Henrico officials weighing adoption of sustainable development loan program

Henrico County could become the first Central Virginia locality to adopt an ordinance designed to encourage sustainable development projects through a loan program, Henrico County Deputy Director of Finance Matt Chafin told board of supervisors July 11.

Henrico’s Environmental Action Resource Team (or HEART), a collection of county officials from various agencies), recommended that the board approve an ordinance to adopt the Commercial Property Assessed Clean Energy (or C-PACE) program, Chafin told the board.

C-PACE is a program that helps developers fund sustainable, energy-efficient upgrades to their commercial or multi-family buildings. Through it, developers can update their utilities to be more environmentally efficient or install sustainable energy sources, like solar panels.

“I would summarize this program to say it has a tremendous amount of benefit for encouraging development of green and sustainable energy projects throughout the county. And it costs nothing for the county to do,” Chafin said.

C-PACE fully funds the upgrade process, and in exchange, the property owner authorizes the addition of an assessment lien to the property tax bill.

“There are capital providers or lenders in the market who are willing to make these types of loans to borrowers, in this case, property owners or developers,” Chafin told the board. “As a way of helping to secure these loans, the county is establishing an ordinance which would allow us to record a special assessment lien on behalf of the lender.”

The first step in adopting the C-PACE program requires the county to pass an enabling ordinance. Then, the statewide program administrator, Virginia PACE Authority, would administer the program on the county’s behalf at no cost to Henrico, explained Chafin.

“Virginia Pace Authority markets the program to property owners, capital providers, contractors and other service providers,” said Chafin. “VPA processes, approves all applications and facilitates the closing of C-PACE loans.”

The Commonwealth of Virginia chose to work under contract with Virginia Pace Authority through a competitive bidding process. Although relatively new to Virginia, C-Pace has provided an economic impact of $15.8 billion across the country and has enabling legislation in 37 states and the District of Columbia.

The county would not have to enforce the lien, nor would it tax the property owner off of the lien. The property owner or developer would need to seek a loan request and the county would consider each C-PACE loan request through an approval process that would involve a review panel consisting of the Economic Development Authority, finance department and a member of the environmental committee. County Manager John Vithoulkas then would need to issue final approval.

“The borrower, the property owner, is able to select their lender,” said Virginia Pace Authority’s Holly Edinger. “So it's a private property owner, selecting private investment, a lender of their own. There are about a dozen lenders that work in this market, in the C-PACE loan across the country.”Chafin referenced a business in the Tuckahoe District that intends to include solar panels in its building project. That business reached out to the Virginia Pace Authority to seek funding from the C-PACE program.

“As part of that loan application, they are voluntarily agreeing to have the special assessment lien added to the land record,” Chafin said.

"The C-PACE lien that we mentioned earlier, would still be subordinate to our own tax lien. So in terms of a scenario where that lien needed to be enforced, we would still stand ahead of the C-PACE lien,” Chaffin added.

There will be a public hearing about  the proposed ordinance Aug. 8.