Four Ann Arbor businesses are reducing energy expenses and boosting property values, thanks to the City of Ann Arbor’s Property Assessed Clean Energy (PACE) program, managed by Clean Energy Coalition.
Energy-efficient lighting, high-efficiency heating and cooling systems, upgraded cooking equipment, roof and wall insulation, and solar shingles are just some of the projects that are receiving financing through the first PACE program to launch in Michigan. PACE financing, which is made available through the sale of a bond and repaid by property owners through annual special assessments, features long-term, low, fixed interest rates.
“PACE is a direct $560,000 investment in the local economy that will result in annual energy savings for local businesses of more than $56,000,” Mayor John Hieftje said. “The annual electricity and natural gas savings of the first four PACE projects will be equivalent to the electricity used by more than 50 homes in a year. Our city’s Climate Action Plan calls for reducing greenhouse gas emissions 8% from 2000 levels by 2015, and these projects – and others like them – are an important part of helping Ann Arbor reach its sustainability goals.”
The Ann Arbor City Council authorized the sale of PACE bonds with Ann Arbor State Bank in 2013. With this successful sale, the City of Ann Arbor is the first Michigan municipality to sell PACE bonds, joining dozens of municipal governments across the country in taking advantage of this financial tool to improve energy efficiency.
Proceeds from the sale of the PACE bond are being assigned to owners of four commercial properties within the City of Ann Arbor. These properties completed a thorough eligibility and application process in order to participate in the program. These properties include:
Property owners are repaying PACE assessments annually. As determined by the terms of the bond sale, these property owners have 10 years to repay assessments at 4.75% interest.
“PACE will have a direct impact on our community. In the short term, projects at these four businesses will pour more than $500,000 into our local economy, employing area contractors and energy experts,” said Peter Schork, President of Ann Arbor State Bank. “PACE will also have a lasting benefit in the years to come – property values will increase with these investments, utility expenses will decrease, and the improved, energy-efficient properties become an asset for the entire community.”
In 2010, with the assistance of local state lawmakers Senator Rebekah Warren and Representative Jeff Irwin, the State of Michigan enacted the Property Assessed Clean Energy Act (Public Act 270 of 2010), enabling local governments to create special assessment districts to offer financing to commercial and industrial property owners for eligible energy efficiency improvements and renewable energy systems. Under Ann Arbor’s program, interested property owners complete a thorough application process to ensure their properties comply with eligibility requirements regarding project size, scope, and payback period; property value; and debt ratios. Energy assessments are performed on properties to identify project and savings opportunities.
“PACE is a significant step in helping Ann Arbor achieve its environmental goals, and we’re proud to continuing our partnership with the City of Ann Arbor. After seeing Ann Arbor businesses breaking ground on energy-saving projects, we hope that additional municipalities throughout the state will take advantage of this program and make PACE a priority,” said Sean Reed, executive director of Clean Energy Coalition.
The Ann Arbor PACE program was developed and is administered through a partnership between the City of Ann Arbor and Clean Energy Coalition. Funding for program development was made possible by the U.S. Department of Energy’s Energy Efficiency and Conservation Block Grant (EECBG) Program, through the American Recovery and Reinvestment Act. For information about PACE, visit a2energy.org/PACE.