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HomeMy WebLinkAbout041122ra02 JEFFERSON COUNTY BOARD OF COUNTY COMMISSIONERS CONSENT AGENDA REQUEST TO: Board of County Commissioners Mark McCauley, County Administrator FROM: Stacie Prada Jefferson County Treasurer Jeff Chapman, Jefferson County Assessor Brent Butler, DCD Director, AICP DATE: April 11, 2022 SUBJECT: Commercial Property Assessed Clean Energy+Resiliency (C-PACER) STATEMENT OF ISSUE: The Jefferson County Assessor received two separate requests from commercial property owners to consider enactment of the C-PACER program authorized in accordance with Revised Code of Washington(RCW) Chapter 36.165. C-PACER is a voluntary statewide program that counties in Washington may choose to participate in to finance a range of projects, including energy and water efficiency: (1) Electrification improvement(eliminates fossil fuel combustion), (2) Renewable energy, (3) Electric vehicle charging, (4) Seismic hardening, (5) Fire detection and suppression, (6) Flood readiness, (7) Stormwater management, and (8) Energystorage, amongothers. Alternatively, counties mayestablish a separate voluntarycountywide C- PACER g Y p Y PACER program in conformance with the requirements of RCW 36.165. ANALYSIS: Jefferson County has identified several other Washington counties with public facing websites featuring their C-PACER programs, including Snohomish, King, Clark and Whatcom counties. Pierce County has included C-PACER as one of the deliverables incorporated in their document, Sustainable 2030: Greenhouse Gas Reduction Plan. C-PACER would be in conformance with the Jefferson County Comprehensive Plan("CP"). Specifically, this program encourages the adoption of programs, policies and procedures that are identified in the CP, including increased energy efficiency in publicly funded infrastructure (see CP page 149), partnerships with other stakeholders such as the Public Utility District#1 (see CP page 331), and resource consuming faculties (CP page 356), among other areas. FISCAL IMPACT: County staff has received a copy of the model ordinance, program guide, and several administrative forms including lien, sample agreement, certification of energy efficiency and consent. These documents will decrease the overall staff time necessary to get the program up and running. Nonetheless, there will be some administrative costs incurred; staff is currently researching this impact. The attached Frequently Asked Question(FAQ) factsheet highlights that a C-PACER lender in Washington would handle nearly all the work associated with collecting payments, so a county would have a small administrative role. (see Attachment 1- FAQ) RECOMMENDATION: Authorize the County Administrator to determine if the benefits outweigh the resources necessary to carry out the program and if they do, submit the ordinance to the Board of County Commissioners for adoption. Prior to ordinance adoption, require staff to review all of the documents and compare them with adopted programs elsewhere in the state. REVIEWED BY: ZZ Mark McCa , County Administrate Date Updated February 2022 FAQ: C-PACER Financing - Implementation in Washington C-PACER/HE 2405 passed in Washington State during the 2020 Legislative Session, authorizing counties to establish C-PACER financing programs. The bill is effective as of June 11, 2020, and is codified in Chapter 3Q.165 RCW. Members of the Shift Zero C-PACER task force, in coordination with national and local C-PACE experts and legal counsel, have developed model guidelines for counties to set up C-PACER financing programs. These are vetted guidelines, forms, and documents that a county can use and adopt for their own purposes. These model documents include a model county ordinance, a program guidebook that describes how the program works, and template forms, including a checklist, which should make administration straightforward for any county staff person. You can find these documents here. *Note, 2/1/22: The Washington legislature is currentl y considering a small technical change to the C-PACER statute, which would change these model documents. Please reach out for any questions to pacer@shiftzero.org and, if the legislation passes, we will update these model documents* Top Questions 1. How does a county implement a C-PACER program? A county must first pass an ordinance that sets up a C-PACER program and develop program documents.A model ordinance is available at the link above, as are model program documents. For more questions for County staff on how to implement C-PACER in a county, please see this FAQ. 2. When will programs be up and running? The new enabling Washington legislation became effective on June 11th, 2020. Counties can set up programs whenever they are ready to do so. So far, Clark, King, Thurston, and Whatcom have all passed ordinances to enable C-PACER, and Snohomish has passed an ordinance to direct staff to develop the program. 3. How can someone advocate for their county to establish a program? Reach out to your county executive's office to see if this is something they are pursuing. Also, contact your county council member; a county council must pass a county ordinance to establish a C-PACER program. 4. How is C-PACER program administration handled? A C-PACER lender in Washington would handle nearly all the work associated with collecting payments, so a county has little administrative role. The program administrator would be responsible for overseeing the C-PACER lien filing process and the associated paperwork filing requirements.A county may hire an outside third party as the administrator, or do this oversight themselves in a designated county office. 5. I'm a lender-what should I do now? Let a County know of your financing interest, and request that they inform you if/when they launch a local C-PACER program. Some counties may set up websites with lists of potential lenders. General C-PACER FAQ 1. What is C-PACER? 2. What public problem is C-PACER trvina to address? 3. What kind of projects can use C-PACER financing? 4. Who finances C-PACER loans? 5. How is the C-PACER lien collected? 6. What happens to the C-PACER lien in the event of a building sale? 7. What happens to the C-PACER lien in the event pf a building foreclosure? 8. What is the role of existina mortgage holders in the C-PACER program? 9. Are C-PACER programs risky for consumers? 10. Has this been done before? 11. What benefits does C-PACER provide? 12. Are nonprofits eliaible for C-PACER? 13. Are public buildings (e.g.. schools and municipal buildings)eligible for C-PACER? 14. Are single-family residential homes eligible for C-PACER? 15. Is a county required to develop a C-PACER program? 16. What are the countv's responsibilities under Washington C-PACER? 17. Does the County incur any liabilities from enacting a C-PACER program? 1. What is C-PACER? Property Assessed Clean Energy (PACE) is a financing mechanism that enables low-cost, long-term funding for qualified improvements, including energy efficiency, renewable energy, and water conservation projects. C-PACE is specific to commercial, large multifamily, industrial, and nonprofit properties. More than 25 states have active C-PACE programs. (Only a few states have residential pace (R-PACE) programs that cover single family and small multi family homes.)The Washington C-PACER bill (HB 2405) includes resiliency measures, including seismic improvements and fire/flood protection in the definition of a "qualified improvement", adding an "R" to the popular acronym. Property owners can use C-PACER financing to cover 100% of the costs of projects for energy efficiency, water conservation, renewable energy generation, and resiliency upgrades. C-PACER financing includes all equipment, materials, and labor costs, as well as indirect services and fees. No public dollars or taxpayer funds are used in C-PACER financing. Like traditional special assessments that finance street lighting or sewers, property owners repay the financing through a special assessment that is added to their property tax bill. C-PACER assessments are totally voluntary. If the property owner sells the property, the balance of the assessment remains with the property and seamlessly transfers to the new owner without any need to approve the new owner. 2. What public problem is C-PACER trying to address? On average, buildings could be improved to save half of the energy that they use. However, because most building owners are uncertain about how long they will own a building, they often choose to make only efficiency improvements that produce a quick payback—often in less than 4 years. Such quick payback improvements often only save ten to fifteen percent on energy consumption. This kind of inaction is also true for resilience measures such as seismic and fire protection improvements, which may not have any immediate economic payback but do improve the health and safety of building occupants, reduce insurance premiums, and increase a building's life, thereby raising the property value. C-PACER addresses a gap in the credit market for these kind of projects. Investing in commercial properties to use renewable energy sources, to be energy efficient, to save water, and to be more resilient and sustainable makes economic sense and generates environmental benefits. C-PACER solves these issues by providing long term, fixed-rate credit that allows the cost savings to equal or exceed the debt service. 3. What kind of projects can use C-PACER financing? Property owners can use C-PACER to finance 100% of project costs related to energy efficiency, renewable energy, water conservation, and eligible resiliency. Items such as HVAC, efficient windows and doors, control systems, roofing, elevators, and solar panels can be paid with C-PACER. On an existing building retrofit, C-PACER can often cover 100% of the cost of a project. On new construction, C-PACER financing usually represents 20-25% of total project costs. Examples of projects that can use C-PACER: • Completely modernizing a vacant Art Deco office building; • Redeveloping an abandoned factory as a business incubator; • Installing solar on an indoor soccer and recreational park; and • Constructing a new hotel with high-efficiency windows and water conserving systems that are above code. 4. Who finances C-PACER loans? In this program model, no public funds would be used to finance loans. Any financial institution could finance these loans, from local credit unions to nationwide C-PACE-focused institutions. 5. How is the C-PACER lien collected? The C-PACER legislation allows counties to show private lender C-PACER loan obligations on regular property tax billings. The Washington law requires that actual loan payments and debt collection be handled by the C-PACER lender, not the county government. 6. What happens to the C-PACER lien in the event of a building sale? The C-PACER lien stays with the building, rather than the owner, so the next property owner will continue paying the C-PACER financing. 7. What happens to the C-PACER lien in the event of a building foreclosure? The C-PACER lien stays with the building, rather than the owner, and the C-PACER lien would not extinguish in the rare event of a foreclosure. This particular feature is important for the structure of a C-PACER program, because it is what allows for the longer term financing. Since C-PACE programs began in 2008, there have been no foreclosed properties of the 2,000+ buildings that have participated in a C-PACE deal. 8. What is the role of existing mortgage holders in the C-PACER program? The C-PACER lien would move into first (superior) position ahead of any other lien on the property, excepting state and local taxes, but only after consent is given by all other mortgage holders. More information on how this can work is available . 9. Are C-PACER programs risky for consumers? No, these are very secure transactions. Of the 2,000+ buildings and $1 billion+ of investment in C-PACE programs nationwide, there have been no foreclosures. There have been some early well-publicized incidents of consumer fraud with residential PACE (R-PACE) programs in the few states that have such programs, but C-PACE programs are very different. California and other states which have ongoing R-PACE programs, have been amending them to require tighter administrative oversight with greater consumer protections. The much more widespread C-PACE programs have not experienced the sort of fraud publicity associated with R-PACE programs. For added protection, the new Washington law requires that for any improvement to be qualified for a C-PACER lien, it must be reviewed by a licensed or certified professional. Finally, the consent required by other mortgage holders adds yet another screen to ensure that the transaction is prudent. 10. Has this been done before? Yes, 37 other states and territories have passed similar C-PACE enabling legislation and there are 25 active programs. To date, C-PACER financing exceeds $1.5 billion in 2,100+ properties. 11.What benefits does C-PACER provide? For building owners: With C-PACER financing, there is little cash outlay and the debt lien is filed against the property, not the owner. That debt obligation stays with the property whenever ownership transfers. The debt doesn't appear on the owner's balance sheet, and it does not encumber the owners' credit capacity. Hence, owners find these kinds of loans attractive for long-term efficiency and resilience improvements. For tenants: Building tenants are the ones typically paying the utility bills (either directly or through rent), occupying uncomfortable spaces, and facing any health and safety risks. Giving the building owners an easier way to pay for these kinds of improvements is a benefit to tenants. For the public: C-PACER financing programs are a type of public-private partnership that make it attractive for building owners to pursue deep efficiency and resilience improvements that are in the public interest. Highly energy and water efficient buildings reduce environmental impacts, including greenhouse gas emissions. Lower energy and water consumption also reduces the need for production and delivery infrastructure, the costs for which are ultimately borne by ratepayers. Further, seismic, fire protection, and other safety-related resilience improvements increase public safety and ultimately mitigate publicly funded emergency response expenses. 12. Are nonprofits eligible for C-PACER? Yes. Even though many nonprofits do not pay property tax, the tax assessor still has a property number for every parcel and that facilitates nonprofits voluntarily opting in to this program. 13. Arepublic buildings (e.g., schools and municipal buildings) eligible for 9 p g ) 9 C-PACER? No, generally, public buildings are not eligible for C-PACER. Public entities generally have access to other types of capital that are more attractive. In addition, in Washington, public entities can also make use of the state Department of Enterprise Services Energy Savings Performance Contracting program, which is a very cost-effective way to complete energy upgrades. 14. Are single-family residential homes eligible for C-PACER? No. This legislation is focused on commercial, institutional, nonprofit, and multifamily (five units and more) buildings. Fewer states have active R-PACE programs, and we want to learn from their challenges and successes before pursuing a program that would cover residential properties in Washington. 15. Is a county required to develop a C-PACER program? No. The C-PACER legislation enables, but does not require, a county to establish a C-PACER program. 16. What are the county's responsibilities under Washington C-PACER? County responsibilities are limited to: p • Enacting C-PACER by ordinance • Designating an office or individual to review C-PACER applications according to a Program Application Checklist • Signing and recording the assessment agreement and associated forms All other responsibilities are performed by the Property Owner and the Capital Provider. 17. Does the County incur any liabilities from enacting a C-PACER program? No. By statute, county funds or credit are prohibited from being utilized to back any assessment or C-PACER lien.