BY MARK J. CRAWFORD
Bradford County commissioners granted the Florida Resiliency and Energy District permission to offer financing to commercial developers, including developer Dwight Hewett, who wants to build townhomes in downtown Starke.
FRED is a separate legal and governmental entity, established under the Florida Development Finance Corporation to administer a financing program known as C-PACE, the Commercial Property Assessed Clean Energy Program. Private capital invests in the C-PACE program, which provides financing to commercial and industrial developers. The property owner pays a voluntary non ad valorem assessment collected by the county’s tax collector on the property owner’s annual tax bill until the debt has been repaid.
Hewett, who has touted the environmentally sustainable features of his 45-townhome CityWalk project, approached the county with Ryan Bartkus of the Florida Development Finance Corporation, for authorization to conduct the C-PACE program in Bradford.
Bartkus explained collecting repayment through a non-ad valorem assessment provides security that helps investors lower the cost of capital for developers. In addition to lower rates, the financing term may also extend up to 30 years.
“This, again, is a voluntary program. This is not like a CDD (community development district). It’s not being put on everybody’s property. (It is a) solely individual voluntary program for somebody like who would this financing,” he said.
Commissioner Chris Dougherty asked about Hewett’s lease-to-own plan for selling the townhomes. At the point they are sold they become residential units, but the commercial financing debt does not transfer to the new owner, according to Bartkus. Hewett, or whomever owns the remaining commercial units, is still responsible for repaying the debt. At the point where all the units are sold, the debt must be fully repaid.
Commission Chairwoman Carolyn Spooner asked about the city’s knowledge of the program, suggesting a conversation with city leaders. She also asked about any connection to the residential, or R-PACE program, which the county has previously rejected for its predatory lending practices to homeowners, and which has faced litigation for operating in counties without an interlocal agreement. Bartkus said that is a separate program not connected to FDFC.
Spooner asked about transparency with property owners since it is possible other developers will contemplate C-PACE funding after Hewett.
“There’s a financing agreement that is signed between the property owner and us, and within that financing agreement are clear terms set up, just like you would go for a mortgage,” Bartkus said. “This is not a quick close. There are attorneys involved in this entire process, and it typically takes about 60 to 90 days to close one of these financings. So, if there are questions that come up, and the property owner has those, they will be resolved within those talks.”
Spooner also asked about conversations with the county tax collector and property appraiser. Bartkus said they didn’t have the opportunity to meet with Tax Collector Teresa Phillips during their last trip. Typically, they enter agreements with county commissions and then establish service agreements with the constitutional officers. He said their organization would act as the assessment administrator, receiving tax roll information related to the project from the county and providing assessment information to the tax collector for placement on the project’s tax bill. The tax collector would receive a fee for the service.
Spooner confirmed there are no financial commitments from the county by entering the agreement.
“That is right,” Bartkus said. “There’s no responsibility on the county. All administration is done through our program, all financing is done through private investors, and there’s no responsibility of the county. Once you guys adopt this program, you are outside of it. We take care of everything, and if something pops up, you can call the office, and we would handle it for the county.”
Spooner tried to gauge the annual repayment cost. Bartkus said projects financed could be a minimum of $250,000, but they just financed a $290 million project, so the annual repayment cost could vary widely.
Spooner had specific questions about Hewett’s project, although he encouraged her to think about C-PACE as an opportunity for a variety of commercial projects to be financed within Bradford County. According to Hewett, several surrounding counties allow C-PACE, and these are counties Bradford is competing with for economic development.
“This is really just another tool. And you know, for me, it will help reduce some of my cost. And in this environment, this lending environment, that could be the go or no go for a lot of developers. So, it’s very important for us to be able to have 20 or 30 percent of our financing at a much lower cost basis,” he said.
Commissioners weren’t convinced to move forward by the Nov. 4 presentation, however, with Starke City Manager Drew Mullins and City Clerk Chrissy Thompson also saying they wanted to more information. At Dougherty’s request, the vote was deferred to Nov. 18, when it passed unanimously.
Amber Shepherd of the Northeast Florida Economic Development Corporation spoke in support of the C-PACE program that evening, saying it’s becoming more popular throughout the state. In addition to differentiating this from the controversial residential funding program, Shepherd spoke well of those in charge of this and other programs, including the Florida Opportunity Fund, which is the state’s venture capital program. She also repeated that those who purchase any of the CityWalk townhomes would not be required to repay the investment debt.
“If there was an issue that that would go through, like a foreclosure process or a bankruptcy process, that would be on the developer,” she said. “Usually when it comes to large properties like what we were talking about having developed, the bank would take that over. They would not evict everybody from the property. They would keep the rent and the tenants coming and keep the property functioning. So, I just wanted to share with you that I’ve done some research on this, and I am in favor of Bradford County moving forward with allowing C-PACE to be utilized in this community.”
