text begin [216C.437] RESIDENTIAL PACE LOAN PROGRAM; AUTHORITY;
CONSUMER PROTECTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin This section applies only to programs established under subdivision
2 that are offered to a homeowner.
new text end

new text begin Subd. 2. new text end

new text begin Program purpose and authority. new text end

new text begin (a) An implementing entity may establish
a residential PACE loan program to finance cost-effective energy improvements to enable
homeowners to pay for the cost-effective energy improvements to qualifying residential
real property with the net proceeds and interest earnings of revenue bonds authorized in
section 216C.436, subdivision 8. The program must serve a public purpose and not primarily
be for the benefit of private entities or private investors even though private benefit may
result incidentally.
new text end

new text begin (b) An implementing entity may limit the number of qualifying residential real properties
for which a homeowner may receive program financing.
new text end

new text begin (c) No implementing entity or residential PACE administrator may:
new text end

new text begin (1) provide, offer, or facilitate financing to a homeowner who is not current on mortgage
or real property tax payments; or
new text end

new text begin (2) permit a homeowner to have more than one residential PACE loan outstanding at a
time or a combination of a residential PACE loan and one or more other loan products
offered by the administrator or any affiliate or related entity of the administrator.
new text end

new text begin (d) Upon completion of a project, an implementing entity shall provide a homeowner
with a certificate stating participation in the program and identify what cost-effective energy
improvements have been made with financing program proceeds.
new text end

new text begin Subd. 3. new text end

new text begin Financing terms. new text end

new text begin (a) An implementing entity shall ensure that financing
provided under this section has:
new text end

new text begin (1) a cost-weighted average maturity not exceeding the useful life of the cost-effective
energy improvements installed, as determined by the commissioner, but in no event may a
term exceed 20 years; and
new text end

new text begin (2) a principal amount not to exceed:
new text end

new text begin (i) for a residential PACE loan for energy efficiency improvements only, the lesser of
ten percent of the assessed value of the real property on which the improvements are to be
installed or the actual cost of installing the cost-effective energy improvements; and
new text end

new text begin (ii) for a residential PACE loan for a renewable energy system or a combination of a
renewable energy system and energy efficiency improvements, the lesser of 20 percent of
the assessed value of the real property on which the improvements are to be installed or the
actual cost of installing the cost-effective energy improvements.
new text end

new text begin For the purposes of this clause, the "actual cost of installing cost-effective energy
improvements" includes the costs of necessary equipment, materials and labor, and the cost
of verification of installation.
new text end

new text begin (b) The combined debt of existing mortgages, the residential PACE lien, and all other
liens on the qualified residential real property may not exceed 90 percent of the assessed
value of the real property.
new text end

new text begin Subd. 4. new text end

new text begin PACE lien position. new text end

new text begin (a) Notwithstanding any statute or ordinance to the
contrary, a residential PACE lien shall be:
new text end

new text begin (1) subordinate to all liens on the qualifying residential real property recorded prior to
the time the PACE lien is recorded;
new text end

new text begin (2) subordinate to a first mortgage or deed of trust on the qualifying property recorded
after the PACE lien is recorded; and
new text end

new text begin (3) superior to any other lien on the qualifying residential real property recorded after
the PACE lien is recorded.
new text end

new text begin (b) Notwithstanding any other law to the contrary, in the event of a foreclosure sale or
a sale pursuant to the exercise of a power of sale under a deed of trust relating to a qualifying
residential real property, the holders of any mortgages or other liens, including delinquent
annual assessments secured by PACE liens, shall receive proceeds in accordance with the
priorities established under paragraph (a).
new text end

new text begin Subd. 5. new text end

new text begin Lienholder notice. new text end

new text begin (a) An implementing entity or a residential PACE
administrator may not enter into a residential PACE loan contract with a homeowner unless
the implementing entity or the residential PACE administrator has provided written notice
to each of the servicers of any mortgage or other lien on the qualifying residential real
property that the homeowner intends to enter into a residential PACE loan contract. A notice
of the PACE loan containing the legal description of the property shall be recorded by the
PACE administrator with the county recorder or registrar of titles, as appropriate, within
30 days of the first date of funding of the PACE loan.
new text end

new text begin (b) No residential PACE loan may be made unless the implementing entity or the
residential PACE administrator obtains written, signed confirmation from the servicer of
any mortgage or other lien on the qualifying residential real property that entering into the
residential PACE loan contract does not constitute an event of default or give rise to any
remedies under the terms of the mortgage loan or other contractual agreement.
new text end

new text begin Subd. 6. new text end

new text begin Licensing. new text end

new text begin No residential PACE administrator may operate in this state without
first obtaining a license from the commissioner. An administrator applying for a license
must provide the following information in a form prescribed by the commissioner:
new text end

new text begin (1) the full name of each natural person who is a principal of the administrator;
new text end

new text begin (2) the mailing address, which must not be a post office box, the telephone number, and,
if applicable, the e-mail address of the primary office of the administrator and any branch
offices in this state;
new text end

new text begin (3) consent to the jurisdiction of the courts of this state;
new text end

new text begin (4) the name and address of the registered agent in this state authorized to accept service
of process on behalf of the administrator;
new text end

new text begin (5) disclosure of:
new text end

new text begin (i) whether any controlling or affiliated party has ever been convicted of a crime or found
civilly liable for an offense involving moral turpitude, including forgery, embezzlement,
obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any
other similar offense or violation, or any violation of a federal or state law or regulation
relating to any consumer fraud, false advertising, deceptive trade practices, or similar
consumer protection law;
new text end

new text begin (ii) any judgments, private or public litigation, tax liens, written complaints, administrative
actions, or investigations by any government agency against the administrator, or against
any officer, director, manager, or shareholder of owning more than five percent interest in
the administrator, unresolved or otherwise, filed or otherwise commenced within the
preceding ten years;
new text end

new text begin (iii) whether the administrator, or any person employed by the administrator, has had a
record of having defaulted in the payment of money collected for others, including the
discharge of debts through bankruptcy proceedings; and
new text end

new text begin (iv) whether authority granted to the administrator to operate in any other state has ever
been denied, revoked, or suspended; and
new text end

new text begin (6) any other information and material as the commissioner may require.
new text end

new text begin Subd. 7. new text end

new text begin Term of license. new text end

new text begin Licenses for residential PACE administrators issued under
this chapter expire on December 31 and are renewable on January 1 of each year after that
date.
new text end

new text begin Subd. 8. new text end

new text begin Timely renewal. new text end

new text begin (a) A person whose application is properly and timely filed
and who has not received notice of denial of renewal is considered approved for renewal,
and the person may continue to transact business as a residential PACE administrator whether
or not the renewed license has been received on or before January 1 of the renewal year.
An application for renewal of a license is considered timely filed if received by the
commissioner by December 15 of the renewal year. An application for renewal is considered
properly filed if made upon forms duly executed and sworn to, accompanied by fees
prescribed by this chapter, and containing any information that the commissioner requires.
new text end

new text begin (b) A person who fails to make a timely application for renewal of a license and who
has not received the renewal license as of January 1 of the renewal year is unlicensed until
the renewal license has been issued by the commissioner and is received by the person.
new text end

new text begin Subd. 9. new text end

new text begin Contents of renewal application. new text end

new text begin Application for the renewal of an existing
license must contain the request for renewal and any changes to the information specified
in subdivision 6.
new text end

new text begin Subd. 10. new text end

new text begin Cancellation. new text end

new text begin A licensee ceasing an activity or activities regulated by this
chapter and desiring to no longer be licensed shall simultaneously inform the commissioner
in writing and surrender the license and all other symbols or indicia of licensure. The licensee
shall include a plan for the withdrawal from regulated business, including a timetable for
the disposition of the business.
new text end

new text begin Subd. 11. new text end

new text begin Powers of the commissioner. new text end

new text begin (a) The commissioner has under this section
the same powers the commissioner has under section 45.027, including the authority to
impose a civil penalty not to exceed $10,000 per violation.
new text end

new text begin (b) The commissioner may condition or refuse to renew a license for any of the reasons
the commissioner may deny, suspend, or revoke a license.
new text end

new text begin (c) The commissioner may order restitution against persons subject to this section for
violations of this section.
new text end

new text begin (d) The commissioner may issue orders or directives under this section as follows:
new text end

new text begin (1) order or direct persons subject to this chapter to cease and desist from conducting
business, including immediate temporary orders to cease and desist;
new text end

new text begin (2) order or direct persons subject to this chapter to cease any harmful activities or
violations of this chapter, including immediate temporary orders to cease and desist;
new text end

new text begin (3) enter immediate temporary orders to cease business under a license if the
commissioner determines that the license was erroneously granted or the licensee is currently
in violation of this chapter; and
new text end

new text begin (4) order or direct other affirmative action the commissioner considers necessary.
new text end

new text begin (e) Each violation or failure to comply with any directive or order of the commissioner
is a separate and distinct violation or failure.
new text end

new text begin Subd. 12. new text end

new text begin Fees. new text end

new text begin The following fees must be paid to the commissioner:
new text end

new text begin (1) for an initial license, $1,000; and
new text end

new text begin (2) for a renewal license, $500.
new text end

new text begin Subd. 13. new text end

new text begin Financial examinations. new text end

new text begin The commissioner shall have the power vested under
section 46.04 to conduct financial examinations of licensees. Each residential PACE
administrator must keep, and use in licensee's business, any books, accounts, and records,
including electronic records, as will enable the commissioner to determine whether the
licensee is complying with this section and any rules, orders, and directives adopted by the
commissioner under this section. Every licensee must preserve the books, accounts, and
records for at least six years after making the final entry on any transaction recorded.
Examinations of the books, records, and method of operations conducted under the
supervision of the commissioner shall be done at the cost of the licensee. The cost must be
assessed as determined under section 46.131.
new text end

new text begin Subd. 14. new text end

new text begin Bond. new text end

new text begin (a) An applicant for a residential PACE administrator license must file
with the department a surety bond in the amount of $100,000, issued by an insurance
company authorized to do so in this state. The bond must cover all persons who are
employees or agents of the applicant. The bond must be available for the recovery of
expenses, fines, and fees levied by the commissioner under this chapter and for losses
incurred by homeowners as a result of a licensee's noncompliance with the requirements of
this section, sections 325D.43 to 325D.48, 325F.67 to 325F.69, or breach of contract relating
to activities regulated by this chapter.
new text end

new text begin (b) The bond must be submitted with the administrator's license application and evidence
of continued coverage must be submitted with each renewal. Any change in the bond must
be submitted for approval by the commissioner within ten days of its execution. The bond
or a substitute bond shall remain in effect during all periods of licensing.
new text end

new text begin (c) A licensee shall maintain or increase its surety bond to reflect the total dollar amount
of the residential PACE loans made in this state in the preceding year according to the table
in this paragraph. A licensee may decrease its surety bond according to the table in this
paragraph if the surety bond required is less than the amount of the surety bond on file with
the department.
new text end

new text begin Dollar Amount of Residential PACE Loans new text end	new text begin Surety Bond Required new text end
new text begin $0 to $5,000,000 new text end	new text begin $100,000 new text end
new text begin $5,000,000.01 to $10,000,000 new text end	new text begin $125,000 new text end
new text begin $10,000,000.01 to $25,000,000 new text end	new text begin $150,000 new text end
new text begin Over $25,000,000 new text end	new text begin $200,000 new text end

new text begin Subd. 15. new text end

new text begin Annual reporting. new text end

new text begin Residential PACE administrators shall file reports by
March 31 of each year on forms supplied by the commissioner and containing information
required by the commissioner.
new text end

new text begin Subd. 16. new text end

new text begin Residential PACE loan contracts. new text end

new text begin (a) A residential PACE loan contract
must:
new text end

new text begin (1) be in writing and must be signed by:
new text end

new text begin (i) the homeowner;
new text end

new text begin (ii) all other persons on the deed, mortgage, or note having a legal interest in the property;
new text end

new text begin (iii) the residential PACE contractor; and
new text end

new text begin (iv) the residential PACE administrator;
new text end

new text begin (2) contain all the terms and conditions of a residential PACE loan and the installation
of cost-effective energy improvements;
new text end

new text begin (3) be written in English and the primary language of the homeowner:
new text end

new text begin (i) at the homeowner's request;
new text end

new text begin (ii) if the residential PACE loan is advertised in that language; or
new text end

new text begin (iii) if the residential PACE loan contract was described, discussed, or negotiated in that
language, regardless of whether the residential PACE loan is advertised in that language;
new text end

new text begin (4) conspicuously display both the verbatim statement that "[insert name of the residential
PACE administrator] is licensed with the Minnesota Department of Commerce" and the
license number of the administrator;
new text end

new text begin (5) conspicuously display both the verbatim statement that "[insert name of the residential
PACE contractor] is licensed by [insert name of agency]" and the license number of the
contractor;
new text end

new text begin (6) offer a fixed, simple interest rate;
new text end

new text begin (7) charge an interest rate that does not exceed the interest rate limit set forth under
section 334.01, subdivision 1, unless the residential PACE administrator is otherwise
authorized to make loans under section 47.20;
new text end

new text begin (8) fully amortize the debt obligation;
new text end

new text begin (9) at any time, permit prepayment of some or all of the residential PACE loan balance;
and
new text end

new text begin (10) include the right to rescind, as provided under subdivision 19.
new text end

new text begin (b) If a homeowner is requested to provide an electronic signature on the residential
PACE loan contract:
new text end

new text begin (1) the residential PACE contractor and residential PACE administrator must comply
with United States Code, title 15, chapter 96; and
new text end

new text begin (2) the residential PACE contractor or residential PACE administrator shall deliver a
paper copy of the residential PACE loan contract to the homeowner no later than five
business days following receipt from the homeowner of the electronically signed contract.
new text end

new text begin (c) A residential PACE loan may not:
new text end

new text begin (1) result at any time in negative amortization;
new text end

new text begin (2) charge any interest upon interest or upon fees;
new text end

new text begin (3) notwithstanding section 429.061, subdivision 1, contain any provision under which
the homeowner is prohibited or restricted from making a prepayment or requiring a penalty,
fee, premium, or other charge for prepayment of some or all of the residential PACE loan;
new text end

new text begin (4) contain any provision requiring forced arbitration or restricting class actions; or
new text end

new text begin (5) be entered into with a contract for deed vendee or vendor for the otherwise qualifying
residential real property that is subject to the contract for deed.
new text end

new text begin (d) It shall be unlawful for a residential PACE administrator or a residential PACE
contractor to enter into a residential PACE loan contract financed through a residential
PACE loan with a homeowner who the administrator or contractor knew or should have
known:
new text end

new text begin (1) is a vulnerable adult;
new text end

new text begin (2) is a homeowner who is not sufficiently competent to understand the terms of the
loan; or
new text end

new text begin (3) does not have the ability to repay the loan, as provided under subdivision 17.
new text end

new text begin Subd. 17. new text end

new text begin Underwriting. new text end

new text begin (a) No residential PACE loan may be executed by a residential
PACE administrator or a residential PACE contractor unless the administrator has first
verified the ability of the homeowner to repay the residential PACE loan by:
new text end

new text begin (1) determining that the ratio of the homeowner's total monthly debt to total monthly
income at the time the loan is executed does not exceed 43 percent;
new text end

new text begin (2) determining that the homeowner has sufficient residual income to meet basic living
expenses;
new text end

new text begin (3) considering whether reductions in income or increases in debt that could adversely
impact the ability of the homeowner to repay the residential PACE loan are reasonably
anticipated to occur following the execution of the residential PACE loan; and
new text end

new text begin (4) considering any other factors, including credit reports and credit scores, that indicate
that the homeowner may not have the ability to repay the residential PACE loan.
new text end

new text begin (b) For the purposes of this subdivision:
new text end

new text begin (1) "total monthly income" means the sum of the homeowner's current or reasonably
expected income. Income may not be derived from temporary sources of income, illiquid
assets, or proceeds derived from the equity the homeowner has in the qualifying residential
real property;
new text end

new text begin (2) "total monthly debt" means the sum of the homeowner's monthly debt obligations
including but not limited to mortgage-related obligations that include all mortgage principal
and interest payments; other secured debt; mortgage guaranty insurance; any other insurance;
property taxes; preexisting fees and assessments on the property, including the PACE
assessment; unsecured debt; alimony; and child support;
new text end

new text begin (3) "residual income" means the homeowner's remaining income after subtracting the
homeowner's total monthly debt obligations from the homeowner's total monthly income;
new text end

new text begin (4) "basic living expenses" include but are not limited to food and other household
necessities; medical expenses, including premiums, co-pays, and the cost of prescriptions
and over-the-counter remedies; transportation costs such as fuel, auto insurance, and
maintenance; public transit costs; and utility expenses; and
new text end

new text begin (5) "current or reasonably expected income" includes income from assets and excludes
the value of the qualifying residential real property, including any attached real property,
that secures the residential PACE loan.
new text end

new text begin (c) The residential PACE administrator must use only reliable documents and records
to verify the homeowner's ability to repay the residential PACE loan. Reliable documents
and records include Internal Revenue Service Form W-2 (Wage and Tax Statement) or other
similar Internal Revenue Service forms that are used for reporting wages or tax withholding,
tax returns, payroll receipts and statements, and financial institution records and statements.
A statement by the homeowner to the residential PACE administrator of the homeowner's
income is not sufficient to establish the existence of the income or resources when verifying
the homeowner's ability to repay the residential PACE loan.
new text end

new text begin Subd. 18. new text end

new text begin Oral confirmation. new text end

new text begin (a) Prior to the execution by the homeowner of a residential
PACE contract and prior to the commencement of any installation of any energy
improvement, the residential PACE administrator must orally, in a live, recorded telephone
conversation with the homeowner:
new text end

new text begin (1) confirm the key terms of the agreement and the scope of energy improvement work,
including, at a minimum, the measures to be installed that are financed by a residential
PACE loan, the total estimated annual payment, the date the first tax payment will be due,
the interest rate expressed as an annual percentage rate, the term of the loan, and that
repayments will be made through the homeowner's property taxes;
new text end

new text begin (2) verify that the homeowner understands:
new text end

new text begin (i) the key terms of the agreement;
new text end

new text begin (ii) that if taxes are escrowed, by how much the escrowed amounts will increase or, if
taxes are not escrowed, that the homeowner should consider saving enough money during
the year to cover the additional residential PACE assessment;
new text end

new text begin (iii) that the residential PACE loan becomes a PACE lien on the homeowner's property
and will likely need to be paid off when the house is sold;
new text end

new text begin (iv) the monetary penalty that accompanies a homeowner delinquency or default on
property tax payments; and
new text end

new text begin (v) that the homeowner has the right to rescind a residential PACE loan contract, as
provided in subdivision 19; and
new text end

new text begin (3) communicate that:
new text end

new text begin (i) energy savings are not guaranteed and the risk that energy savings from the
cost-effective energy improvements may not equal or exceed the residential PACE loan
payments that will be added to the homeowner's property taxes;
new text end

new text begin (ii) refinancing a home encumbered by a residential PACE lien will likely be more
difficult or impossible;
new text end

new text begin (iii) selling a home encumbered by a residential PACE lien will likely be more difficult;
and
new text end

new text begin (iv) the homeowner risks tax forfeiture or foreclosure upon default.
new text end

new text begin (b) At the commencement of the oral confirmation, the administrator must ask if the
homeowner would prefer to communicate during the oral confirmation primarily in a
language other than English. If the preferred language is supported by the residential PACE
administrator, the oral confirmation shall be given in the preferred language, except where
the homeowner on the call chooses to communicate through an interpreter chosen by the
homeowner. If the preferred language is not supported and an interpreter is not chosen by
the homeowner on the call, the administrator shall terminate the call and no residential
PACE loan contract may be executed.
new text end

new text begin (c) Notwithstanding paragraph (b), the oral confirmation must be conducted in the
primary language of the homeowner if the PACE contract was explained, discussed, or
negotiated in that language.
new text end

new text begin (d) A voice mail message does not meet the requirements of this subdivision.
new text end

new text begin (e) For purposes of this subdivision, "an interpreter chosen by the homeowner" means
a person 18 years of age or older who is able to speak fluently and read with full
understanding both the English language and the preferred language of the homeowner,
and:
new text end

new text begin (1) who is not employed by the residential PACE administrator or the residential PACE
contractor or an affiliate or related entity of the administrator or contractor; or
new text end

new text begin (2) whose services are not made available through the administrator or the contractor.
new text end

new text begin Subd. 19. new text end

new text begin Right to rescind a residential PACE loan contract. new text end

new text begin (a) A homeowner shall
have the right to rescind, without penalty or obligation, a residential PACE loan contract
until midnight on the third calendar day following execution of the contract by the
homeowner. For the purposes of this subdivision, the rescission period begins at 12:01 a.m.
of the day following the day the contract was executed by the homeowner.
new text end

new text begin (b) The homeowner shall notify the offering party of the rescission by:
new text end

new text begin (1) mail or other written communications delivered to the offeror's physical address; or
new text end

new text begin (2) by electronic means if the residential PACE administrator or residential PACE
contractor has previously communicated with the homeowner via electronic means. Service
by mail is effective upon deposit in the United States mail.
new text end

new text begin (c) Any payments made by the homeowner in connection with the residential PACE
loan or a home improvement contract for cost-effective energy improvements financed with
a residential PACE loan must be returned to the homeowner within 20 business days after
receipt by the administrator or the contractor by any means of notification of rescission.
new text end

new text begin (d) When more than one homeowner in a transaction has the right to rescind, the exercise
of the right by one consumer shall be effective as to all homeowners.
new text end

new text begin Subd. 20. new text end

new text begin Rescission notice and form. new text end

new text begin (a) A residential PACE administrator and a
residential PACE contractor shall furnish the buyer with the following rescission notice and
form, which must be in a writing separate from the residential PACE loan contract and shall
not be considered substantive law under this section:
new text end

new text begin RESCISSION RIGHT AND FORM
new text end

new text begin Your right to cancel
new text end

new text begin You have the right to rescind (cancel) this contract without penalty until midnight on
[insert day and date].
new text end

new text begin To rescind (cancel): Mail or otherwise deliver a signed and dated copy of this form to
[insert name of the residential PACE administrator] at [insert physical or, if the residential
PACE administrator accepts electronic rescission, the e-mail address of the residential PACE
administrator].
new text end

new text begin You do not have to use this form, but must notify [insert the name of the residential
PACE administrator] in writing at the address listed in the previous sentence of your intention
to rescind (cancel).
new text end

new text begin If you rescind (cancel), any payments made by you under this contract will be returned
within 20 business days after the residential PACE administrator receives this form.
new text end

new text begin Notice of Rescission Form
new text end

new text begin I HEREBY RESCIND (CANCEL) THIS CONTRACT.
new text end

new text begin . new text end
new text begin (Print your name) new text end
new text begin . new text end
new text begin (Sign your name) new text end
new text begin . new text end
new text begin (Date) new text end

new text begin (b) The document containing the rescission right and form must be provided to the
homeowner at the time the homeowner executes the residential PACE loan contract.
new text end

new text begin (c) When a homeowner rescinds a residential PACE loan, the homeowner shall not be
liable for any amount, including any finance charge, fees, or other charges.
new text end

new text begin Subd. 21. new text end

new text begin Installation of energy improvements. new text end

new text begin (a) Without exception and
notwithstanding section 326B.805, subdivision 6, cost-effective energy improvements
financed through a residential PACE loan must be installed by a residential PACE contractor
who is licensed by the commissioner of labor and industry as a residential building contractor
or residential remodeler, except that mechanical contractors, plumbing contractors, electrical
contractors, and technology system contractors properly registered or licensed under chapter
326B may perform installation of energy improvements that fall completely within the scope
of the contractor's registration or license.
new text end

new text begin (b) A residential PACE contractor may not commence work to install cost-effective
energy improvements financed with a residential PACE loan prior to the expiration of the
rescission period provided under subdivision 19. A residential PACE contractor who violates
this paragraph:
new text end

new text begin (1) is not entitled to compensation for that work;
new text end

new text begin (2) must restore the property to its original condition at no cost to the homeowner; and
new text end

new text begin (3) immediately and without condition return all money, property, and other consideration
given by the homeowner.
new text end

new text begin (c) A residential PACE contractor may not charge a homeowner a different price for the
cost-effective energy improvements and their installation that the contractor would charge
for the same or similar installations that are not financed through a residential PACE loan.
new text end

new text begin (d) An implementing entity must inspect all installations and conduct a performance
verification of at least ten percent of the cost-effective energy improvements financed by
the program.
new text end

new text begin (e) A residential PACE loan program shall require that all cost-effective energy
improvements be made to a qualifying real property prior to, or in conjunction with, an
applicant's repayment of financing for cost-effective energy improvements for that property.
new text end

new text begin Subd. 22. new text end

new text begin Coordination with other programs. new text end

new text begin A residential PACE loan program must
include cooperation and coordination with the conservation improvement activities of the
utility serving the qualifying residential real property under section 216B.241 and other
public and private energy improvement programs identified by the commissioner or the
commissioner's designee.
new text end

new text begin Subd. 23. new text end

new text begin Retail and end use prohibited. new text end

new text begin (a) Energy generated by an energy
improvement may not be sold, transmitted, or distributed at retail and may not provide for
end use of the electrical energy from an off-site facility. On-site generation is allowed to
the extent provided for in section 216B.1611.
new text end

new text begin (b) This section does not modify the exclusive service territories or exclusive right to
serve as provided in sections 216B.37 to 216B.43.
new text end

new text begin Subd. 24. new text end

new text begin Prohibited practices. new text end

new text begin (a) No residential PACE administrator or residential
PACE contractor may:
new text end

new text begin (1) in any form of communication, make any statement or implication that is false, unfair,
unlawful, deceptive, abusive, or misleading, or make any material omission, regardless of
reliance on the statement or omission by the homeowner, in connection with a residential
PACE loan or the marketing or offering of cost-effective energy improvements financed
through a residential PACE loan;
new text end

new text begin (2) indicate or imply that the cost-effective energy improvements will pay for themselves
or offset or exceed the amount of the residential PACE loan, unless the residential PACE
administrator or residential PACE contractor guarantees in writing that the improvements
will pay for themselves or offset or exceed the amount of the residential PACE loan, and a
provision for sufficient consideration to the homeowner is included in the residential PACE
loan contract in the event that the guarantee does not materialize;
new text end

new text begin (3) indicate or imply that the residential PACE loan is free, a form of public assistance,
or a government program;
new text end

new text begin (4) indicate or imply that the residential PACE loan will be repaid, in whole or in part,
by a subsequent homeowner;
new text end

new text begin (5) engage in any false, deceptive, or misleading advertising, act, or practice;
new text end

new text begin (6) use an implementing entity's logo, city seal, or other graphic in marketing materials
or representations;
new text end

new text begin (7) steer or otherwise direct a homeowner to a residential PACE loan;
new text end

new text begin (8) offer or provide any tax advice or information, unless the offeror or provider is a tax
expert, provided that a residential PACE administrator or residential PACE contractor may:
new text end

new text begin (i) indicate to a homeowner that tax benefits may be available to certain homeowners
who obtain residential PACE loans; and
new text end

new text begin (ii) direct the homeowner to seek the advice of an expert regarding tax matters related
to the residential PACE loan;
new text end

new text begin (9) offer or provide direct or indirect monetary payments or any other form of
compensation, incentive, kickback, inducement, or any other thing of value to a homeowner
to enter into a residential PACE loan;
new text end

new text begin (10) engage in practices prohibited under section 47.605;
new text end

new text begin (11) engage in practices prohibited under section 332.37;
new text end

new text begin (12) engage in practices prohibited under section 326B.84;
new text end

new text begin (13) enter into any residential PACE loan unless both the Federal Housing Finance
Agency and the Federal Housing Administration will purchase, refinance, or insure mortgages
encumbered by PACE liens;
new text end

new text begin (14) violate state or federal do-not-call or telemarketing restrictions or prohibitions; or
new text end

new text begin (15) violate any other state or federal law or rule.
new text end

new text begin (b) No residential PACE administrator may:
new text end

new text begin (1) offer or provide direct or indirect monetary payments or any other form of
compensation, incentive, kickback, inducement, or any other thing of value to a residential
PACE contractor to offer, favor, or refer a homeowner to a residential PACE loan over
other forms of financing or credit; and
new text end

new text begin (2) disclose or permit disclosure to a residential PACE contractor the amount of PACE
loan financing for which a homeowner is eligible.
new text end

new text begin Subd. 25. new text end

new text begin Relation to other laws. new text end

new text begin (a) A residential PACE administrator must comply
with the Servicemembers Civil Relief Act, United States Code, title 50, section 3901, et
seq., except that, for the purposes of this section, the rights granted under the act may not
be waived.
new text end

new text begin (b) A residential PACE administrator is subject to section 582.043.
new text end

new text begin Subd. 26. new text end

new text begin Special protection for low-income homeowners. new text end

new text begin (a) Neither a residential
PACE administrator nor a residential PACE contractor may enter into a residential PACE
loan contract with a homeowner unless the administrator first screens the homeowner for
eligibility for, and, if eligible, refers the homeowner to, the free low-income weatherization
assistance program and low-income home energy assistance programs, relevant programs
offered by the Minnesota Housing Finance Agency, relevant programs offered by the electric
and gas utility company or companies serving the homeowner, and any other relevant no-
or low-cost programs known to the administrator or contractor.
new text end

new text begin (b) For the purposes of this subdivision:
new text end

new text begin (1) "low-income" means income qualifying a homeowner for assistance under the
low-income home energy assistance program;
new text end

new text begin (2) "low-income home energy assistance program" has the meaning given under section
256J.08, subdivision 52; and
new text end

new text begin (3) "low-income weatherization assistance program" means the program described under
section 216C.264.
new text end

new text begin Subd. 27. new text end

new text begin Disclosures. new text end

new text begin (a) The following verbatim disclosure must be provided to a
homeowner on a one-page document, separate from any other, and in 14-point type:
new text end

new text begin IMPORTANT THINGS TO KNOW ABOUT THIS LOAN
new text end

new text begin 1. This loan is called a PACE loan. PACE stands for Property Assessed Clean Energy
Loan.
new text end

new text begin 2. This is not a typical loan. You pay it back through your property taxes. Property
taxes are paid annually or twice a year, not monthly, like most loans.
new text end

new text begin 3. You are putting up your house as a guarantee of repayment (collateral) for this loan.
You could lose your house in foreclosure or tax forfeiture if you fall behind or cannot
meet the tax payments necessary to repay the loan.
new text end

new text begin 4. This PACE loan will increase your property tax bill by [$ insert annual amount]
per year for [insert duration of the loan] years, unless you pay the loan back early.
new text end

new text begin 5. Having a PACE loan on the house will likely make it harder to sell your house because
you will have to pay off the PACE loan or reduce the price of the house by the amount of
the remaining PACE loan balance.
new text end

new text begin 6. Having a PACE loan on the house will likely make it more difficult to refinance your
mortgage or get a loan modification. It may also delay a closing on a sale.
new text end

new text begin 7. To learn about the benefits and risks of a PACE loan, contact the Minnesota
Homeownership Center at 651-659-9336 or 866-462-6466 (toll-free) to get the name and
location of a local certified housing counseling organization. You might also consider talking
to a lawyer.
new text end

new text begin (b) A residential PACE administrator or a residential PACE contractor shall give the
disclosure in paragraph (a) to the homeowner five days prior to the execution by the
homeowner of a residential PACE loan contract at the first in-person encounter with the
homeowner at which a residential PACE loan or the installation of energy measures to be
financed by a residential PACE loan is discussed.
new text end

new text begin No other disclosures or papers may be proffered with the disclosures and annual statement
required under this subdivision. The administrator must ensure that the contact information
for the referral provided in the disclosure is up to date.
new text end

new text begin (c) In addition to the disclosure required under paragraph (a), the residential PACE
administrator must provide, before the execution of a PACE loan contract, a disclosure that
is approved by the commissioner that includes information specified by the commissioner.
The disclosure must include:
new text end

new text begin (1) the total amount of the assessment;
new text end

new text begin (2) the annual assessment payments and a payment schedule;
new text end

new text begin (3) the term of the assessment;
new text end

new text begin (4) the interest rate and annual percentage rate of the PACE loan, and all applicable fees;
new text end

new text begin (5) the improvements to be installed;
new text end

new text begin (6) that no penalty shall be assessed or collected for prepayment of the assessment;
new text end

new text begin (7) that any potential utility savings are not guaranteed and may not be equal to or greater
than the assessment payments or total assessment amount;
new text end

new text begin (8) that the payments will be added to the homeowner's property tax bill; and
new text end

new text begin (9) the amount by which escrowed property taxes will increase.
new text end

new text begin (d) A residential PACE administrator must provide an annual statement of the status of
the residential PACE loan, including, at a minimum, the amount paid to date and the
remaining balance of the loan.
new text end

new text begin (e) All legally required and voluntary disclosures made in connection with a residential
PACE loan must be provided in the primary language of the homeowner if:
new text end

new text begin (1) requested by the homeowner;
new text end

new text begin (2) the residential PACE loan is advertised in that language; or
new text end

new text begin (3) the residential PACE loan contract was explained, discussed, or negotiated in that
language, regardless of whether the residential PACE loan is advertised in that language.
new text end

new text begin Subd. 28. new text end

new text begin Repayment. new text end

new text begin (a) An implementing entity that finances an energy improvement
under this section must:
new text end

new text begin (1) secure payment with a lien against the qualifying real property;
new text end

new text begin (2) collect repayments as a special assessment as provided for in section 429.101 or by
charter, provided that special assessments may be made payable in up to 20 equal annual
installments;
new text end

new text begin (3) impose requirements and conditions on financing arrangements to ensure timely
repayment;
new text end

new text begin (4) require a petition to the implementing entity by all homeowners of the qualifying
real property requesting collections of repayments as a special assessment under section
429.101;
new text end

new text begin (5) provide that payments and assessments are not accelerated due to a default and that
a tax delinquency exists only for assessments not paid when due; and
new text end

new text begin (6) require that liability for special assessments related to the financing runs with the
qualifying real property.
new text end

new text begin (b) If the implementing entity is an authority, the local government that authorized the
authority to act as implementing entity shall impose and collect special assessments necessary
to pay debt service on bonds issued by the implementing entity under section 216C.436,
subdivision 8, and shall transfer all collections of the assessments upon receipt to the
authority.
new text end

new text begin (c) All residential PACE administrators must develop, offer, and implement binding
residential PACE loan forbearance, modification, and forgiveness mechanisms for
homeowners of residential real property who are facing economic hardship. The mechanisms
may not result in an increase in monthly payments and must restructure or forgive debt in
cases of permanent hardship, including loss of income due to death or disability.
new text end

new text begin Subd. 29. new text end

new text begin Prepayment of loan. new text end

new text begin A homeowner may prepay a residential PACE loan, in
whole or in part, at any time or from time to time without penalty or premium by paying
the principal amount to be prepaid together with accrued interest to the date of prepayment.
new text end

new text begin Subd. 30. new text end

new text begin Preservation of claims and defenses. new text end

new text begin A homeowner or subsequent homeowner
of, a successor in interest to, or any person obligated to pay the property taxes on qualifying
residential real property encumbered by a PACE lien may assert all claims and defenses
against a subsequent residential PACE administrator that the homeowner who originally
entered into the residential PACE loan could assert against the original residential PACE
administrator or servicer of a residential PACE loan.
new text end

new text begin Subd. 31. new text end

new text begin Standard of conduct; agency relationship. new text end

new text begin (a) Residential PACE
administrators, residential PACE contractors, subcontractors of the residential PACE
contractor, and agents thereof shall act in good faith toward and in the best interests of the
homeowners.
new text end

new text begin (b) For the purposes of this section, a residential PACE contractor, a subcontractor of
the residential PACE contractor, and any other agent of the contractor is an agent of a
residential PACE administrator. The performance of any act related to a residential PACE
loan contract by a residential PACE contractor, a subcontractor of the residential PACE
contractor, or any agent of the contractor is considered an act of the administrator, provided
the act was within the contractual scope work.
new text end

new text begin Subd. 32. new text end

new text begin Remedies. new text end

new text begin (a) Any homeowner aggrieved by a person or entity violating this
section is entitled in an action to:
new text end

new text begin (1) actual, incidental, and consequential damages;
new text end

new text begin (2) statutory damages of either:
new text end

new text begin (i) $5,000; or
new text end

new text begin (ii) $10,000 if the defendant violated subdivision 11 or 17, clause (1);
new text end

new text begin (3) reasonable attorney fees; and
new text end

new text begin (4) investigative and court costs.
new text end

new text begin (b) A homeowner of qualified residential real property who is a vulnerable adult is
entitled, in addition to any other relief available under this section, to the civil relief available
under section 626.557, subdivision 20, if the homeowner prevails in any claim that the
defendant:
new text end

new text begin (1) did not possess a license as required under subdivision 6; and
new text end

new text begin (2) violated subdivision 10, 11, 12, 13, 14, 17, 18, 19, 20, 21, or 24.
new text end

new text begin (c) The remedies provided under this subdivision are cumulative, not exclusive, and do
not restrict any remedy that is otherwise available to a homeowner at law or in equity.
new text end

new text begin Subd. 33. new text end

new text begin Waivers not permitted. new text end

new text begin The parties to a residential PACE loan contract may
not waive any of the rights or requirements set forth or any provision contained in this
section. Any waiver of any right, requirement, or provision in a residential PACE loan
contract or home improvement contract for cost-effective energy improvements financed
with a residential PACE loan is void and unenforceable as contrary to public policy.
new text end

Sec. 32.

Minnesota Statutes 2016, section 290B.03, subdivision 1, is amended to read:

Subdivision 1.

Program qualifications.

The qualifications for the senior citizens'
property tax deferral program are as follows:

(1) the property must be owned and occupied as a homestead by a person 65 years of
age or older. In the case of a married couple, at least one of the spouses must be at least 65
years old at the time the first property tax deferral is granted, regardless of whether the
property is titled in the name of one spouse or both spouses, or titled in another way that
permits the property to have homestead status, and the other spouse must be at least 62 years
of age;

(2) the total household income of the qualifying homeowners, as defined in section
290A.03, subdivision 5, for the calendar year preceding the year of the initial application
may not exceed $60,000;

(3) the homestead must have been owned and occupied as the homestead of at least one
of the qualifying homeowners for at least 15 years prior to the year the initial application
is filed;

(4) there are no state or federal tax liens or judgment liens on the homesteaded property;

(5) there are no mortgages or other liens on the property that secure future advances,
except for those subject to credit limits that result in compliance with clause (6); and

(6) the total unpaid balances of debts secured by mortgages and other liens on the
property, including unpaid and delinquent special assessments and interest and any delinquent
property taxes, penalties, and interest, but not including property taxes payable during the
year new text begin or debts secured by a residential PACE lien, as that term​ is defined under section
216C.435, subdivision 10d new text end , does not exceed 75 percent of the assessor's estimated market
value for the year.

Sec. 33. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, section 216C.435, subdivision 5, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: H3688-3

216C.435 DEFINITIONS.

Subd. 5.

Energy improvement.

"Energy improvement" means:

(1) any renovation or retrofitting of a building to improve energy efficiency that is permanently affixed to the property and that results in a net reduction in energy consumption without altering the principal source of energy;

(2) permanent installation of new or upgraded electrical circuits and related equipment to enable electrical vehicle charging; or

(3) a renewable energy system attached to, installed within, or proximate to a building that generates electrical or thermal energy from a renewable energy source.