The 109th Tennessee General Assembly adjourned at the close of business on April 22, 2016. Below is our end of session report to update you of the most important bills affecting credit unions that your League’s Governmental Affairs Team followed and weighed in on during this legislative session.
This bill authorizes local governments to establish a property assessed clean energy (PACE) program to provide financing for a qualified project to an owner of commercial, industrial, or residential real property. A “qualified project” is the installation or modification of a permanent improvement fixed to real property and intended to decrease or offset water or energy consumption. Under this bill a local government may enter into a written agreement with a property owner to provide financing for a qualified project. Notice of each contractual assessment entered into must be filed with the register of deeds of the county where the property is located. A contractual assessment and any interest or penalties on the assessment is a first and prior lien against the property on which the assessment is imposed and has the same priority status as a tax lien. The lien will run with the land and may not be eliminated by foreclosure of a property tax lien. A contractual assessment that is deemed to be a lien against residential property shall be subordinate to any existing lien against the property and subsequent first deed of trust or first mortgage holder.
Although the bill language subordinated the PACE lien to the first deed of trust or first mortgage holder, we opposed this legislation. TCUL supports initiatives to make energy efficient improvements available to property owners but we did have serious concern about the structure of PACE programs.
A property owner who use PACE financing must agree to repay the loan through a voluntary assessment collected along with their property taxes once a year. This puts the local government in the business of collection and ensuring that the property owner repays the PACE assessment. Another concern is that PACE loans have super lien priority statuses. Although the legislation on its face may state the PACE assessment does not have priority over a first mortgage lien, it also clearly states the “assessment lien may be enforced by the local government in the same manner that a property tax lien against real property may be enforced by the local government” (i.e., foreclosure). It also provides that “the lien shall run with the land” (i.e., not be extinguished in the event of foreclosure). Given that a PACE assessment lien can be enforced through foreclosure action and, in the event of a tax or other foreclosure sale, would become the responsibility of the next owner, PACE assessment liens do contain elements of having super priority status.
Both the Federal Housing Finance Administration (FHFA) and HUD have issued cautionary warnings to states that enact PACE programs with lien priorities.
TCUL opposed this legislation; the bill was deferred to Summer Study.
As introduced, this bill prohibits schools districts and state special schools from paying through payroll deduction their professional employees’ dues to a professional employee association.
Our concern was that this bill would affect far more than professional associations, and that it could possibly eliminate any payroll deduction for any entity that is not a direct benefit offered by a local education association. After discussions with the bill sponsor, we were confident that the intent was not to eliminate payroll deduction for credit unions or other groups such as insurance companies. The bill sponsor was very accepting to filing an amendment to exclude credit union payroll deduction as well as other groups that expressed concern.
SB 2005 – Data Breach
This bill redefines the time period within which a business must notify a consumer if the consumer’s personal information that was held by the business was obtained by an unauthorized person from immediate notification to no later than 45 days; includes employees of the business who use the information in an unlawful manner as unauthorized persons, thus triggering the notice requirements. This bill also specifies that an unauthorized user includes employees of the information holder and that a breach of the security system includes unauthorized acquisition of all computerized data, whether encrypted or unencrypted.
TCUL supported this bill; it passed the full Senate on 3/14/16 and was signed into law by Governor Haslam on 3/24/16.
TCUL would like to recognize and thank Ron Smith, CEO Electric Service Credit Union in Nashville for his role in working closely with the bill sponsor on this legislation.
Senate Joint Resolution 0678 – Financial Exploitation of Vulnerable Adults
This Senate Joint Resolution (SJR) directs the Tennessee Commission on Aging and Disability to conduct a study of the financial exploitation of vulnerable adults relative to personal financial transactions within banks and other financial organizations. The TN Commission on Aging and Disability will work with the Tennessee Bankers Association, the Tennessee Credit Union League, and other appropriate organizations to develop a list of recommended changes to current Tennessee law that would assist financial institutions in protecting consumers from fraudulent and other questionable transactions. As a part of this study the TCAD will hold a community meeting in each grand division of the State, members of the financial community will have the opportunity to voice concerns relative to financial exploitation of vulnerable adults. TCAD will facilitate the design of an online survey that will be posted on the Commission’s website to allow for online feedback from the banking community in regard to the financial exploitation of vulnerable adults. The TCAD will provide the Senate Health and Welfare Committee and the House Health Committee a compiled list of recommendations by October 15, 2016.
TCUL supported this Senate Joint Resolution; it passed the full Senate on April 20, 2016.
While there were approximately eighty bills that your League’s lobbying team followed, studied and collaborated on with other associations; this update spotlights the ones that we devoted significant time and attention to. As always, we will continue to follow any and all developments on the legislative front both state and federal. Should you have questions regarding this update, please feel free to contact Sheila Franklin, VP Governmental Affairs at 423-280-3545 or [email protected]
The 110th General Assembly will convene after the 2016 election cycle, in an organizational session at noon on Tuesday, January 10, 2017.