The Commercial Property Assessed Capital Expenditure Act (C-PACE) passed the General Assembly on Thurday and establishes a statewide program that provides long-term financing options to businesses from private vendors to pay for improvements.
Capital expenditure programs are offered in over 30 states. In North Carolina, it would enable property owners and qualifying commercial property to apply to the Economic Development Partnership of NC to be approved for long-term financing provided by private lenders.
Funded entirely by private capital, C-PACE loans offer favorable interest rates and incentivize specific improvements in new and existing constructions. The bill authorizes the Department of Commerce and the Economic Development Partnership of NC to create a program for application and funding. The loan would cover property improvements, including energy-efficiency programs, water conservation, renewables, and resiliency measures.
The program will be administered 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 the C-PACE loan. The loan applies to commercial and multi-family projects, excluding single-family homes.
“It’s a tool in the toolbox that the state could offer at its own will in the individual counties and or cities to offer this financing package,” Sen. Lazarra explained during a committee meeting earlier this month. “We think it’s a great program. We think it’s something that municipalities and counties can utilize at their choosing.”
Private funds are secured by an assessment of the property, and no public funds are involved in the program.
The unanimous passage comes following concerns highlighted by State Treasurer Dale Folwell, who concluded that, while it’s a concept that may have laudable objectives, it is incompatible with the basic premises, goals, and structure of governmental finance in the state.
“C-PACE accomplishes nothing that cannot be done in the private sector between a private borrower and a private lender,” cautioned Folwell earlier this week. “Rather, it seems to confuse the process of necessary capital acquisition for projects by interjecting local government participation and State involvement into an already well-established type of transaction.”
The bill now heads to the governor’s desk.
