Roswell council approves first reading of hotel-focused development finance program using CPACE mechanism

The City of Roswell on July 28 approved on first reading an ordinance establishing the Roswell Development Finance Program, a financing tool that uses the state Commercial Property Assessed Conservation, Energy, and Resiliency Act (OCGA 36-62-17, or CPACE) and targets new hotel development in the city.

The program, presented by Daryl Connolly, director of economic development, is structured so third-party lenders provide capital that is repaid through a special tax assessment rather than by city general funds. "What the program does is it leverages a law that was set, put in place by the state ... OCGA 36 62 17," Connolly said. The city will administer the program on behalf of the Roswell Development Authority through an intergovernmental agreement.

The ordinance narrows CPACE application to new hotel projects and related ancillary uses, not rehabilitation. It sets a minimum completed project value of $20,000,000 and a minimum loan size of $4,000,000. Eligible improvements listed in the presentation include energy efficiency, water conservation, renewable energy and resiliency measures. Connolly said the structure can offer lower interest rates and amortizations up to 30 years, and that loans can transfer with the property on sale.

Council members asked about the program's scale and administration costs. Council member Alan Sells said the city needs projects "big enough to cover its cost," noting the city acts as the collection arm. Connolly replied, "We have a minimum loan amount of $4,000,000," and described the fee schedule intended to make the program self-sustaining: a $500 nonrefundable application fee; a 1% fee of the loan amount payable at closing; a legal-fee cap of $25,000 (described as approximately 50 basis points in Connolly's remarks); and an annual servicing fee added to the tax bill.

Connolly said the city has discussed the program in committee, and outlined next steps in his presentation: the Roswell Development Authority (RDA) is scheduled to consider an intergovernmental agreement on Aug. 19, and the city will return for a second reading of the ordinance later in the month. After those steps, the city plans to launch the application procedures.

Council member Alan Sells moved to approve the first reading of the ordinance; the motion was seconded by Council member William Moreland and passed unanimously, 6-0.

The ordinance and guidelines approved in first reading limit the program to hotels for now; Connolly told council the guidelines could be amended in the future to expand eligible property types if mayor and council choose to do so.

Meeting materials and the final ordinance and IGA will determine exact implementation details and fees at closing. The city warned that the program relies on third-party capital and on the RDA's authorization before any loans can be issued.

Ending: The first-reading vote permits staff to complete the RDA IGA and return to mayor and council for a second reading and final approval before the program can accept applications.