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Local Government Financing of Energy Conservation & Efficiency Improvements to Property

December 14, 2021

By Gary M. Kaleita 

Owners of improved property in Florida may obtain financing from their local governments (city or county) for qualified improvements that conserve energy, enhance energy efficiency, provide renewable energy, and/or enhance resistance to wind damage, pursuant to Florida Statutes, Section 163.08.

If approved, the construction of the proposed improvements can be financed by the owner’s entry into a financing agreement with the local government that provides for the government to fund the cost of construction of the qualified improvement, with repayment to be made from new non-ad valorem tax assessments levied by the local government against the improved property. These assessments will constitute a first lien on the improved property (having the same priority as ad valorem real property taxes), which means that they will prime mortgage liens (even those previously recorded).

Any such financing agreement (or a memorandum thereof) upon execution must be recorded among the public records in the county where the property is located. Before entering into a financing agreement, the government is required to obtain a title search on the property in order to verify that there are no involuntary liens on the property, and that the owner is current on the payment of its real estate taxes and mortgages.

At least 30 days before entering into any financing agreement with a local government, the owner must notify all mortgagees of the owner’s intention to do so, and inform them of the amount to be financed and the maximum new annual assessment necessary to repay it. If the value of the improvements to be funded pursuant to the financing agreement exceeds 20% of the county’s appraised value of the property, any mortgagees of the property must consent, but if it is 20% or less then mortgagee consent is not required.

If an owner intends to sell property that is subject to a financing agreement under this statute, at or before entering into a contract for sale the owner must provide a notice of the existence of the financing to the prospective purchaser, the form of which is set forth in the statute.

Lenders have legitimate concerns that their existing mortgage lien can be primed by subsequent new assessments levied for the repayment of this kind of financing obtained after the lender’s mortgage is recorded. The statute provides that any loan document provision purporting to make it a default for the borrower to enter into this kind of financing arrangement is unenforceable. However, the statute does not preclude lenders from making it a default if the Borrower fails to comply with its obligations under the statute or under any financing obtained pursuant to the statute. Additionally, the statute does not preclude lenders from increasing the amounts of their escrows or impounds for the payment of taxes and assessments if such financing is obtained.
This article is not an exhaustive analysis of the issues presented in the scenarios described above. As always with complex financing transactions, there are nuances and technicalities that are best addressed with the advice of an experienced real estate finance attorney.

Gary M. Kaleita is a shareholder at the Lowndes law firm who has been certified by the Florida Bar as a specialist in real estate law since 1993. He is also a member of the firm’s Banking & Finance Group. He can be reached by phone at (407) 418-6334, or by e-mail at Any questions can be directed to him or any member of the firm’s Banking & Finance Group.

This article is informational only. You should consult an attorney before acting or failing to act. The law may change rapidly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ALL ARTICLES ARE PROVIDED AS IS AND WITH ALL FAULTS. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.

With more than 30 years of experience in real estate law, including over 20 years as a Board-certified expert in the field, Gary Kaleita has acquired the ability to navigate the complexities of sophisticated real estate deals with relative ease.

Gary has a wide variety of experience in real estate development, finance and transactions, condominiums, property owners’ associations, commercial leasing, commercial lending, and title insurance.

Gary enjoys a reputation for anticipating and avoiding problems, rather than merely reacting to them. He has years of experience handling purchases, sales and financings of commercial and residential projects, including office, industrial, retail, multi-family, single-family, condominium, resort, hotel and golf course properties. Gary has prepared and negotiated contracts for sale and purchase, performed due diligence investigations, and handled all aspects of closings, including issuance of title insurance and legal opinions. He has also performed tax free exchanges (both forward and reverse) under Section 1031 of the Internal Revenue Code, and has handled closings for housing revenue bond financing transactions with the Florida Housing Finance Corporation and various local housing finance authorities.

In the area of real estate development, Gary has assisted developers in obtaining land use approvals, plat approvals and permits for various developments from a number of jurisdictions in Central Florida, including planned developments (PD’s) and Developments of Regional Impact (DRI’s). He has drafted and negotiated complex land use documents, including development agreements, cost-sharing agreements, declarations of covenants, conditions, restrictions and easements. He also has experience in mall and shopping center developments, including outparcels, and has assisted developers with the selection, formation and operation of business entities, including commercial and residential property owners associations. He has extensive experience with the formation and operation of both commercial and residential condominiums as well.

In addition, Gary has established somewhat of a boutique practice by acting as local counsel to help out-of-state lenders, investors and law firms navigate the complexities of Florida real estate law. He is frequently engaged by large national and international law firms needing assistance on a variety of issues for their clients doing business in Florida. Gary regularly provides advice on Florida law and custom pertaining to purchase and sale contracts as well as loan documents, addresses local due diligence issues, answers questions involving titles, surveys and title insurance, and provides Florida legal opinions.

Not just another real estate lawyer, before pursuing his career in law Gary served as a U.S. Naval officer on active duty for 4 years in the Mediterranean Sea, first with a patrol gunboat squadron in Italy and then at a communications station in Greece. During this period he traveled extensively throughout Europe, the Middle East and North Africa. He believes his military experience is the source of the practical approach he has developed to problem solving.

Gary also took the initiative, after a homeowner in his own neighborhood was mauled by a Florida black bear in 2013, of researching what his homeowners’ association could do to limit the likelihood of future attacks. In the process, he became an expert in the subject of “bear-wise” communities and drafted a policy that his own homeowners’ association adopted, thereby becoming the first residential community to be officially recognized as bear-wise by the Florida Fish and Wildlife Conservation Commission (FWC). He has since written and spoken extensively on this subject, serves on the FWC’s Central Bear Management Unit Stakeholder Group, and has become a resource for FWC to educate other communities on the importance of bear-wise practices in areas of Florida containing black bear habitat.

Gary focuses on finding pragmatic solutions to complex problems, recognizing that clients want sensible and realistic advice in a timely manner so they can go about their business.

Chambers USA (2015)* reports that Gary has substantial experience acting as lender’s counsel and is acclaimed by market sources as an “extremely responsive, very practical and reasonable” practitioner.

*We make no guarantees or promises that the reader will realize the same or similar results

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