Thu June 19, 2014
Program Lets Business Set PACE on Green Building
Businesses can have a tough time borrowing money to make their buildings more energy-efficient. That’s where a variety of government programs that promote what’s called Property Assessed Clean Energy come in.
PACE programs let a property owner take on a special tax assessment for energy retrofits, allowing for longer repayment periods. Michigan’s PACE program covers a number of upgrades to commercial and industrial buildings and multifamily (though not single-family) homes.
But it’s up to local governments – cities, townships and counties – whether they want to join. Seven counties have opted in but Kalamazoo County isn’t yet among them.
WMUK recently spoke with Andy Levin of Lean and Green Michigan, a public-private partnership that manages PACE programs for local governments, about why he says the program is a boon for all involved.
Levin says that since most commercial loans last three to five years, many private lenders are reluctant to give loans for renewable energy projects because they can take eight to 15 years to pay off.
But in the PACE program, the borrower takes on a special tax assessment. That places a lien on the property that takes priority even over a mortgage.
“Whoever lends you the money becomes the beneficiary of that tax obligation,” Levin says.
“It’s so secure for the lender, they’ll lend you money for up to 20 years at a fixed interest rate.”
Levin says many industries could save large amounts of money from making their operations more energy efficient. The contractors that install the retrofits are among PACE’s foremost proponents; without the program they often see efficiency projects stall, he says.
“You talk to any of these contractors, on bigger projects they have shelves full of perfectly great projects that they pitched to property owners, the property owner said ‘oh I’d love to do that, and even though you told me about all the incentives from the utility or this or that, how am I going to get the money for the bulk of it that I still have to pay for?’” he asks.
In addition to helping business, Levin says the program has a “huge potential impact on the environment.”
“In the United States 40 to 45 percent of all the energy we use is used to heat and cool and light our buildings. That’s 10 percent of all the energy used by human beings on planet Earth, is for our buildings in America. And 30 percent of that energy use is unnecessary,” he says.
“The portion of that that comes from all manner of commercial, industrial and multifamily properties which could be helped by this PACE financing is very big.”
WMUK will have more on efforts to make Kalamazoo County a PACE district in the coming weeks.