                                 CODE OF VIRGINIA

COMMERCIAL PROPERTY ASSESSED CLEAN ENERGY (C-PACE) FINANCING PROGRAMS (§
15.2-958.3)

A. As used in this section:
			&#8220;Eligible improvements&#8221; means any of the following improvements
made to eligible properties:

   1. Energy efficiency improvements;

   2. Water efficiency and safe drinking water improvements;

   3. Renewable energy improvements;

   4. Resiliency improvements;

   5. Stormwater management improvements;

   6. Environmental remediation improvements; and

   7. Electric vehicle infrastructure improvements.
   				A program administrator may include in its C-PACE loan program guide or
   other administrative documentation definitions, interpretations, and examples
   of these categories of eligible improvements.
   				&#8220;Eligible properties&#8221; means all assessable commercial real
   estate located within the Commonwealth, with all buildings located or to be
   located thereon, whether vacant or occupied, whether improved or unimproved,
   and regardless of whether such real estate is currently subject to taxation by
   the locality. &#8220;Eligible properties&#8221; are eligible for the C-PACE
   loan program and may include multifamily properties with no fewer than five
   units, common areas of real estate owned by a cooperative or a property
   owners&#8217; association as defined in &#xA7; 55.1-1800 that have a separate
   real property tax identification number, and commercial condominiums as
   defined in &#xA7; 55.1-1900. Residential real estate with fewer than five
   units is not eligible for the C-PACE loan program.
   				&#8220;Program administrator&#8221; means a third party that is contracted
   for professional services to administer a C-PACE loan program.
   				&#8220;Property owner&#8221; means the fee simple owner of eligible
   property or the lessee under a long-term ground lease of eligible property,
   including a property that is owned by a public or private entity. To be
   eligible for a C-PACE loan (i) the term of the C-PACE loan shall not exceed
   the remaining term of the ground lease, (ii) there shall be no ground lease
   provisions or other circumstances that would prevent the property owner from
   participating in the C-PACE loan program, (iii) the fee simple owner shall
   consent to the C-PACE loan, and (iv) the fee simple owner and the lessee under
   a long-term ground lease shall comply with the requirements of the C-PACE loan
   program, including the program guide.
   				&#8220;Resiliency improvement&#8221; means an improvement that increases
   the capacity of a structure or infrastructure to withstand or recover from
   natural disasters, the effects of climate change, and attacks and accidents,
   including, but not limited to:

   1. Flood mitigation or the mitigation of the impacts of flooding;

   2. Inundation adaptation;

   3. Natural or nature-based features and living shorelines, as defined in
   &#xA7; 28.2-104.1;

   4. Enhancement of fire or wind resistance;

   5. Microgrids;

   6. Energy storage; and

   7. Enhancement of the resilience capacity of a natural system, structure, or
   infrastructure.

B. Any locality may, by ordinance, authorize contracts to provide C-PACE loans
(loans) for the initial acquisition, installation, and refinancing of eligible
improvements located on eligible properties by free and willing property owners
of such eligible properties. The ordinance may refer to the mode of financing as
Commercial Property Assessed Clean Energy (C-PACE) financing and shall include
but not be limited to the following:

   1. The kinds of eligible improvements that qualify for loans;

   2. The proposed arrangement for such C-PACE loan program (loan program),
   including (i) a statement concerning the source of funding for the C-PACE
   loan; (ii) the time period during which contracting property owners would
   repay the C-PACE loan; and (iii) the method of apportioning all or any portion
   of the costs incidental to financing, administration, and collection of the
   C-PACE loan among the parties to the C-PACE transaction;

   3. (i) A minimum dollar amount that may be financed with respect to an
   eligible property; (ii) if a locality or other public body is originating the
   loans, a maximum aggregate dollar amount that may be financed with respect to
   loans originated by the locality or other public body, and (iii) provisions
   that the loan program may approve a loan application submitted within three
   years of the locality&#8217;s issuance of a certificate of occupancy or other
   evidence that eligible improvements comply substantially with the plans and
   specifications previously approved by the locality and that such loan may
   refinance or reimburse the property owner for the total costs of such eligible
   improvements;

   4. In the case of a loan program described in clause (ii) of subdivision 3, a
   method for setting requests from owners of eligible properties for financing
   in priority order in the event that requests appear likely to exceed the
   authorization amount of the loan program. Priority shall be given to those
   requests from owners of eligible properties who meet established income or
   assessed property value eligibility requirements;

   5. Identification of a local official authorized to enter into contracts on
   behalf of the locality. A locality may contract with a program administrator
   to administer such loan program;

   6. Identification of any fee that the locality intends to impose on the
   property owner requesting to participate in the loan program to offset the
   cost of administering the loan program. The fee may be assessed as a program
   fee paid by the property owner requesting to participate in the program; and

   7. A draft contract specifying the terms and conditions proposed by the
   locality.

C. The locality may combine the loan payments required by the contracts with
billings for water or sewer charges, real property tax assessments, or other
billings; in such cases, the locality may establish the order in which loan
payments will be applied to the different charges. The locality may not combine
its billings for loan payments required by a contract authorized pursuant to
this section with billings of another locality or political subdivision,
including an authority operating pursuant to Chapter 51 (&#xA7; 15.2-5100 et
seq.), unless such locality or political subdivision has given its consent by
duly adopted resolution or ordinance. The locality may, either by ordinance or
its program guide, delegate the billing; collection, including enforcement; and
remittance of C-PACE loan payments to a third party.

D. The locality shall offer private lending institutions the opportunity to
participate in local C-PACE loan programs established pursuant to this section.

E. In order to secure the loan authorized pursuant to this section, the locality
shall place a voluntary special assessment lien equal in value to the loan
against any property where such eligible improvements are being installed. The
locality may bundle or package said loans for transfer to private lenders in
such a manner that would allow the voluntary special assessment liens to remain
in full force to secure the loans. The placement of a voluntary special
assessment lien shall not require a new assessment on the value of the real
property that is being improved under the loan program.

F. A voluntary special assessment lien imposed on real property under this
section:

   1. Shall have the same priority status as a property tax lien against real
   property, except that such voluntary special assessment lien shall have
   priority over any previously recorded mortgage or deed of trust lien only if
   (i) a written subordination agreement, in a form and substance acceptable to
   each prior lienholder in its sole and exclusive discretion, is executed by the
   holder of each mortgage or deed of trust lien on the property and recorded
   with the special assessment lien in the land records where the property is
   located, and (ii) evidence that the property owner is current on payments on
   loans secured by a mortgage or deed of trust lien on the property and on
   property tax payments, that the property owner is not insolvent or in
   bankruptcy proceedings, and that the title of the benefited property is not in
   dispute is submitted to the locality prior to recording of the special
   assessment lien;

   2. Shall run with the land, and that portion of the assessment under the
   assessment contract that has not yet become due is not eliminated by
   foreclosure of a property tax lien;

   3. May be enforced by the local government in the same manner that a property
   tax lien against real property is enforced by the local government. A local
   government shall be entitled to recover costs and expenses, including attorney
   fees, in a suit to collect a delinquent installment of an assessment in the
   same manner as in a suit to collect a delinquent property tax; and

   4. May incur interest and penalties for delinquent installments of the
   assessment in the same manner as delinquent property taxes.

G. Prior to the enactment of an ordinance pursuant to this section, a public
hearing shall be held at which interested persons may object to or inquire about
the proposed loan program or any of its particulars. The public hearing shall be
published twice, with the first notice appearing no more than 28 days before and
the second notice appearing no less than seven days before the hearing, in a
newspaper of general circulation in the locality.

H. The Department of Energy shall serve as a statewide sponsor for a loan
program that meets the requirements of this section. The Department of Energy
shall engage a private program administrator through a competitive selection
process to develop the statewide loan program. A locality, by its adoption or
amendment of its C-PACE ordinance described in subsection B, may opt into the
statewide C-PACE loan program sponsored by the Department of Energy without
undertaking any competitive procurement process, provided that the locality
agrees to execute a locality agreement within 30 days after the adoption or
amendment of its C-PACE ordinance.

HISTORY: 2009, c. 773; 2010, c. 141; 2015, cc. 389, 427; 2019, cc. 564, 753;
2020, c. 664; 2021, c. 6; 2021, Sp. Sess. I, c. 532; 2022, c. 402; 2023, cc.
506, 507; 2024, cc. 225, 242; 2025, c. 205.