1. 2.3.

Ann Arbor Spark

November 10, 2021

Commercial Property Owners Save Using PACE Financing to Adopt Energy and Water-Efficient Technologies

Commercial buildings account for 28 percent of energy consumption and on average, a third of that energy is wasted. This leads to utility and operations costs that are higher than necessary. PACE financing enables commercial property owners to access resources to make energy-saving upgrades. Benefits include long-term loans, fixed interest rates, 100 percent financing upfront, and utility and operations costs significantly lowered, thus covering the cost of loan payments. This opportunity is available to commercial property owners who want to retrofit or rehab a property or embark on new construction.

As of November 2021, Michigan is one of 26 states (plus Washington D.C.) with active PACE programs, with 11 more states undergoing PACE-enabling legislation. Check the PACENation website to learn more about other PACE programs across the country. To date, the Michigan PACE program has received over $115 million in financing and has helped generate over $237 million in savings for Michigan commercial property owners.

Lean & Green Michigan (LAGM) is the statewide administrator for PACE financing in Michigan, partnering with 49 local governments that include over 76 percent of the state’s population. Check out the LAGM website for a map of all currently participating Michigan PACE jurisdictions. LAGM has closed 52 PACE projects across Michigan. Review featured projects on LAGM’s website, where you can find case studies on properties that are utilizing PACE to pay for energy and water savings upgrades as well as renewable energy technologies.

Examples of Michigan PACE Projects

The Henry – Washtenaw County

The Henry was a formerly vacant lot transformed into two buildings with eleven three-level townhouses and additional co-working space. With advanced energy technologies such as solar panels, electric vehicle charging stations for an on-site vehicle fleet, lighting controls, and other high-efficiency appliances, The Henry is sure to reap significant energy savings for the property owner, while helping the city meet its commitment to ambitious clean energy and climate goals. An investment of $1,970,972 will net a 20-year savings of $1,773,677.

YMCA Storer Camps – Jackson County

To finance energy improvements at YMCA Storer Camps, the property owner utilized Lean & Michigan’s ​PACE Express program designed to help finance smaller PACE projects (at and below $250,000). ​ The project financed multiple furnace upgrades, digital thermostats, a boiler upgrade, and LED lighting, leading to $111,480 energy savings over 20 years.

Weber Apartments – Wayne County

Weber Apartments will help carry out a deep renovation of a multifamily housing building located in Detroit’s North End neighborhood. Built in 1927, this four-story English Revival-era building will become an apartment complex with 41 individual units. $945,000 in building improvements will include the installation of new insulative roofing and windows, and the replacement of old HVAC, lighting, and water systems for newer cost-efficient energy and building technologies expected to save 20 million gallons of water and result in a total energy savings of 104 thousand MBTUs over the next 25 years. Net savings: $1,231,831.

Qualified Properties

The Michigan PACE market is for commercial properties planning retrofits, gut rehabs, new construction projects and energy refinancing of buildings such as

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

Energy Conservation Measures

One of the best things about PACE financing is the broad array of qualified energy conservation measures that can be included. If it can help a property owner save on their utility and operations costs, chances are it can be included in a PACE deal. Examples of qualified energy conservation measures include:

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

Benefits of PACE

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

  • Long-term financing (up to 25 years)
  • 100% upfront financing
  • Immediate positive cashflow
  • Energy savings guaranteed for projects above $250,000
  • Fixed interest rates
  • Non-recourse loans that run with the property
  • Great sustainability/environmental PR

About Lean & Green Michigan™

Lean & Green Michigan™ helps commercial, industrial, multifamily, nonprofit, and agricultural property owners finance energy efficiency, water conservation, and renewable energy projects that are profitable for all parties – property owners, contractors, and local governments.

To learn more about PACE financing, contact the program administrator at info@leanandgreenmi.com or by phone at 313-444-1474.