THE FIRST PRIVATELY FINANCED PROPERTY ASSESSED CLEAN ENERGY (PACE) PROJECT IN MICHIGAN CREATES JOBS & SAVES ENERGY
Back in the September 2013 issue of cam magazine I wrote about the pace program, a new type of financing that would have job-creating impact for the construction industry. well, we finally have our first project. The project involves over $1,000,000 of energy improvements to the 1-800- law-Firm building in Southfield. over $500,000 will be financed through pace, an innovative new tool that allows any commercial property owner to use a property tax assessment to obtain much longer term financing than is otherwise available in traditional capital markets. In a recent announcement, Andy Levin, president of lean & Green Michigan and the administrator of Southfield’s pace program said, “Today marks the beginning of a new era of cost saving for Michigan businesses of all kinds. The door is now open for businesses to save money by making their buildings more efficient and producing their own clean energy.”
PACE is a game changer because it enables lenders to finance projects over ten to twenty years. Keep in mind this includes any and all energy conservation measures, such as windows, doors, insulation, HVAC and roofing, as well as renewable energy generation from solar and wind. Too often, energy upgrades and projects may not pay off for seven to fifteen years, while traditional commercial loans generally have terms of only three to five years. This mismatch has left many valuable clean energy projects stuck with no effective way to finance them. by allowing the use of the “special assessment” mechanism by private parties to achieve a public good, pace opens the market for a win-win clean energy economic development… without the use of taxpayer dollars. The overall upside is that this creates jobs in all sectors of the construction industry and results in a net energy savings for the building owners.
Lean & Green Michigan is a true example public-private partnership. Levin congratulated the parties that came together to achieve this historic deal:
– The city of Southfield, which was the very first jurisdiction to create a pace district with lean & Green Michigan. “mayor Brenda Lawrence, the city council, and the city’s hardworking professional staff all played big roles in reaching this historic day.”
– Ari Kresch, CEO of 1-800-law-Firm (located at 26700 Lahser road, Southfield, mI 48033). “Today’s announcement derives above all from the vision of Ari Kresch. not satisfied to have made his building more efficient, today he is adding solar and wind generating capacity, electric vehicle charging stations, and additional efficiency measures. Ari understands the power of pace to transform our commercial and industrial building stock.”
– Srinergy, the turnkey solar projects development company: “Srinergy president Prasad Gullapalli represents the can-do, entrepreneurial spirit that will bring Michigan back – and make it a center of the clean energy economy.”
– Comerica bank: “Comerica banker Joe Vassallo provided up-front capital and consent for the pace portion of financing, helping to give birth to this innovative new finance market in Michigan.”
According to general contractor and Srinergy president Prasad Gullapalli, “energy conservation measures such as a power optimizer that will stabilize power throughout the building in addition to the generation from solar and wind will reduce the power consumption of the building by nearly half.” In addition to four wind generators and a 145Kw solar array on the roof, there will be a solar powered carports with EV charging stations for up to 30 cars. as one of the first pace financing projects in Michigan, this serves as a good example of what commercial building owners around the state can expect in energy saving. as part of the performance guarantee, the energy savings will offset the additional property tax assessment resulting in positive cash flow from day one. The parties expect that the construction will be complete by early summer.
For more information about how you can participate in pace programs, visit the following websites;
Mr. Andy Levin, lean & Green Michigan (PACE administrator)
Mr. Prasad Gullapalli, Srinergy
Source: Newman Consulting Group
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