Property Assessed Clean Energy (PACE) is now available in Illinois for commercial properties.
This year, SB1700 – HB2831 successfully passed committees and just last month the Illinois governor signed it into law. According to dailyherald.com, “The introduction of PACE in Illinois will help spur more energy efficient projects within the commercial real estate market, improve property values and create jobs in the clean and renewable energy industries.”
PACE offers property owners long-term loans for energy upgrades at fixed interest rates that owners can repay through their property tax bills. The program is currently financing as much as $450 million in projects in the US.
PACE must be enabled by county legislation to take effect, and projects must be made in cooperation with local government units. Eligibility is for industrial, commercial, non-residential agriculture and multi-family (5 units or more) properties, not single to four units residences. Funding and repayment may be backed up by bond issuances.
PACE has been adopted in other states as well. Michigan is on the verge of exploding with PACE projects, according to Andy Levin, president of Levin Energy Partners LLC. Levin, who promotes PACE through the company’s Lean & Green Michigan program, says nearly 10 energy management improvement projects in Michigan have taken advantage of PACE, with five to 10 more coming this year.
The owner of the historic Whitney Restaurant in Detroit spends about $95,000 in electricity and $25,000 in natural gas annually, but with a PACE loan of more than $860,000 that will pay for a more efficient heating and cooling system, the restaurant expects to save big. The new systems are expected to save $86,000 in annual utility costs – a 25% savings – but will also significantly reduce the $100,000 per year the restaurant spends on maintenance for mechanical systems. Overall, the Whitney can expect to save about $450,000 over 20 years.
And in Wisconsin, developer Juli Kaufmann has installed an energy efficient furnace, a more efficient water heater, upgraded windows, LED lighting, more insulation and a green roof in her 1930s former tavern near downtown Milwaukee. The improvements cost approximately $150,000.
Kaufmann received financing for these improvements from the Milwaukee version of PACE, which allows her to use her annual energy savings of approximately $10,000 to pay the loan back over several years through a special assessment on her property tax bill. Milwaukee then sends the money to PACE equity, which provided the funding.