A Wisconsin developer is upgrading an outdated building with energy efficient features thanks to funding from the Property Assessed Clean Energy (PACE) initiative.
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.
This trend has become commonplace in several Wisconsin towns, where local governments are supporting the PACE private loan program in hopes of increasing energy efficient and renewable energy initiatives for homeowners and businesses.
According to wpr.org, eight redevelopment projects worth $13 million have used PACE. Milwaukee’s environmental sustainability director Erick Shambarger said the program is a great way to revive historic buildings and address climate change.
“Regardless of what you feel about the politics of all this, we’re helping building owners cut waste, become more efficient and invest in the building itself, rather than something as ephemeral as energy,” said Shambarger.
Milwaukee was the first Wisconsin community to start using PACE in 2013. Now, 18 counties have PACE, with four signing on just in the last two months.
Pennsylvania is another state that finds benefits in PACE financing, but for commercial buildings. In February, David Masur, executive director of Penn Environment, said, “Through Senate Bill 234, Pennsylvania can join the growing ranks of states where successful Commercial PACE programs are helping to protect the environment and build healthier communities.”
According to the Department of Energy:
The property-assessed clean energy (PACE) model is an innovative mechanism for financing energy efficiency and renewable energy improvements on private property. PACE programs allow local governments, state governments, or other inter-jurisdictional authorities, when authorized by state law, to fund the up-front cost of energy improvements on commercial and residential properties, which are paid back over time by the property owners.
There have been reports of several risks associated with PACE financing, however. Property owners may be surprised by the amount PACE loans add to monthly property-related outlays. In many cases, the PACE loan is considered before mortgage itself. Thus, a property owner who defaults on their PACE loan can lose the property, though the mortgage itself is up to date.