Fraser Trebilcock Attorney Assists In Closing $5.5 Million in PACE Financing for Energy Efficiency Improvements
Fraser Trebilcock attorney assisted a client in closing on $5.5 million in Property Assessed Clean Energy (PACE) funding for the renovation of the historic St. Clair Inn.
Fraser Trebilcock attorney Paul V. McCord recently assisted a client in closing on $5.5 million in Property Assessed Clean Energy (PACE) financing for the renovation of the historic St. Clair Inn. Paul served as the lender's local council in providing the PACE funding, which will be used to improve the inn's energy efficiency, including LED lights, new appliances and water saving measures. This project is estimated to save over $1.9 million during its lifetime, and more importantly, figures estimate that there will be a reduction in energy consumption equivalent to 243 less cars on the road each year, and providing 14,980 people with drinking water.
Commercial building owners waste close to a third of their utility expenses each year, caused by inefficient energy systems. There isn't a simple solution to this. Because of the other demands on the building owner's available capital, the upfront costs of energy efficient systems can be difficult to justify.
PACE is an innovative mechanism for financing energy efficiency and renewable energy improvements. PACE financing allows a property owner to leverage the local government's taxing authority to the property owner's advantage. The property owner voluntarily enters into a special assessment agreement, which it pays off as part of its property tax bill for up to 25 years. PACE financing installments are assessed to the owner just like any other special assessment property tax obligation.
By financing such projects through PACE, businesses can eliminate the need for upfront capital, generally paying nothing down as 100% of the project costs are eligible for financing. By spreading out the costs over 15 or 20 years, the savings generated from the project are greater than the annual PACE loan repayment – generating an immediate positive cash flow. In fact, under Michigan law, the savings to investment ratio must be positive starting day one, as a condition for project approval. Further, PACE special assessment financing "runs with the land" – the owner can sell the property and the new owner will be able to pick up the payments (and energy savings).
In 2017, St. Clair County joined the statewide Lean & Green Michigan PACE program, operated by Levin Energy Partners. Twenty-three of Michigan's counties actively participate in PACE. In addition, eleven Michigan cities are participants.
If you have any questions related to PACE financing, contact Paul V. McCord at 517.377.0861 or at pmccord@fraserlawfirm.com.