As noted in the previous section, the final C-PACE Guidelines have not been published yet, but the likelihood is that they will closely resemble the latest draft, which is version 2. So to begin with let’s cover property and project eligibility.
Eligible properties for the Garden State C-PACE program include:
1. industrial, agricultural, or commercial property;
2. residential property containing five or more dwelling units;
3. common areas of condominiums and other planned real estate developments as defined
in N.J.S.A. 45:22A-23; or
4. property owned by a tax-exempt or nonprofit entity, including, but not limited to, schools,
hospitals, institutions of higher education, or religious institutions;
The property must be located in a municipality that has approved C-PACE. To be eligible, a property must
A. Must not be subject to any bankruptcy proceedings;
B. Must not be the subject of any mortgage loans with any default; and
C. All tax payments, charges, or assessments for the Property must be current
In addition, the owner must:
A. Must not be subject to any bankruptcy proceedings;
B. Has a valid Tax Clearance Certificate;
C. Has written consent from all Property Owners to the C-PACE Assessment being imposed on the Eligible Property; and
D. Has written consent from all mortgage lien holders on the Eligible Property of the proposed C-PACE Assessment.
This last requirement is typically called “Mortgage Lender Consent,” and is required because the eventual C-PACE special assessment technically comes before the mortgage.
As for eligible projects, the draft Guidelines list the following;
A. Energy Efficiency Improvements: Improvements to reduce energy consumption through conservation or a more efficient use of electricity, natural gas, propane, or other forms of energy, including, but not limited to:
1. Air sealing;
2. Installation of insulation;
3. Installation of energy-efficient electrical, heating, cooling, or ventilation systems,
including, but not limited to, air and ground source heat pump systems;
4. Energy efficient water heating;
5. Building modifications to increase the use of daylight;
6. Energy efficient windows, doors, and glass;
7. Installation of energy or water controls or energy recovery systems;
8. Installation of efficient lighting equipment and/or controls; and
9. Other improvements that the Authority, in consultation with the New Jersey Board of
Public Utilities (NJBPU), determines reduce energy consumption.
B. Water Conservation Improvements: Improvements that reduce water consumption, increase the efficiency of water use, or reduce water loss.
C. Renewable Energy System Improvements: Improvements by which electrical, mechanical, or thermal energy is produced from a method that uses one or more of the following fuels or energy sources:
1. Hydrogen;
2. Solar energy;
3. Geothermal energy;
4. Biomass;
5. Wind energy; and
6. Other fuels and energy sources that the Authority, in consultation with the NJBPU, determines are renewable energy fuels or sources.
D. Energy Storage: Technology that can absorb energy, store it for a period, and thereafter dispatch the energy, including, but not limited to, battery electric storage, thermal storage, pumped hydropower, and such other forms of energy storage as may be determined by the Authority.
E. Electric Vehicle Charging Infrastructure: Equipment designed to deliver electric energy to a battery electric vehicle or a plug-in hybrid vehicle.
F. Stormwater Management Systems: Has the same meaning as in N.J.S.A. 40A:26B-3, which, as of the date of these Guidelines is: “Any equipment, plant, structures, machinery, apparatus, management practices, design practices, planning activities, land, or any combination thereof, acquired, used, constructed, implemented, or operated to convey stormwater, control or reduce stormwater runoff and associated pollutants or flooding, induce or control the infiltration of groundwater recharge of stormwater, or eliminate illicit or illegal non-stormwater discharges into stormwater conveyances.”
G. Flood Resistant Construction Improvements: Improvements that mitigate the likelihood of flood damage, including, but not limited to, the installation of break-away walls and building elevation alterations.
H. Hurricane Resistant Construction Improvements: Improvements that enable components of structures to be in compliance with the standards for a “wind-borne debris region” adopted pursuant to the “State Uniform Construction Code Act,” N.J.S.A. 52:27D-119 et seq., or into compliance with a successor standard under that code.
In short, a wide range of projects designed to make buildings more energy efficient, powered by renewables, and more resilient.
Eligible costs include the following:
A. Direct Costs: Including, but not limited to, costs for the equipment, materials, and labor related to the purchasing, constructing, installing, modifying, or acquiring a C-PACE Project.
B. Indirect Costs: Including, but not limited to, expenses and fees of engineers, architects, and other professionals, inspection fees and permits, and warranties and pre-paid maintenance contracts for the C-PACE Project.
C. Financing Costs of Capital Provider: Including, but not limited to, origination fees, prepaid interest and payment reserves, closing costs, counsel fees, trustee or custodian fees, recording fees, and other financing charges.
D. Program Fees: The application fee, determination fee, and closing fee paid to the Authority, and the municipality closing fee paid to the Participating Municipality. (Program fees can be found in Article VI.)
The Guidelines then go on to define “Direct Financing,” and specify that
A. The principal amount, when combined with mortgage and other lien obligations on the
Eligible Property, shall not exceed ninety (90) percent of the appraised value of the Eligible Property after including the anticipated value created by the C-PACE Project;
B. The amount shall be a specific amount, which may not exceed the Project Costs;
C. The maximum duration shall not exceed the Weighted Average Useful Life (“WAUL”) of the Eligible Improvements in the C-PACE Project or thirty (30) years, whichever is less. The WAUL is determined by the methods identified in Section 5.05B; and
D. Except as otherwise expressly provided in these Guidelines, the terms of repayment shall be solely determined and negotiated between the Eligible Owner and the Qualified Capital Provider. The schedule for the Eligible Owner’s repayment of the C-PACE Assessment (“Repayment Schedule”) shall be included in the C-PACE Assessment Agreement. [Emphasis added.]
Finally, this section notes that for a proposed project to be eligible under the C-PACE Program:
A. The applicant proposing the project must satisfy the definition of Eligible Owner;
B. The proposed property on which the proposed project will be located must satisfy the definition of Eligible Property;
C. The proposed financing must satisfy the definition of Direct Financing; and
D. Relevant Qualified Technical Reviewers have signed the Technical Review Certification Letter that the proposed project satisfies the definition of C-PACE Project and have determined the amount of Project Costs.