The Commercial Property Assessed Capital Expenditure (C-PACE) bill was approved by the General Assembly on Thursday, establishing a state program that provides long-term financing options for businesses from private providers to pay for improvements.
C-PACE programs are offered in over 30 states. In North Carolina, it would allow owners of qualified commercial properties to apply for approval from the North Carolina Economic Development Association to obtain long-term financing provided by private lenders.
Fully funded with 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 North Carolina Economic Development Association to create a program for application and funding. The loan would cover property improvements, including energy efficiency programs, water conservation, renewable energy, and resilience measures.
The program is administered under the oversight of the Department of Commerce, as detailed in Senate Bill 802. Developers can receive up to 35% of the loan-to-value ratio of a property through the C-PACE loan. The loan applies to commercial and multifamily projects, excluding single-family homes.
“It’s a tool in the toolbox that the state could offer at its own discretion in individual counties or cities to provide this financing package,” explained Senator Lazarra during a committee meeting earlier this month. “We believe it’s a great program. We believe it’s something that municipalities and counties can use at their discretion.
Private funds are secured through a property assessment, with no public funds involved in the program.
The unanimous passage comes after concerns raised by State Treasurer Dale Folwell, who concluded that while the concept may have laudable goals, it is incompatible with the state’s government finance premises, goals, and basic structure.
“C-PACE doesn’t achieve anything that can’t be done in the private sector between a private borrower and a private lender,” Folwell warned earlier this week. Instead, it seems to confuse the process of acquiring capital needed for projects by interjecting the involvement of local governments and the state in a well-established type of transaction.
The bill now heads to the governor’s desk.
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