FILED SENATE
Mar 25, 2021
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 358
SESSION 2021 PRINCIPAL CLERK
S D
SENATE BILL DRS45196-LMf-13C
Short Title: C-PACE Program. (Public)
Sponsors: Senators Johnson, Lazzara, and Woodard (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 as follows:
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 commercial property assessed clean energy program that local governments may
17 voluntarily join to allow free and willing owners of commercial, industrial, agricultural,
18 nonprofit, and multifamily residential properties with five or more dwelling units to obtain
19 low-cost, long-term financing for qualifying improvements, including energy efficiency, water
20 conservation, renewable energy, and resilience projects, secured by an assessment and lien
21 authorized by this Article. The State finds that a valid public purpose exists because the use of a
22 commercial property assessed clean energy program creates an additional financing mechanism
23 for property owners to use private funds to finance renewable energy, energy efficiency, and
24 resilience improvements to their eligible property, thereby driving economic development by
25 creating a diversity of jobs in the clean energy and resilience sectors of the economy. The
26 assessment requires minimal upfront costs and provides a more accessible financial mechanism
27 to fund improvements that will increase the tax value of the affected properties. C-PACE
28 improvements allow property owners to save on their utility bills because the improvements lead
29 to energy or utility savings. C-PACE improvements will result in improved indoor air quality or
30 increased resilience.
31 "§ 160A-239.12. Definitions.
32 The following definitions apply in this Article:
33 (1) Administrator. – The person or agency selected by the North Carolina State
34 Energy Office to administer the C-PACE program as provided in this Article.
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1 (2) Capital provider. – A private entity, or the private entity's designee, successor,
2 and assigns, that makes or funds C-PACE financing improvements under this
3 Article.
4 (3) Commercial property. – Privately owned commercial, industrial, or
5 agricultural real property or privately owned residential real property
6 consisting of five or more dwelling units. This term includes property owned
7 by nonprofit, charitable, or religious organizations.
8 (4) Commercial property assessed capital expenditure program (C-PACE). – An
9 assessment voluntarily imposed on an eligible property owner to pay for the
10 costs of eligible qualified improvements.
11 (5) Financing agreement. – The contract in which a property owner agrees to
12 repay a capital provider for the C-PACE financing provided including, but not
13 limited to, the details of any finance charges, fees, debt servicing, accrual of
14 interest and penalties, and any terms relating to the treatment of prepayment
15 and partial payment, billing, collection, and enforcement of the C-PACE
16 financing.
17 (6) Local government. – Any county, city, or public authority.
18 (7) C-PACE Toolkit. – A comprehensive document developed by the statewide
19 administrator that describes the C-PACE program and establishes any
20 appropriate guidelines, specifications, underwriting, and approval criteria, and
21 any other application forms consistent with the administration of the program
22 and not otherwise provided for in this Article.
23 (8) Project application. – The application submitted to the C-PACE program to
24 demonstrate that a proposed project qualifies for financing and an assessment
25 and lien under this Article.
26 (9) Property owner. – The owner or owners of a commercial property whose
27 names are listed on the property title, duly recorded in the appropriate office
28 of the register of deeds.
29 (10) Qualified improvement. – A permanent improvement that is affixed to a
30 qualified project and includes one or more of the following approved by the
31 statewide administrator:
32 a. Energy efficiency measure. – An equipment, physical, or program
33 change implemented that results in less energy used to perform the
34 same function. For purposes of this sub-subdivision, the term "energy
35 efficiency measure" includes, but is not limited to, energy produced
36 from a combined heat and power system that uses nonrenewable
37 energy resources. The term does not include demand-side
38 management.
39 b. Increase resilience. – Includes, but is not limited to, storm retrofits,
40 flood mitigation, stormwater management, wind resistance, energy
41 storage, and microgrids, and other resilience projects.
42 c. Renewable energy resource. – (i) A solar vehicle, solar thermal, wind,
43 hydropower, geothermal, electric vehicle charging station, or ocean
44 current or wave energy resource, (ii) a biomass resource, including
45 agricultural waste, animal waste, wood waste, spent pulping liquors,
46 combustible residues, combustible liquids, combustible gases, energy
47 crops, or landfill methane, (iii) waste heat derived from a renewable
48 energy resource and used to produce electricity or useful, measurable
49 thermal energy at a retail electric customer's facility, or (iv) hydrogen
50 derived from a renewable energy resource. For purposes of this
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1 sub-subdivision, the term "renewable energy resource" does not
2 include peat, a fossil fuel, or a nuclear energy resource.
3 d. Water conservation measure. – To decrease water consumption or
4 demand or to address safe drinking water through the use of efficiency
5 technologies, products, or activities that reduce or support the
6 reduction of water consumption, allow for the reduction in demand, or
7 reduce or eliminate lead from water which may be used for drinking
8 or cooking.
9 (11) Qualified project. – A project approved by the statewide administrator which
10 involves the installation or modification of a qualified improvement,
11 including:
12 a. New and existing commercial properties.
13 b. New and existing multifamily properties of five or more units per
14 dwelling.
15 c. New and existing nonprofit properties.
16 d. New and existing industrial properties.
17 e. New and existing agricultural properties.
18 (12) Program Sponsor. – The North Carolina State Energy Office, which shall be
19 responsible for developing a process for selecting a statewide administrator
20 and for oversight of the C-PACE program.
21 "§ 160A-239.13. Statewide C-PACE Program – authorization.
22 (a) The C-PACE program is a statewide program in which any local government may
23 participate by allowing direct financing between private capital providers and property owners
24 within its jurisdictional boundaries as the means to finance qualified projects. The direct
25 financing shall be secured by placing a voluntary assessment and lien on the property, which
26 shall be duly recorded in the office of the register of deeds in the county where the property is
27 located.
28 (b) The North Carolina State Energy Office (hereinafter "Office") is hereby authorized
29 to serve as the program administrator, and in that capacity shall be responsible for overseeing the
30 C-PACE program. The Office shall develop a process for selecting a third-party program
31 administrator who shall be responsible for accepting and approving applications for C-PACE
32 financing and developing and promoting the program.
33 "§ 160A-239.14. Statewide C-PACE program – administration.
34 In the administration of the C-PACE program, the administrator shall do the following:
35 (1) Prepare a Program Toolkit prior to accepting applications for C-PACE
36 financing.
37 (2) Prepare the following C-PACE documents, which shall be known as the
38 "documentation set":
39 a. An assessment contract to be used by the program and property owner
40 specifying the terms of the voluntary assessment to be recorded on the
41 property.
42 b. A notice of assessment and C-PACE lien.
43 c. An assignment of notice of assessment and C-PACE lien between the
44 local government and capital provider.
45 d. A consent form for the C-PACE assessment by the holder of the
46 mortgage or deed of trust.
47 (3) Impose fees to offset the actual and reasonable costs of administering the
48 C-PACE program, including:
49 a. An application fee not to exceed one hundred fifty dollars ($150.00).
50 b. A processing fee assessed to the property owner whose application for
51 C-PACE financing is approved, which shall be one percent (1%) of
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1 the total amount financed, but shall not be more than fifteen thousand
2 dollars ($15,000).
3 (4) Prescribe the form and manner of the application for financing, and establish
4 the process for reviewing and evaluating applications. The following shall be
5 provided or demonstrated:
6 a. For an existing building: (i) where renewable energy, energy
7 efficiency, or water conservation improvements are proposed, an
8 energy analysis by a licensed engineering firm or engineer or another
9 qualified professional listed in the Program Toolkit stating that the
10 proposed qualified improvements will result in more efficient use or
11 conservation of energy or water, the reduction of greenhouse gas
12 emissions, or the addition of renewable sources of energy or water, or
13 (ii) where resilience improvements are proposed, certification by a
14 licensed engineer stating that the qualified improvements will result in
15 improved resilience.
16 b. For new construction, certification by a licensed engineering firm or
17 engineer stating that the proposed qualified improvements will allow
18 the project to meet the requirements of the current State building code.
19 c. A qualified capital provider may certify to the program, in accordance
20 with a process approved by the program, that the property owner and
21 the project qualifies for financing under this Article, complies with the
22 provisions of this Article, and complies with the Program Toolkit.
23 d. Upon approval by the program, the program shall finalize the C-PACE
24 documentation set and the local government shall execute the C-PACE
25 assessment and lien with no faith or liability towards the debt. The
26 program administrator shall be responsible for recording the
27 documents, as prescribed in the Program Toolkit, in the county in
28 which the property is located.
29 e. The capital provider shall be solely responsible for all billing,
30 collection, and enforcement of the special assessment and lien. Under
31 this Article, delinquent installments shall incur interest and penalties
32 as specified in the financing agreement between the property owner
33 and capital provider. Enforcement of a delinquent installment shall be
34 in the manner of a deed of trust under Article 2A of Chapter 45 of the
35 General Statutes, except that assessments not yet due may not be
36 accelerated or eliminated by foreclosure of the past due amounts of the
37 lien. Any outstanding and delinquent State, local, and federal property
38 taxes or liens at the time of the enforcement action shall be satisfied
39 first.
40 f. If enforcement action is taken against property on which there is a
41 C-PACE lien placed by the capital provider or third-party
42 administrator, foreclosure shall follow the same process as provided in
43 Article 2A of Chapter 45 of the General Statutes. Any outstanding and
44 delinquent State, local, and federal property taxes or liens at the time
45 of the enforcement action shall be satisfied first, and the C-PACE lien
46 shall be superior to all other liens on the property from the date on
47 which notice of the C-PACE lien is recorded until the lien, interest,
48 penalties, and charges accrued or accruing are paid; provided that the
49 mortgage holder consent is obtained from existing mortgage holders
50 on the property as provided in this Article.
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1 (5) Require any commercial property owner seeking C-PACE financing to certify
2 that the applicant:
3 a. Is the legal owner of the benefited property, of which the title is not in
4 dispute.
5 b. Is current on all mortgage payments and property taxes.
6 c. Is not insolvent or in bankruptcy proceedings.
7 (6) Record the C-PACE documentation set executed by the local government in
8 the office of the register of deeds in the county in which the approved property
9 is located. The administrator may delegate recording duties to the property
10 owner and the capital provider.
11 "§ 160A-239.15. Local government participation.
12 (a) A local government seeking to participate in the C-PACE program shall adopt a
13 resolution which shall include all of the following:
14 (1) A grant of authorization for the C-PACE program to operate within its
15 jurisdictional boundaries and to offer C-PACE financing to willing and
16 qualified property owners.
17 (2) The local government's intent to participate i