PACE Financing is Saving Commercial Property Owners Serious Money on Their Energy Bills (while helping the environment too) 

Mar, 6 2020

Featured Resource: PACE Financing

Accounting for 32% of total energy consumption, commercial buildings consume a great amount of energy. Subsequently, significant energy consumption also leads to significant energy waste. According to the EPA, on average, 30% of all energy consumed at commercial properties is wasted. But energy waste is not just inefficient. It also takes a toll on property owners’ wallets.

Making buildings more energy efficient makes sense. Energy upgrades help property owners save on their utility bills. These upgrades make for more comfortable buildings and increase property value, as well as help the environment. However, the biggest obstacle standing in the way of creating more energy-efficient buildings is the upfront cost. That’s where PACE (Property Assessed Clean Energy) financing comes in.

What is PACE financing?

PACE is a long-term financing mechanism available to commercial property owners to pay for energy efficiency, water efficiency, and renewable energy upgrades. Upon receiving 100% financing to pay for energy upgrades to their facilities, property owners then pay back the PACE loan through a special assessment on their property taxes, via their energy savings.

PACE was first introduced over ten years ago in Berkeley, California. Berkley city officials saw PACE as a solution to help their constituents save money on their utility bills during the Great Recession, while also helping the city meet its climate action goals. Since then, PACE programs have become available in 36 states and Washington D.C. Check out the PACENation website to learn more.

PACE in Michigan

Lean & Green Michigan (LAGM) is the state-wide administrator for PACE financing. While the Michigan PACE market is relatively young, it is steadily growing. Currently partnering with 44 local governments across Michigan — covering over 71% of the state’s population — the LAGM PACE program helps commercial property owners save on their energy bills. Check out the LAGM website for a map of all currently participating Michigan PACE jurisdictions.

Since the closing of the first PACE project in 2015, LAGM has completed 24 total PACE projects across Michigan. To get a better idea of what Michigan PACE projects look like, check out the Featured Case Studies portion of LAGM’s website. There, you can find case studies on properties that are utilizing PACE to pay for energy upgrades to their facilities.

Qualified Properties

The Michigan PACE market is for commercial properties only. From retrofits, gut rehabs, new construction projects, and energy refinancing, PACE is available for properties such as:

  • Commercial & Industrial: hotels, hospitals, restaurants, office buildings & more
  • Multifamily housing: both market-rate and low-income apartment buildings
  • Agricultural: farms, wineries & more
  • Nonprofits: houses of worship, private schools, cooperatives & more

Energy Conservation Measures

One of the greatest benefits of PACE financing is the broad array of qualified energy conservation measures that can be included in a PACE project. Examples of qualified energy conservation measures include:

  • Energy Efficiency: lighting, HVAC, windows, insulation, roofing, caulking & more
  • Water efficiency: stormwater recapture, low-flow toilets/sinks/showerheads, greywater systems & more
  • Renewables: solar energy, wind energy

Benefits of PACE

There are many unique features of PACE that separate this form of “green financing” apart from other financing mechanisms. Benefits of PACE financing include:

  • Long-term financing (up to 25 years)
  • 100% financing — no upfront costs
  • Immediate positive cash flow
  • Energy savings guaranteed for projects above $250,000
  • Fixed interest rates
  • Non-recourse loans that run with the property
  • Great sustainability/environmental PR

Learn more

Want to learn more about how PACE can help reduce building energy consumption and save money? Contact Michigan PACE program administrator, Lean & Green Michigan at info@leanandgreenmi.com or by phone at (313) 444-1474.

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