Rutherford County steering committee backs intent to consider commercial C-PACE program; sends resolution to budget

The Rutherford County Steering Committee voted to send a resolution to county budget officials recommending the county consider adopting the state'authorized commercial Property Assessed Clean Energy and Resilience (C-PACE) program and to use TN PACE as a third-party administrator.

The resolution, described to the committee by county staff member Tim Beatty, would authorize the county to adopt a special assessment that gives qualifying C-PACE loans parity with tax liens and a priority position above first mortgages for participating commercial properties. After discussion, the committee voted by roll call to forward the resolution to the budget office with the committee's recommendation; the motion passed on a 7-0 roll call.

Why it matters: County staff said the program would allow commercial property owners and developers to finance renewable energy, energy-efficiency, water-conservation and resiliency projects by placing a special assessment on the property that secures the loan. Proponents say the structure makes projects easier to finance while not creating a county repayment obligation.

Beatty told the committee the state adopted the C-PACE enabling program in 2021 and that Rutherford County's proposed role would be limited to authorizing the special assessment; "we're not obligating ourselves to any payments or repayments in case of default," he said. He said the county would not give up tax revenue and that the assessor would not change how taxes are administered.

County staff proposed using a third-party administrator to process applications and paperwork. Beatty said the county solicited responses and selected TN PACE as the proposed administrator; a representative from TN PACE attended to answer technical questions. The administrator would handle underwriting paperwork and obtain written consent from existing mortgage holders for each application, Beatty said.

Committee members asked how the county would verify the work being done under projects. The TN PACE representative said underwriting and written project proposals are required up front; permitting and standard inspections for new construction would occur through normal county building and zoning processes. Beatty said qualifying improvements generally must exceed code requirements.

Staff and the TN PACE representative described statutory and program limits discussed in the meeting: a C-PACE charge can be up to 25% of the loan-to-value (LTV) for qualifying improvements, and total lending against a project generally cannot exceed 90% LTV. Beatty said the loans are commercial loans underwritten by lenders and that mortgage holders must provide written consent.

Next steps: If the commission approves forwarding the intent, staff said the item will go to the county budget office for review. The committee was told the commission would hold a public hearing next month and then decide whether to formally adopt the county participation in the program.

Votes at a glance: The steering committee conducted a roll-call vote to send the resolution to budget with recommendation; recorded votes were "aye/yes" from Commissioner Cush, Commissioner Beverly, Commissioner McAdoo, Commissioner Wilson, Commissioner Paul Johnson, Commissioner Reid and Chairman Harris. The motion passed by recorded vote 7-0.

Details and limits discussed: County staff emphasized the county would not be financially liable for loan repayments and said the program is intended for commercial — not residential — properties. Staff noted projects can include new construction and rehabilitation and that some prospective projects are already awaiting the county's decision.

The committee did not adopt an ordinance at this meeting; the action was limited to forwarding the resolution to budget with recommendation and scheduling subsequent public hearing and commission consideration.