C-PACER Study Session

Presentation from DMK Developments

A special study session was held on Monday night for the Board of Mayor and Aldermen to look at DMK Development’s assisted living home partially financed with a C-PACER loan.

After having delved deeper into C-PACER there is more information for you. The house and the senate here in the state of Tennessee adopted C-PACER last year. Here is a link to the senate bill. This is the idea behind C-PACER

The idea behind the bill is to allow commercial and multifamily home owners to borrow money at a lower interest rate with better terms than a conventional bank loan if the project lowers energy usage and/or upgrades the current building to be more energy efficient or safer. (i.e. earthquake or flood upgrades) This is a voluntary program for which any business can apply. The issue is the city has to agree to take on the C-PACER program.

The state has passed this bill allowing the program to be available in Tennessee. Each city or county is tasked with the job of managing the C-PACER loans. A city has to agree to take on this program before a project is allowed to accept C-PACER monies and begin a project.

If a city decides to allow C-PACER loans, then they also have to manage the loan the same as they would manage the tax on the property. C-PACER must be established in the city and then the developer may utilize the loan process.

The city would be allowed to charge a fee to assess the property for the financial institution behind the loan.

The city can designate an area for C-PACER qualifying projects, or simply allow them case by case. Currently, the city administrator has a map that includes the city center as a C-PACER qualifying area. He also stated that map could be removed from the resolution and they could take each loan as the developer applies for it.

The requirements for program eligibility are in the next screen shot. The only area that seems to deviate from the rules of this program are for low income housing.

Finally, the correction from the last meeting is that the city will NOT be responsible for any payments if the borrower defaults. The loan is treated like a tax. If the company goes bankrupt, no one is paid until the property is sold. This loan stays with the property as a tax lien would.

At the actual meeting, DMK Developers pitched their senior housing project. This project would sit on Sage Road just north of the mixed use apartments and commercial space that is already started.

This home would have 79 units with 56 of them being for memory care. The senior bank financing this project is Central Bank and Trust out of Louisville KY. The C-PACER financial institution is Forbright Capital out of Maryland

.

Forbright will be financing $3.5 million, or 20% of the project. There are no public funds involved and the lien rights have to be approved by the city.

Alderman Hutson asked if there were bonds involved in this program. J. Campbell, lawyer for DMK stated that bond issuing was addressed at the state level. The state of Tennessee decided that no bonds would be involved even though other states implemented bonds.

Alderman Corbitt asked what benefit is it to Forbright to issue these types of loans. Again, attorney Campbell answered that it is attractive to these banks because the city is behind the assessment of the loan and the property making it “safer” for the bank. These loans are attractive to the developer because the interest rate is lower.

DMK went on to describe the project. There isn’t a facility like this within ten miles of the city.

DMK will be both the developer and the contractor. They will be using local contractors creating business in the city. The project is funded with private capital and the two loans discussed above. The items that qualify this project for C-PACER are any materials used that are above the energy code rating in place. DMK will be using roofing, HVAC, windows, and doors that exceed these codes. There will be no need for any changes to the current public utilities to meet this project.

This is a very well put together project that the city states they have needed for years.

The vote on this project took place on Thursday. The map including a C-PACER designated area was removed from the resolution. I was not able to attend that meeting, however all items were approved including this one.

Here are my questions: Why do we need more government involvement? This is yet another public/private partnership. Notice the “ESG” information on the bank’s page? Do you know what ESG scores are yet? Our legislature approved the bill and have zero liability in implementing this program. Why? This is yet MORE govt, not less, when are “we the people” going to wake up, get involved and say enough? Smaller government means more freedom. We continue to grow the size and scope of our government from the federal to the local level and no one bats an eye.

“The natural progress of things is for liberty to yield, and government to gain ground.” Thomas Jefferson

If you find my writing worthwhile, send me your appreciation through Venmo. @Nicole-Taylor-262