PACE Financing Presented by, Lean & Green Michigan
Ag Agenda Intro: What is PACE? What is Lean & Green Michigan? PACE 101 Understanding the PACE Process Case Studies Questions?
Wha What is s Pro roperty Asse ssesse ssed Clean lean Ener nergy gy? ? • PACE helps property owners finance energy efficiency, water efficiency, and clean energy upgrades — without incurring upfront costs. • Upfront, long-term, fixed rate financing = pay as you save and come out cashflow positive! • Property owners repay their loans through a special assessment on their property taxes
Ma Map of Part rtici cipating Ju Jurisdict ctions • Michigan Property Assessed Clean Energy Act (PA 270, 2010) • Public-private partnership • 44 Local Governments • 71% of state’s population • Even higher % of the biz-to-biz economy
Lean & Green Michigan Michigan’s PACE Administrator • Located in Detroit, MI • Coordinate the Michigan PACE market • Help qualify and coordinate potential projects • Community engagement • Perform due diligence for all PACE projects • Conducts contractor trainings • A resource for all things PACE related
More About PACE • 100% financing • Loan-to-value ratio (about a quarter’s worth of property value) • Appraised property value • As completed property value • Long-term loans (up to 25 years) • Guaranteed cashflow positive PACE projects (if financing >$250,000) • Fixed interest rates • Non-recourse loans (no personal guarantee) • Payments can be passed through tenants • Broad ECM qualification measures
More About PACE • No use of taxpayer dollars • An economic development tool • Helps create and win jobs for local energy contractors • An open market
Michigan PACE Market Data
States with PACE Legislation Source: PACENow pacenation.us
PACE 101
Why PACE? Energy Efficiency Matters! - Buildings generate nearly 40% of global GHG emissions - Global building stock will double in area by 2060
Why PACE? Energy Waste = Capital Waste - On average 30% of all energy consumed in commercial buildings is wasted
Energy Efficient Buildings Makes Sense…But Can Be Hard To Pay For • Increases property values • Improves local building stock • Creates for more comfortable buildings • Retain tenants • Reduces energy burdens • Increases the bottom line • Reduces GHG emissions and water consumption!
PACE v Traditional Bank Finance Short-term loan payback PACE payback
The PACE Process
Qu Qualified P Prop opert rties • 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 • • New Construction & Energy Refinancing: Available for all the above •
Qualified Energy Upgrades • 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, EV charging, geothermal, CHP & more.
Qualified Projects • Retrofits • Gut rehabs • New construction • Energy refinancing
PACE Express & Standard PACE projects
Project upper limit? • No upper limit financing • MI’s largest project to date $6.8 M PACE Project Project lower limit? range • Depends on capital providers • PACE Express! • ~ $100,000 lower limit • Smallest project to date $117,580
• Utility programs • Traditional bank finance PACE in the • Historic Tax Credits – (515 Ionia case study) Capital Stack: • Brownfield Funding – (515 Ionia case study) Incentives and Rebates • Solar tax credits • Match loans • Other energy upgrade incentives
LAGM Case Studies
LAGM Case Study 513-515 Ionia St.
LAGM Case Study St. Clair Inn
LAGM Case Study Detroit Unity Temple
LAGM Case Study Powers Distributing
LAGM Case Study Cambria Hotel
Questions? Contact: Info@LeanAndGreenMi.com
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