By Jamie Thalgott
In 2017, the Nevada State Legislature amended Chapter 271 of the Nevada Revised Statutes (NRS) to allow local governments to enact Commercial Property Assessed Clean Energy (C-PACE) programs to facilitate access to long-term, fixed-rate, and low-cost capital for the installation of clean and renewable energy improvements through private capital providers.
Initially, the statutory framework proved cumbersome. Then, in 2021, through Senate Bill (SB) 283, the Legislature amended the C-PACE program to make it more user-friendly:
- The 2017 version of the law required the creation of a separate C-PACE district for each parcel benefitting from a C-PACE financing, resulting in inefficient administration that required extra public meetings and delayed owner receipt of funds. Today, the entire jurisdiction may comprise the C-PACE district, eliminating this first step, so that owners may now opt into the district.
- It was unclear in the initial iteration of the law whether certain standard assessment requirements in NRS Chapter 271 applied to C-PACE financings, such as the creation of an assessment roll. The current version of the state law clearly exempts C-PACE financing from these traditional requirements.
- Whereas the original C-PACE structure only allowed for the financing of energy efficiency and renewable energy improvements, the 2021 amendment expanded the list, authorizing the financing of “resiliency projects” and “water efficiency improvement projects.” The former broadly covers improvements with a useful life of not less than 10 years that improve: a building’s structural resiliency for seismic events; indoor air quality; wind and fire resistance; storm water quality or risks of flash flooding; the ability of a building to withstanding an electrical outage; the urban heat island effect or effects of extreme heat; the state of any other environmental hazard identified by a local government; or the surrounding environment in which the real property is located.
- The 2017 legislation required the local government to sign the agreement for the financing, whereas the 2021 legislation bifurcated the process into: (a) an assessment agreement, which the local government signs, dealing with the limited issue of assessment creation, and (b) a financing agreement between the property owner and the private capital provider, governing the terms of the financing itself. This split furthers the goal of allowing the owner and lender to negotiate financing terms with less government involvement while minimizing government review time.
- The 2017 legislation did not specify any unique remedy available to a capital provider for a default under a C-PACE financing, leaving local governments to specify remedies in their authorizing resolutions. Following the 2021 amendment, enforcement of a delinquent C-PACE payment under state law is now by judicial foreclosure in the manner of a mortgage.
The foregoing presents only a high-level summary of the restructuring work performed by SB 283. Especially in today’s market of compressed capital and high interest rates, C-PACE benefits all parties involved and should be considered as a serious option. As the state deals with a water crisis, necessitating sustainability improvements, as well as an increasing need to retrofit existing structures as we run out of undeveloped land options, C-PACE financing could be an excellent part of our state’s development solution.
About the author
Jamie Thalgott, shareholder with Brownstein Hyatt Farber Schreck, shepherds development projects through local government channels and understands local governmental regulatory implications on complex land use and real estate transactions. Her practice provides counsel to high-profile developers, through the negotiation of development agreements and entitlement applications, and to market-leading casino and resort clients, through the negotiation of property acquisitions, dispositions and leasing as well as legal issues related to land use and property development.
About the article
This article was originally published in the Communiqué (Jan. 2024), the official publication of the Clark County Bar Association. See https://clarkcountybar.org/about/member-benefits/communique-2024/communique-jan-2024/.
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