HB1796 – Authorizes jurisdictions to establish commercial property assessed clean energy financing programs.
Prime Sponsor – Representative Doglio (D; 22nd District; Olympia)
Current status – Scheduled for a hearing in the House Committee on Local Government, February 12th at 10:00 AM. A substitute bill passed out of committee February 20th. Referred to Rules; placed on 2nd Reading March 11th. Referred to Rules 2 Consideration March 21st 2019. Still in Rules by the 2019 cutoff; reintroduced and retained in present status for 2020 session. Referred to the House Committee on Local Government.
Next step would be – Scheduling a hearing.
Legislative tracking page for the bill.
SB 5730 is an identical companion bill in the Senate.
The various legal adjustments in the substitute are summarized on p. 6 of the House Bill Report.

Comments –
Property assessed clean energy financing programs make the repayment of a loan for an energy efficiency upgrade a lien on the property, which is repaid through the property tax billing process, and which stays as an obligation of the new owners if the building changes hands. Thirty states have established these programs. However, it isn’t clear that they’re legal in Washington, because our Constitution prohibits any gift of public funds to private parties.

ShiftZero, a coalition of green building organizations, has been promoting this idea, and has obtained a serious legal opinion which says that they would be if they were structured the way they are in Texas, because that relies entirely on private financing, rather than lending any state funds. (However, it isn’t clear whether the State using its property tax mechanism to implement a private loan and other details in this bill are constitutional here. Presumably, a court will settle those questions if the bill passes.) ShiftZero has a flyer about the bill.

Summary –
The bill authorizes municipalities to set up programs like this for energy efficiency, water conservation, renewable energy, and resiliency projects in agricultural, commercial, and industrial properties; and in multifamily properties with five or more units.

A municipality can impose fees on property owners who want to participate in order to pay for the reasonable costs of administering the program, provided the fees don’t exceed the municipality’s actual costs. It can contract with another municipality or entity to administer loans, or administer them in cooperation with other municipalities.

The Department of Commerce is also to set up or contract for the administration of a program to administer these loans, and a municipality could contract with Commerce to participate in that program. However, the municipality itself would remain responsible for collecting payments on a loan, and for foreclosing on the property if that became necessary.

If Commerce contracted with a third party to administer the statewide program, it would have to be done efficiently and transparently, including:

• Making any services offered to property owners, such as estimating energy savings, overseeing project development, or evaluating alternative equipment installations, priced separately and open to purchase by the property owner from qualified third-party providers;
• Making information about any properties joining the program available to all interested and qualifying third-party capital providers so the owners could receive impartial terms from them;
• Disclosing any financial interest the administrator had in any of the services provided to property owners to the public;
• Allowing financial underwriting and evaluation to be performed by capital providers, and;
• Working in a collaborative process with capital providers and other stakeholders to develop a program guidebook and documents or forms.

If funding were appropriated, Commerce could set up a loan loss reserve or credit enhancement program to support financing of qualified projects.