The Fredericksburg City Council is eyeing a new clean energy financing program whose first use would likely be for the proposed multipurpose stadium in Celebrate Virginia South.
Commercial Property Assessed Clean Energy Financing, or C–PACE as the program is called, would give local banks the option of granting landlords and developers a minimum $20,000 loan for a maximum of 20 years for such things as solar facilities, Energy Star-rated heating and air conditioning systems, LED lights and WaterSense-certified products.
The loan would be repaid through special real estate tax assessments, and secured by a special assessment lien.\\
“The public benefits of the program include the environmental benefits of energy-efficient, water-usage-efficient buildings, the incentive to renovate, retrofit or rehabilitate historic buildings, enhancement of the real property tax base and the promotion of employment and economic growth in the city,” Bill Freehling, director of the Fredericksburg Department of Economic Development and Tourism, told the City Council at its Oct. 23 meeting.
While the immediate use would likely be for the $35 million stadium the Potomac Nationals’ owners hope to build, Freehling said he thinks owners of older buildings in the city would be interested in C–PACE as well.
“If those buildings are updated with new and efficient HVAC systems, for example, they will enjoy a longer lifespan and will be more attractive to commercial tenants,” Freehling said.
City Council will hold a public hearing on the proposed C–PACE ordinance and fees when it holds a special meeting about the stadium at 7 p.m. Tuesday, Oct. 30, in Council Chambers in City Hall, 715 Princess Anne St.
Freehling said a number of states offer localities the option of creating C–PACE programs, and they first came to his department’s attention when a C–PACE loan was used for Audi Field, D.C. United’s stadium in the Buzzard Point neighborhood of Washington.
Virginia began the process to allow localities to create the programs in 2015, when legislation was approved that directed the Virginia Department of Mines, Minerals and Energy to develop guidelines for C–PACE. So far, Arlington County is the only Virginia locality that has adopted a C–PACE ordinance. Similar programs are in the works in both Loudoun and Fairfax counties.
“No C–PACE loans have yet been made in Virginia, however, and with this ordinance, Fredericksburg has an opportunity to establish itself as a statewide leader in green energy initiatives,” Freehling said. “If enacted, my office would plan to promote the new program extensively with real estate developers and rehabilitators.”
The advantage of a C–PACE loan is that costs of the special assessment can be passed on to tenants who benefit from the energy improvements. In addition, the financing and assessment also transfer if the property is sold.
The city’s version, if approved, would combine C-PACE loan payments with the city’s real property tax billing and collection. The city treasurer would first deduct any real estate taxes, penalties and interest due, and then remit payments to the lender, minus fees to cover billing and collection costs.
“This ordinance was drafted very carefully to protect the interests of city taxpayers,” City Attorney Kathleen Dooley told the council.
She said the program would give loan recipients a one-year grace period for any delinquent payments instead of the normal two-year period.