Bill Text: NC S493 | 2017-2018 | Regular Session | Amended

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Bill Title: C-PACE Program

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2017-03-30 - Ref To Com On Rules and Operations of the Senate [S493 Detail]

Download: North_Carolina-2017-S493-Amended.html

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GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

S                                                                                                                                                     1

SENATE BILL 493*

 

 

Short Title:      C-PACE Program.		(Public)
Sponsors:	Senators Tucker and Gunn (Primary Sponsors).
Referred to:	Rules and Operations of the Senate

March 30, 2017

A BILL TO BE ENTITLED

AN ACT authorizing cities and counties to participate in commercial property assessed capital expenditures (C‑PACE) to allow property owners to voluntarily agree to assessments to finance upgrades or improvements to their real property.

The General Assembly of North Carolina enacts:

SECTION 1.  Chapter 160A of the General Statutes is amended by adding a new Article to read as follows:

"Article 10B.

"Commercial Property Assessed Capital Expenditures (C‑PACE).

"§ 160A‑239.11.  Definitions.

(a)        The following definitions apply in this Article:

(1)        Assessment. – A charge against real property belonging to an owner within a district created pursuant to this Article. The assessment must be made only upon qualifying real property located within the district. An assessment imposed under this Article shall remain valid and enforceable even if there is a later sale or transfer of the property or a part of the property. The rates of assessment within a district do not have to be uniform.

(2)        Commercial Property Assessed Capital Expenditures (C‑PACE). – The financing of building and property upgrades and improvements through property tax assessments.

(3)        C‑PACE financier. – A financing institution that provides capital for building and property upgrades or improvements through a C‑PACE program.

(4)        C‑PACE program. – The program established by the governing body of a local government unit to administer building and property upgrades or improvements financed through property tax assessments. The program may be administered by the governing body or a third party.

(5)        District. – A C‑PACE district formed pursuant to this Article by the governing body of a local government unit. A district may be comprised of noncontiguous parcels of land. A governing body may create more than one C‑PACE district, and districts may be separate, overlapping, or coterminous.

(6)        Local government unit. – A city or county.

(7)        Property owner. – A person whose name appears on county tax records as the owner of qualifying real estate and who voluntarily consents to an assessment against the qualifying real property to finance building upgrades or improvements.

(8)        Qualifying real property. – A new or existing building or property, including, but not limited to, commercial, industrial, agricultural, and nonprofit‑owned buildings and multifamily dwellings consisting of five or more units. Qualifying real property does not include single‑family residential properties of one to four units.

(9)        Qualifying upgrades or improvements. – Eligible upgrades or improvements that improve the health, safety, energy usage, performance, environmental impact, or other qualifying characteristics of a building or property.

"§ 160A‑239.12.  Administration.

A local government unit may, by ordinance, establish a C‑PACE program for the purpose of promoting, encouraging, and facilitating building and property upgrades or improvements within the unit's territorial jurisdiction. Two or more governing bodies may jointly establish a C‑PACE program by entering into a joint agreement to create a C‑PACE district and adopting an ordinance that provides each governing body shall participate in the C‑PACE program. A governing body or C‑PACE district may contract with a nonprofit, not‑for‑profit, public university, or private third party to administer the C‑PACE program in one or more C‑PACE districts. A governing body is not required to obtain the approval of the Local Government Commission for C‑PACE assessments.

"§ 160A‑239.13.  Qualifying buildings and property.

(a)        All of the following types of building and property are eligible for C‑PACE financing:

(1)        Commercial buildings, including office buildings, retail buildings, restaurants, hospitality buildings, and hospitals.

(2)        Institutional buildings, including public and private universities, community colleges, and schools.

(3)        Industrial buildings, including manufacturing facilities, warehouses, and data centers.

(4)        Nonprofit buildings, including charitable offices and congregations and places of worship.

(5)        Multifamily residential buildings with five or more units.

(6)        Agricultural buildings and properties.

(b)        Property in a C‑PACE district does not have to be contiguous. The governing body of a local government unit that created a C‑PACE district may, by resolution, do any of the following:

(1)        Add the property of any owner who voluntarily executed a written agreement with members of the C‑PACE district consenting to the inclusion of their property in the district and participation in the C‑PACE program.

(2)        Remove the property of any owner who has satisfied their property tax assessment obligations under the C‑PACE program.

(3)        Delegate to the C‑PACE program administration the authority to add new properties to the C‑PACE district as long as the property qualifies under the qualifications adopted by the governing body.

(c)        The governing body shall, in establishing guidelines for the C‑PACE district, include a provision that requires that the owner of qualifying real property shall be informed that it is recommended that he or she have a benchmarking survey, energy audit, feasibility study, or other review performed by a trained, certified, or licensed third party of the qualifying real property considered for building and property upgrades or improvements before C‑PACE financing is provided. The survey should do the following:

(1)        Determine whether the requested building and property upgrades or improvements will improve the overall functionality and lifespan of the building or property.

(2)        Provide an estimate of the financial savings or earnings from the proposed building or property upgrades or improvements, including an evaluation of whether the individual measures are appropriately sized for the specific use contemplated.

(d)       The agreement between the C‑PACE district and owner of qualifying real property shall specify the building and property upgrades or improvements to be completed and the contractor who shall be responsible for completion of the building and property upgrades or improvements. If a survey was conducted under subsection (c) of this section, the agreement shall include the specific items from the survey that shall be completed. Documentation verifying the completion of building and property upgrades or improvements shall be publicly available to ensure that realtors, appraisers, and lenders have clear, accurate, and timely access to information on C‑PACE liens.

(e)        Qualifying real property must be current on property tax and assessment payments and shall not be encumbered by any involuntary liens, default judgments, or judgments.

(f)        The governing body shall, in establishing guidelines for the C‑PACE district, require that minimum building and property owner protection guidelines are implemented and verified in C‑PACE programs.

"§ 160A‑239.14.  Qualifying upgrades and improvements.

(a)        Qualifying upgrades and improvements must improve the health and safety, energy efficiency, renewable energy on‑site generation or storage, water conservation, durability, or resiliency to weather and disaster damages of new or existing buildings and properties. Upgrades providing only aesthetic or design improvements shall not qualify as qualifying upgrades and improvements. Eligible upgrades and improvements include the following:

(1)        Renewable energy measures:

a.         Solar photovoltaic generation systems.

b.         Geothermal heating and air systems.

c.         Wind energy generation systems.

d.         Hydroelectric energy generation systems.

e.         Electric vehicle charging stations.

f.          Biomass or waste‑to‑energy generation systems.

g.         Energy storage systems.

(2)        Performance, energy efficiency, and deferred maintenance improvements, including new installations and existing repairs or upgrades:

a.         Heating, air, and ventilation systems.

b.         Windows.

c.         Roofing.

d.         Lighting.

e.         Building envelope sealing, tightness, and barrier measures.

f.          Water efficiency, recycling, and conservation.

g.         Refrigeration systems.

h.         Building automation and control systems.

(3)        Measures critical to North Carolina's weather‑related property and building infrastructure:

a.         Weather resiliency improvements, including roofing, windows, and building envelope.

b.         Flood damage prevention, including water runoff.

c.         Drought tolerance improvement, including irrigation.

d.         Radon mitigation.

(b)        Property upgrades and improvements shall be permanently affixed to the property or building and shall not be removed from the property or building if the ownership of the property or building changes.

"§ 160A‑239.15.  Requirements for property owners.

(a)        In order to participate in the C‑PACE program, a property owner shall provide documentation that any historical or architectural review boards with jurisdiction over the qualifying real property have approved the requested building or property upgrades or improvements.

(b)        If the qualifying real property is subject to a mortgage, the property owner must obtain written consent from the secured mortgage holder before participating in the C‑PACE program. A property owner is not eligible to participate in the C‑PACE program if the property is currently in foreclosure or has current involuntary liens, defaults, or judgments.

(c)        A C‑PACE financier may impose minimum requirements on property owners to demonstrate their ability to pay the voluntarily imposed assessments for the life of the lien amount.

"§ 160A‑239.16.  Program administration.

(a)        The C‑PACE program administrator shall establish and manage contractor registration and shall develop quality assurance guidelines. In selecting a contractor to perform qualifying upgrades or improvements, the property owner shall select from a list of contractors registered with the C‑PACE program administrator. The contractor shall be responsible for remedying any upgrades or improvements that are determined to have been done improperly or to be inappropriately sized for the intended use. Each C‑PACE program administrator shall be responsible for handling complaints and resolution procedures involving registered contractors and property owners and shall make available for public inspection complaints involving contractors registered with the program and the manner in which the complaints were resolved.

(b)        Upon completion of the qualifying upgrades or improvements, the C‑PACE program administrator shall recommend that the property owner receive a benchmarking survey, energy audit, feasibility study, or other review by a trained, certified, or licensed third party to evaluate how the qualifying upgrades or improvements met expectations.

"§ 160A‑239.17.  Assessment financing.

(a)        A C‑PACE financer shall have authority to impose property tax assessments on qualifying real property when a property owner has voluntarily executed a written agreement with the governing body of the local government unit that created the C‑PACE district consenting to (i) undertake building or property upgrades or improvements and (ii) have a C‑PACE assessment imposed on the property owner's property. The financing agreement between the C‑PACE financier and property owner shall be in writing.

(b)        A written lender consent form for each existing secured mortgage that is signed by an authorized mortgage holder representative authorizing the C‑PACE lien must be provided to the C‑PACE financier. The form must be filed with, and as an attachment to, the C‑PACE lien in the office of the register of deeds of the county in which the qualifying real property is located. The lender consent form shall include all of the following information:

(1)        The name and address of each qualifying real property owner.

(2)        The name and principal address of each mortgagee.

(3)        The address of the qualifying real property and a description of the property.

(4)        The name of the local government unit responsible for imposing the assessment under the C‑PACE program.

(5)        The proposed lien amount and payment terms.

(6)        The estimated financial benefits of the proposed upgrades or improvements.

(7)        General information about the C‑PACE financer and their C‑PACE program.

(8)        A form or language that the mortgage holder shall send back to the C‑PACE financier authorizing the C‑PACE lien.

(c)        A C‑PACE program may access project capital from any funds legally available to the local government unit whose governing body created the C‑PACE district, including taxable or tax‑exempt, if eligible, municipal bonds, in conjunction with any source of credit enhancement. Revenue bonds secured solely by C‑PACE assessment payments must be issued by a local government unit or an authorized authority or local development corporation. The provisions of this section shall  have no effect on (i) existing laws related to the issuance of revenue bonds by cities participating in a C‑PACE program or by any other qualified issuer of revenue bonds, provided that the revenue bonds shall be secured solely by assessments collected from qualifying real property, the owner of which has voluntarily entered into assessment contracts and has undertaken property upgrades or improvements projects, or (ii) any other funds lawfully pledged as security.

(d)       A local government unit may offer C‑PACE capital by establishing a special C‑PACE benefit district that allows it to impose, collect, and enforce assessments or charges.

(e)        The assessment under the C‑PACE program shall include, but not be limited to, an amount of up to one hundred percent (100%) of the unpaid costs of the qualifying upgrades or improvements. These costs include the following: (i) the costs of the equipment and technologies for property upgrades or improvements, (ii) interest expenses, (iii) the fees of the property owner or C‑PACE financier, (iv) third‑party costs, including architectural, engineering, and legal costs, and (v) any other costs associated with the administration of the C‑PACE district or the completion of C‑PACE financing. The sum of the mortgage and the C‑PACE lien should not exceed ninety‑five percent (95%) of the total assessed property value, unless otherwise provided by the governing body by ordinance.

(f)        The term of the assessment shall not exceed the weighted average of the useful life of the property upgrades or improvements and in no case shall be for more than 25 years from the date of the initial assessment. If the qualifying real property is sold, liability for assessments related to the financing of property upgrades or improvements shall remain with the qualifying real property.

(g)        A local government unit may contract with a variety of C‑PACE financiers through open and competitive bidding in order to provide financing to qualifying real property in the C‑PACE district.

(h)        To qualify for financing under this Article, property upgrades or improvements shall meet all applicable safety, performance, interconnection, and reliability standards established by the governing body that created the C‑PACE district, the Public Service Commission of North Carolina, the National Electrical Code, the National Electrical Safety Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, and the Federal Energy Regulatory Commission.

"§ 160A‑239.18.  Liens.

(a)        The property tax assessment levied, including any interest, fees, and penalties, shall constitute a C‑PACE lien against the qualifying real property if the lender consent form is filed as provided in G.S. 160A‑239.17(b). The C‑PACE lien related only to the portion of the currently due and payable and delinquent assessments currently in arrears shall have priority over any mortgage, provided the C‑PACE lien is perfected by filing a written financing agreement in the office of the register of deeds of the county where the qualifying real property is located.

(b)        If a mortgagee forecloses on the qualifying real property, the mortgagee shall serve all procedural documents of the foreclosure on the governing body of the local government unit that created the C‑PACE district or its C‑PACE administrator as though it were a party to the action. The C‑PACE lien shall survive any judgment of foreclosure awarded to a mortgagee and shall be disclosed to any subsequent purchaser prior to closing.

(c)        If provided for in a written agreement, the governing body of a local government unit participating in a C‑PACE program may assign to the C‑PACE financier any and all liens filed by the unit's tax collector. The assignee of the liens shall have and possess the same powers and rights in law or equity as the C‑PACE district and the participating unit and its tax collector would have had if the lien had not been assigned with regard to the priority of the lien, accrual of interest, and fees and expenses of collection. The costs and reasonable attorneys' fees incurred by the assignee either as a result of any foreclosure action or other legal proceeding brought pursuant to this Article and directly related to the proceeding shall be levied against each person having title to any real property subject to the proceedings. The costs and fees may be collected by the assignee at any time after demand for payment has been made. A local government unit may charge the C‑PACE financier a service fee to cover the unit's administrative costs related to imposing the assessment requested by the property owner for qualifying upgrades or improvements.

(d)       A C‑PACE lien shall not be due on the date of sale of the property, but may be paid early and, in such a case, the governing body may permit principal reductions. A C‑PACE financier may, in its discretion, charge prepayment penalties to lien holders. Upon payment in full of the assessments owed, the lien shall be released in the same manner as property tax liens.

(e)        The equipment included in a C‑PACE lien may be removed if it becomes obsolete or damaged. However, if the equipment is removed for obsolescence or damage, the assessment for the equipment and any interest, fees, and penalties shall remain a lien against the qualifying real property until paid in full.

(f)        If a C‑PACE assessment is not paid when due, the lien may be enforced by the local government unit or its C‑PACE administrator in the same manner as property taxes on the qualifying real property. If a C‑PACE assessment becomes delinquent due to default, foreclosure, or bankruptcy of the property owner of the qualifying real property, assessment payments due in future years that are still outstanding shall not be accelerated, but shall not be extinguished. If a payment on qualifying real property subject to a C‑PACE lien is in default for 30 days or more, the governing body or its C‑PACE administrator shall send written notice of the default to each mortgagee of record."

SECTION 2.  This act is effective when it becomes law.