Council hears CPACE financing overview; Exceptional Healthcare seeks to use program for new Farmington micro‑hospital

Farmington City Councilors received an overview of New Mexico’s Commercial Property Assessed Clean Energy program, known as CPACE, and heard from the developer of a new Exceptional Healthcare micro‑hospital that plans to use the financing tool.

Eric Christensen of Adelante Consulting, the state CPACE administrator, described CPACE as a private‑sector‑funded tool authorized in New Mexico through the Improvement Special Assessment Act (2023). Christensen said municipalities opt in by resolution and counties adopt ordinances because CPACE funding is secured by an improvement special assessment lien on the property; lenders require local participation to place the lien. He described eligible projects — energy efficiency, water conservation, renewable energy and resiliency — and said the program can finance up to 100% of direct and indirect costs, typically functions as part of a capital stack, and charges an administrative fee of 1% of transaction cost (capped at $25,000) paid at closing.

Christensen told council that Adelante processes applications, requires a certificate of eligible improvement from a third‑party professional and that lenders bill and collect loan payments. He said the state program has connected with out‑of‑state capital providers and the New Mexico Climate Investment Center for smaller projects. He said counties and municipalities that wish to participate must pass local legislation; San Juan County was in the process of introducing an ordinance with a July 1 hearing and the council would be asked to pass a city resolution at its July 8 meeting.

Don (Don Nicolini), representing Exceptional Healthcare, presented the company’s micro‑hospital model and a Farmington site under construction. Nicolini said the Farmington facility will include emergency exam rooms and inpatient beds (he described nine emergency exam rooms and 11 inpatient beds), an imaging suite, laboratory and a small procedural center. Nicolini said using CPACE would help the project finance energy‑saving and resiliency measures and reduce borrowing costs; he emphasized the project does not require city subsidy and that the company appreciated cooperation from city staff through permitting and inspections.

City Manager Sam Mace and others noted no formal action was required that night. Councilors and staff asked staff to bring a standard resolution to the July 8 council meeting if San Juan County adopts its ordinance on July 1. No local approvals were granted at the meeting; the council will consider a resolution at a future meeting if county action proceeds.

The presentation included case studies of closed CPACE transactions in New Mexico and a procedural overview: applicant and lender agree terms, submit an application to the program administrator (including lienholder consent), the administrator typically processes the file within about 10 business days, the county executes a voluntary agreement to allow recording of the improvement special assessment lien, the lender disperses funds, and the county records a release upon repayment.

Councilors asked about lienholder consent (existing lienholders must agree because CPACE liens take priority over subordinate liens), the liability of local governments (the state statute limits county liability for property owner debt), permitted property types (commercial, industrial, agricultural, or multifamily with five or more dwelling units, including nonprofit‑owned properties), and how administrative fees are covered (fees can be rolled into financed amounts). Mr. Christensen and developer Nicolini provided written materials and said staff would return with a resolution for council consideration if the county proceeds.