Getting Ready for PACE in New Jersey (Part 4)*

In the last post, we briefly outlined the Garden State C-PACE legislation’s mandate and the reporting requirements. Here we look at the mitty-gritty —the implementation steps contemplated in the legislation.

Within 270 days after the effective date of P.L. 2021, c. 201(C.34:1B-374 et al.), the authority shall establish the Garden State C-PACE program by publishing on its Internet website:

(1) uniform assessment documents;
(2) a model opt-in ordinance;
(3) Garden State C-PACE program guidelines adopted pursuant to subsection c. of this section; and
(4) a description of the process by which a county or an authorized municipality applies to the authority for approval of a local C-PACE program ordinance.
However, this section also states:
The Garden State C-PACE program shall not be operational and available for the participation of capital providers, municipalities and property owners until the authority has taken all of the actions required by this subsection.
This prevents any program from getting started under the new law until all the guidelines and documents are in place. This is now anticipated for February of 2024.

 

This section then specifies some elements that must be included in the model ordinance, effectively prescribing some of the eligibility and other program requirements.
(1) Financing recipients shall be the legal or beneficial owners of the property or duly authorized by the legal or beneficial owners of the property, there shall be no defaults on any mortgage loans on the subject property, all tax payments, charges, and assessments with respect to the property shall be current, the legal or beneficial owners of the property shall not be subject to any bankruptcy proceeding, and the subject property shall not be the subject of a bankruptcy proceeding;
(2) The principal amount of the C-PACE assessment, when combined with mortgage and other lien obligations on a property shall not exceed 90 percent of the appraised value of the property after including the value created by the C-PACE project;
(3) The maximum duration of a C-PACE assessment… shall not exceed the weighted average useful life of the improvements in the C-PACE project or 30 years, whichever is less;
….
(5) a property owner seeking a C-PACE assessment shall receive written consent of the existing mortgage holders on the property prior to the closing of the financing.
Further
… the authority shall develop, in consultation with the Division of Local Government Services in the Department of Community Affairs, program guidelines governing the terms and conditions under which financing may be made available under the Garden State C-PACE program. Any amendments to the Garden State C-PACE program guidelines shall require the approval of the authority’s board of directors.
Local program guidelines will also need to conform to these provisions and are subject to approval by NJEDA. They need to include:
(1) a uniform project application, uniform application requirements, including uniform application documents; and the procedures for a property owner to obtain approval of a C-PACE project and a capital provider to finance a C-PACE project;
(2) minimum standards for a C-PACE project to qualify for C-PACE financing;
(3) eligibility criteria for a property owner and property to qualify for a C-PACE assessment;
(4) the underwriting criteria to be applied in determining the eligibility of properties and their owners to participate in the Garden State C-PACE program and local C-PACE programs and the maximum permitted amount of a financing based on a property’s value and other characteristics;
Plus the other requirements already described, such as mortgage holder consent, duration, etc. The remainder of the section spells out various technical requirements, including the following:
The funds shall not constitute public funds, and shall not be subject to the laws governing public funds…
 Nevertheless, in the event of a default, the assessment will be treated as a failure to pay property tax.

(Series continues)

_________________________

*This is a layperson’s interpretation of the statute and should not be construed as legal advice or relied upon without consulting a qualified attorney.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.