Summary of Bill:

A commercial property assessed clean energy and resiliency (C-PACER) program is established. This program authorizes local jurisdictions and private entities to provide financing to owners of agricultural, commercial, and industrial properties and of multi-family residential properties with five or more dwelling units. The financing must be used to provide qualified building improvements.

"Qualified improvement" means a permanent improvement affixed to real property and intended to: (1) decrease energy consumption or demand through the use of efficiency technologies, products, or activities that reduce or support the reduction of energy consumption, allow for the reduction in demand, or support the production of clean, renewable energy, including but not limited to a product, device, or interacting group of products or devices on the customer's side of the meter that generates electricity, provides thermal energy, or regulates temperature; (2) decrease water consumption or demand through the use of efficiency technologies, products, or activities that reduce or support the reduction of water consumption or allow for the reduction in demand; or (3) increase resilience, including but not limited to seismic retrofits, flood mitigation, storm water management, wildfire and wind resistance, energy storage, and microgrids.

Local Jurisdictions.

In order to establish a C-PACER program, the governing body of a county, city, or town must adopt a resolution or ordinance and hold a public hearing on the proposed program. The ordinance or resolution must include a statement that:

financing qualified projects through assessments is in the public interest for safety, health, and other common good reasons;
the municipality intends to make assessments to repay C-PACER financing for qualified projects available to owners of eligible property;
describes the regions in which the program is offered;
describes how both the municipality and the capital providers will bill, collect, and remit payments;
describes the process for creating a program guidebook describing the program and identifying where the program guidebook will be available for public inspection; and
indicates the time and place for a public hearing on the proposed C-PACER program.

Program Handbook.

Each local jurisdiction that establishes a C-PACER program must prepare a program guidebook on the C-PACER program that includes, at minimum a:

map showing the boundaries of the region;
a sample contract between the municipality, the property owner, and the capital provider specifying the terms of an assessment under the program and the C-PACER financing provided by a capital provider;
a statement identifying an entity authorized to enter into written contracts on behalf of the municipality;
a statement that the period of the assessment will not exceed the useful life of the qualified project, or weighted average life if more than one qualified improvement is included in the qualified project, that is the basis for the assessment;
a description of the C-PACER program application process and eligibility requirements;
a statement explaining the lender consent requirement;
a statement explaining the review requirement;
a description of marketing and participant education services to be provided for the program; and
a procedure for collecting the proposed assessment.

The program guidebook must be available for public inspection on the municipality's website or the website of the municipality's designated program administrator.

Program Requirements.

In order to participate in a C-PACER program, the following documentation (as well as any documentation specified in the program guidebook) is required for each proposed project:

for an existing building, an engineer must certify: (1) Where energy or water usage improvements are proposed, that the proposed qualified improvements will either result in more efficient use or conservation of energy or water, result in the reduction of greenhouse gas emissions, or result in the addition of renewable sources of energy or water, or (2) where resilience improvements are proposed that the qualified improvements will result in improved resilience.
for new construction, an engineer must certify that the proposed qualified improvements will enable the project to exceed the energy efficiency, water efficiency, renewable energy, renewable water, or resilience requirements of the current building code.

Financing obtained under a C-PACER program authorizes a property owner to directly: (1) purchase the related equipment and materials for the installation or modification of a qualified improvement; and (2) contract for the installation or modification of a qualified improvement.

After a qualified project is completed, the municipality must require written verification from a licensed professional engineer stating that the qualified project was properly completed and is operating as intended.

Program Fees and Assessments.

Before a municipality may enter into a contract with a property owner to impose an assessment to repay assessments and C-PACER financing for a project, the municipality must receive written consent from the lien holder or person who holds security interest in the real property that the property may participate in the program.

The C-PACER financing for which the assessments may be imposed, includes the cost of materials and labor necessary for installation or modification of a qualified improvement, permit fees, inspection fees, lender's fees, program application and administrative fees, project development and engineering fees, third-party review fees, capitalized interest, interest reserves, escrow for prepaid property taxes and insurance, or any costs that may be incurred by the property owner incident to the installation, modification, or improvement on a specific or pro rata basis.

In addition, a municipality may impose fees to offset costs for administering a C-PACER program, including the costs of a third-party administrator. Such fees may be imposed as an application fee paid by the property owner requesting to participate in the program, a percentage of the assessment amount, or in any other manner that reflects the just and reasonable cost of administering the assessment to the municipality for its administration of the program or any contracted program administrator. The fees included in the total C-PACER financing cannot exceed the actual costs of qualified project approval and management incurred by the municipality or any contracted program administrator.

Multiple municipalities may agree to jointly implement or administer a C-PACER program. A municipality may also contract with another municipality or taxing district to perform the duties of the municipality relating to the administration and collection of the assessments. Enforcement of delinquent assessments or C-PACER financing installment payments remains the responsibility of the municipality itself.

Department of Commerce.

Subject to available appropriations, the Department of Commerce (COM) must establish a C-PACER program to administer the approval and municipal recordation of qualified improvements.

Municipalities may contract with the COM, to implement and perform the duties of administering a C-PACER program. The COM may also contract with a third party, selected through a fair and open solicitation process, to administer a C-PACER program available to municipalities provided that the: (1) cost of contracted administration reflects the reasonable actual costs incurred by that third party; and (2) contracted program administrator runs the statewide program available to municipalities in an efficient and transparent way.

If funding is available, the COM must allocate appropriated funds to cover start-up costs associated with the program over the course of the first twenty-four months following the designation of a contracted program administrator, start-up costs includes but are not limited to program promotion and contractor education, a stakeholder collaboration process, and early program costs before the contracted program administrator becomes self-sustaining. In addition, the COM may establish a loan loss reserve or credit enhancement program to support financing of qualified projects if it is determined that such a credit enhancement program is appropriate.

C-PACER Assessments for Repayment.

A municipality that authorizes C-PACER financing through assessments must record written notice of each assessment in the real property records of the county in which the property is located. The assessments, plus any interest, penalties, and charges accrued or accruing on the assessment is a lien against the real property on which the assessment is imposed and is not eliminated by foreclosure of a property tax lien. Delinquent payment installments due on an assessment incur interest and penalties in the same manner as delinquent property taxes.

A municipality that establishes a region, in which the C-PACER program if offered, is prohibited from: (1) Making the issuance of a permit, license, or other authorization from the municipality to a person who owns property in the region contingent on the person entering into a contract to repay the financing of a qualified project through C-PACER assessments; or (2) compelling a person who owns property in the region to enter into a contract to repay the financing of a qualified project through assessments.