Rutherford County committee approves CPACE program; TN PACE named administrator

Rutherford County's Budget, Finance and Investment Committee voted Oct. 9 to authorize the county's participation in a Commercial Property Assessed Clean Energy and Resiliency program and designated TN PACE as the third-party administrator.

The committee heard a presentation from Ted Beatty, Rutherford County trustee, and Chris Jones of TN PACE explaining the program's mechanics. Beatty said the program allows property owners to finance qualifying renewable-energy, energy-efficiency, water-conservation and resiliency improvements through a special-assessment loan that carries a tax-priority lien position. "The county is not guaranteeing a loan. The county is not financing a loan. The county is not foregoing any taxes," Beatty said, stressing the county's role is limited to recognizing the assessment's priority in collection.

Under the program described to the committee, lenders in the CPACE market underwrite and provide capital; they also bill and collect assessments in most program structures. The CPACE loan can cover qualifying items up to 25% of a project's value and will generally be limited to 90% loan-to-value, meaning property owners provide at least 10% equity. Presenters said projects can be new construction, remodels or, in some cases, completed projects from the prior two years that meet the program's higher-efficiency standards.

Committee members questioned how the special-assessment lien interacts with existing mortgages. Chris Jones said the senior mortgage lender must sign off on the CPACE loan at the time of financing; recorded mortgages found in the title report would require consent from those mortgage holders. Jones also said the CPACE assessment typically remains with the property on sale and is not generally subject to acceleration by the lender as long as annual assessments are made.

Supporters told commissioners the program makes long-term, lower-cost capital available to developers and property owners for eligible upgrades. "Our goal is to sell it; normally you'd have to pay off all of the loans. This actually stays with the project and is transferable, which is an advantage," Jones said, describing the potential 30-year amortization and how the program can reduce reliance on more expensive preferred-equity financing.

Paul Johnson moved approval; the motion was seconded and passed on a roll call vote by the committee.

The committee instructed staff to proceed with implementation steps, including executing any necessary enabling documents and coordinating program administration with TN PACE. No county funds, credit, or guarantees were authorized as part of the vote.