The League has been actively engaged on LD 1748, “An Act To Allow for the Establishment of Commercial Property Assessed Clean Energy Programs” (C-PACE). If passed in its current form, this bill will harm the credit union lien status on commercial mortgages by creating super-priority liens for green energy improvements.
While the bill requires the prior consent of the mortgage holder before the C-PACE loan can be made, this provision can be removed by future legislation. This scenario could occur if the proponents feel too many C-PACE projects are being rejected. In addition, should a C-PACE loan default, the local municipality will be required to foreclose and extinguish all junior liens leaving no ability for the mortgage holder to recoup any owed funds.
The League successfully advocated for some underwriting safeguards to reduce the risk of default on these loans in the version passed by the Energy, Utilities and Technology committee, but there is still a significant risk to mortgage holders. The League will continue to work to protect the investments of credit unions, but given the governor’s support, this bill is likely to pass.