Chapter 16.22
COMMERCIAL PROPERTY ASSESSED CLEAN ENERGY AND RESILIENCY (C-PACER) PROGRAM IN SKAGIT COUNTY
Sections:
16.22.040 Program administration.
16.22.070 Application and review.
16.22.090 Assignment, billing, collection, and enforcement.
16.22.130 No liability—No public funds.
16.22.010 Establishment.
(1) There is hereby established within the boundaries of Skagit County (the “County”) a Commercial Property Assessed Clean Energy and Resiliency (“C-PACER”) program (the “program”) in accordance with RCW Chapter 36.165 et seq. (the “C-PACER Act”). The County finds that it is convenient and advantageous to establish the program, at no net cost to the County, in order to finance qualified projects (as hereinafter defined), repaid by a voluntary assessment on the property benefited by such qualified projects, and that the program is in the public interest, providing for the safety, health, and environmental public benefits, and provides for economic development of the community.
(2) The program shall allow financing for the full range of qualified improvements on all eligible properties, as authorized by the C-PACER Act, and shall abide by and operate according to the C-PACER Act. (Ord. O20240006 § 2 (Att. A))
16.22.020 Definitions.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) “Application checklist” means the list of items in a project application required by the C-PACER Act, this Code, and the Program Guidebook, and the corresponding documentation that the County accepts in order to show the requirement has been met.
(2) “Assessment” means the voluntary agreement of a property owner to allow the County to place an annual assessment on their property to repay C-PACER financing.
(3) “Assessment agreement” means an agreement between the County and a property owner whereby the County agrees to place an assessment and C-PACER lien on the property to secure the obligation to repay the financing.
(4) “Capital provider” means any private entity, their designee, successor, or assigns that makes or funds C-PACER financing under this Code. A capital provider may be any of the following: a corporation, partnership, or other legal entity that provides proof that it is currently registered as a C-PACER capital provider in two different states with C-PACER programs; a Federal or State-chartered bank or credit union; or a private entity, whose principal place of business is located in Washington State, provided it is licensed or permitted to do business within the State and can produce its most recent audited financial statement or regulatory business filing.
(5) “C-PACER financing” means an investment from a capital provider to a property owner to finance or refinance a qualified project as described under this Code. The proposed C-PACER financing for a qualified improvement may authorize the property owner to (a) directly purchase the related equipment and materials for the installation or modification of a qualified improvement; and (b) directly contract, including through lease, power purchase agreement, or other service contract, for the installation or modification of a qualified improvement.
(6) “C-PACER lien” means the lien recorded on the eligible property to secure the voluntary annual assessment, which remains on the property until paid in full.
(7) “Eligible property” means privately owned commercial, industrial, or agricultural real property or multifamily residential real property with five or more dwelling units. Eligible property may be owned by any type of business, corporation, individual, or nonprofit organization permitted by State law. Eligible property may include property with ground leases and property financed through power purchase agreements.
(8) “Financing agreement” means the contract under which a property owner agrees to repay a capital provider for the C-PACER financing including, but not limited to, details of any finance charges, fees, debt servicing, accrual of interest and penalties, and any terms relating to treatment of prepayment and partial payment of the C-PACER financing.
(9) “Program” means the C-PACER program established under this Code and described in RCW Chapter 36.165 et seq.
(10) “Program Administrator” means the department or office designated by the County to administer the C-PACER program.
(11) “Program Guidebook” means a document that states the program’s territory, establishes appropriate guidelines, specifications, approval criteria, processes, and the standard application forms or other documents determined by the Program Administrator to be necessary or appropriate for the administration of the program consistent with this Code and the C-PACER Act.
(12) “Program Guidelines” means the guidelines that the C-PACER statute (currently RCW Chapter 36.165 et seq.), Program Guidebook, this Code, and any other applicable laws, statutes, regulations and ordinances (and as they may be amended) provide for the program.
(13) “Project application” means an application submitted to the County to demonstrate that a proposed project qualifies for C-PACER financing and for a C-PACER lien.
(14) “Property owner” means an owner of qualifying eligible property who desires to install qualified improvements and provides free and willing consent to the assessment against the eligible property.
(15) “Qualified improvement” means a permanent improvement affixed to real property and intended to: (a) decrease energy consumption or demand through the use of efficiency technologies, products, or activities that reduce or support the reduction of energy consumption, allow for the reduction in demand or, alternatively, 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 generates electricity, provides thermal energy, or regulates temperature; (b) decrease water consumption or demand and address safe drinking water through the use of efficiency technologies, products, or activities that reduce or support the reduction of water consumption, allow for the reduction in demand, or reduce or eliminate lead from water which may be used for drinking or cooking; (c) increase resilience, including but not limited to seismic retrofits, fire suppression, flood mitigation, stormwater management, wildfire and wind resistance, energy storage, and microgrids; or (d) improve electric vehicle charging infrastructure, which means it supports the electrification of the transportation sector and the reduction of greenhouse gas emissions.
Installation, maintenance, or repair of equipment that burns fossil fuel or an improvement that merely replaces an existing improvement without providing any additional public benefit is not a qualified improvement.
(16) “Qualified project” means a project approved by the Program Administrator, involving the installation or modification of a qualified improvement, including new construction or the adaptive reuse of eligible property with a qualified improvement that provides a significant public benefit related to the intended purpose of the qualified improvement. Together, qualified improvements, inclusive of all related and eligible costs pursuant to RCW Chapter 36.165 et seq., that are to be financed as described in a project application and approved by the Program Administrator, are a qualified project. (Ord. O20240006 § 2 (Att. A))
16.22.030 Territory.
The program shall be available to all eligible property within the following region, defined by the County in accordance with RCW Chapter 36.165, within the boundaries of the County, including both incorporated and unincorporated territory. The region is all areas of Skagit County, including incorporated and unincorporated territory. (Ord. O20240006 § 2 (Att. A))
16.22.040 Program administration.
(1) Pursuant to the C-PACER Act, the County designates the Planning and Development Services Director or their designee as the Program Administrator. That person shall review and approve the project applications submitted in accordance with the Program Guidebook, collect any fees, and have the appropriate person execute the documents required by the Program Guidebook to enable a C-PACER financing.
(2) No services, including but not limited to energy audits, project development, or other activities associated or related to the development of a project application or installation of qualified improvements, shall be offered for the C-PACER program unless priced separately and open to purchase by the property owner from third parties. (Ord. O20240006 § 2 (Att. A))
16.22.050 C-PACER financing.
(1) Under RCW Chapter 36.165 et seq., C-PACER financing is to be provided by capital providers through a financing agreement entered into with the owner of an eligible property to fund a qualified project.
(2) The C-PACER financing through a program established under this Code may include:
(a) The cost of materials and labor necessary for installation or modification of a qualified improvement;
(b) Permit fees;
(c) Inspection fees;
(d) Financing or origination fees;
(e) Program application and administrative fees;
(f) Project development and engineering fees;
(g) Third-party review fees, including verification review fees;
(h) Capitalized interest;
(i) Interest reserves;
(j) Escrow for prepaid property taxes and insurance;
(k) Any other fees or costs that may be incurred by the property owner incident to the installation, modification, or improvement on a specific or pro rata basis; or
(l) Any other costs or fees as outlined in the Program Guidebook.
(3) Prior to entering into a financing agreement, the capital provider must receive written consent from every nonapplicant property owner, holder of a lien, mortgage, or security interest in the real property that will be subject to the assessment and C-PACER lien agreeing that the property may participate in the program and that the C-PACER lien will take precedence over all other liens except for a lien for taxes. Additionally, prior to entering into a financing agreement on an eligible property that is a multifamily residential property with five or more dwelling units, the Program Administrator must also receive written consent from any holder of affordable housing covenants, restrictions, or regulatory agreements encumbering the real property as a condition precedent to the property participating in the program that affirms that the property may participate in the program and that the C-PACER lien will take precedence over all other liens except for a lien for taxes. The capital provider or property owner must tell the Program Administrator that the eligible property is a multifamily residential property with five or more dwelling units and will require such written consent. County will not consent or allow a C-PACER lien if it does not receive such consent set forth herein.
(4) The proposed C-PACER financing for a qualified project may authorize the property owner to:
(a) Purchase directly the related equipment and materials for the installation or modification of a qualified improvement; and
(b) Contract directly, including through lease, power purchase agreement, or other service contract, for the installation or modification of a qualified improvement. (Ord. O20240006 § 2 (Att. A))
16.22.060 C-PACER lien.
(1) The C-PACER lien amount, plus any interest, penalties, and charges accrued or accruing on the C-PACER lien: (a) takes precedence over all other liens or encumbrances except a lien for taxes imposed by the State, a local government, or a junior taxing district on real property, which liens for taxes shall have priority over such C-PACER lien, provided existing mortgage holders, if any, have provided written consent described in this Code chapter; and (b) is a first and prior lien, second only to a lien for taxes imposed by the State, a local government, or a junior taxing district against the real property on which the C-PACER lien is imposed, from the date on which the notice of the C-PACER lien is recorded until the C-PACER lien, interest, penalties, and charges accrued or accruing are paid.
(2) The C-PACER lien runs with the land, and that portion of the C-PACER lien that has not yet become due is not accelerated or eliminated by foreclosure of the C-PACER lien or any lien for taxes imposed by the State, a local government, or junior taxing district against the real property on which the C-PACER lien is imposed.
(3) Delinquent installments due on a C-PACER lien incur interest and penalties as specified in the financing agreement.
(4) After the C-PACER lien is recorded as provided in this code, the voluntary assessment and the C-PACER lien may not be contested on the basis that the improvement is not a qualified improvement or that the project is not a qualified project. (Ord. O20240006 § 2 (Att. A))
16.22.070 Application and review.
(1) A property owner and capital provider shall complete a project application and submit it to the Program Administrator for review.
(2) The project application shall require:
(a) An attestation by the property owner that the project is a “qualified improvement” as defined in this Code and, if applicable, the Program Guidebook.
(b) For an existing building seeking improvements where: (i) energy or water usage improvements are proposed, a certification by a licensed professional engineer or other professional listed in the guidebook, stating that the proposed qualified improvements will either result in more efficient use or conservation of energy or water, the reduction of greenhouse gas emissions, the addition of renewable sources of energy or water, or the reduction of lead in potable water; or (ii) resilience improvements are proposed, a certification by a licensed professional engineer stating that the qualified improvements will result in improved resilience and savings in insurance, improved property values, or other benefits sufficient to leverage financing of those improvements.
(c) For new construction, a certification by a licensed professional engineer or other professional listed in the Guidebook stating that the proposed qualified improvements, individually, or acting as a whole, will enable the project to exceed the energy efficiency or water efficiency or renewable energy or resilience requirements of the current building code of the County.
(d) The capital provider or property owner to disclose to the Program Administrator that the eligible property is a multifamily residential property with five or more dwelling units that will require written consent from any holder of affordable housing covenants, restrictions, or regulatory agreements in the real property and disclose the identity of all such entities.
(3) The Program Administrator shall review the application according to the application checklist solely to determine whether it is complete, proposes a “qualified improvement,” contains no errors on its face, and that all information is provided in the substance and form required by the application checklist. If so, the Program Administrator shall sign the checklist indicating that the project application is deemed approved. If a project application is incomplete and/or does not conform to the requirements of the application checklist, the Program Administrator shall inform the applicant as soon as practicable that the application is denied, the reasons for the denial, and any corrections that could make the application acceptable. If feasible, the applicant shall have an opportunity to correct the application.
(4) Upon approval of a project application, a property owner or capital provider shall provide all the required completed forms to the Program Administrator for execution at least five days prior to close of the C-PACER transaction, including the assessment agreement, notice of assessment interest and C-PACER lien, and assignment of notice of assessment and assessment agreement. The Program Administrator shall have authority to sign the assessment agreement, notice of assessment interest and C-PACER lien, and assignment of notice of assessment and assessment agreement without further Board of County Commissioners’ approval.
(5) The property owner or capital provider shall record in its real property records the assessment agreement, the notice of assessment interest and C-PACER lien, and the assignment of notice of assessment and assessment agreement or, at the request of the property owner and the capital provider, the executed documents may be delegated to a non-County entity for recordation. Expedited recording may be available for a fee to be determined by the Skagit County Auditor’s office.
(6) For a property owner and capital provider whose project application is denied by the County’s Program Administrator, either party, or both, may request an adjudicative proceeding before the County’s adjudicative body, consistent with the County’s rules and subject to the applicable provisions of Washington’s Administrative Procedures Act, RCW Chapter 34.05. (Ord. O20240006 § 2 (Att. A))
16.22.080 Program Guidebook.
(1) The C-PACER program shall be administered in accordance with the requirements contained in this Code, the Program Guidebook, the Program Guidelines, forms, and any other requirements set forth in law, statutes, regulations, and other requirements. The Program Guidebook, attached as Exhibit B to the ordinance codified in this chapter, shall include:
(a) A project application form, to be used by the property owner and capital provider.
(b) An application checklist, to be used by the Program Administrator to approve or disapprove an application.
(c) A form assessment agreement.
(d) A form notice of assessment interest and C-PACER lien.
(e) A form assignment of notice of assessment interest and assessment agreement.
(f) A statement that the period of the financing agreement will not exceed the useful life of the qualified project, or weighted average life if more than one qualified improvement is included in the qualified project.
(g) A description of the application and review process established under this Code.
(h) A statement explaining the lender consent requirement under the C-PACER Act.
(i) A statement explaining the requirements for qualifying as a capital provider for this program.
(j) A statement that the County has no liability as a result of the agreement and a statement that neither the County, its governing body members, employees, board members, elected officials, Commissioners, or executives are personally liable as a result of exercising any rights or responsibilities granted under this Code, especially and including all actions related to, or arising from, administering the program.
(k) A description of the marketing and participant educational services, if any, provided in support of the program.
(2) The Program Guidebook and forms may be updated by the Program Administrator without approval by the Board of County Commissioners, so long as the changes comply with this Code and RCW Chapter 36.165 et seq. (Ord. O20240006 § 2 (Att. A))
16.22.090 Assignment, billing, collection, and enforcement.
(1) The assessment and C-PACER lien shall be assigned by the County to the capital provider by the close of any approved C-PACER financing, as provided in RCW 36.165.050(3). The C-PACER lien, as assigned to the capital provider, shall maintain the same precedence and priority and characteristics set forth in the C-PACER Act and this Code.
(2) Billing, collection, and enforcement of delinquent C-PACER liens or C-PACER financing installment payments, including foreclosure, shall remain the sole responsibility of the capital provider or its assigns or designees. The County has no role in billing, collection, and enforcement of delinquent C-PACER liens or C-PACER assessment installment payments.
(3) Pursuant to the assessment agreement, the C-PACER lien shall be solely enforced by the capital provider at any time after one year from the date of delinquency, and may be foreclosed in the same manner as a mortgage lien under RCW Chapter 61.12 et seq., except that no sale of the property shall discharge or in any manner affect the priority of the C-PACER lien with respect to installments not yet due and payable at the time of sale, and no deficiency judgment may be sought by the capital provider with respect to any unpaid assessment at the time of sale. Skagit County shall have no obligation to the property owner or capital provider with respect to collection, enforcement, or foreclosure of this assessment agreement or the C-PACER lien. The participation of the Skagit County Sheriff’s Office in any foreclosure action is not in violation of, or inconsistent with, RCW Chapter 36.165 et seq., which limits the role of the County in the enforcement of a C-PACER lien.
(4) The capital provider may also pursue any other enforcement method authorized under RCW Chapter 36.165 et seq., as it may be amended from time to time. However, at no time shall the capital provider or property owner have any remedies against Skagit County except as otherwise provided by law.
(5) The C-PACER lien shall terminate upon the final payment or prepayment of the assessment. Following such termination, the capital provider shall cause to be executed, delivered, and/or recorded such instruments as are necessary in order to release the C-PACER lien. (Ord. O20240006 § 2 (Att. A))
16.22.100 Fees.
(1) An application fee in the amount the County’s Planning and Development Services Department has set shall be paid to the County when the project application is submitted.
(2) Upon approval of an application by property owner and a capital provider, and prior to recordation of documents for a C-PACER transaction, the parties shall pay a fee equal to one percent of the financing amount of the C-PACER transaction, with a minimum fee of $2,500 and a cap on the fee of $15,000, as a good faith estimate of the costs of establishing and implementing the program, to the County to make the costs of the C-PACER program cost-neutral. (Ord. O20240006 § 2 (Att. A))
16.22.110 Enactment.
The provisions of the Code sections implementing the C-PACER program are hereby declared to be severable and if any section, phrase, or provision shall for any reason be declared by a court of competent jurisdiction to be invalid or unenforceable, such declaration shall not affect the validity or enforceability of the remainder of the sections, phrases and provisions hereof. All codes, orders, resolutions, and parts thereof in conflict herewith are, to the extent of such conflict, ineffective as to the C-PACER lien and C-PACER program upon the effectiveness of the Code sections implementing the C-PACER program. No provision of the Skagit County Code or violation of any provision of the Code shall be deemed to impair the validity of the Code sections implementing the C-PACER program or the instruments authorized by this Code or to impair the security for or payment of the instruments authorized by this Code; provided further, however, that the foregoing shall not be deemed to affect the availability of any other remedy or penalty for any violation of any provision of the Code. In the event and to the extent of a conflict between this Code and RCW Chapter 36.165 et seq., RCW Chapter 36.165 et seq., shall govern. (Ord. O20240006 § 2 (Att. A))
16.22.120 Effective date.
The Code sections implementing the C-PACER program shall take effect 10 days after enactment. The County may begin accepting applications for review 60 days after the effective date. (Ord. O20240006 § 2 (Att. A))
16.22.130 No liability—No public funds.
(1) As to the County, the Code sections implementing the C-PACER program do not confer any right of action nor property interest upon any party to a C-PACER transaction, and the County shall incur no liability for enacting the C-PACER program, nor shall the County, its governing body members, employees, board members, elected officials, Commissioners, or executives be personally liable as a result of exercising any rights or responsibilities granted under the Code sections implementing the C-PACER program. The County has no obligation to defend the C-PACER lien, assessment agreement, notice of assessment interest and C-PACER lien, assignment of notice of assessment and assessment agreement or any other C-PACER program document against any claim by the holder of any other security interest in the eligible property. The capital provider must agree to indemnify and hold Skagit County harmless for any cost, expense, loss, or damages arising out of the imposition, assignment, recording, enforcement, and foreclosure of the C-PACER lien, assessment agreement, notice of assessment interest and C-PACER lien, assignment of notice of assessment and assessment agreement or any other C-PACER program document.
(2) The County shall not enforce any privately financed debt under the Code sections implementing the C-PACER program. The County shall not use public funds to fund or repay any loan between a capital provider and property owner. No section under the Code sections implementing the C-PACER program shall be interpreted to pledge, offer, or encumber the full faith and credit of the County, nor shall the County or any local government within the County pledge, offer, or encumber its full faith and credit for any lien amount through a program. (Ord. O20240006 § 2 (Att. A))
16.22.140 Termination.
The Code sections implementing the C-PACER program shall automatically terminate if RCW Chapter 36.165 et seq. (or any successor statute) or the C-PACER program is terminated or repealed in Washington. The Board of County Commissioners shall also have the authority, in their sole discretion, to limit, repeal, or terminate the C-PACER program at any time. (Ord. O20240006 § 2 (Att. A))