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HomeMy WebLinkAboutAgenda 10-21-2025; 5-a - Public Hearing and Resolution for Orange County to Participate in the North Carolina Commercial Property Assessed Capital Expenditure (C-PACE) Program 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 21, 2025 Action Agenda Item No. 5-a SUBJECT: Public Hearing and Resolution for Orange County to Participate in the North Carolina Commercial Property Assessed Capital Expenditure (C-PACE) Program DEPARTMENT: County Manager ATTACHMENT(S): INFORMATION CONTACT: October 7, 2025 Approved Resolution of Amy Eckberg, Sustainability Programs Intent to Adopt C-PACE Manager; (919) 245-2626 Proposed Resolution to Adopt C-PACE C-PACE Legislation — Senate Bill 802 North Carolina C-PACE Program Guidelines and Toolkit Presentation PURPOSE: To hold a public hearing, receive public comment, close the public hearing, and consider action on a Resolution for Orange County to Participate in the North Carolina Commercial Property Assessed Capital Expenditure (C-PACE) Program. BACKGROUND: At its Business meeting on October 7, 2025, the Orange County Board of Commissioners adopted a Resolution of Intent to participate in the Commercial Property Assessed Capital Expenditure (C-PACE) program and scheduled a public hearing on the program for the Business meeting on October 21, 2025. This public hearing and the authorizing resolution are required for Orange County to participate in C-PACE which allows commercial property owners to finance energy efficiency, renewable energy, water conservation and resiliency improvements through low-cost, long-term financing. The County is not providing funding or financing, nor will it perform any billing or collection functions related to C-PACE projects. C-PACE was authorized in North Carolina in July 2024 with the North Carolina General Assembly's adoption of Senate Bill 802 (Sections 1-3) authorizing the creation of a statewide Commercial Property Assessed Capital Expenditure (C-PACE) program. This program allows commercial property owners to finance energy efficiency, renewable energy, water conservation, and resiliency improvements through a voluntary special assessment on the property. C-PACE enables property owners to finance up to 100% of eligible upgrades (not to exceed 35% of the property's expected stabilized value), with repayment spread over the useful life of the improvements. This structure often results in lower annual payments and positive cash flow, providing financial benefits such as reduced energy costs, increased property value, and potentially more favorable interest rates due to the low-risk tax assessment model. 2 Already implemented in 40 states and Washington, D.C., C-PACE is now available in North Carolina. The program is administered by the Economic Development Partnership of North Carolina (EDPNC), with property owners working directly with private lenders. Repayment occurs through a property assessment and lien, which may allow financing over longer terms than traditional loans. For Orange County property owners to participate, the County was first required to adopt a Resolution of Intent, followed by a public hearing and adoption of a final Authorizing Resolution. If adopted, the County's responsibilities will be limited to education and outreach, executing agreements, recording liens, and coordinating with EDPNC — requiring minimal administrative effort. The County will not provide funding, financing, billing, or collections for C-PACE projects. FINANCIAL IMPACT: This item has no financial impact. Financing is provided by private capital providers, and the County does not incur debt or provide funds for improvements. ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GOAL 1: ENVIRONMENTAL PROTECTION AND CLIMATE ACTION OBJECTIVE 1. Identify the priorities and resources necessary to implement the Climate Action Plan. OBJECTIVE 3. Improve educational opportunities for County staff and community members on climate action and available resources to advance climate action projects. • GOAL 6: DIVERSE AND VIBRANT ECONOMY OBJECTIVE 2. Review and revise County policies and regulations to support business investment in Orange County. OBJECTIVE 5. Increase access to and awareness of resources and assistance available to residents and businesses. RECOMMENDATION(S): The Manager recommends that the Board: 1. Conduct the public hearing and receive public comments; 2. Close the public hearing; and 3. Approve the Resolution to Adopt the C-PACE program in Orange County. 3 RES-2025-050 ORANGE COUNTY BOARD OF COMMISSIONERS RESOLUTION DECLARING INTENT OF THE COUNTY OF ORANGE, NORTH CAROLINA TO PARTICIPATE IN THE COMMERCIAL PROPERTY ASSESSED CAPITAL EXPENDITURE (C-PACE) PROGRAM WHEREAS, Article 106 of Chapter 160A of the General Statutes of North Carolina, as amended (the "C- PACE Act"), authorizes the establishment of a statewide commercial property assessed capital expenditure (C-PACE) program (the "C-PACE Program")that local governments may voluntarily join; and WHEREAS, the C-PACE Act authorizes the North Carolina Department of Commerce (the "Program Sponsor")to oversee the C-PACE Program and requires the Economic Development Partnership of North Carolina, Inc., a North Carolina nonprofit corporation (the "Statewide Administrator"), to administer the C-PACE Program and, in support thereof, provide certain administrative services described in North Carolina General Statute § 160A-239.14; and WHEREAS, the C-PACE Act and C-PACE Program permit willing owners of commercial, industrial, or agricultural real property, or residential real property with five or more dwelling units located in the jurisdictional boundaries of participating local governments("Qualifying Commercial Property")to obtain direct financing ("C-PACE Financing") from a "capital provider" (as further defined in North Carolina General Statute § 160A-239.12(1), "Capital Provider") for "qualifying improvements" (as further defined in North Carolina General Statute § 160A-239.12(14), "Qualifying Improvements") approved by the Program Sponsor, including energy efficiency measures, resiliency measures, renewable energy measures, and water conservation measures; and WHEREAS, under the C-PACE Act, C-PACE Financing shall be secured by a (a) voluntary assessment imposed on Qualifying Commercial Property by a local government for the total amount of such financing (the "C-PACE Assessment")and (b) lien on such Qualifying Commercial Property until the financing is paid in full (the "C-PACE Lien"); and WHEREAS, the County of Orange, North Carolina, ("The County") acting by and through its Board of Commissioners, desires to participate in the CPACE Program and, in support thereof, adopt a resolution setting forth the items required by North Carolina General Statute § 160A-239.15(a); NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the County of Orange, North Carolina as follows: Section 1. The County hereby authorizes (a) the C-PACE Program to operate within its jurisdictional boundaries and (b)the Statewide Administrator to provide the administrative services described in North Carolina General Statute § 160A-239.14. Section 2. The County intends to (a) authorize C-PACE Financing within the jurisdictional boundaries of the County,(b)authorize the imposition of C-PACE Assessments to secure repayment of C-PACE Financing, (c) assign the C-PACE Lien to Capital Providers providing C-PACE Financing and (d) delegate billing, collection, and enforcement duties for the C-PACE Assessment and C-PACE Lien to Capital Providers. 4 Section 3.The amount of any C-PACE Financing and related C-PACE Assessment repayment terms shall be pursuant to an agreement by and among the County, the Statewide Administrator, a "property owner" (as defined in the C-PACE Act, a "Property Owner") and Capital Provider (an "Assessment Agreement") and a financing agreement between a Property Owner and a Capital Provider in which a Property Owner agrees to repay a Capital Provider for the C-PACE Financing provided, including, but not limited to, any finance charges, fees, debt servicing, accrual of interest and penalties, and any terms relating to the treatment of prepayment and partial payment, and the billing, collection, and enforcement of the C-PACE Financing. Section 4. The Orange County Tax Office shall, upon receipt from the Statewide Administrator of an approved project application for C-PACE Financing within the jurisdictional boundaries of the County, execute an Assessment Agreement, a Notice of C-PACE Assessment, and an Assignment of C-PACE Lien. Section 5. The County shall be reimbursed by the Statewide Administrator for the actual and reasonable costs associated with the performance of the duties described in Section 4 hereof. Section 6. A public hearing on the C-PACE Program will be held by Orange County on October 21, 2025 at 7pm at Southern Human Services, 2501 Homestead Road, Chapel Hill, NC 27514. Section 7. Nothing in this resolution shall be interpreted as authorizing the County to pledge, offer, or encumber its full faith and credit, and the County shall not pledge, offer, or encumber its full faith and credit in connection with any C-PACE Financing. Section 8. Should any provision or provisions of this Resolution be declared invalid or unenforceable in any respect by final decree of any court of competent jurisdiction,the invalidity or unenforceability of any such provisions shall not affect the remaining provisions of such Resolution. Section 9. All resolutions or parts thereof in conflict herewith are, to the extent of such conflict, hereby repealed. Section 10. This Resolution shall take effect upon its adoption. ADOPTED this 7th day of October, 2025. I, l dwre� �, Clerk for Orange County, North Carolina, DO HEREBY CERTIFY that the foregoing is a true and complete copy of a resolution adopted by Orange County, North Carolina at a regular meeting duly called and held on 4. A 0 S . WITNESS my hand and the official seal of Orange County this day of dck-olo.c. , 20.g5 Call /Clerkto the BoJcl, Orange County, NC t 17 ., 5 RES-2025-053 RESOLUTION AUTHORIZING THE COUNTY OF ORANGE, NORTH CAROLINA TO PARTICIPATE IN THE COMMERCIAL PROPERTY ASSESSED CAPITAL EXPENDITURE (C-PACE) PROGRAM WHEREAS, as required by N.C. Gen. Stat. § 160A-239.14(a)(1), the Board of County Commissioners of the County of Orange, North Carolina (the "County]") previously adopted Resolution No. RES-2025-050 (the "Resolution of Intent"), declaring the intent of the County to participate in the Commercial Property Assessed Capital Expenditure (C-PACE Program) established under Article lOB of Chapter 160A of the General Statutes of North Carolina, as amended(the "C-PACE Act"); and WHEREAS, as required by N.C. Gen. Stat. § 160A-239.14(b), on October 21, 20253the County held a public hearing on its intent to participate in the C-PACE Program; and WHEREAS, as required by N.C. Gen. Stat. § 160A-239.14(a)(2), the County now desires to adopt a resolution to join the C-PACE Program; NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of the County of Orange,North Carolina as follows: Section 1. The County hereby joins the C-PACE Program, and declares that its participation in the C-PACE Program shall be subject to and consistent with the provisions of the C-PACE Act, the terms of the C-PACE Program as established by the Economic Development Partnership of North Carolina as the Statewide Administrator of the C-PACE Program, and the Resolution of Intent. Section 2. Nothing in this resolution shall be interpreted as authorizing the County to pledge, offer, or encumber its full faith and credit, and the County shall not pledge, offer, or encumber its full faith and credit in connection with any C-PACE Financing. Section 3. Should any provision or provisions of this Resolution be declared invalid or unenforceable in any respect by final decree of any court of competent jurisdiction, the invalidity or unenforceability of any such provisions shall not affect the remaining provisions of such Resolution. Section 4. All resolutions or parts thereof in conflict herewith are, to the extent of such conflict,hereby repealed. 'NTD:Insert name of City,Town or Village,and define as"City","Town"or"Village" 2 NTD: Insert name of governing body(e.g.,"Town Council"or"Board of Commissioners"). 3 NTD:Insert date of public hearing. 6 Section 5. This Resolution shall take effect upon the concurrence of the governing body of the County of Orange upon its adoption.5 ADOPTED AND APPROVED this day of , 20_. Clerk to the Board of County Commissioners for the County of Orange,North Carolina, DO HEREBY CERTIFY that the foregoing is a true and complete copy of a resolution adopted by the Board of County Commissioners of the County at a regular meeting duly called and held on October 21, 2025. WITNESS my hand and the official seal of the County this day of , 20_. , Clerk Board of County Commissioners County of Orange (SEAL) a NTD: N.C. Gen. Stat. § 160A-239.15(b) makes resolutions adopted by municipalities effective only with the "concurrence of the governing body of the county in which the city is located." For municipalities located in multiple counties,this language must be revised further to state: "upon the concurrence of all of the governing bodies of the counties in which the city is located." s NTD:A resolution adopted by the governing board of a county should be made effective upon adoption. 7 GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2023 SESSION LAW 2024-44 SENATE BILL 802 AN ACT TO ADVANCE BUILDING RESILIENCY AND UTILITY EFFICIENCY IN NORTH CAROLINA BY AUTHORIZING A STATEWIDE PROGRAM TO UTILIZE ASSESSMENTS TO REPAY NONPUBLIC FINANCING OF COMMERCIAL BUILDING IMPROVEMENTS THAT WILL PROMOTE ECONOMIC DEVELOPMENT, REDUCE UTILITY BILL COSTS, AND HARDEN COMMERCIAL BUILDINGS AGAINST STORM AND FLOOD DAMAGE AND TO AMEND ARTICLE 8 OF CHAPTER 143 OF THE GENERAL STATUTES TO MODIFY THE REQUIREMENTS TO BE CERTIFIED AS A MINORITY BUSINESS OR HISTORICALLY UNDERUTILIZED BUSINESS. The General Assembly of North Carolina enacts: SECTION 1. Chapter 160A of the General Statutes is amended by adding a new Article to read: "Article IOB. "Commercial Property Assessed Capital Expenditure (C-PACE.)Act. "§ 160A-239.11. Purpose; findings. This Article shall be known and may be cited as the "Commercial Property Assessed Capital Expenditure (C-PACE) Act." This Article authorizes the establishment of a statewide C-PACE Program that local governments may voluntarily join to allow willing owners of commercial, industrial, agricultural, nonprofit, and multifamily residential properties with five or more dwelling units to obtain low-cost, long-term financing for qualifying improvements, including energy efficiency, water conservation, renewable energy, and resilience projects, secured by an assessment and lien authorized by this Article. The State finds that a valid public purpose exists because the use of a C-PACE Program creates an additional financing mechanism for property owners to use private funds to finance improvements to their eligible property, thereby driving economic development by creating a diversity of jobs in the resilience and clean energy sectors of the economy. The assessment requires minimal upfront costs and provides a more accessible financial mechanism to fund improvements that will increase the tax value of the affected properties at minimal administrative cost to local governments. C-PACE improvements allow property owners to save on their utility bills because the improvements lead to energy or utility savings and will result in improved indoor air quality or increased resilience, which will increase the ability of communities and local governments to respond to natural disasters and improve public health. 160A-239.12. Definitions. The following definitions apply in this Article: Capital provider.—A private entity,or the private entity's designee, successor, and assigns, that makes or funds ying improvements under this Article. Commercial property assessed capital expenditure programC-PACE Program). —A program wherein a C-PACE assessment and C-PACE lien are voluntarily imposed by a local ,government on qualifying commercial property to pay for the costs of qualifn�ng improvements. 111111 a 1111 zJill Jill * 8 C-PACE assessment. — A voluntary assessment imposed on a commercial property by a local ,government under this Article pursuant to an assessment agreement for the total amount of the C-PACE financing. The voluntary C-PACE assessment shall not constitute a tax. C-PACE financing.—Direct financing between capital providers and property owners within the jurisdictional boundaries of a local government participating in the C-PACE Program to finance qualifying improvements. C-PACE lien. —A lien to secure the C-PACE assessment that remains on the qualifying property until paid in full. C-PACE toolkit. — A comprehensive set of documents developed by the statewide administrator in consultation with stakeholders and local governments and subject to approval by the program sponsor that describes the C-PACE Program guidelines, application approval criteria, and forms consistent with the administration of the program as provided for in this Article. Financing agreement. — The contract in which a property owner agrees to repay a capital provider for the C-PACE financing provided, including, but not limited to, any finance charges, fees, debt servicing, accrual of interest and penalties, and any terms relating to the treatment of prepayment and partial payment, and the billing, collection, and enforcement of the C-PACE financing. Local government. —An.. county or city_ Program sponsor. —The North Carolina Department of Commerce. 10 Project application.—The application submitted to the statewide administrator by the property owner to demonstrate that a proposed project qualifies for C-PACE financing under this Article. 11 Property owner.—The holder of title in fee simple to a qualifying commercial property_ Publicly-owned land. — Property that is owned by a State or local governmental entity and that is subject to a leasehold. Qualifying commercial property. — Privately owned commercial, industrial, or agricultural real grope . or privately owned residential real property consisting of five or more dwelling units. This term includes property owned by nonprofit, charitable, or religious. organizations. Qualifying improvement. —A permanently affixed improvement to a building on a qualifying commercial property as part of the construction or renovation of the qualifying property and that includes one or more of the following approved by the program sponsor: a. Energy efficiency measure. —An equipment, physical component, or program change implemented that results in less energy used to perform the same function and that meets or exceeds then-existing State and federal building codes and efficiency standards or conservation codes, including, but not limited to, energy produced from a combined heat and power system that uses nonrenewable energy resources. b. Resiliency measure.—An equipment,physical component,or program change implemented that includes,but is not limited to,storm retrofits, flood mitigation, stormwater management,wind resistance, indoor air quality improvement, electric vehicle charging station, backup energy generators enrolled in an electric public utility demand response program, energy storage,torage, and microgrids and other resilience projects. Page 2 Session Law 2024-44 Senate Bill 802 9 C. Renewable energy measure.—A renewable energy resource as defined in G.S. 62-133.8. d. Water conservation measure.—An equipment,physical component, or program change implemented to decrease water consumption or demand or to address safe drinking water. 15 Statewide administrator. —The Economic Development Partnership of North Carolina. "§ 160A-239.13. Statewide C-PACE Program—authorization. (a) The State authorizes a statewide C-PACE Program in which any local government may participate. (b) The program sponsor is hereby authorized under this Article to oversee the C-PACE Program. "& 160A-239.14. Statewide C-PACE Program— administration. La) In the administration of the C-PACE Program, the statewide administrator shall do the following: Prepare a C-PACE toolkit in consultation with stakeholders and local governments and subject to approval by the program sponsor prior to accepting applications for C-PACE financing, which shall include, at a minimum, all of the following: a. A form of assessment agreement to be used between a local government and property owner specifying the terms of the C-PACE assessment. b. A form of notice of C-PACE assessment that identifies the qualified commercial property subject to the C-PACE assessment and the property owner consenting to the C-PACE assessment. C. A form of assignment of the C-PACE lien from the local government to the capital provider that cross-references the registry book and page number of the notice C-PACE assessment giving rise to the lien. d. A form of consent to a C-PACE assessment by the holder of a mortgage, deed of trust, or other lien upon the qualifying commercial property_ e. A form of project application with checklist requirements and corresponding documentation that will be required by the statewide administrator to approve a project application. (22,) Impose fees to offset the actual and reasonable costs of administering the C-PACE Program, including: a. An application fee not to exceed seven hundred fifty dollars($750.00). b. A processing fee assessed to the property owner whose application for C-PACE financing is approved, which shall be one percent (1%) of the total amount financed but shall not be more than twenty-five thousand dollars ($25,000). Establish the process for reviewing and evaluating applications, which shall, at a minimum, require the followingtprovided or demonstrated: a. For an existing building: (i) where renewable energy, energy efficiency, or water conservation measures are proposed, an energy analysis by a licensed engineering firm or engineer or another qualified professional listed in the C-PACE toolkit stating that the proposed qualifying ing improvements will result in more efficient use or conservation of energy that meets or exceeds then-existing State and federal building codes and efficiency standards or conservation codes, more efficient use or conservation of water, the reduction of Senate Bill 802 Session Law 2024-44 Page 3 10 greenhouse gas emissions, or the addition of renewable sources of energy or water or GO where resilience measures are proposed, certification by a licensed engineer stating that the qualifying improvements will result in improved resilience. b. For construction of a new building, certification by a licensed engineering firm or engineer stating that the proposed qualifying improvements will allow the proposed project to exceed the energy or water efficiency requirements of the current State building code, or in the case of a resiliency measure, achieve compliance with a national model resiliency standard. C. For existing or new buildings, certification by a licensed engineering firm or engineer that all available electric public utility energy efficiency and demand response programs available to property owners and any tenants thereof have been evaluated prior to applying for C-PACE financing. Accept and approve project applications for C-PACE financing meeting the requirements of subdivision (3) of this subsection. Require any property owner applying for C-PACE financing to certify that the applicant: a. Is the holder of title in fee simple to the qualifying commercial property and that title to the qualifying commercial property is not in dispute. b. Is current on all mortgage payments and property taxes. C. Is not insolvent or in bankruptcy proceedings. Upon execution by the local government of(i) a C-PACE assessment and (ii) a notice of assignment of C-PACE lien related to an approved project gpplication,record such documents in the office of the register of deeds in the county in which the approved property is located. The statewide administrator may delegate recording duties to the property owner and the capital provider. Submit a report to the programponsor annually_ The provisions of Chapter 150B of the General Statutes shall not apply to the C-PACE toolkit or any actions of the programponsor or statewide administrator in the administration of the program. "& 160A-239.15. Local government participation. (a) A local government seeking to participate in the C-PACE Program shall adopt a resolution that includes all of the following: A grant of authorization for the C-PACE Program to operate within its jurisdictional boundaries and for the statewide administrator to provide the administrative services described in G.S. 160A-239.14. A statement that the local government intends to (i) authorize C-PACE financing, (ii) authorize the imposition of C-PACE assessments on qualifying commercial properties benefitting from qualif iy g improvements to secure repayment of C-PACE financing, (iii,) assign the C-PACE lien to the capital provider providing C-PACE financing and (iv) delegate billing, collection, and enforcement duties for the C-PACE assessment and C-PACE lien to capital providers. A statement that the amount of a C-PACE financing and related assessment repayment terms shall be pursuant to the related financing agreement. fD A statement identifying the local government department or employee that shall, upon receipt of an approved project application for C-PACE financing within its jurisdictional boundaries from the statewide administrator, execute Page 4 Session Law 2024-44 Senate Bill 802 11 the documents included in G.S. 160A-239.14(a)(I)a., b., and c. on behalf of the local government. A statement that the local government shall be reimbursed by the statewide administrator for the actual and reasonable costs associated with the performance of the duties described in subdivision(4) of this subsection. A statement of the time and place for a public hearing on the proposed program. The governing body of the local ,government may, after conducting_a public hearing on the proposed program, adopt a resolution providing that the local government is joining the C-PACE Program. If the local government seeking to participate in the C-PACE Program is a city, the resolution adopted pursuant to this subsection shall be effective only with the concurrence of the governing body of the county in which the city is located. O Pursuant to G.S. 160A-239.17(4), no funds for repayment of the voluntary C-PACE assessment should be received by the participatinglgovernment. However,if any such funds are received by the participatinglocal ocal government, such funds shall be custodial funds as described in G.S. 159-13(a) for the benefit of the capital provider. "& 160A-239.16. Immunity and foreclosure process. La) Neither the State nor any participating local ocal government, its officers, or employees shall be liable for any actions taken pursuant to this Article. A local government shall not be financially or legally liable or responsible for any assessment and lien imposed within its jurisdiction under the program. The capital provider shall be solely responsible for all billing, collection, and enforcement of the C-PACE assessment and C-PACE lien. Lc) Delinquent C-PACE assessment payments shall incur interest and penalties as specified in the financing agreement and shall accrue to the C-PACE lien. Enforcement of a delinquent C-PACE assessment payment by the capital provider shall be in the manner of the foreclosure of a deed of trust as provided in Article 2A of Chapter 45 of the General Statutes, except that C-PACE assessment payments not yet billed or due may not be accelerated or extinguished by foreclosure of the delinquent assessment payment or payments. Any outstanding or delinquent State, local, or federal taxes or liens at the time of the foreclosure proceeding shall be satisfied first, but the C-PACE lien shall be superior to all other liens on the property from the date on which the notice of the C-PACE assessment was recorded until the C-PACE assessment, interest, penalties, and charges accrued or accruing are paid. "& 160A-239.17. C-PACE assessment and lien. The followingshall hall apply to the C-PACE assessment and lien: L The lien shall be inferior to all prior and subsequent State, local, and federal taxes or liens and superior to all other liens on the property from the date on which the notice of the C-PACE assessment is recorded until the C-PACE assessment, interest,penalties, and charges accrued or accruing are paid. The lien shall run with the land, and that portion of the C-PACE assessment that is not yet due may not be accelerated or eliminated by foreclosure of a property tax or other lien. (3) The C-PACE lien may not be contested on the basis that the improvement is not a qualified improvement or for any procedural or substantive irregularities related to the financing. For C-PACE assessments for leaseholds, the C-PACE assessment may be levied on the leasehold or possessory interest, including on publicly-owned land, subject to the consent of the entity owning the property and shall be payable by the owner of the leasehold interest. 160A-239.18. Financing. Senate Bill 802 Session Law 2024-44 Page 5 12 La) The financing for assessments imposed under this Article may include, but is not limited to: The cost of materials and labor necessgy for the installation or modification of a qualified improvement. Permit fees. Inspection fees. Financingfees. �5,) Application and administrative fees. f6)) Project development and engineering fees. Interest reserves. Capitalized interest, in an amount determined by the owner of the commercial property and the capital provider. JD Any other fees or costs incurred by the property owner incident to the installation, modification, or improvement on a specific or pro rata basis, as determined by the local government. The term of the C-PACE financing may not exceed the weighted average useful life of qualifying improvements. The total amount for financing of the qualifying improvement secured by the propertX shall not exceed thirty-five percent 35%) of the value of the property. The calculation of value used to determine the maximum amount of financing available for a particular property shall reflect the reasonable expected stabilized value of the property with the proposed qualifying improvements installed. The financing agreement between the capital provider and the property owner shall be negotiated by the parties, including all terms and conditions of repayment, including interest, penalties, and prepayment. "& 160A-239.19. Lender consent. Prior to entering into an assessment agreement, the property owner must submit to the statewide administrator a written statement, executed by each holder of a mortgage, deed of trust, or other lien on the property securing indebtedness, indicating their consent to the C-PACE assessment and that the C-PACE assessment does not constitute an event of default under the terms of the mortgage, deed of trust, or other indebtedness secured by lien. 160A-239.20. Prohibition on use of public funds. It is the intent of this Article that neither the State nor any local government shall use public funds to fund or repay any C-PACE assessment. Nothing in this Article shall be interpreted as authorizing a local government to pledge, offer, or encumber its full faith and credit, and no local government shall pledge, offer, or encumber its full faith and credit under this Article. 160A-239.21. Purchases and contracts. The proposed arrangements for C-PACE financing may authorize the property owner to do any of the following: L Directly purchase the related equipment and materials for the installation or modification of a qualifying improvement. Contract directly, including through lease, power purchase agreement, or other service contract, for the related equipment and materials used in the installation or modification of a qualifying improvement." SECTION 2. G.S. 105-375(i)reads as rewritten: "(i) Issuance of Execution. —At any time after three months and before two years from the indexing of the judgment as provided in subsection (b) of this section, execution shall be issued at the request of the tax collector in the same manner as executions are issued upon other judgments of the superior court, and the real property shall be sold by the sheriff in the same manner as other real property is sold under execution with the following exceptions: (1) No debtor's exemption shall be allowed. Page 6 Session Law 2024-44 Senate Bill 802 13 (2) At least 30 days prior to the day fixed for the sale,the sheriff shall send notice by registered or certified mail, return receipt requested, to the taxpayer at the taxpayer's last known address,in lieu of personal service,and to all lienholders of record. If within 10 days following the mailing of a notice, a return receipt has not been received by the sheriff indicating receipt of the notice, then the sheriff shall make additional efforts to locate and notify the taxpayer, if not yet notified, and all unnotified lienholders of record of the sale under execution in accordance with subdivision(4) of subsection(c) of this section. (3) The sheriff shall add to the amount of the judgment as costs of the sale any postage expenses incurred by the tax collector and the sheriff in foreclosing under this section. (4) In any advertisement or posted notice of sale under execution,the sheriff may (and at the request of the governing body shall) combine the advertisements or notices for properties to be sold under executions against the properties of different taxpayers in favor of the same taxing unit or group of units;however, the property included in each judgment shall be separately described and the name of the taxpayer specified in connection with each property. The purchaser at the execution sale acquires title to the property in fee simple free and clear of all claims, rights, interests, and liens except the liens of other taxes or special assessments not paid from the purchase price and not included in the judgttjudgment, liens arising from rom C-PACE assessments authorized under Article 1 OB of Chapter 160A of the General Statutes, and conservation agreements, as defined in G.S. 121-35(1)." SECTION 3. G.S. 105-374(k)reads as rewritten: "(k) Judgment of Sale. — Any judgment in favor of the plaintiff or any defendant taxing unit in an action brought under this section shall order the sale of the real property or as much as may be necessary for the satisfaction of all of the following: (1) Taxes adjudged to be liens in favor of the plaintiff,other than taxes the amount of which has not been definitely determined, together with penalties, interest, and costs. (2) Taxes adjudged to be liens in favor of other taxing units, other than taxes the amount of which has not yet been definitely determined, if those taxes have been alleged in answers filed by the other taxing units,together with penalties, interest, and costs. The judgment shall appoint a commissioner to conduct the sale and shall order that the property be sold in fee simple, free and clear of all interests,rights, claims, and liens whatever, except that the sale shall be subject to (i) taxes the amount of which cannot be definitely determined at the time of the judgment, (ii) taxes and special assessments of taxing units which are not parties to the action, ( }(iii) C-PACE assessments authorized under Article 1 OB of Chapter 160A of the General Statutes, (iv) in the discretion of the court, taxes alleged in other tax foreclosure actions or proceedings pending against the same real property, and(�v}Cv,Zconservation agreements, as defined in G.S. 121-35(1). In all cases in which no answer is filed within the time allowed by law, and in cases in which answers filed do not seek to prevent sale of the property,the clerk of the superior court may enter the judgment, subject to appeal as provided in G.S. 1-301.1." SECTION 3.1. G.S. 105-376(b)reads as rewritten: "(b) Payment of Purchase Price by Taxing Units; Status of Property Purchased by Taxing Units.—Any taxing unit that becomes the purchaser at a tax foreclosure sale may,in the discretion of its governing body, pay only that part of the purchase price that would not be distributed to it and other taxing units on account of taxes, penalties, interest, and such costs as accrued prior to the initiation of the foreclosure action under G.S. 105-374 or docketing of a judgment under G.S. 105-375. Thereafter, in such a case, the purchasing taxing unit shall hold the property for Senate Bill 802 Session Law 2024-44 Page 7 14 the benefit of all taxing units that have an interest in the property as defined in this subsection (b). All net income from real property so acquired and the proceeds thereof, when resold, shall be first used to reimburse the purchasing unit for disbursements actually made by it in connection with the foreclosure action and the purchase of the property, and any balance remaining shall be distributed to the taxing units having an interest therein in proportion to their interests. The total interest of each taxing unit, including the purchasing unit, shall be determined by adding: (1) The taxes of the unit, with penalties, interest, and costs (other than costs already reimbursed to the purchasing unit) to satisfy which the property was ordered sold; (2) Other taxes of the unit, with penalties, interest, and costs which would have been paid in full from the purchase price had the purchase price been paid in full; (3) Taxes of the unit, with penalties, interest, and costs to which the foreclosure sale was made subject; and (4) The principal amount of all taxes which became liens on the property after purchase at the foreclosure sale or which would have become liens thereon but for the purchase, but no amount shall be included for taxes for years in which (on the day as of which property was to be listed for taxation) the property was being used by the purchasing unit for a public purpose. If the amount of net income and proceeds of resale distributable exceeds the total interests of all taxing units defined in this subsection (b), the remainder shall be applied to any special benefit assessments to satisfy which the sale was ordered or to which the sale was made subject, and any balance remaining shall accrue to the purchasing unit. When any real property that has been purchased as provided in this section is permanently dedicated to use for a public purpose,the purchasing unit shall make settlement with other taxing units having an interest in the property(as defined in this subsection)in such manner and in such amount as may be agreed upon by the governing bodies; and if no agreement can be reached,the amount to be paid shall be determined by a resident judge of the superior court in the district in which the property is situated. Nothing in this section shall be construed as requiring the purchasing unit to secure the approval of other interested taxing units before reselling the property or as requiring the purchasing unit to pay other interested taxing units in full if the net income and resale price are insufficient to make such payments. Any taxing unit purchasing property at a foreclosure sale may, in the discretion of its governing body, instead of following the foregoing provisions of this section,make full payment of the purchase price, and thereafter it shall hold the property as sole owner in the same manner as it holds other real property, subject only to taxes and special assessments, with penalties, interest, and costs, and liens arising from C-PACE assessments under Article 1013 of Chapter 160A of the General Statutes, to which the sale was made subject." SECTION 4. G.S. 143-128.2(g)reads as rewritten: "(g) As used in this section: (1) The term "minority business" means either of the following: b. An Employee Stock Ownership Plan company in which at least fifty-one percent (51%) of the plan participants are minority persons or socially and economically disadvantaged individuals. SECTION 5. G.S. 143-128.4(a)reads as rewritten: "(a) As used in this Chapter,the term "historically underutilized business" means either of the following: Page 8 Session Law 2024-44 Senate Bill 802 15 (2) An Employee Stock Ownership Plan company in which at least fifty-one percent (51%) of the steek is ov,%ed by one e per-sons who--plan participants are members of at least one of the groups set forth in subsection (b) of this section. An ESOP company applying for certification as a historically underutilized business shall provide an attestation that it meets the requirements of this subdivision together with such documentation supporting the attestation as may be required by the Secretary." MODERNIZE WASTEWATER PERMITTING TO SUPPORT ENVIRONMENTALLY SOUND ECONOMIC DEVELOPMENT SECTION 5.1.(a) The General Assembly finds all of the following: (1) Residents of the State should be assured enjoyment of, and access to, proven and reasonable methods of treating and disposing of wastewater that embrace new technologies. (2) As the State continues to grow and attract businesses, it is critical that wastewater treatment and disposal facilities are provided for those businesses; and adequate and affordable housing that is proximate to those businesses must be available to assure the success of those businesses. (3) Residents of the State should be assured treatment in an equitable manner to their counterparts within other states comprising the United States Environmental Protection Agency's (USEPA) Region 4 where permits are authorized and issued for the discharge of treated wastewater from municipalities, businesses, and developments to, for example, receiving waters "in which natural flow is intermittent, or under certain circumstances non-existent" (Alabama Admin. Code r. 335-6-10-.09). (4) The discharge of treated wastewater to low flow or zero flow receiving waters is of low risk to the environment, protects and improves water quality, and provides the most prudent use of ratepayer funds. (5) For all these reasons, it is necessary to establish methodologies and rules for the discharge of treated domestic wastewaters with low risk following site specific criteria to surface waters of the State, including wetlands, perennial streams, and unnamed tributaries of named and classified streams and intermittent streams or drainage courses where the 7Q 10 flow or 30Q2 flow of the receiving waters is estimated to be low flow or zero flow,as determined by the United States Geological Survey(USGS). (6) This act preserves and maintains the authority of the Department of Environmental Quality (Department) for appropriate review, including opportunities for public comment, and requires the Department and the Environmental Management Commission (Commission) to seek necessary approvals from USEPA to adopt temporary and permanent rules to authorize discharges of wastewater to such receiving waters. SECTION 5.1.(b) G.S. 143-215.1(c8) is repealed. SECTION 5.1.(c) Section 12.9 of S.L. 2023-134 is repealed. SECTION 5.1.(d) No later than August 1, 2024, the Department of Environmental Quality (Department) and the Environmental Management Commission (Commission) shall develop and submit to the United States Environmental Protection Agency for USEPA's approval draft rules that establish methodologies and permitting requirements for the discharge of treated domestic wastewaters with low risk following site-specific criteria to surface waters of the State, including wetlands, perennial streams, and unnamed tributaries of named and classified streams and intermittent streams or drainage courses where the 7Q10 now or 30Q2 flow of the receiving Senate Bill 802 Session Law 2024-44 Page 9 16 water is estimated to be low flow or zero flow, or under certain conditions non-existent, as determined by the United States Geological Survey(USGS). Within 20 days of the date USEPA approves the draft rules submitted pursuant to this subsection, the Commission shall initiate the process for temporary and permanent rules pursuant to Chapter 150B of the General Statutes. The draft rules submitted to USEPA for approval shall include all of the following: (1) Defined terms. — a. "Treated domestic wastewater" shall mean sewage and wastewater comprised of waste and wastewater from household, commercial or light industrial operations (e.g., homes, restaurants, car washes, laundromats servicing only domestic laundry)excluding any industrial process wastewater regulated by USEPA under the Categorical Pretreatment Standards. b. "Low-risk discharges" means discharges of 2 million gallons per day or less of treated domestic wastewater when the dissolved oxygen content(DO)of the effluent is significantly higher(1.5 mg/l or greater) than the DO of the receiving water during low flow periods and the biological oxygen demand content (BOD) of the effluent is significantly lower(1.5 mg/1 or more) than the DO of the effluent. C. "Sag"means a reduction in the existing DO in the background surface receiving water to which treated wastewater will be discharged. Sag is typically related to nutrient elements within treated wastewater,which may promote the growth of oxygen-consuming micro-organisms, increasing the BOD, which at elevated levels may reduce DO in the background surface water body. (2) Criteria for permitting. — a. Applicants shall be required to demonstrate, through an analysis comparing the limits of the NPDES permit to the characteristics of the receiving water,that a proposed discharge meets criteria for a low-risk discharge as defined in this subsection. When a discharge is determined to be low-risk, the applicant shall demonstrate using simple modeling of the applicant's choosing, provided that the model chosen is utilized elsewhere in USEPA Region 4, such as the Streeter-Phelps model used in the State of Alabama, to show that the Sag, if any, in the DO of the receiving water will not exceed 0.1mg/l. b. Discharges to low flow or zero flow receiving waters shall be subject to the following conditions: 1. The receiving waters fall within any of the following categories: I. The 7Q10 or 32Q2 flow statistics are estimated to be zero by the USGS. II. The drainage area of the discharge point is less than 5 square miles as specified by the USGS on-line tools or other methodology that meets the standard of care for such work. III. The 7Q 10 flow is estimated to be less than 1 cubic foot per second by the USGS. 2. The proposed flow for any wastewater discharge shall be the lesser of the following: I. No more than one-tenth of the flow generated by the one-year, 24-hour storm event given the drainage area and calculated using the rational method. The rational Page 10 Session Law 2024-44 Senate Bill 802 17 method shall be used to calculate the peak runoff for the one-year, 24-hour precipitation event in cubic feet per second. The peak runoff shall then be divided by 10 and multiplied by 646,272 to convert the result to gallons per day of allowable discharge at the point studied. II. Two million gallons per day. 3. All discharges shall be directed to buffer systems that utilize low-energy methodologies to function as a buffer between the discharge and the receiving waters. Buffer systems shall consist of one of the following: I. High-rate infiltration basins that may include engineered materials to achieve high rates of infiltration, which engineered materials shall have an ASTM gradation of a fine to coarse grain sand, and angular to maintain structural integrity of the slope. II. Constructed free-surface wetlands having a hydraulic residence time of 14 days. 111. Other suitable technologies that provide a physical or hydraulic residence time buffer, or both, between the discharge and the receiving waters. 4. Discharge to areas that are 50 feet upland of the receiving waters or wetlands at a non-erosive velocity equal to or less than 2 feet per second through an appropriately designed energy dissipater, or other applicable designs, that meet the standard of practice for professional engineers for such devices. 5. Utilize more than one outfall to the receiving stream so that no one outfall exceeds 1 cubic foot per second based on the average daily flow of the discharge. Discharges from buffer systems shall be allowed to be placed at increments along a stream or receiving waters at no less than 50 linear feet. 6. No discharge shall be permitted to classified shellfish waters (SA), tidal waters (SC), water supply waters (WS), or outstanding resource waters (ORW). Discharges to unnamed tributaries of classified shellfish waters, however, shall be authorized in compliance with requirements of this section and only when a low-risk situation is present. Discharges to nutrient sensitive waters (NSW) may require additional modeling and allocation of flow and will be at the discretion of the Department. 7. The following effluent limits shall generally apply except where(i)the applicant and Department agree to more stringent limits or (ii) complex modeling conducted pursuant to sub-sub-subdivision 8. of this sub-subdivision demonstrates that Sag in the DO content of the receiving water of 0.1 mg/l or less will occur and water quality standards are protected: 1. Biological oxygen demand(BOD5)shall not exceed 5.0 mg/l monthly average. 11. NH3, 0.5 mg/l monthly average, 1.0 mg/l daily maximum. Senate Bill 802 Session Law 2024-44 Page 11 18 III. Total nitrogen shall not exceed 4.0 mg/l monthly average. IV. Total phosphorus, 1.0 mg/l monthly average, 2.0 mg/1 daily maximum. V. Fecal coliforms, 14 colonies/100ml or less. VI Dissolved oxygen, 7.0 mg/I or greater. VII. Total suspended solids, 5.0 mg/I monthly average, 8mg/1 daily maximum. VIII. Nitrate, 1.0 mg/l monthly average, 2.0 mg/I daily maximum. 8. If an applicant proposes less stringent effluent limits than those set forth in sub-sub-subdivision 7. of this sub-subdivision, the applicant shall conduct more complex modeling using any model accepted elsewhere in USEPA Region 4 that the applicant elects to use to confirm that a Sag in the DO content of the receiving water of 0.1 mg/l or less will occur and water quality standards are protected. 9. The Department shall not require an applicant to obtain mapping data from the USGS as part of an application. In lieu, an engineer of record licensed in the State of North Carolina may prepare required mapping utilizing either USGS maps or other maps approved by the Department. 10. Within 30 days of the filing of an application for a wastewater discharge subject to this section, the Department shall (i) determine whether or not the application is complete and notify the applicant accordingly and(ii)if the Department determines an application is incomplete, specify all such deficiencies in the notice to the applicant. The applicant may file an amended application or supplemental information to cure the deficiencies identified by the Department for the Department's review. If the Department fails to issue a notice as to whether or not the application is complete within the requisite 30-day period, the application shall be deemed complete. Within 180 days of the filing of a completed application, the Commission shall either grant or deny the permit. If the Commission fails to act in the requisite time frame, ten percent (10%) of the application fee shall be returned to the applicant for each working day beyond the 180-day period. SECTION 5.1.(e) No later than September 1, 2024, the Department in conjunction with the North Carolina Collaboratory at the University of North Carolina at Chapel Hill (Collaboratory) shall convene a Wastewater General Permit Working Group (Working Group) consisting of Department and Collaboratory staff and a maximum of five consulting experts appointed by the Director of the Collaboratory in the fields of environmental regulation, wastewater regulation,water quality regulation, and wastewater treatment regulation, to develop the draft rules for the implementation of a Wastewater Treatment and Discharge General Permit process for the State. The Working Group shall report its findings to the Environmental Review Commission no later than March 15, 2025. Following consideration by the Environmental Review Commission, and after making any changes required by the Environmental Review Commission,the Department shall develop and submit proposed rules to USEPA for its approval. Within 20 days of the date USEPA approves the draft rules submitted pursuant to this subsection, Page 12 Session Law 2024-44 Senate Bill 802 19 the Commission shall initiate the process for temporary and permanent rules pursuant to Chapter 150B of the General Statutes. SECTION 5.1.(f) Beginning September 1, 2024, and quarterly thereafter until such times as permanent rules as required by subsections (d) and (e) of this section have become effective, the Department and the Environmental Management Commission shall report on their activities to implement subsections (d) and (e) of this section to the Environmental Review Commission, the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the Senate Appropriations Committee on Agriculture, Natural and Economic Resources, and the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources of the General Assembly. SECTION 5.1.(g) This section is effective when it becomes law. SECTION 6. This act becomes effective July 1, 2024. In the General Assembly read three times and ratified this the 281h day of June, 2024. s/ Phil Berger President Pro Tempore of the Senate s/ Tim Moore Speaker of the House of Representatives s/ Roy Cooper Governor Approved 5:10 p.m. this 8th day of July, 2024 Senate Bill 802 Session Law 2024-44 Page 13 20 NORTH CAROLINA C-PACE PROGRAM GUIDELINES AND TOOLKIT Administered by: The Economic Development Partnership of North Carolina (EDPNC) Sponsored and Approved by: The North Carolina Department of Commerce January 2025 21 Table of Contents I. Introduction to C-PACE 2 II. Benefits of C-PACE 3 III. C-PACE Program Guidelines 4 1. Program Participation 4 2. Program Administration 4 3. Program Fees 5 4. Government Has No Liability or Financial Responsibility 5 5. Project Eligibility 5 6. Application and Closing Process 8 7. Billing, Collection, and Enforcement 10 8. Consent from Mortgage and Lien Holder(s) Required 10 IV. C-PACE Toolkit Exhibits (attached) 11 A. Resolution of Intent Template B. Resolution to Join C-PACE Program Template C. Resolution Concurring in Municipality Joining C-PACE Program Template D. Certificate of Qualifying Improvements E. Checklist and Property Owner Certification F. Form of Lienholder Consent G. Form of Assessment Agreement H. Form of Notice of C-PACE Assessment and Lien I. Form of Assignment of C-PACE Lien and Assessment Agreement 1 22 I. Introduction to C-PACE In 2024, the North Carolina State legislature passed SIB 802, with the following purpose: "The use of a C-PACE Program creates an additional financing mechanism for property owners to use private funds to finance improvements to their eligible property, thereby driving economic development by creating a diversity of jobs in the resilience and clean energy sectors of the economy.The assessment requires minimal upfront costs and provides a more accessible financial mechanism to fund improvements that will increase the tax value of the affected properties at minimal administrative cost to local governments. C-PACE improvements allow property owners to save on their utility bills because the improvements lead to energy or utility savings and will result in improved indoor air quality or increased resilience, which will increase the ability of communities and local governments to respond to natural disasters and improve public health." Under North Carolina General Statutes §160A-239.11 et seq. (the "C-PACE Act"), The Economic Development Partnership of North Carolina (EDPNC) is designated to administer a Commercial Property Assessed Capital Expenditure (C-PACE) Program. This Program allows owners of qualifying commercial property to obtain long-term financing from private capital providers for certain qualifying improvements up to 35% of the value of the property. Qualifying Improvements include energy efficiency, renewable energy, resiliency, and water conservation as well as improvements made to address safe drinking water. Similar C-PACE programs are active in over 36 states and have attracted more than $7 billion in private investment for thousands of properties. Counties and cities in North Carolina may participate in the statewide C-PACE Program to support commercial, industrial, agricultural, and multifamily property owners with access to financing for efficient and resilient building improvements (N.C.G.S. §160A-239.15). Joining the statewide program does not expose a local government to any financial or legal liability (N.C.G.S. §160A- 239.16 (a)). Private capital providers and the statewide administrator, EDPNC, will assist interested commercial property owners to apply for C-PACE financing. Local governments that join the C-PACE Program will be reimbursed for actual and reasonable costs associated with executing documents related to C-PACE assessments (N.C.G.S. §160A-239.15a(5)). To cover these costs, EDPNC will collect a $500 administration fee for approved C-PACE projects at time of closing. Except for executing documents necessary for a C-PACE financing, there is no other administrative involvement by the local government. Joining the C-PACE Program is a voluntary 3-step process, with support of EDPNC: 1) Adopt a Resolution of Intent 2) Hold a public hearing 3) Adopt a final Resolution to join the C-PACE Program A C-PACE assessment is secured by a voluntary senior lien on the property imposed by the local government at the property owner's request and is paid back over time. The security of the C- PACE lien enables capital providers to offer C-PACE financing which spreads the cost of qualifying improvements over the useful life of the measures, a term generally lasting between 20-30 years. C-PACE liens are junior in priority to all taxes and other governmental liens. Like other assessments, C-PACE financing is non-accelerating, which means only current or past due payments can be collected. In the event of default, only the payments in arrears are due. If the property is sold, the C-PACE repayment obligation transfers automatically to the next owner unless it is fully repaid. No change in the Program or in North Carolina's C-PACE legislation will affect a property owner's eligibility or obligation to pay C-PACE assessments incurred. Local governments are not responsible for collection; duties for billing and collection will be delegated to and handled privately by the capital provider for the project financed (§160A-239.16 (b)). 2 23 II. Benefits of C-PACE For Local Governments: C-PACE is an economic development tool. By making it more affordable for building owners to make major improvements to their buildings, local building stock is enhanced, which drives job creation. Energy and resiliency upgrades retain and attract new businesses by lowering utility costs, and in turn these upgrades generate higher property tax payments for local governments. C-PACE can also support local governments in their efforts to achieve energy and emissions reduction goals. The C-PACE program is structured to be cost- neutral for local governments and requires little-to-no administrative resources. For Property Owners and Developers: One of the biggest barriers to converting potential projects to completed projects for efficiency and resiliency upgrades are the up-front costs. C- PACE financing typically requires little up-front investment, and qualifying improvements have a direct impact on property value. Energy and water efficiency measures also lower operating costs. C-PACE financing has the following additional benefits: • Up to 100%, long-term financing. Many owners lack the capital to complete efficiency and resiliency improvements. All direct and indirect hard and soft costs incidental to the qualifying improvements can be included in C-PACE financing applications and are described on p.8. • Transferrable upon sale. Some owners may need to sell their property before the C-PACE financing is fully repaid. The C-PACE lien and assessment are attached to the property and transfers to the new owner unless the prior owner pays off the assessment. • Increased cash flow. C-PACE financing may be repaid over the useful life of the improvements, generally between 20-30 years. This is longer than other traditional commercial loans and therefore reduces the installment payments, having a positive effect on cash flow. For Existing Mortgage Holders: C-PACE improvements can enhance property value and typically improve a building's longevity, thereby reducing the risk of property value decline over time. In addition, by reducing utility expenses, C-PACE financing increases property owners' net operating income, improving the stability of their business. C-PACE assessments are non- accelerating, meaning only current or past due annual payments can be collected each year while future payments stay with the property. As such, existing lienholders see their collateral improved without substantial increase in credit risk and with minimal impact on lien priority. C-PACE financing is not permitted without the consent of all existing mortgage holders and, under certain circumstances, the holders of certain other obligations encumbering commercial property. For Energy Auditors, Architects, Building Engineers, and Contractors: When property owners can access financing for longer terms than are typically available, substantial efficiency and resiliency improvements become more affordable. Energy auditors, architects, engineers, and contractors can suggest C-PACE financing as a way for their clients to implement needed energy or resiliency upgrades that might otherwise be unaffordable. Since the demand for building efficiency and resiliency improvements will increase in a C-PACE-enabled jurisdiction, C-PACE is a powerful business growth catalyst for building professionals like energy auditors and contractors. 3 24 III. C-PACE Program Guidelines These Program Guidelines are established as part of the C-PACE Toolkit, which includes information of the C-PACE Program, approval criteria, and forms necessary for property owners to obtain C-PACE financing. 1. Program Participation Counties and cities may join the voluntary, statewide C-PACE Program by taking the following actions (N.C.G.S. §160A-239.15). Forms of Resolution of Intent Template (Exhibit A) and form of Resolution to Participate in the North Carolina C-PACE Program Template (Exhibit 8) are provided by EDPNC. ❑ Adopt a Resolution of Intent that includes: (1) Authorization for the C-PACE Program to operate within its jurisdictional boundaries and for EDPNC to provide administrative services (2) A statement that the local government intends to: (1) authorize C-PACE financing (ii) authorize the imposition of C-PACE assessments on qualifying commercial properties benefitting from qualifying improvements to secure repayment of C-PACE financing (iii) assign the C-PACE lien to the capital provider providing C-PACE financing (iv) delegate billing, collection, and enforcement duties for the C-PACE assessment and C-PACE lien to capital providers (3) A statement that the amount of a C-PACE financing and related assessment repayment terms shall be pursuant to the related financing agreement (4) A statement identifying the local government department or employee that shall, upon receipt of an approved project application for C-PACE financing within its jurisdictional boundaries from the statewide administrator, execute documents related to the C-PACE assessment on behalf of the local government (5) A statement that the local government shall be reimbursed by the statewide administrator for the actual and reasonable costs associated with the performance of the duties described in (4) (6) A statement of the time and place for a public hearing on the proposed program ❑ Conduct a public hearing on the proposed C-PACE Program ❑ Adopt a Resolution to join the C-PACE Program after conducting a public hearing o If a city wishes to participate in the C-PACE Program, the Resolution shall be effective only with the concurrence of the governing body of the respective county (Template Form provided in Exhibit C) 2. Program Administration The Economic Development Partnership of North Carolina (EDPNC) is the statewide administrator of the North Carolina C-PACE Program, with support from the program sponsor, The North Carolina Department of Commerce. EDPNC will review Project Applications to confirm that they meet requirements of statute. After approving a Project Application, EDPNC will coordinate with the related participating local government for execution of the Assessment Agreement (Exhibit G), Notice of C-PACE Assessment and Lien (Exhibit H), and Assignment of C-PACE Lien and Assessment Agreement (Exhibit 1). The Assessment and Notice may be recorded by either EDPNC or the property owner and capital provider in the local government's county register of deeds. Annual reports regarding the C-PACE Program will be submitted by EDPNC to the North Carolina Department of Commerce annually. 4 25 EDPNC will: • Accept C-PACE Project Applications from property owners and capital providers, with application fee • Review Project Applications to determine compliance with the C-PACE Act • Communicate to applicants the approval, conditional approval, or disapproval or their Project Application • If a Project Application is approved, submit relevant closing documents to the local government for execution • Record the Assessment Agreement and Notice of Assignment of C-PACE Lien, or delegate recording to the property owner and their capital provider • Collect a processing fee and administration fee at closing of the C-PACE financing • Submit an annual report to the North Carolina Department of Commerce 3. Program Fees To offset the actual and reasonable costs of administering the C-PACE Program, as required by the C-PACE Act, EDPNC will collect a $750 application fee with each Project Application. For each approved Project Application, EDPNC will collect at closing of the C-PACE financing: 1. A processing fee equal to 1% of the total amount financed, not to exceed $25,000 (N.C.G.S. §160A-239.14(2b)). 2. A $500 administration fee to reimburse local governments for costs associated with their duties under the C-PACE Act (N.C.G.S. §160A-239.15a(5)). These fees will be included in the C-PACE assessment and financing, to be paid by the property owner. 4. Government Has No Liability or Financial Responsibility Neither the State nor any participating local government, its officers, or employees shall be personally liable for any actions taken pursuant to the C-PACE Act. Per the Act, the State nor any local government may use public funds to finance or repay C-PACE assessments, and all financing is obtained by commercial property owners from private-sector capital providers, including costs for program administration. A local government shall not be financially or legally liable or responsible for any assessment and lien imposed within its jurisdiction under the program. Neither the State nor any local government shall use public funds to fund or repay any C-PACE assessment. A local government shall not pledge, offer, or encumber its full faith and credit for any lien amount through a C-PACE Program. 5. Project Eligibility This section outlines the roles and responsibilities of a C-PACE transaction and includes descriptions of project and participant eligibility requirements: Capital providers may be any private entity, including its designee, successor, and assigns, that makes or funds C-PACE financing, including refinancing. Capital providers may submit their information to EDPNC to be listed as a prospective lender for C-PACE projects on the program website. Property owner means the holder of title in fee simple to qualifying commercial property. The title to the qualifying commercial property may not be in dispute. The property owner must be current on all mortgage and property tax payments and cannot be insolvent or in bankruptcy proceedings. These requirements will be verified using the Checklist and Property Owner Certification (Exhibit E) 5 26 Property owners may receive funding for their qualifying improvements only from capital providers pursuant to a Financing Agreement negotiated between the property owner and capital provider. Neither the statewide administrator, the local government, nor program sponsor are party to this agreement. In the Financing Agreement, the property owner agrees to repay a capital provider for the C-PACE financing provided, including, but not limited to, any finance charges, fees, debt servicing, accrual of interest and penalties, and any terms relating to the treatment of prepayment and partial payment, and the billing, collection, and enforcement of the C-PACE financing. The financing agreement between the capital provider and the property owner shall be negotiated by the parties, including all terms and conditions of repayment, including interest, penalties, and prepayment. Property owners are authorized to obtain C-PACE financing to: (1) Directly purchase the related equipment and materials for the installation or modification of a qualifying improvement. (2) Contract directly, including through lease, power purchase agreement, or other service contract, for the related equipment and materials used in the installation or modification of a qualifying improvement. Qualifying commercial property means any privately-owned commercial, industrial, agricultural, or multi-family real property with five (5) or more dwelling units. This includes properties owned by nonprofit, charitable, or religious organizations. C-PACE financing may be provided to qualifying commercial properties for: o The acquisition, construction (including new construction), adaptive reuse, lease, installation, or modification of qualifying improvements o The refinancing of existing properties or new construction that have had qualifying improvements installed for no more than three (3) years prior to the date of Project Application. Exceptions will be approved by EDPNC on a case-by-case basis. Qualifying improvements mean permanently affixed improvements on qualifying commercial property as part of construction or renovation, including one or more of the following: • Energy efficiency measure - equipment, component, or program change that reduces energy use and that meets or exceeds then-existing State and Federal building codes and efficiency standards or conservation codes. This includes, but is not limited to, energy produced from a combined heat and power system that uses nonrenewable energy resources. Examples of eligible measures may also include, but are not limited to: air sealing; installation of insulation; installation of energy-efficient heating, cooling, or ventilation systems; building modification to increase the use of daylight; window replacement; windows; energy controls or energy recovery systems; installation of electric vehicle charging equipment; installation of efficient lighting equipment; installations necessary for electrical connectivity; construction materials that use less carbon or have fewer emissions than comparable materials designed to serve the same purpose; or any other improvements necessary to achieve a sustainable building rating or compliance with a national model green building code. • Resiliency measure-equipment, component, or program change including, but not limited to, storm retrofits, flood mitigation, stormwater management (including but not limited to green and gray infrastructure), wind resistance, indoor air quality improvement, electric vehicle charging station, backup energy generators enrolled in an electric public utility 6 27 demand response program, energy storage, and microgrids and other resilience projects as approved by the program administrator or sponsor. Examples of eligible measures may also include, but are not limited to: repairing, replacing, improving, or constructing a roof, including improvements that strengthen the roof deck attachment; creating a secondary water barrier to prevent water intrusion; installing wind-resistant shingles or gable-end bracing; and reinforcing roof-to-wall connections. • Renewable energy measure - equipment, component, or program change that utilizes a renewable energy resource. Applicable renewable resources include: solar electric, solar thermal, wind, hydropower, geothermal, or ocean current or wave energy; biomass including agricultural waste, animal waste, wood waste, spent pulping liquors, combustible residues, combustible liquids, combustible gases, energy crops, or landfill methane; waste heat derived from a renewable energy resource and used to produce electricity or useful, measurable thermal energy at a retail electric customer's facility; or hydrogen derived from a renewable energy resource. Renewable energy resources do not include peat, a fossil fuel, or nuclear energy resource. • Water conservation measure - equipment, component, or program change to decrease water consumption or demand, either indoor or outdoor. This also includes measures to address safe drinking water. On the Certificate of Qualifying Improvements, a licensed engineer or authorized representative of a licensed engineering firm will certify that qualifying improvements meet the following requirements on the form of Certificate of Qualifying Improvements (Exhibit D). • All Buildings: Certification that all available electric public utility energy efficiency and demand response programs available to property owners, and any of their tenants, have been evaluated. • Improvements to Existing Buildings: 1. For renewable energy, energy efficiency, or water conservation measures, an energy analysis stating that the proposed qualifying improvements will result in: a. more efficient use or conservation of energy that meets or exceeds then- existing State and federal building codes and efficiency standards or conservation codes b. more efficient use or conservation of water c. the reduction of greenhouse gas emissions d. the addition of renewable sources of energy or water 2. For resilience measures, certification that the qualifying improvements will result in improved resilience. • New Construction: certification that the proposed qualifying improvements will allow the project to exceed the energy or water efficiency requirements of the current State building code (or an equivalent standard), or in the case of a resiliency measure, achieve compliance with a national model resiliency standard (or equivalent standard). o At time of publication of these guidelines, national standards for resiliency are led by the U.S. Green Building Council. EDPNC will consider improvements that could apply for least 1 point on the LEED Climate Resilience Screening Tool as eligible. Certification by LEED for Cities, SITES, and PEER will also qualify 7 28 related measures. More information can be found here: o EDPNC or Department of Commerce will review measures that qualify under other national models for resiliency standards on a case-by-case basis. Financing for C-PACE assessments may include, but are not limited to: o Hard costs: all costs related to direct installation and construction contracts, including materials, labor, and overhead associated with the qualifying improvements. Costs ancillary to the direct installation and construction contracts for improvements, such as changes to interior walls or ceilings to accommodate new piping or ducting, remediation of asbestos or mold, or other related costs, are also included. o Soft costs: indirect costs that are not considered direct construction costs but are necessary to complete the qualifying improvements. Examples include but are not limited to: o Project management o Application and closing fees (e.g., program administrator fees) o Title reports and credit checks o Financial services (e.g., capital provider fee, project developer fee) o Legal services (e.g., property owner legal, capital provider legal) o Recording taxes and fees, and escrow disbursement fees o Architectural and engineering costs related to the qualifying improvements o Consulting reports (e.g., technical review, energy audit, commissioning reports, measurement and verification, feasibility studies, financial projections, surveys) o Due diligence reports (e.g., appraisal, environmental, physical condition assessments) o Inspection fees o Energy savings performance guaranty or insurance o Building accreditation(s) o Permitting fees o Interest reserves o Capitalized interest, in an amount determined by the owner of the commercial property and the capital provider o Any other fees or costs incurred by the property owner incident to the installation, modification, or improvement on a specific or pro rata basis, as determined by the program administrator The term of C-PACE financing, excluding any capitalized interest or interest only periods, may not exceed the weighted average useful life of qualifying improvements and begins from first repayment. Installments for repayment of the assessment do not need to be equal. The total C- PACE financing amount shall not exceed 35% of the property's expected stabilized value with the proposed qualifying improvements installed (N.C.G.S. §160A-239.18(c)). 6. Application and Closing Process The Program has adopted the following documents as part of the Project Application: • Certificate of Qualifying Improvements (Exhibit D) • Checklist and Property Owner Certification (Exhibit E) • Form of Lienholder Consent (Exhibit F) o If not available at time of application, Lienholder Consent maybe delivered at close and EDPNC will issue conditional approval if all other requirements are met. 8 29 The Program has adopted the following form documents which shall be part of the closing of any C-PACE transaction. A property owner and capital provider may adapt the forms to the needs of their particular transaction but must not modify or omit any material substantive terms contained in the forms, unless as otherwise approved by EDPNC. • Assessment Agreement (Exhibit G) • Notice of C-PACE Assessment and Lien (Exhibit H) • Assignment of C-PACE Lien and Assessment Agreement (Exhibit 1) After a local government has joined the North Carolina C-PACE Program, a property owner begins the process of obtaining financing by connecting with a capital provider. The capital provider will work with the property owner to collect several diligence items. Once all the items have been received, reviewed, and approved by the capital provider, the parties will settle on the assessment terms and begin the application and closing process. This process will generally take the following steps: (1) The capital provider works with the property owner to prepare the Project Application documents including the Checklist and Property Owner Certification, Certificate of Qualifying Improvements, and Lienholder Consent. Applicants should review the Checklist and Property Owner Certification to ensure the types of information that the administrator will rely upon to verify compliance with the C-PACE Act are present in the completed Project Application. (2) EDPNC will have 15 (fifteen) business days to review and approve the Project Application. • If the Project Application is approved, the approval will be communicated in writing to the applicant, capital provider, and local government. The Project Application may be conditionally approved if Lienholder Consent is not yet available, but all other requirements have been satisfied. Conditional approval will be treated the same as an approval, with exceptions noted below. EDPNC's application review process is confined to confirming that the Project Application conforms to these guidelines. Approval does not constitute endorsement of any representations that may be made with regard to the operation and any savings associated with the Qualifying Improvements. • Incomplete Project Applications will be returned to the applicant with notice about which items were not provided or are insufficient or inaccurate on their face. (3) Upon receipt of approval, the capital provider will finalize drafts of the closing documents, including the Assessment Agreement, Notice of C-PACE Assessment, and Assignment of C-PACE Lien. At or before closing, the applicant's designated and authorized official may execute closing documents. If the Project Application received conditional approval, the closing documents executed by EDPNC and the local government may not be released from escrow unless and until all lender consents have been received and executed in accordance with the C-PACE Act. (4) At closing and upon execution by the local government, EDPNC or the capital provider will record the Assessment Agreement, Notice of C-PACE Assessment, and the Assignment of C-PACE Lien in the office of the register of deeds in the county in which the property is located. Upon confirmation of recordation, the capital provider will disburse funds in accordance with the Financing Agreement. (5) Per the Assessment Agreement and in accordance with the Financing Agreement, the property owner makes payments over the assessment term. 9 30 7. Billing, Collection, and Enforcement Billing, collection and enforcement of C-PACE assessments and C-PACE liens will be the sole responsibility of capital providers. Delinquent assessment payments shall incur interest and penalties as specified in the Financing Agreement and shall be paid in accordance with the amortization schedule. Capital providers will enforce delinquent assessment payments in the same manner as foreclosure of a deed of trust. C-PACE assessment payments not yet billed or due may not be accelerated or extinguished by foreclosure of the delinquent assessment payment or payments. Outstanding or delinquent State, local, or federal taxes or liens at the time of the foreclosure proceeding will be satisfied first, but the C-PACE lien shall be superior to all other liens on the property from the date on which the Notice of the C-PACE Assessment was recorded and until the assessment, interest, penalties, and charges accrued or accruing are paid. 8. Consent from Mortgage and Lien Holder(s) Required Before entering into an Assessment Agreement, the property owner must submit to the statewide administrator, EDPNC, a written statement by each holder of a mortgage, deed of trust, or other lien securing indebtedness on the property regarding their consent to placement of the C-PACE Assessment. Each consenter must also attest that placement of the assessment does not constitute an event of default under the terms of the mortgage, deed of trust, or other indebtedness secured by the lien. If lienholder consent is not available at time of Project Application, EDPNC may issue conditional approval if all other requirements are met. In this case, lienholder consents are executed at closing, the signatures of the local government will be held in escrow and will not be released until the consents are obtained. Capital Providers may provide their own form of consent that conforms to the C-PACE Act. 10 31 Exhibits Attached A. Resolution of Intent Template B. Resolution to Join C-PACE Program Template C. Resolution Concurring in Municipality Joining C-PACE Program Template D. Certificate of Qualifying Improvements E. Checklist and Property Owner Certification F. Form of Lienholder Consent G. Form of Assessment Agreement H. Form of Notice of C-PACE Assessment and Lien I. Form of Assignment of C-PACE Lien and Assessment Agreement 11 32 ORANGE COUNTY NORTH CAROLINA C =PACE Public Hearing and Resolution to Adopt Amy Eckberg Sustainability Programs Manager October 21 , 2025 33 What is C- PACE? C-PACE = Commercial Property Assessed Capital Expenditure ➢ Statewide program enacted thru NC Senate Bill 802 (July 2024); 40 other states have adopted C-PACE ➢ Voluntary financing program for commercial property upgrades for clean energy, energy efficiency, water conservation and resiliency projects ➢ Program Administered by Economic Development Partnership of North Carolina (EDPNC) ➢ Benefits include: Low cost, long-term financing 34 How It Works : •County joins the program — The County adopts resolutions and holds a public hearing to join the statewide NC C-PACE Program . •Property owner applies — A business or property owner applies to EDPNC for project approval . •Private lender funds the work — A private lender provides the upfront money for improvements like energy efficiency, solar, or resilience upgrades. •Paid back over time — The owner repays the loan through a line added to their property tax bill . •No County cost or risk — The County helps enable the program but doesn't handle money or take on liability. 35 HEATING/VENTILATION SOLAR PANELS iiiii *iiii iiiii Who Can Take Advantage : • Industrial • Agricultural • Nonprofit • Multifamily Residential (5 or more units) • New Construction or Renovations C- PACE Program 36 Key Points: No budgetary impacts No exposure of County to financial or legal liability Strategic Plan and Climate Action Plan Alignment County adoption enables Town participation-Towns support Benefits: ■Utility bill savings ■ Energy savings ■ Enhanced building resilience ■ Potential property value increase • Economic development ■ Reduced GHG emissions 37 C- PACE Adoption : 3- Step Process : 1 . Adopt Resolution of Intent 2 . Hold a Public Hearing 3 . Adopt Final Resolution to formally join the C- PACE Program 38 For more details/questions on the C-PACE Program : Mr. Larry Price Director of Finance Economic Development Partnership of NC