One more tool has been added to Michigan's Economic Development toolbox - the Property Assessed Clean Energy (PACE) program. The Property Assessed Clean Energy Act was implemented in Michigan in 2010, allowing commercial, industrial and multi-family property owners to finance energy improvements using property tax assessments.
According to federal government estimates, 44 percent of the nation s energy use is through building operations. That's a big number, almost half of our total energy use. It's often too expensive for business owners to upgrade energy efficiencies because commercial loans have a short loan cycle, and the financial benefits to such upgrades occur over an extended amount of time.
That's where PACE comes in; it allows property owners to finance the energy saving retrofits, with long-term loans that are repaid through a Special Assessment applied to the property tax assessments. The property assessments are structured to be equal to or less than annual energy savings so property owners see an almost immediate benefit. The key is these assessments "run with the property" and constitute a lien; only when the assessment is paid in full is it removed. This allows the current (and future) building owner to reap the benefits with a positive cash flow from energy savings through the life of the property tax. All types of energy efficiency projects are eligible for financing through this program. Any financial institution can be a lender under this program.
To take advantage of the program, the property must be in an established District. In Cities and Counties throughout Michigan, local governments are partnering with Lean & Green Michigan, a third-party service provider to implement the PACE program. Currently in Michigan the following Counties and Cities are participating in the program. If your community is not an established district, do not let this be a deterrent to evaluating this program - Lean & Green Michigan has established standardized processes and documents allowing for a community to establish a district with ease. Often the impetus for the creation of a new district is a specific project within that community.
The PACE program is one more way to help renovations, retrofits, and Brownfield Redevelopment projects finance the upfront costs of energy improvements through long-term financing. The benefits are many - the developer sees a positive cash flow and an improved property; Lenders are secure with a senior level process for debt repayment; the community sees enhanced development and investment; and we further environmental protection through increased energy efficiency.
Envirologic has participated in the PACE Contractor Training and can help you evaluate how this program can fit into your project.
Lean & Green Michigan is a program managed by Levin Energy Partners.
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pace • property assessed clean energy • lean & green michigan • energy savings • michigan's economic development • special assessment