Amended substitute Senate Bill 232 (Am Sub SB 232), signed by Governor Ted Strickland June 17, 2010, provides additional options for municipalities, and in certain circumstances townships, to assist property owners in providing alternative energy projects in their communities.

Municipal Alternative Energy Revolving Loan Programs

Expanding on provisions originally enacted in 2009 for residential solar panels, Revised Code Section 717.25 now provides that a municipality may establish an alternative energy revolving loan program to assist property owners (not just residents) with installing on their property (i) certain solar photovoltaic projects, solar thermal energy projects, geothermal energy projects and customer-generated energy projects (certain wind, biomass or gasification facilities for the generation of electricity); or (ii) energy efficiency technologies, products and activities that reduce or support the reduction of energy consumption, allow for the reduction in demand or support the production of clean, renewable energy .

In order to establish an alternative energy revolving loan program, a municipality needs to adopt an ordinance that:

  1. creates an alternative energy revolving loan fund in the municipal treasury;
  2. provides a source of money to seed that fund;
  3. establishes facilities criteria, procedures and terms and conditions for making loans from that fund;
  4. specifies that property owners may repay loans in installments, which may be paid and collected as if they were special assessments; specifies that loan repayments and investment earnings are credited to that fund; and
  5. establishes other measures that are necessary for the proper operation of the program to encourage alternative energy and energy efficient technologies.

Interest rates charged on loans from the alternative energy revolving loan program must be below prevailing market rates.

Municipalities providing loans under an alternative energy revolving loan program are required to submit quarterly reports to the for profit electric distribution utility detailing the projects for which loans were made and any other information needed by that utility in order to obtain credit for energy efficiency savings or reduction in demand from such project.  

Special Improvement Districts for Special Energy Improvement Projects

Am. Sub. SB 232 expanded the scope of provisions relating to a special improvement district (SID) established for a special energy improvement project. Traditional SID projects in municipal corporations and townships consist of “public improvements” for which special assessments could be levied (see our Fall 2006 Ohio Public Law Update for a description of a traditional SID in a municipality). In 2009 Revised Code Chapter 1710 was amended to provide that a “public improvement” under Chapter 1710 also includes a special energy improvement project. Pursuant to those amendments, a SID could be formed to undertake special energy improvement projects (a “special energy SID”) that generally included property or equipment necessary for the acquisition, installation and improvement of real and personal property used for certain solar projects. Moreover, unlike traditional SIDs, a special energy SID need not consist of contiguous property (i.e., property may be located anywhere in the district) and a petition to form a special energy SID must be signed by 100 percent of the property owners to be included in the district.

Similar to the changes to the municipal alternative energy revolving loan program described above, Am. Sub. SB 232 expanded the projects for special energy SIDs to allow for geothermal energy projects, customer-generated energy projects and energy efficiency improvements in addition to solar projects.

Other changes to special energy SIDs effected by Am. Sub. SB 232:

  • The number of years for which special assessments may be levied for a special energy project is extended from 25 to 30 years.
  • With the consent of the owners of the credits, a SID may aggregate renewable energy credits generated by special improvement projects within the SID for the purpose of selling those renewable energy credits.
  • Similar to the duties imposed on a municipality under the revolving loan program, the board of directors of a SID is required to submit quarterly reports to the for-profit electric distribution utility providing certain details regarding special energy improvement projects within the SID and any other information needed by that utility in order to obtain credit for energy efficiency savings or reduction in demand from such project.