PACE Financing

Go ‘green’ on your project with clean energy funding.

In today’s development market, many U.S. municipalities and counties are providing incentives for owners and developers to use energy efficient and green infrastructure practices within their new build and retrofit projects. For commercial building owners — who spend $200 billion per year on utilities, with 30% of those dollars essentially wasted through energy inefficiencies — these green building ‘nudges’ couldn’t come at a better time.

PACE (Property Assessed Clean Energy) Financing gives commercial/multi-family property owners and non-profits the opportunity to fund the installation of energy and water efficient technologies — including green roofs and other Green Stormwater Infrastructure — with low-cost, zero-down financing.

PACE loans are funded by private capital (usually via private equity firms) and repaid through a special assessment on your building’s property taxes. By eliminating the need for upfront capital and spreading costs over a long period of time (up to a term of 25 years), a PACE-funded project brings you an opportunity for immediate positive cash flow.

When the efficiencies are realized and the energy, operations, and maintenance savings generated from the green infrastructure project are greater than the annual PACE loan repayment, you as a business owner or developer can feel good about going green while you build yourself a more solid financial future, freeing up money to use elsewhere on other projects or investments.

Benefits of PACE Financing

Immediate positive cash flow

A typical commercial loan carries a term of only 3-5 years and with a 20-25 year amortization period, its high payments make it difficult to achieve profitability until well after a project gets off the ground. With PACE’s long term financing up to 25 years (or the useful life of the project), the costs of the project can be spread over time so that: annual energy, operations, and maintenance savings is greater than the annual PACE loan repayment.

Non-recourse lending

Property owners are not personally liable and PACE loan debt stays with the land, linked to that property’s deed and transferring to subsequent owners with any sale of the property. The new owner will pick up the loan payments — and the energy savings — for the remaining term of the loan.

Fixed interest loans

Interest rates are fixed and negotiated on each PACE lending deal, giving business owners (and subsequent purchasers) a clear picture of their repayment liability over the term of the loan. (The terms of these PACE loans have also been found to be more favorable, compared with equity lines of credit and/or SBA oriented loans and traditional business growth funding.)

Loan payment pass-along

Payment obligations can be easily passed on to tenants as part of their lease payments or through metering (whether based on actual energy consumption or square footage rented).

No upfront costs

Typically 100% of PACE-related energy upgrades and green infrastructure costs — as well as soft costs related to architectural, engineering, and landscape architectural services — can be covered with PACE financing, allowing for immediate savings after the project has been completed. And compared with traditional lending, PACE lenders do not require any down payment.

Secured lending

Participating PACE districts — which is typical by county in Michigan — are created to join their state’s official PACE program or designated authority. Since each county typically enforces the PACE assessment to the borrower the same as any other property tax obligation, private lenders are given the security to provide these long term, fixed rate loans.

Stronger communities

A PACE-funded project is a perfect complement to the restoration and revitalization work being done in our cities, where rebuilding is happening after decades of decline. With upgraded buildings in revitalized areas and new builds in ‘green’ neighborhoods, the local tax base will increase over time and the community will be stronger. PACE also offers opportunities for trade contractors to specialize in energy efficiency and GSI-related work, creating good jobs, and helping our communities receive triple bottom line benefits.

Do I qualify for PACE financing?

Currently, PACE loans are available for the building of new or the retrofitting of existing privately-owned commercial properties as well as non-profit entities including:

Office buildings
Mixed use developments
Industrial complexes
Multi-family housing
Hospitals & healthcare facilities
Hospitality businesses & hotels
Retail stores & restaurants
Non-profit cooperatives
Private schools
Churches & other places of worship

What does it cover?

Overall, the variety of energy saving solutions that can be covered under a PACE loan is broad. In general, if the proposed installation can provide noted energy, stormwater, and utility savings, that solution can usually be included in a PACE project. Some examples include:

Energy efficiency: lighting, HVAC systems, windows, etc.
Water efficiency: low flush toilets, low flow fixtures, gray water solutions, etc.
Renewable energy solutions: solar, Combined Heat & Power (CHP), etc.
Green Stormwater Infrastructure: green roofs, blue roofs, rain gardens, permeable paving, etc.

case study

Inhabitect is a natural PACE partner.

PACE financing is not a new concept, but it’s one that’s relatively new to us in Michigan. In a state that’s known as one of the more challenging to close on a PACE-related project, we’re proud to have been an integral part in figuring out how to make it work.

In 2020, we completed Michigan’s first PACE-funded green roof project — the Belt Line Center in Detroit, valued at just over $1 million. Not only was it the first of its kind in the state, but it’s currently the first GSI project that was solely funded by PACE in the United States. It was also the very first PACE project to include any form of Green Stormwater Infrastructure in Wayne County, Detroit’s home.

coming in 2022

We’re proud to be collaborating on the Commongrounds project in Traverse City, for which we helped the project’s developer secure $1.85 million in PACE financing.

Let’s get your PACE project off the ground.

As the trusted contractors who installed Michigan’s first and soon-to-be second PACE-funded green roofs, we sit in a unique position among the industry’s clean energy and stormwater management players. And we’re ready to take this model nationwide.

We’ve already proven the private-finance model is possible in both urban and rural counties, and have relationships with several PACE funders who are waiting to finance your qualifying Green Stormwater Infrastructure (GSI) project.

project spotlight

Belt Line Center

At Inhabitect, we helped this owner receive over $1 million in financing and installed Michigan’s first PACE-funded green roof project in Detroit.

Take A Closer Look >

Let’s Talk

We’re eager to help you take a closer look at PACE financing for your next project and to create more opportunities for future green infrastructure projects in your community. Click to schedule a time to talk with us about PACE financing, what it could mean for your project, and for an assessment of project qualification.

Inhabitect is a full-service firm dedicated to designing, building, and growing all forms of living architecture. Based in Traverse City, Michigan — and consulting throughout North America — we create green roofs, natural shorelines, and other stormwater management and eco-minded landscape solutions for clients across the state. We’re bringing a new meaning to ‘GREEN.’