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HomeMy WebLinkAbout2025-06-09 25-192 Ordinance25-192 06/09/2025 CITY COUNCIL ACTION Council Meeting Date: June 9, 2025 Item No: 25-192 Responsible Dept: Planning Action Requested: Ordinance Map/Lot: n/a Title, Ordinance Amending the Code of Ordinances to Create a Commercial Property Assessed Clean Energy Program Summary This Ordinance change would create a commercial property assessed clean energy program so that owners of qualifying property can access financing for energy savings improvements to their commercial properties located in the City. This program works via a property owner borrowing money from a capital provider to pay for the upfront costs of energy efficiency or renewable energy improvements. The capital is secured through a property tax assessment with an associated lien on the subject property. In the program created by this ordinance, Efficiency Maine would serve as the program administrator and a third -party capital provider registered with Efficiency Maine would provide the financing for the project. The administrative burden to the City would be minimal and the City would not be financially liable for repayment of loans under this program in the case of tax foreclosure on an enrolled property. By providing an additional avenue for financing of energy efficiency, this program can help commercial property owners in the City save money and reduce their carbon footprint. Committee Action Committee: Business & Economic Development Action Staff Comments & Approvals L'X City Manager Director Meeting Date: June 16, 2025 For: Against: A44 ML--4-- S City Solicitor Firfance Introduced for: First Reading and Referral 25-192 06/09/2025 CITY COUNCIL ORDINANCE Date: June 9, 2025 Assigned to Councilor: Leonard ORDINANCE, Amending the Code of Ordinances to Create a Commercial Property Assessed Clean Energy Program WHEREAS, this change would create a commercial property assessed clean energy program so that owners of qualifying property can access financing for energy savings improvements to their commercial properties located in the City; WHEREAS, by providing an additional avenue for financing of energy efficiency, this program can help commercial property owners in the City save money and reduce their carbon footprint; BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BANGOR AS FOLLOWS, THAT The Code of the City of Bangor is amended as shown below: CHAPTER 222: PROPERTY ASSESSED CLEAN ENERGY ORDINANCE - COMMERCIAL 6222-1. Purpose and authority A. Purpose. By and throuah this Ordinance. the Citv of Bangor declares as its public purpose the establishment of a municipal program to enable its citizens to participate in a Commercial Property Assessed Clean Energy ("C-PACE")program so that owners of qualifying property can access financing for energy savings improvements to their commercial properties located in the City. The City declares its purpose and the provisions of this Ordinance to be in conformity with federal and state laws. B. Enabling legislation. The City enacts this Ordinance pursuant to Public Law 2021, Chapter 142 of the 130th Maine State Legislature, "An Act to Allow for the Establishment of Commercial Property Assessed Clean Energy Program," also known as "the Commercial Property Assessed Clean Energy Act" or "the Commercial PACE Act" (codified at 35-A M.R.S. W201 etsegj. C. Title. This Ordinance shall be known and may be cited as "Property Assessed Clean Energy — Commercial Ordinance" or "C-PACE Ordinance" (this "Ordinance") §222-2. Definitions Except as specifically defined below, words and phrases used in this Ordinance shall have their customary meaninas. As used in this Ordinance, the followina words and phrases shall have the meanings indicated: CITY The City of Bangor. COMMERCIAL PACE or ("C-PACE" 25-192 06/09/2025 Commercial Property Assessed Clean Energy. COMMERCIAL PACE AGREEMENT An aareement that authorizes the creation of a Commercial PACE Assessment on Qualifying PropertL and that is approved in writing by all owners of the Qualifying Property at the time of the agreement and by the municipal officers of the City. COMMERCIAL PACE ASSESSMENT An assessment made against Qualifying Property to finance an Energy Savings Improvement. COMMERCIAL PACE DISTRICT The area within which the City establishes a Commercial PACE Program hereunder, which is all that area within the City boundaries. COMMERCIAL PACE LIEN A lien, secured against a Qualifying Property that is created by a Commercial PACE Assessment. COMMERCIAL PACE LOAN A loan,, payable through a Commercial PACE Assessment and secured by a C-PACE Lien, made to the owner(s) of a qualifyingpropertLpursuant to a Commercial PACE Program to fund Energy Savings Improvements. COMMERCIAL PACE PROGRAM A program established under this Ordinance pursuant to the Commercial PACE Act under which commercial property owners can finance Energy Savings Improvements on Qualifying Property ENERGY SAVINGS IMPROVEMENT An improvement or series of improvements to Qualifying Property that are new and permanently affixed to Qualifying Property and that: A. Will result in increased energy efficiency or substantially reduced energy use and: (1) Meet or exceed applicable United States Environmental Protection Agency and United States Department of Energy "Energy Star" program or similar energy efficiency standards established or approved by the Trust; or (2) Involve weatherization of commercial or industrial property in a manner approved by the Trust; or B. Involve a renewable enerav installation, an enerav storaae system as defined in 35-A M.R.S. 5 3481(6 an electric thermal storage system, electric vehicle supply equipment or heating equipment that meets or exceeds standards established or approved by the Trust. Heating equipment that is not a Renewable Energy Installation must be heating equipment that produces the lowest carbon emissions of any heatina eauioment reasonablv available to the Drooerty owner, as determined by the Trust, and must meet the requirements of 35-A M.R.S. W204 (1)(B). QUALIFYING PROPERTY Real commercial property in the City that: A. Does not have a residential mortaaae; B. Is not owned by a residential customer or small commercial customer as defined in 35-A M.R.S. 0016(l)(C) and (D), respectively 25-192 06/09/2025 C. Consists of 5 or more rental units if the property is a commercial building designed for residential use; D. Is not owned by a federal, state or municipal government or public school; and E. Is located in a municipality that participates in a Commercial PACE Program. REGISTERED CAPITAL PROVIDER or CAPITAL PROVIDER An approved lender proving financing for the Energy Savings Improvements through a C-PACE Program and registered with Efficiency Maine Trust. RENEWABLE ENERGY INSTALLATION A fixture, product, system, device or interactina arouD of devices installed behind the meter at a Qualifying Property, or on contiguous property under common ownership, that produces energy or heat from renewable sources, includina but not limited to,, photovoltaic systems, solar thermal systems highly efficient wood heating systems, geothermal systems and wind systems that do not on average generate more energy or heat than the peak demand of the property_ TRUST The Efficiency Maine Trust established in 35-A M.R.S. �10103 and/or its agents, if any. §222-3. Program established; Amendments. A. Establishment. The City hereby establishes a Commercial PACE Program allowing owners of Qualifying Property located in the City who so choose to access financing for Energy Savings Improvements to their Qualifying Property, with such financing to be repaid through a Commercial PACE Assessment and secured by a Commercial PACE Lien. B. The City may: (1) Administer the functions of the Commercial PACE Program, including, but not limited to, entering into Commercial PACE Aareements with commercial property owners and collecting Commercial PACE Assessments, or designate an agent to act on behalf of the City for such billing and collection purposes; or (2) Enter into a contract with the Trust to administer some or all functions of the Commercial PACE Program for the City, including billing and collection of Commercial PACE Assessments, subject to the limitations set forth in Section 10205, subsection 5 of the Commercial PACE Act. C. Amendment to or Repeal Commercial PACE Program. The City may from time to time amend this Ordinance to use any funding sources made available to it or appropriated by it for the express purpose of its Commercial PACE Proaram, and the City shall be responsible for administration of loans made from those funding sources. The City may also repeal this Ordinance in the same manner as it was adopted,, provided, however, that such repeal shall not affect the validity of any Commercial PACE Aareements entered into by the City prior to the effective date of such repeal, or a Commercial PACE Loan or Commercial PACE Lien arisina out of such Aareements. 6222-4. Financina; Private Lenders; Terms. C-PACE Loans may be provided by anv aualified Capital Provider private lender Darticioatina in the C-PACE Proaram and a C-PACE Agreement may contain any terms agreed to by the lender and the property owner, as permitted by law, for the financing of Energy Savings Improvements. Unless the City specifically designates fundina sources made available to it or appropriated by it for the express purpose of its Commercial PACE Program and agrees to provide financing for Energy Savings Improvements, the City will not finance or fund 25-192 06/09/2025 any loan under the Commercial PACE Program, and shall serve only as a program sponsor to facilitate loan repayment by including the Commercial PACE Assessment on the property tax bill for the property, and shall incur no liability for the loan. §222-5. Program Requirements and Administration A. Agreement Required. All commercial property owners seeking financing for Energy Savings Improvements on Qualifying Property pursuant to the Commercial PACE Program must enter into a Commercial PACE Agreement, approved as to form and substance by the City, authorizing the creation of a Commercial PACE Assessment and acknowledging_ the creation of a Commercial PACE Lien. A notice of the Commercial PACE Agreement will be filed in the registry of deeds, which filing will create a lien until the amounts due under the agreement are paid in full. B. Underwriting Standards. A Commercial PACE Aareement entered into pursuant to the Commercial PACE Proaram must satisfy the minimum underwriting requirements of the Commercial PACE Act and such additional requirements established by the Trust. C. Collection of assessments. A commercial property owner participating in the Commercial PACE Program will repay the financing of Energy Savings Improvements through an assessment on their property similar to a tax bill. A Commercial PACE Assessment constitutes a lien on the Qualifying_ Property until it is paid in full and must be assessed and collected by the City or its designated aaent, the Trust, or a 3rd-party administrator contracted by the Trust, consistent with applicable laws. The City may, by written agreement, designate the applicable third -party Capital Provider as its aaents for the billina and collection of Commercial PACE assessment payments in satisfaction of the Commercial PACE Loan. Where Commercial PACE assessment payments are received directly by the City along with other municipal tax payments, such payments received from property owners shall first be applied to City taxes, assessments, and charges. The City shall have no ownership of the Commercial PACE assessments collected except for any administrative costs provided under the Commercial PACE Program. The City shall pay all Commercial PACE assessment payments in any calendar month to the applicable Capital Provider or the Commercial PACE program administrator within 30 days after the end of the month in which such amounts are collected. The City shall have no obligation to make payments to any Capital Provider with respect to any Commercial PACE repayment amounts or loan obligations other than that portion of the Commercial PACE Assessment actually collected from a property owner for the repayment of a Commercial PACE Loan. If the Trust or a 3rd-party administrator contracted by the Trust or an agent of the City collects Commercial PACE Assessments on behalf of the City, the Trust or agent shall periodically report to the City on the status of the Commercial PACE Assessments in the City and shall notify the City of any delinquent Commercial PACE Assessments. Upon receiving notification from the Trust or agent of a delinquent Commercial PACE Assessment, the City shall notify the holder of any mortgage on the property of the delinquent assessment. D. Notice; filing. A notice of a Commercial PACE Aareement must be filed in the appropriate registry of deeds. The filina of this notice creates a Commercial PACE Lien against the property subject to the Commercial PACE Assessment until the amounts due under the terms of the Commercial PACE Agreement are paid in full. The notice must include the information required by the Commercial PACE Act. E. Priority. A Commercial PACE Lien secures payment for any unpaid Commercial PACE Assessment and, together with all associated interest and penalties for default and associated attorney's fees and collection costs, takes precedence over all other liens or encumbrances except a lien for real property taxes of the municipality and liens of municipal sewer, sanitary and water districts. From the date of recording, a Commercial PACE Lien is a priority lien against a property, except that the 25-192 06/09/2025 priority of such a Commercial PACE Lien over any lien, except a lien for real property taxes of the City or a lien of a municipal sewer, sanitary or water district, that existed prior to the Commercial PACE Lien is subject to the written consent of such existing lienholder. F. Mortaaae lender notice and consent. Any financial institution holding a lien, mortgage or security interest in or other collateral encumbrance on the property for which a Commercial PACE Assessment is sought must be provided written notice of the commercial property owner's intention to participate in the Commercial PACE Program and must provide written consent to the commercial property owner and City that the borrower may participate and enroll the collateral property in the Commercial PACE Program. This written consent must be filed in the registry of deeds and must include a written acknowledgement and understanding by the financial institution holding the lien, mortgage or security interest in or other collateral encumbrance on the property as required by the Commercial PACE Act. §222-6. Collection, default; foreclosure. A. A Commercial PACE Assessment and any interest, fees,, penalties and attorney's fees incurred in its collection must be collected in the same manner as the real property taxes of the City. A Commercial PACE Assessment for which notice is properly recorded under this section creates a lien on the property. The portion of the assessment that has not yet become due is not eliminated by foreclosure, and the lien may not be accelerated or extinguished until fully repaid. (1) If a Commercial PACE Assessment is delinquent or in default and the borrower or property owner is delinquent in any tax debt due to the City, collection may occur only by the recording of liens and by foreclosure under 36 M.R.S. 1� 942 and 943. Liens must be recorded and released in the same manner as liens for real property taxes. (2) If only a Commercial PACE Assessment is delinquent but the borrower or property owner is current on payment of all municipal taxes due to the City, then a Commercial PACE lienholder shall accept an assignment of the Commercial PACE Lien, as provided in the written agreement between City and the Capital Provider. The assignee shall have and possess all the same powers and riahts at law as the City and its tax collector with regards to the priority of the Commercial PACE Lien, the accrual of interest and fees and the costs of collection. The assignee shall have the same riahts to enforce the Commercial PACE Lien as any private party or lender holding a lien on real property, including, but not limited to, the right of foreclosure consistent with 14 M.R.S.�� 6203-A and 6321 and any other action in contract or lawsuit for the enforcement of the Commercial PACE Lien. B. Judicial or nonjudicial sale or foreclosure. In the event of a judicial or nonjudicial sale or foreclosure of a property subject to a Commercial PACE Lien by a lienholder that is not a Commercial PACE lienholder, the Commercial PACE Lien must survive the foreclosure or sale to the extent of any unpaid installment, interest,, penalties or fees secured by the lien that were not paid from the proceeds of the sale. All parties with mortgages or liens on that property, includina without limitation Commercial PACE lienholders, must receive on account of such mortaaaes or liens sale proceeds in accordance with the priority established in this chapter and by applicable law. A Commercial PACE Assessment is not eliminated by foreclosure and cannot be accelerated. Only the portion of a Commercial PACE Assessment that is in arrears at the time of foreclosure takes precedence over other mortgages or liens; the remainder transfers with the property at resale. C. Unless otherwise agreed upon by the Capital Provider, all payments on a Commercial PACE Assessment that become due after the date of transfer by judicial or nonjudicial sale or 25-192 06/09/2025 foreclosure must continue to be secured by a lien on the property and are the responsibility of the transferee. D. Release of lien. The City will discharge a Commercial PACE Lien created under the Commercial PACE Act and this Ordinance upon full payment of the amount specified in the Commercial PACE Aareement. A discharae under this subsection must be filed in the appropriate registry of deeds and must include reference to the notice of Commercial PACE Agreement previously recorded pursuant to the Commercial PACE Act and this Ordinance. 6222-7. Liability of municipal officials; liability of City. (1) Notwithstanding any other provision of law to the contract, City officers and City officials, including without limitation, Tax Assessors and Tax Collectors, are not personally liable to the Trust or to any other person for claims, of whatever kind or nature, under or related to a Commercial PACE Proaram, includina without limitation, claims for or related to uncollected Commercial PACE Assessments under this Ordinance. (2) Other than the fulfillment of its obligations specified in a Commercial PACE Agreement, the City has no liability to a commercial property owner for or related to Energy Savings Improvements financed under a Commercial PACE Proaram. 6222-8. Conformity to Changed Standards. This Ordinance is intended to comply with the Commercial PACE Act and the administrative rules of the Trust issued in connection with the Commercial PACE Act, as the same may be amended. If the Trust or any State or federal agency adopts standards,, promulgates rules, or establishes model documents subsequent to the City's adoption of this Ordinance and those standards, rules or model documents substantially conflict with this Ordinance, the City shall take necessary steps to conform this Ordinance and its Commercial PACE Program to those standards, rules or model documents. Additions underlined, deletions strtrel( thFeugr IN CITY COUNCIL JUNE 9, 2025 COrd 25-192 Motion made and seconded for First Reading and Referral to Business and Economic Development Committee on June 16, 2025 Vote: 8 —0 Councilors Voting Yes: Beck, Deane, Fish, Fournier, Leonard, Mallar, Tremble, Pelletier Councilors Voting No: None Passed ���.�` � M,�� �������w������ � �s� CITY CLERK IN CITY COUNCIL JUNE 23, 2025 COrd 25-192 Motion made and seconded for Passage Vote: 9 —0 Councilors Voting Yes: Beck, Deane, Fish, Fournier, Hawes, Leonard, Mallar, Tremble, Pelletier Councilors Voting No: None Passed ���.�` � M,�� �������w������ � �s� CITY CLERK