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2022 SESSION
22103393DBe 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 affixed 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; or
7. Electric vehicle infrastructure 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 residential condominium as defined in § 55.1-2000.
"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; or
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 improvements;
4. In the case of a loan program described in clause (ii) of subdivision 3, a method for setting requests from eligible property owners 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 eligible property owners 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 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 delegate the billing, collection,
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 on real property:
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 Shall 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. Localities that have already enacted a C-PACE
ordinance prior to July 1, 2022,
are exempt from the requirement of enforcement; 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 program that
meets the requirements of this section. The Department of Energy shall engage a
private entity through a competitive selection process to develop and
administer the program.