Commercial buildings all across Michigan could become more energy-efficient thanks to a new funding mechanism and a training program put together by Lean & Green Michigan and supported by the Ecology Center and the Southeast Michigan Regional Energy Office, a collaboration of local governments and non-profit organizations.
The funding mechanism is called PACE, for Property Assessed Clean Energy, which allows property owners to use a property-tax mechanism to finance energy improvements without incurring upfront costs, and at no cost to the public.
The training program has reached close to 100 architects, builders and contractors at programs around the state over the last month.
“PACE sets out to solve a major problem: energy consumption is very high and inefficient in American commercial buildings,” according to Alexis Blizman, legislative and policy director at the Ecology Center. “But the most effective retrofit projects can take years for the energy savings to break even, and very few businesses can spend big money today for a project with a 10-plus year payback.”
In 2010, the legislature passed Michigan’s PACE statute, which allows local units of government to establish PACE districts in their communities. So far, nine counties and three cities in Michigan have taken advantage of the legislation. The counties include some of the state’s most populous including Wayne, Macomb, Washtenaw, Saginaw and Genesee, as well as large cities in Oakland County, including Southfield, Royal Oak and Rochester Hills. Eaton, Grand Traverse, Huron and Ingham counties also have partnered with Lean & Green Michigan to establish PACE districts. Ann Arbor also has its own publicly financed district.
“Many commercial property owners have done energy audits and know they could be more efficient, but they don’t get started because payback is longer than the standard business loan,” according to Andy Levin of Lean & Green Michigan. “PACE offers them a new financing option that is cash-flow positive, so they can close deals and get projects going. This long-term payback leads to positive cash flow since the savings generated from the project are greater than the monthly repayment.”
PACE allows building owners to finance projects supporting efficiency in both energy and water consumption and renewable energy.
“The ‘property-assessed’ part is key,” Levin says. “The energy project is repaid through a special tax assessment on the property over a 10-year to 20-year term, so owners can get the benefits of lower energy costs immediately, and pay for them over more years than they might with a normal loan.”
Lean & Green Michigan is the name of the statewide PACE program and public-private partnership created by Levin Energy Partners, a company founded to promote clean energy strategies in Michigan. Levin has tailored a single PACE model for whole state so property owners, contractors and lenders only have one set of rules to follow. This model relies on private capital, although local governments are also permitted to issue bonds.
“The Ecology Center’s support for PACE reflects our long-standing commitment to clean, renewable energy,” Blizman says. “PACE is a terrific example of something we can do right now, in our own communities, to address the crisis of climate change.”
EcoLink — October 2014
An online publication of the Ecology Center