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BOMA Members Advocating for Our Industry: A Recap of Recent Successes in Olympia

Thursday, February 27, 2020   (0 Comments)
Posted by: Christine Miclat
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BOMA is the voice of commercial real estate on the issues that matter to the ownership of commercial real estate. BOMA’s key state legislative issue for 2020 is to seek legislative approval for C-PACER financing in Washington State. C-PACER financing is a tool that owners can use to make deeper energy retrofits and seismic upgrades that they otherwise might not have the capital to do.

 

C-PACER financing would make millions of dollars of private equity available for certain qualified projects (i.e. deep energy retrofits, seismic upgrades, water projects, etc.). C-PACER loan terms can be longer than 30 years at interest rates slightly below market. The loan attaches to the property and stays with the property, so it does not impact the balance sheet of the owner. C-PACE financing has been approved in 36 states and is active in 20 states with more coming online.

 

 

Every legislative session sees about 4,000 bills introduced in Olympia, but only about 400 become law. To become law, a bill must make it through at least three committees in the chamber of origin (House or Senate) then passed by that whole chamber. The process then must be repeated in the other chamber. A conference committee negotiates and resolves conflicts between the two versions and then both chambers must pass that compromise bill. Finally, the governor has 30 days to let it become law with no action, sign the bill or veto it.

 

This year, the legislative session in Olympia ends on March 12, 2020.

 

BOMA leaders from Seattle King County, Spokane and South Puget Sound have been working together with our Alliance Partners to move this legislation forward. The key to our success thus far has been the expert assistance of BOMA’s state lobbyist, Chester Baldwin.

 

Our message at each committee hearing and in meetings with lawmakers has been:

 

Please support SHB2405/SB6222 - Concerning commercial property assessed clean energy and resilience

  • Property Assessed Clean Energy (C-PACER) is a financing mechanism that enables low-cost, long-term funding for qualified improvements, including energy efficiency, renewable energy, water conservation projects, seismic improvements and fire/flood protection.
  • Lending comes from private capital; no public funds are used to finance loans. Any financial institution can finance these loans, from local credit unions to nationwide C-PACE-focused institutions. This financing mechanism has already funded over $1 billion in 20 other states (approved in 36 states), creating jobs, reducing carbon emissions and helping meet climate change goals.
  • The bill allows loan obligations on regular property tax billings, but the actual loan payments and debt collection would likely be handled by the C-PACER lender, not the county government. Counties that choose to establish a local C-PACER financing program will charge the C-PACER lender an administrative handling fee at the time that the C-PACER lien is filed; consequently, there is no use of county funds.
  • As government and regulating bodies enact carbon reduction measures and seismic upgrades requirements, as many financing tools as possible are needed to achieve climate goals.
  • This bill has bipartisan support.

 

More About This Story:

The 2020 state legislative session is only 60 days and is scheduled to end in two weeks. We decided to focus our efforts on just the C-PACER bill this year. BOMA has taken a lead role and is part of a coalition of groups seeking the passage of HB 2405: Concerning commercial property assessed clean energy and resilience.

 

Through our lobbyist, Chester Baldwin, BOMA took on a key role and the task of securing bi-partisan sponsorship of the bill. We accomplished this very successfully early in the legislative session.

 

BOMA’s President, Rod Kauffman, has testified in several committee hearings along with coalition partners.  

 

Amy Wheeless, NW Energy Coalition, Genevieve Sherman, Greenworks (Large C-PACER lender out of Oakland), Erik Makinson, Resource Synergy (BOMA Spokane), Rod Kauffman, for BOMA WA State, Barb Graff, Seattle OEM, Court Olson, Optimum Building Consultants

 

BOMA held our Olympia Day on February 11th, a critical day for the bill as it had to be voted out of House Appropriations that day. We had 38 participants and met with several key lawmakers about the bill. Ken Rosenfeld, BOMA International’s Director of State and Local Affairs flew out from D.C. to join us.

 

 

The bill’s prime sponsor Senator, Lovelett, joined us for lunch and while she has been working hard to get the bill passed, she told us that sadly, it was not going to move out of the committee in time. BOMA went to work and in a couple of hours, our bill was back on the agenda and was voted out before the deadline.

 

Our colleagues from Spokane are well connected and worked magic for us.

 

BOMA has established working relationships with several lawmakers including Representative J.T. Wilcox. He met with our team pictured below:

 

Ken Rosenfeld, Eric Makinson (BOMA Spokane), Rita Wells, President of BOMA SPS (Clise Properties), Evan Cole, CBRE and BOMA lobbyist Chester Baldwin

 

Rep. Wilcox left that meeting and immediately went to his colleagues and convinced them to add C-PACER to the bills his caucus wanted passed that day. He worked across the aisle and with the help of Representatives: Stokesbury, Steel, Hoff, Doglio and Durr they got the bill added to the pass list. Our BOMA Spokane colleagues who have developed a good relationship with Rep. Ormsby, got his help as well. It was all last-minute, but the bill made it out before the deadline closed.

 

Others meeting with their lawmakers

 

The version that passed the state House was modified to address the concerns of the county treasurers, but unfortunately, the amendments adopted basically killed the usefulness of the legislation. This meant we needed to get new amendments adopted in the Senate. We were successful and the version moving forward in the Senate is the bill we need to get C-PACER going in our state.

 

At the time of the writing of this article, the C-PACER bill has moved to the Senate Ways and Means committee. If we can get it passed there it has one more vote to win and then it is heard by the entire Senate. We are optimistic that the House and Senate would then find concurrence and move the bill to the governor’s desk.

 

Stay tuned. 

 

Please consider joining BOMA’s Government Affairs Committee and being part of the team that helps guide our advocacy efforts. The committee meets every second Thursday of each month at 9 a.m. in the BOMA office. Contact Justin at  justin@bomaseattle.org to be added to the meeting notification list.

 

 

FAQs

C-PACER Legislation (HB 2405 / SB 6222)

Concerning commercial property assessed clean energy and resilience

1.      What is PACE?

Property Assessed Clean Energy (PACE) is a financing mechanism that enables low-cost, long-term funding for qualified improvements, including energy efficiency, renewable energy, and water conservation projects.

2.      Why is there an “R” added in C-PACER?

The Washington C-PACER bill (HB 2405) includes resiliency measures, including seismic improvements and fire/flood protection in the definition of a “qualified improvement”.

3.      Who finances C-PACER loans?

In this program model, no public funds would be used to finance loans. Any financial institution could finance these loans, from local credit unions to nationwide C-PACE-focused institutions. 

4.      How is the C-PACER lien collected?

The bill allows counties to show private lender C-PACER loan obligations on regular property tax billings, but the actual loan payments and debt collection would likely be handled by the C-PACER lender, not the county government. Counties that choose to establish a local C-PACER financing program will charge the C-PACER lender an administrative handling fee at the time that the C-PACER lien is filed; consequently, there is no use of county funds. 

5.      Is a county required to develop a C-PACER program?

No. The bill enables, but does not require, a county to establish a C-PACER financing program. The bill directs the State’s Department of Commerce to draft standard guidelines for a local program, which could be used by a county if they chose to develop a program.

6.      What happens to the C-PACER lien in the event of a building foreclosure?

The C-PACER lien stays with the building, rather than the owner, and the C-PACER lien would not extinguish in the rare event of a foreclosure. This particular feature is important for the structure of a C-PACER program, as it is what allows for the longer-term financing. More information can be found in the C-PACER memo, but it is important to note that since C-PACE programs began in 2008, there have been no foreclosed properties of the 2,000+ buildings that have participated in a C-PACE deal.

7.      What is the role of existing mortgage holders in C-PACER program?

The C-PACER lien would move into first (superior) position ahead of any other lien on the property, but only after consent is given by all other mortgage holders.

8.      Are C-PACER programs risky for consumers?

No, these are very secure transactions. Of the 2,000+ buildings and $1 billion+ of investment in C-PACE programs nationwide, there have been no foreclosures. There have been some well-publicized incidents of consumer fraud with residential PACE (R-PACE) programs, but C-PACE programs are very different. More information can be found in the C-PACER memo.

 

In addition, for any improvement to be qualified for a C-PACER lien, it must be reviewed by a licensed or certified professional, which provides another layer of review. Finally, the consent required by other mortgage holders is another screen to ensure that the transaction is prudent.

9.      What public problem is C-PACER trying to address?

On average, buildings could be improved to save half of the energy that they use. However, because most building owners are uncertain about how long they will own a building, they often choose to make only efficiency improvements that produce a quick payback – often in less than 4 years. Such quick payback improvements often only save ten to fifteen percent on energy consumption. This kind of inaction is also true for resilience measures such as seismic and fire protection improvements, which may not have any economic payback. 

10.   Has this been done before?

Yes, 36 other states have passed similar C-PACE enabling legislation, and more than 20 have active programs. Five other states are developing their programs now. 

11.  What benefits does C-PACER provide?

For building owners: With C-PACER financing, there is little cash outlay and the debt lien is filed against the property, not the owner. That debt obligation stays with the property whenever ownership transfers. The debt doesn’t appear on the owner’s balance sheet, and it does not encumber the owners’ credit capacity. Hence, owners find these kinds of loans attractive for long-term efficiency and resilience improvements.

 

For tenants: Building tenants are the ones paying the utility bills (either directly or through rent), Providing building owners an easier way to pay for these kinds of improvements provides benefits to all tenants.

 

For the public: C-PACER financing programs are a type of public-private partnership that make it attractive for building owners to pursue deep efficiency and resilience improvements that are in the public interest. Highly energy and water efficient buildings reduce environmental impacts, including greenhouse gas emissions. Lower energy and water consumption also reduces the need for production and delivery infrastructure, the costs for which are ultimately borne by ratepayers. Further, seismic, fire protection, and other safety-related resilience improvements increase public safety and ultimately mitigate publicly funded emergency response expenses.

12.   Are nonprofits eligible for C-PACER?

Yes. Even though many nonprofits do not pay property tax, the tax assessor still has a property number for every parcel and that facilitates nonprofits voluntarily opting in to this program.

13.   Are residential homes eligible for C-PACER? 

No. This legislation is focused on commercial, institutional, nonprofit, and multifamily (five units and more) buildings. Fewer states have active R-PACE programs, and we want to learn from their challenges and successes before pursuing a program that would cover residential properties in Washington.

14.   Is this bill constitutional?

Yes. After PACE legislation was first launched in other states, it was rumored that PACE financing would be unconstitutional in Washington State due to provisions limiting the state lending of credit or gift of public funds. However, the C-PACER legislation, as proposed, does none of these things. A legal opinion, affirmed by the State of Washington’s Attorney General’s office, confirms that this bill is constitutional. 


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