Ann Arbor’s PACE aims to speed rate of green upgrades by local businesses.

12 Apr 2011

Photo by Joe Braun Photography

Last month the Ann Arbor City Council approved a number of notable green initiatives which included the installation of solar panels on the roof of a city fire station and the purchase of 500 new LED streetlights.  The Council’s action that I’m most interested in, however, is the establishment of a $482,800 loan loss reserve fund to be used in connection with the city’s new Property Assessed Clean Energy (PACE) program that’s currently under development.

The PACE law (HB 5640) was signed by outgoing Governor Granholm last December.  The new law gives local governments authority to establish programs to make loans to private property owners (it only applies to businesses for now) for energy efficiency improvements or the installation of renewable energy systems (ranging anywhere from a few thousand dollars for a new high-efficiency furnace to tens of thousands for a new solar panel system).  The property owner would be required to borrow all costs associated with the project from the municipality and the loan would be repaid over a period of several years through special assessments added to their property tax bills.  Local governments can issue bonds in order to obtain the funds necessary to make the loans.  The loan loss reserve fund approved by the Ann Arbor City Council would cover any potential delinquent repayments of the PACE loans.

The PACE program is of particular interest to me.  We represent a number of developers and commercial property owners who would like to make energy efficiency improvements but are hesitant about assuming long-term financing for such upgrades.  The PACE program allows the cost of improvements to remain with the property so that a new owner would take over the payments (and would also enjoy the energy savings).

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