Bill Summaries: S 42 C-PACE PROGRAM.

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  • Summary date: Jan 31 2023 - View Summary

    Enacts Article 10B, titled the "Commercial Property Assessed Capital Expenditure and Resilience Act (C-PACE)," in GS Chapter 160A. Sets forth legislative findings and 11 defined terms. Authorizes the establishment of a statewide commercial property assessed clean energy program that local governments can voluntarily join to allow free and willing owners of certain properties to obtain low-cost, long-term financing from capital providers for qualifying improvements, secured by a recorded assessment and lien pursuant to the Article. Authorizes the State Energy Office (Office) to serve as administrator with oversight responsibility; requires the Office to develop a process to select a third party administrator to handling C-PACE applications and promote the program. Defines qualified projects to mean a project approved by the administrator which involves the installation or modification of a qualified improvement, including new and existing commercial properties, multifamily properties of five or more units per dwelling, nonprofit properties, industrial properties, and agricultural properties. Defines qualified improvement to mean a permanent improvement that is affixed to a qualified project and includes one of the following characteristics approved by the administrator, as described: energy efficiency measure; increased resilience; renewable energy resource; and/or water conservation measure.

    Details program administration by the administrator, including (1) preparing a Program Toolkit prior to accepting applications; (2) preparing a set of C-PACE documents as specified; (3) imposing administration fees as specified, with an authorized application fee up to $150 and a processing fee for approved applicants capped at $15,000; (4) prescribing the form and manner for financing applications and establishing the process for reviewing and evaluating financing applications that include six specifications regarding certification of proposed improvements, execution and recordation of the C-PACE assessment and lien, responsibilities of the capital provider including enforcement of the special assessment and lien, and situations of foreclosure and priority of liens; (5) requiring specified certifications from commercial property owners seeking C-PACE financing; and (6) recording the C-PACE documentation as specified. 

    Requires local governments seeking to participate in the program to adopt a resolution with specified content included, such as (1) an authorization for the C-PACE program to operate within its jurisdictional boundaries and to offer C-PACE financing to willing and qualified property owners, (2) its intent to participate in the program and take associated actions, (3) designation of the department or employee that will execute the C-PACE documentation set, and (4) notice of the public hearing on the proposed program. Requires the local government to adopt a resolution stating participation in the program following a public hearing.

    Details procedures governing special assessment under the C-PACE program, including State and local government immunity. Places sole enforcement responsibility upon the capital provider. Further provides for foreclosure procedure, parameters, and lien priority, with the C-PACE lien being superior to all non-governmental liens on the property from the date on which the notice of the C-PACE lien was recorded, subject to mortgage holder consent. Details the effect of a C-PACE lien, deeming the lien to run with the land and reign superior to all non-governmental liens from the date of recordation, with other liens providing for accelerated payment deemed unenforceable as provided. Bars contesting matters regarding whether the improvement or project is a qualified improvement or qualified project, or financing procedural or substantive irregularities, following assessment recordation. 

    Provides a non-exhaustive list of permissible financing for assessments, including material and labor costs, permit fees, inspections fees, and capitalized interest. Restricts the term of financing to the useful life of an improvement or the weighted average useful life if multiple improvements are approved. Provides for financing negotiations and enforcement responsibilities.  

    Provides for prior consent of each holder of a mortgage or deed on the property securing indebtedness, required to be submitted to the administrator, which also acknowledges that the assessment is not an event of default under the terms of the mortgage or deed.

    Prohibits the use of public funds pursuant to the Article. Prohibits local governments from conditioning local government permitting, licensing or other authorities upon the person entering into contract to repay the financing of a qualified project under the Article, or otherwise compel a property owner within the jurisdiction to do the same.

    Specifies that financing arrangements can include direct purchases or contractual agreements. 

    Includes a severability clause.

    Effective July 1, 2023.