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PROGRAM GUIDEBOOK:
C-PACE PROGRAM
City/County of [________], Idaho
Table of Contents
I.Introduction2
II.Benefits of C-PACE3
III.C-PACE Financing Program Rules4
1.Establishment of C-PACE Program Boundaries4
2.Administration of Program; Authorized Officials4
3.Eligibility Requirements5
4.Application Process6
5.Application Documents7
6.Closing Documents8
7.Financing Requirements and Interest Rates8
8.Billing, Collection, and Enforcement of C-PACE Liens8
9. </w:Program Fee8
10. Term of an Assessment; Calculation of Useful Life of Qualified Improvements8
11.Written Consent from Mortgage Holder(s) Required8
12.Provisions for Marketing and Participant Education9
13.Government Has No Liability or Financial Responsibility9
IV. Exhibits
Introduction
ABOUT C-PACE
The City/County of [______], Idaho (the “Local Government”) administers a Commercial Property Assessed Capital Expenditure (“C-PACE”) program (the “C-PACE Program” or the “Program”)
under the Commercial Property Assessed Capital Expenditure Act, Chapter 38 of Title 67, Idaho Code, as amended (the “C-PACE Act”). The C-PACE Program allows owners of eligible commercial
property to obtain long-term financing from private capital providers (the “Capital Provider”) for certain qualified improvements. While the financing is repaid to the Capital Provider,
the C-PACE Act directs the Local Government to levy a voluntary assessment and record a lien (the “C-PACE Lien”) on the property. This approach to financing has been used by programs
like the C-PACE Program on thousands of properties in more than 30 states and the District of Columbia.
In 2024, the Idaho State legislature passed C-PACE enabling legislation, HB 624. This legislation allows local governments to establish (C-PACE) programs. C-PACE allows property owners
to access financing for qualifying energy efficiency, renewable energy, water conservation, and resiliency improvements for qualifying buildings. Improvements made to reduce lead in
drinking water also qualify as improvements.
Individual counties, municipalities or other political subdivisions of the State of Idaho may now take action to create their own C-PACE programs and help buildings become more efficient
and resilient. Creating a local C-PACE program is simple: first, a local government adopts a resolution that establishes the C-PACE program and its terms and which govern how its C-PACE
program works. Second, since the repayment of the C-PACE financing is between a private lender and a property owner, a local government only has to review the C-PACE application for
compliance with the C-PACE Act, prior to executing and recording (i) a written assessment contract between the property owner and the local government, (ii) a local government notice
of assessment and C-PACE lien, and (iii) an assignment of the written assessment contract and an assignment of notice of assessment and C-PACE lien to the Capital Provider.
In Idaho, C-PACE financing is available in four categories: energy efficiency, renewable energy, water conservation, and resiliency improvements. Improvements that reduce greenhouse
gas emissions would qualify, provided that the improvements also fall under one of the aforementioned categories. A voluntary C-PACE loan is secured by a first and prior lien on the
property and paid back over time, which lien is a junior only to liens for local government property taxes or ad valorem taxes. Like other assessments, C-PACE financing is non-accelerating,
which means only current or past due payments can be collected, while future payments are the responsibility of whomever owns the property at the time. The C-PACE repayment obligation
transfers automatically to the next owner if the property is sold. In the event of default, only the payments in arrears are due. This arrangement spreads the cost of qualifying improvements
– such as energy-efficient HVAC equipment, upgraded insulation, new windows, or solar installations – over the useful life of the measures.
The Program exists as a function of Idaho’s C-PACE legislation and the rules established by the local government. No change in the Program or in Idaho’s C-PACE legislation will affect
a property owner’s obligations to pay C-PACE assessments incurred under the Program prior to such changes.
Idaho C-PACE Program Guidebook
This Guidebook was developed to help Idaho counties, municipalities and other political subdivisions of the State launch C-PACE programs. The Guidebook and related model materials are
available at no cost to use and adopt. A major benefit to using a ready-made and legally reviewed program is that it allows Idaho governments, property owners, contractors, and capital
providers to follow a standard set of rules. This is critical in attracting the broadest capital investment to C-PACE projects. In this document, you can find information about eligibility
requirements for C-PACE projects in Idaho and the City/County of [______], Idaho and the process for applying for C-PACE project approval.
Benefits of C-PACE
C-PACE offers benefits to building owners, developers, municipalities, mortgage holders, and building professionals.
For Building Owners and Developers: One of the biggest barriers to converting potential projects to completed projects for efficiency and resiliency upgrades are the up-front cost of
the types of measures identified in the statute as qualifying improvements. C-PACE financing typically requires little up-front investment, and qualifying improvements improve property
value. Energy efficiency measures also lower operating costs. In addition, C-PACE financing has the following benefits:
Up to 100%, long-term financing. Many owners lack the capital to complete efficiency and resiliency improvements. All direct and indirect costs incidental to the qualified improvements
can be wrapped into C-PACE financing.
Transferrable upon sale. Some owners may want to sell the building before the financing is repaid. The C-PACE lien and assessment are attached to the property and transfers to the new
owner.
Cash flow benefits. C-PACE financing may be repaid over the useful life of the improvements, which because of the long-term financing options can have positive effects on cash flow.
Triple-net and full-net leases may allow pass-through of assessment installments to tenants. Under triple/full net leases, it may be possible for C-PACE payments to be passed along to
tenants, who also typically derive benefit from any energy savings through reduced operating costs.
For Energy Auditors, Architects, Building Engineers, and Contractors: By allowing a property owner to access 100% up-front financing for longer terms than are typically available for
conventional financing, more substantial efficiency and resiliency improvements are now more affordable with C-PACE. 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.
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 value
can be enhanced, and more jobs are created. Energy and resiliency upgrades create a more competitive environment for retaining and attracting new businesses by lowering energy costs
and improving the structural soundness of buildings. Upgraded buildings can generate higher property tax payments for the Local Government. Energy upgrades also typically reduce greenhouse
gases and other pollutants, which facilitates adherence to the Local Government or state climate action plans or goals.
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, C-PACE financing is 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 mortgage holders see their collateral improved without substantial increase in credit risk and with only a modest impact on lien priority. C-PACE financing is not permitted
without the consent of all existing mortgage holders.
C-PACE Financing Program Rules
The purpose of this C-PACE Program Guidebook is to provide statutorily compliant guidelines, criteria, and application forms, consistent for local governments across Idaho.
This Program Guidebook (the “Guidebook”) is prepared as required by the C-PACE Act, at the direction of the Local Government, and is approved in connection with the enabling resolution
for this program (the “C-PACE Resolution”) dated [___________]. Capitalized terms used herein, but not defined herein, have the meaning given to such terms in the C-PACE Resolution.
The Guidebook establishes guidelines, eligibility, approval criteria, and an application form for the administration of the C-PACE Program for the Local Government. The C-PACE Program
enables financing for commercial property owners (“Property Owners”) to make certain energy efficiency, renewable energy, water conservation, and resiliency improvements (each, a “Qualified
Improvement”) as described in the C-PACE Act and further clarified in this Guidebook.
Qualified Improvements, including all eligible costs that are to be financed as described in a project application (the “Project Application”) approved by the Program, constitute a “Qualified
Project.” Property Owners may receive funding for their Qualified Improvements only from Capital Providers pursuant to a separate Financing Agreement negotiated between the Property
Owner and Capital Provider (a “Financing Agreement”).
In the following numbered subsections, a reader can find information about:
Statutory and programmatic eligibility requirements for C-PACE project financing in Idaho, and
The appropriate steps and forms needed for a Local Government to receive and process a C-PACE project lien application.
Establishment of C-PACE Program Boundaries
The Local Government adopted Resolution number [________] on [____________], establishing the C-PACE Program for all eligible commercial properties within the boundaries of the Local
Government (the “Region”). The Region is illustrated in Exhibit ____.
Administration of Program; Authorized Officials
The [___________________] (the “Program Administrator”) is designated and authorized to review each Project Application to confirm that it is complete and contains no errors on its face.
The Program Administrator will then execute the Assessment Agreement and C-PACE Lien documents on behalf of the Local Government and record the Notice of Assessment Interest and C-PACE
Lien with the real property records.
The Program Administrator will:
Accept Project Applications from Property Owners and Capital Providers
Review the Project Application to determine conformance with the Application Checklist.
Approve/conditionally approve/disapprove the Project Application and communicate to applicant.
Execute the Assessment Agreement and Notice of Assessment Interest and C-PACE Lien.
Record the Notice of Assessment Interest and C-PACE Lien.
Eligibility Requirements
Eligible Property means any privately-owned commercial, agricultural, industrial, or multi-family real property of five (5) or more dwelling units located within the boundaries of the
Region (including properties owned by nonprofit, charitable, or religious organizations or one (1) or more owner-occupied or rental condominium units affiliated with a hotel). `
Property Owner means the legal owner of qualifying eligible property, which is the record owner of title to the Eligible Property or the owner of an estate for years created pursuant
to a written lease agreement or similar agreement. The Property Owner must be current on mortgage and property tax payments and cannot not be insolvent or in bankruptcy proceedings.
Title to the Eligible Property cannot be in dispute.<
Qualified Improvement means a permanent improvement affixed to the Eligible Property intended to:
Decrease energy consumption or demand through the use of efficiency technologies, products, or activities that reduce or support the reduction of energy consumption (“Energy Efficiency
Improvement”);
Support the production of clean, renewable energy, including but not limited to a product, device, or interacting group of products or devices on the customer's side of the meter that
provides thermal energy, or regulates temperature (“Renewable Energy Improvement”);
Decrease water consumption or demand, increase water conservation and storage, and address safe drinking water through the use of efficiency technologies, products, or activities that
reduce or support the reduction of water consumption or increase the storage of water (“Water Efficiency Improvement”);
Reduce or eliminate lead from water which may be used for drinking or cooking (“Safe Drinking Water Improvement”); or
Increase water or wastewater resilience, including through storm retrofits, flood mitigation, and stormwater management, or wind resistance, energy storage, microgrids, or structures,
measures, or other improvements that reduce land use impact, and other resilience projects approved by the Local Government (“Resiliency Improvement”).
Qualified Projects are approved by the Program Administrator and include the following:
The acquisition, construction (including new construction), adaptive reuse, installation, or modification of a Qualified Improvement permanently affixed to an Eligible Property.
The refinancing of existing properties that have had Qualified Improvements installed and operational for no more than three (3) years prior to the date of Project Application.
Capital Providers may be any private third-party entity, including its designee, successor, and assigns, that makes or funds C-PACE financing, including refinancing.
Qualifying costs that can be C-PACE financed include:
Materials and labor necessary for installation or modification of a Qualified Improvement;
Permit fees;
Inspection fees;
Lender fees;
Program application and administrative fees;
Project development and engineering fees;
Interest reserves;
Capitalized interest, in an amount determined by the Property Owner and Capital Provider;
Other fees or costs that may be incurred by the Property Owner incidental or ancillary to the installation, modification, or improvement on a specific or pro rata basis, as determined
by the Local Government.
Application Process
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The Idaho C-PACE statute reduces the administrative burden on participating jurisdictions as much as possible. The Program Administrator will review the Project Application for proof
of compliance with the statute requirements that are necessary for the Local Government to approve the application and execute the applicable documents for the proposed C-PACE transaction.
The process of obtaining financing under the Program starts when a Property Owner approaches a Capital Provider. The Capital Provider will work with the Property Owner to collect a number
of diligence items. Once all the items have been received, reviewed, and approved by the Capital Provider, the parties should settle on the loan terms.
The general flow of the C-PACE application process will be as follows:
The Property Owner and the Capital Provider prepare the Project Application, consisting of the Project Application Checklist and all supporting documents (described below). Applicants
should review the Project Application Checklist accompanying the Project Application to ensure the types of information that the Local Government will rely upon to verify compliance
with the C-PACE Act and C-PACE Resolution are present in the completed Project Application.
The Program Administrator will have ten (10) business days to review and approve the Project Application. If the office has received an unusually high number of applications, or if review
is delayed because of some force majeure event, the office may notify the applicant that the application review and approval will be delayed by no more than ten (10) additional business
days.
The Local Government application review process is confined to confirming that the Project Application is complete, and all attachments conform to these guidelines. <Local Government
approval does not constitute endorsement of any representations that may be made with regard to the operation and any savings associated with the Qualified Improvements. The Program
Administrator will review the Project Application for proof of compliance with the requirements of the C-PACE Act and C-PACE Ordinance that are necessary for the Local Government to
approve the Project Application and execute the applicable documents for the proposed C-PACE transaction.
If the Project Application and supporting documents comply with the Project Application Checklist, the Project Application will be approved, and the approval communicated in writing
to the applicant. The Project Application may be conditionally approved if the application is complete but the attachment regarding lender consent is not yet available. Conditional approval
will be treated the same as an approval, with exceptions noted below.
Incomplete Project Applications will be returned to the applicant, and the Program Administrator will notify the applicant about which items from the Project Application Checklist were
not provided or are insufficient or inaccurate on their face.
Upon receipt of approval, the Capital Provider will draft the following “Closing Documents”: the Assessment Agreement, the Notice of Assessment Interest and C-PACE Lien, and the Assignment
of Notice of Assessment Interest and C-PACE Lien and Assignment of Assessment Agreement. At or before closing, at the request of the applicant, the designated and authorized official
will execute Closing Documents. If the Project Application received conditional approval, the Closing Documents executed by 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 and C-PACE Ordinance.
At closing, the Local Government will record the Assessment Agreement, the Notice of Assessment Interest and C-PACE Lien, and the Assignment of Notice of Assessment Interest and C-PACE
Lien and Assignment of Assessment Agreement in the recorder’s office of ____ County, in which the Project is located.
Upon confirmation of recordation, the Capital Provider will disburse funds in accordance with the Financing Agreement.
The Property Owner begins making assessment payments per the Assessment Agreement and in accordance with the Financing Agreement
After project completion, the Property Owner will submit the Certificate of C-PACE Completion to the local government, which provides written verification provided by a licensed professional
engineer or engineering firm stating that the qualified project was properly completed and is operating as intended.
Application Documents
The Project Application must be submitted with the following documents appended:
Project Application Checklist (form attached)
Mortgage Holder Consent (form attached)
Certificate of Public Benefits (form attached) which includes:
Certification that the project provides one or more of the following benefits to the public:
Energy or water resource conservation
Reduced public health costs or risks
Reduced public emergency response cost or risk
Certificate of Qualified Improvements (form attached)
A licensed Engineer or an authorized representative of a licensed engineering firm will certify the Qualified Improvements, as applicable for the existing building or new construction.
The certifying individual may hold additional licenses or qualifications demonstrating their qualifications, as listed on the form of Certificate of Qualified Improvements.
Existing Buildings:
For Renewable Energy Improvements, Energy Efficiency Improvements, or Water Efficiency Improvements: A statement by the author of the energy analysis that the proposed Qualified Improvements
will either result in more efficient use or conservation of energy or water, or the addition of renewable sources of energy or water.
For Resilience Improvements: A statement by the author of the analysis that the Qualified Improvements will result in improved water or wastewater resilience, including through storm
retrofits, flood mitigation and stormwater management, or increase wind resistance, energy storage, microgrids, or structures, measures or other improvements that reduce land use impact.
New Construction: A certification that the proposed Qualified Improvements will enable the subject property’s project to exceed the current building code requirements for energy efficiency,
water efficiency, renewable energy, or renewable water. For resilience improvements, a certification that the proposed Qualified Improvements will enable the project to meet or exceed
resilience standards for the local government’s building codes or, if none are available, compliance with a nationally available and recognized resiliency standard.
Closing Documents
The Program has adopted the following form Closing Documents, which require the signature of the Local Government and 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.
Assessment Agreement (form attached)
Notice of Assessment Interest and C-PACE Lien (form attached)
Assignment of Notice of Assessment Interest and C-PACE Lien and Assignment of Assessment Agreement (form attached)
Financing Requirements and Interest Rates
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Under the C-PACE Act, the amount of the assessment plus any existing indebtedness on the property cannot exceed ninety percent (90%) of the fair market value of the property as determined
by a qualified appraiser. In addition, the amount of the assessment in the case of new construction cannot exceed thirty-five percent (35%) of the fair market value of the property
as completed or as stabilized, and, in the case of a retrofit of existing property, cannot exceed twenty-five percent (25%) of the fair market value of the property as completed or as
stabilized, all as determined by a qualified appraiser. The determination of fair market value will be established by a qualified appraisal completed no more than twelve (12) months
prior to the time of application.<
Interest rates are negotiated in a Financing Agreement between the Property Owner and the Capital Provider. A Local Government has no role in reviewing, setting, or opining on such interest
rates or other aspects of the Financing Agreement. Market forces – such as competition, the intended use of the property, potential risk –will affect the terms negotiated by the Property
Owners and Capital Providers.
Billing, Collection, and Enforcement of C-PACE Liens
Billing, collection and enforcement of C-PACE Liens and financing installment payments will be the responsibility of the Capital Provider. The Capital Provider will enforce the C-PACE
Lien in the same manner as a deed of trust. In accordance with Chapter 15, Title 45, Idaho Code, delinquent installments of the assessment incur interest and penalties as specified in
the financing agreement between the Property Owner and Capital Provider. In an enforcement action, assessments not yet due shall not be accelerated or eliminated by foreclosure of the
past due amount of the lien.
Program Fee
To make the costs of administering the C-PACE Program cost-neutral, the Local Government will collect a servicing fee equal to 1% of the total amount financed by the Property Owner,
not to exceed $50,000. An application fee of $500 will be paid with submission of the Program Application.
Term of an Assessment; Calculation of Useful Life of Qualified Improvements
The maximum term of an assessment may not exceed the useful life of the Qualified Improvement or weighted average useful life if more than one Qualified Improvement is included in the
Qualified Project.
Written Consent from Mortgage Holder(s) Required
Before entering into an Assessment Agreement with the Local Government, the Property Owner must obtain and furnish to the Local Government the written consent to the placement of the
assessment and C-PACE Lien from any holder of a mortgage or a deed of trust on the property.
Provisions for Marketing and Participant Education
This Guidebook will be made available to the public on the Local Government’s website. It is determined that there is no need for marketing and participant education at this time. It
is presumed that Property Owners and Capital Providers understand the principles and processes associated with C-PACE financing and will look to the Guidebook for understanding and clarification
of the Program.
Government Has No Liability or Financial Responsibility
The Local Government, its governing bodies, executives, or employees are not personally liable as a result of exercising any rights or responsibilities granted under this Program. The
Local Government shall not pledge, offer, or encumber its full faith and credit for any lien amount through a C-PACE program. No public funds may be used to fund or repay any C-PACE
financing obligation between a capital provider and property owner.
[EXHIBITS TO BE INSERTED]
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