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2022 SESSION
Be it enacted by the General Assembly of Virginia:
1. That § 15.2-958.3 of the Code of Virginia is amended and reenacted as follows:
§ 15.2-958.3. Commercial Property Assessed Clean Energy (C-PACE) financing programs.
A. As used in this section:
"Eligible improvements" means any of the following improvements made to eligible properties:
1. Energy efficiency improvements;
2. Water efficiency and safe drinking water improvements;
3. Renewable energy improvements;
4. Resiliency improvements;
5. Stormwater management improvements;
6. Environmental remediation improvements; and
7. Electric vehicle infrastructure improvements.
A program administrator may include in its C-PACE loan program guide or other administrative documentation definitions, interpretations, and examples of these categories of eligible improvements.
"Eligible properties" means all assessable commercial real estate located within the Commonwealth, with all buildings located or to be located thereon, whether vacant or occupied, whether improved or unimproved, and regardless of whether such real estate is currently subject to taxation by the locality, other than a residential dwelling with fewer than five dwelling units or a condominium as defined in § 55.1-2000 used for residential purposes. Common areas of real estate owned by a cooperative or a property owners' association described in Subtitle IV (§ 55.1-1800 et seq.) of Title 55.1 that have a separate real property tax identification number are eligible properties. Eligible properties shall be eligible to participate in the C-PACE loan program.
"Program administrator" means a third party that is contracted for professional services to administer a C-PACE loan program.
"Resiliency improvement" means an improvement that increases the capacity of a structure or infrastructure to withstand or recover from natural disasters, the effects of climate change, and attacks and accidents, including, but not limited to:
1. Flood mitigation or the mitigation of the impacts of flooding;
2. Inundation adaptation;
3. Natural or nature-based features and living shorelines, as defined in § 28.2-104.1;
4. Enhancement of fire or wind resistance;
5. Microgrids;
6. Energy storage; and
7. Enhancement of the resilience capacity of a natural system, structure, or infrastructure.
B. Any locality may, by ordinance, authorize contracts
to provide C-PACE loans (loans) for the initial acquisition
and, installation, and refinancing of clean energy,
resiliency, or stormwater management improvements with eligible
improvements located on eligible properties by free and willing property
owners of both existing properties and new construction, provided, however,
that such loans may not be used to improve a residential dwelling with fewer
than five dwelling units or a residential condominium as defined in §
55.1-2000. Such an ordinance shall include such eligible properties. The
ordinance may refer to the mode of financing as Commercial Property Assessed
Clean Energy (C-PACE) financing and shall include but not be limited to the
following:
1. The kinds of renewable energy production and
distribution facilities, energy usage efficiency eligible
improvements resiliency improvements, water usage efficiency improvements,
or stormwater management improvements for which loans may be offered.
Resiliency improvements may include mitigation of flooding or the impacts of
flooding or stormwater management improvements with a preference for natural or
nature-based features and living shorelines as defined in § 28.2-104.1
that qualify for loans;
2. The proposed arrangement for such C-PACE loan
program (loan program), including (i) a statement concerning the source
of funding that will be used to pay for work performed pursuant to
the contracts the C-PACE loan; (ii) the time period during which
contracting property owners would repay the C-PACE loan; and (iii) the
method of apportioning all or any portion of the costs incidental to financing,
administration, and collection of the arrangement C-PACE loan
among the consenting property owners and the locality the parties to
the C-PACE transaction;
3. (i) A minimum dollar amount that may be financed with
respect to a an eligible property,; (ii) if a
locality or other public body is originating the loans, a maximum aggregate
dollar amount that may be financed with respect to loans originated by the
locality or other public body, and (iii) provisions that the loan program may
approve a loan application submitted within two years of the locality's
issuance of a certificate of occupancy or other evidence that the clean
energy, resiliency, or stormwater management eligible improvements
comply substantially with the plans and specifications previously approved by
the locality and that such loan may refinance or reimburse the property owner
for the total costs of such eligible improvements;
4. In the case of a loan program described in clause (ii) of
subdivision 3, a method for setting requests from property owners of
eligible properties for financing in priority order in the event that
requests appear likely to exceed the authorization amount of the loan program.
Priority shall be given to those requests from property owners of eligible
properties who meet established income or assessed property value
eligibility requirements;
5. Identification of a local official authorized to enter into
contracts on behalf of the locality. A locality may contract with a third
party for professional services program administrator to administer
such loan program;
6. Identification of any fee that the locality intends to impose on the property owner requesting to participate in the loan program to offset the cost of administering the loan program. The fee may be assessed as a program fee paid by the property owner requesting to participate in the program; and
7. A draft contract specifying the terms and conditions proposed by the locality.
B. C. The locality may combine the loan payments
required by the contracts with billings for water or sewer charges, real
property tax assessments, or other billings; in such cases, the locality may
establish the order in which loan payments will be applied to the different
charges. The locality may not combine its billings for loan payments required
by a contract authorized pursuant to this section with billings of another
locality or political subdivision, including an authority operating pursuant to
Chapter 51 (§ 15.2-5100 et seq.), unless such locality or political subdivision
has given its consent by duly adopted resolution or ordinance. The locality
may, either by ordinance or its program guide, delegate the billing;
collection, including enforcement; and remittance of C-PACE loan payments to a
third party.
C. D. The locality shall offer private lending
institutions the opportunity to participate in local C-PACE loan
programs established pursuant to this section.
D. E. In order to secure the loan authorized
pursuant to this section, the locality shall place a voluntary special
assessment lien equal in value to the loan against any property where such
clean energy systems, resiliency improvements, or stormwater management
eligible improvements are being installed. The locality may bundle or
package said loans for transfer to private lenders in such a manner that would
allow the voluntary special assessment liens to remain in full force to secure
the loans. The placement of a voluntary special assessment lien shall not
require a new assessment on the value of the real property that is being
improved under the loan program.
E. F. A voluntary special assessment lien
imposed on real property under this section:
1. Shall have the same priority status as a property tax lien against real property, except that such voluntary special assessment lien shall have priority over any previously recorded mortgage or deed of trust lien only if (i) a written subordination agreement, in a form and substance acceptable to each prior lienholder in its sole and exclusive discretion, is executed by the holder of each mortgage or deed of trust lien on the property and recorded with the special assessment lien in the land records where the property is located, and (ii) evidence that the property owner is current on payments on loans secured by a mortgage or deed of trust lien on the property and on property tax payments, that the property owner is not insolvent or in bankruptcy proceedings, and that the title of the benefited property is not in dispute is submitted to the locality prior to recording of the special assessment lien;
2. Shall run with the land, and that portion of the assessment under the assessment contract that has not yet become due is not eliminated by foreclosure of a property tax lien;
3. May be enforceable enforced by the local
government in the same manner that a property tax lien against real property
may be is enforced by the local government. A local government shall
be entitled to recover costs and expenses, including attorney fees, in a suit
to collect a delinquent installment of an assessment in the same manner as in a
suit to collect a delinquent property tax; and
4. May incur interest and penalties for delinquent installments of the assessment in the same manner as delinquent property taxes.
F. G. Prior to the enactment of an ordinance
pursuant to this section, a public hearing shall be held at which interested
persons may object to or inquire about the proposed loan program or any of its
particulars. The public hearing shall be advertised once a week for two successive
weeks in a newspaper of general circulation in the locality.
G. H. The Department of Energy shall serve as a
statewide sponsor for a clean energy financing loan program that
meets the requirements of this section. The Department of Energy shall engage a
private entity program administrator through a competitive
selection process to develop and administer the statewide loan
program. A locality, in its adoption or amendment of its C-PACE ordinance
described in subsection B, may opt into the statewide C-PACE loan program
sponsored by the Department of Energy, and such action shall not require the
locality to undertake any competitive procurement process.