FILED SENATE
May 2, 2024
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 802
SESSION 2023 PRINCIPAL CLERK
S D
SENATE BILL DRS45442-TGa-3
Short Title: C-PACE Program. (Public)
Sponsors: Senators Johnson, Lazzara, and Lee (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO ADVANCE BUILDING RESILIENCY AND UTILITY EFFICIENCY IN
3 NORTH CAROLINA BY AUTHORIZING A STATEWIDE PROGRAM TO UTILIZE
4 ASSESSMENTS TO REPAY NONPUBLIC FINANCING OF COMMERCIAL
5 BUILDING IMPROVEMENTS THAT WILL PROMOTE ECONOMIC DEVELOPMENT,
6 REDUCE UTILITY BILL COSTS, AND HARDEN COMMERCIAL BUILDINGS
7 AGAINST STORM AND FLOOD DAMAGE.
8 The General Assembly of North Carolina enacts:
9 SECTION 1. Chapter 160A of the General Statutes is amended by adding a new
10 Article to read:
11 "Article 10B.
12 "Commercial Property Assessed Capital Expenditure and Resilience Act (C-PACE).
13 "§ 160A-239.11. Purpose; findings.
14 This Article shall be known and may be cited as the "Commercial Property Assessed Capital
15 Expenditure and Resilience Act (C-PACE)." This Article authorizes the establishment of a
16 statewide C-PACE program that local governments may voluntarily join to allow willing owners
17 of commercial, industrial, agricultural, nonprofit, and multifamily residential properties with five
18 or more dwelling units to obtain low-cost, long-term financing for qualifying improvements,
19 including energy efficiency, water conservation, renewable energy, and resilience projects,
20 secured by an assessment and lien authorized by this Article. The State finds that a valid public
21 purpose exists because the use of a C-PACE program creates an additional financing mechanism
22 for property owners to use private funds to finance improvements to their eligible property,
23 thereby driving economic development by creating a diversity of jobs in the resilience and clean
24 energy sectors of the economy. The assessment requires minimal upfront costs and provides a
25 more accessible financial mechanism to fund improvements that will increase the tax value of
26 the affected properties at minimal administrative cost to local governments. C-PACE
27 improvements allow property owners to save on their utility bills because the improvements lead
28 to energy or utility savings and will result in improved indoor air quality or increased resilience,
29 which will increase the ability of communities and local governments to respond to natural
30 disasters and improve public health.
31 "§ 160A-239.12. Definitions.
32 The following definitions apply in this Article:
33 (1) Capital provider. – A private entity, or the private entity's designee, successor,
34 and assigns, that makes or funds qualifying improvements under this Article.
35 (2) Commercial property assessed capital expenditure program (C-PACE
36 program). – A program wherein a C-PACE assessment and C-PACE lien are
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1 voluntarily imposed by a local government on qualifying commercial property
2 to pay for the costs of qualifying improvements.
3 (3) C-PACE assessment. – A voluntary assessment imposed on a commercial
4 property by a local government under this Article pursuant to an assessment
5 agreement for the total amount of the C-PACE financing. The voluntary
6 C-PACE assessment shall not constitute a tax.
7 (4) C-PACE financing. – Direct financing between capital providers and property
8 owners within the jurisdictional boundaries of a local government
9 participating in the C-PACE program to finance qualifying improvements.
10 (5) C-PACE lien. – A lien to secure the C-PACE assessment that remains on the
11 qualifying property until paid in full.
12 (6) C-PACE toolkit. – A comprehensive set of documents developed by the
13 statewide administrator in consultation with stakeholders, and subject to
14 approval by the program sponsor, that describes the C-PACE program
15 guidelines, application approval criteria, and forms consistent with the
16 administration of the program as provided for in this Article.
17 (7) Financing agreement. – The contract in which a property owner agrees to
18 repay a capital provider for the C-PACE financing provided, including, but
19 not limited to, any finance charges, fees, debt servicing, accrual of interest and
20 penalties, and any terms relating to the treatment of prepayment and partial
21 payment, and the billing, collection, and enforcement of the C-PACE
22 financing.
23 (8) Local government. – Any county or city.
24 (9) Program sponsor. – The North Carolina Department of Commerce.
25 (10) Project application. – The application submitted to the statewide administrator
26 by the property owner to demonstrate that a proposed project qualifies for
27 C-PACE financing under this Article.
28 (11) Property owner. – The owner or owners of a commercial property whose
29 names are listed on the property title, duly recorded in the appropriate office
30 of the register of deeds.
31 (12) Publicly-owned land. – Property that is owned by a State or local
32 governmental entity and that is subject to a leasehold.
33 (13) Qualifying commercial property. – Privately owned commercial, industrial,
34 or agricultural real property or privately owned residential real property
35 consisting of five or more dwelling units. This term includes property owned
36 by nonprofit, charitable, or religious organizations.
37 (14) Qualifying improvement. – A permanent improvement that is affixed to a
38 qualifying commercial property and that includes one or more of the following
39 approved by the program sponsor:
40 a. Energy efficiency measure. – An equipment, physical component, or
41 program change implemented that results in less energy used to
42 perform the same function, including, but not limited to, energy
43 produced from a combined heat and power system that uses
44 nonrenewable energy resources.
45 b. Resiliency measure. – An equipment, physical component, or program
46 change implemented that includes, but is not limited to, storm retrofits,
47 flood mitigation, stormwater management, wind resistance, indoor air
48 quality improvement, energy storage, and microgrids and other
49 resilience projects.
50 c. Renewable energy measure. – (i) A solar electric, solar thermal, wind,
51 hydropower, geothermal, electric vehicle charging station, or ocean
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1 current or wave energy resource, (ii) a biomass resource, including
2 agricultural waste, animal waste, wood waste, spent pulping liquors,
3 combustible residues, combustible liquids, combustible gases, energy
4 crops, or landfill methane, (iii) waste heat derived from a renewable
5 energy resource and used to produce electricity or useful, measurable
6 thermal energy at a retail electric customer's facility, or (iv) hydrogen
7 derived from a renewable energy resource. For purposes of this
8 sub-subdivision, the term "renewable energy measure" does not
9 include peat or a fossil fuel.
10 d. Water conservation measure. – An equipment, physical component, or
11 program change implemented to decrease water consumption or
12 demand or to address safe drinking water.
13 (15) Statewide administrator. – The Economic Development Partnership of North
14 Carolina.
15 "§ 160A-239.13. Statewide C-PACE program – authorization.
16 (a) The State authorizes a statewide C-PACE program in which any local government
17 may participate.
18 (b) The program sponsor is hereby authorized under this Article to oversee the C-PACE
19 Program.
20 "§ 160A-239.14. Statewide C-PACE program – administration.
21 (a) In the administration of the C-PACE program, the statewide administrator shall do
22 the following:
23 (1) Prepare a C-PACE toolkit in consultation with local governments and the
24 Program Sponsor prior to accepting applications for C-PACE financing,
25 which shall include, at a minimum, all of the following:
26 a. A form of assessment agreement to be used between a local
27 government and property owner specifying the terms of the C-PACE
28 assessment.
29 b. A form of notice of C-PACE assessment and C-PACE lien.
30 c. A form of assignment of notice of C-PACE assessment and C-PACE
31 lien from the local government to the capital provider.
32 d. A form of consent to a C-PACE assessment by the holder of the
33 mortgage or deed of trust.
34 e. A form of project application with checklist requirements and
35 corresponding documentation that will be required by the statewide
36 administrator to approve a project application.
37 (2) Impose fees to offset the actual and reasonable costs of administering the
38 C-PACE program, including:
39 a. An application fee not to exceed seven hundred fifty dollars ($750.00).
40 b. A processing fee assessed to the property owner whose application for
41 C-PACE financing is approved, which shall be one percent (1%) of
42 the total amount financed but shall not be more than twenty-five
43 thousand dollars ($25,000).
44 (3) Establish the process for reviewing and evaluating applications, which shall,
45 at a minimum, require the following to be provided or demonstrated:
46 a. For an existing building: (i) where renewable energy, energy
47 efficiency, or water conservation measures are proposed, an energy
48 analysis by a licensed engineering firm or engineer or another
49 qualified professional listed in the C-PACE toolkit stating that the
50 proposed qualifying improvements will result in more efficient use or
51 conservation of energy or water, the reduction of greenhouse gas
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1 emissions, or the addition of renewable sources of energy or water or
2 (ii) where resilience measures are proposed, certification by a licensed
3 engineer stating that the qualifying improvements will result in
4 improved resilience.
5 b. For construction of a new building, certification by a licensed
6 engineering firm or engineer stating that the proposed qualifying
7 improvements will allow the proposed project to exceed the energy or
8 water efficiency requirements of the current State building code, or in
9 the case of a resiliency measure, achieve compliance with a national
10 model resiliency standard.
11 (4) Accept and approve project applications for C-PACE financing.
12 (5) Require any commercial property owner seeking C-PACE financing to certify
13 that the applicant:
14 a. Is the legal owner of the benefited property and that title to the
15 benefited property is not in dispute.
16 b. Is current on all mortgage payments and property taxes.
17 c. Is not insolvent or in bankruptcy proceedings.
18 (6) Upon execution by the local government of (i) C-PACE assessment and
19 C-PACE lien and (ii) a notice of assignment of C-PACE assessment and
20 C-PACE lien related to an approved project application, record such
21 documents in the office of the register of deeds in the county in which the
22 approved property is located. The statewide administrator may delegate
23 recording duties to the property owner and the capital provider.
24 (7) Submit a report to the Program Sponsor annually.
25 (b) The provisions of Chapter 150B of the General Statutes shall not apply to the C-PACE
26 toolkit or any actions of the program sponsor or statewide administrator in the administration of
27 the program.
28 "§ 160A-239.15. Local government participation.
29 (a) A local government seeking to participate in the C-PACE program shall adopt a
30 resolution that includes all of the following:
31 (1) A grant of authorization for the C-PACE program to operate within its
32 jurisdictional boundaries and for the statewide administrator to provide the
33 administrative services described in G.S. 160A-239.14.
34 (2) A statement that the local government intends to (i) authorize C-PACE
35 financing, (ii) authorize the imposition of C-PACE assessments and C-PACE
36 liens on qualifying commercial properties benefitting from qualifying
37 improvements to secure repayment of C-PACE financing and assign the same
38 or the right to repayment proceeds to the capital provider providing C-PACE
39 financing, and (iii) delegate billing, collection, and enforcement duties for the
40 C-PACE assessment and C-PACE lien to capital providers.
41 (3) A statement that the amount of a C-PACE financing and related assessment
42 repayment terms shall be pursuant to the related financing agreement.
43 (4) A statement identifying the local government department or employee that
44 shall, upon receipt of an approved project application for C-PACE financing
45 within its jurisdictional boundaries from the statewide administrator, execute
46 the documents included in G.S. 160A-239.14(a)(1)a., b., and c. on behalf of
47 the local government.
48 (5) A statement that the local government shall be reimbursed by the statewide
49 administrator for the actual and reasonable costs associated with the
50 performance of the duties described in subdivision (4) of this subsection.
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1 (b) Pursuant to G.S. 160A-239.17(4), no funds for repayment of the voluntary C-PACE
2 assessment should be received by the participating local government. However, if any such funds
3 are received by the participating local government, such funds shall be custodial funds as
4 described in G.S. 159-13(a) for the benefit of the capital provider.
5 "§ 160A-239.16. Immunity and foreclosure process.
6 (a) Neither the State nor any participating local government, its officers, or employees
7 shall be liable for any actions taken pursuant to this Article. A local government shall not be
8 financially or legally liable or responsible for any assessment and lien imposed within its
9 jurisdiction under the program.
10 (b) The capital provider shall be solely responsible for all billing, collection, and
11 enforcement of the C-PACE assessment and C-PACE lien.
12 (c) Delinquent C-PACE assessment payments shall incur interest and penalties as
13 specified in the financing agreement and shall accrue to the C-PACE lien.
14 (