The Commercial Property Assessment Capital Expenditures Act (C-PACE) passed the state Assembly on Thursday, establishing a statewide program that provides long-term financing options from private contractors to businesses to pay for improvements.
Capital expenditure programs are available in more than 30 states. In North Carolina, property owners and qualifying commercial properties can apply to the North Carolina Economic Development Partnership and be approved for long-term financing from private lenders.
Funded entirely by private capital, C-PACE loans offer competitive interest rates and encourage certain improvements in new and existing buildings. The bill authorizes the Department of Commerce and the North Carolina Economic Development Partnership to create a program for application and funding. The loans would cover real property improvements such as energy efficiency programs, water conservation, renewable energy, and resiliency measures.
The program will operate under the oversight of the Department of Commerce, as detailed in Senate Bill 802. Developers can secure up to 35% of a property's loan-to-value ratio through a C-PACE loan. The loan applies to commercial and multifamily housing projects, excluding single-family homes.
“This is a tool in the toolbox that the state can offer this loan package to counties and cities on their own initiative,” Sen. Lazzara explained during a committee meeting earlier this month. “I think this is a great program, and I think it's something that cities, towns and counties can use at their discretion.”
Private funding will be secured through asset assessments and the program will not involve any public funds.
The bill's unanimous passage follows concerns raised by state Treasurer Dale Falwell, who concluded that while the bill may have laudable objectives, it is at odds with the fundamental assumptions, goals and structure of state government finances.
“C-PACE accomplishes nothing that can't be done in the private sector between private borrowers and private lenders,” Folwell warned earlier this week. “Rather, it appears to disrupt the process of acquiring the capital needed for projects by injecting local government participation and state involvement into an already established transactional format.”
The bill will now go to the governor's desk.