The tour of the Zero Net Energy Center in Detroit’s Corktown offered a compelling vision of what’s possible when building owners embrace sustainability and clean energy options. While the average commercial building wastes 30% of the energy it consumes, the Zero Net Energy Center produces its own energy while incorporating the latest in energy-saving technologies to minimize waste.
Originally built in 1966, a recent upgrade of the facility was used to showcase all the possibilities now available to building owners by incorporating advanced insulation, rooftop solar, geothermal heating and air conditioning, LEDs, and building lighting controls. The pre upgrade $65,000 annual energy cost has been dramatically reduced to a minuscule $1.67 per month!
The tour of the Zero Net Energy Center was the compelling case study used to support the expansive vision presented at the Property Assessed Clean Energy summit on May 2nd, 2019. Organized by Lean & Green Michigan, the program administrator for all Michigan PACE districts, the summit brought together an impressive array of leaders with a shared focus on sustainability, clean energy and a reduction of energy waste.
Because of the significant level of energy wasted in the average commercial building, a number of communities are taking action to conserve energy utilizing a forward thinking program known as 2030 Districts. At present Michigan has 2030 Districts in Ann Arbor, Detroit and Grand Rapids, and they were represented at the summit by Cheri Holman (Grand Rapids) and Connie Lilley (Detroit). From a 2003 baseline the goal of the 2030 Districts is a 50% reduction in the use of water, building energy use, and transportation emissions by the year 2030.
The 50% energy and waste reduction goal requires creative solutions to address the leading obstacle which can delay or hinder many innovative energy goals – especially how to pay for the required upgrades.
The summit highlighted Property Assessed Clean Energy (PACE) as an increasingly popular source of financing that overcomes this financial obstacle. PACE enables a property owner to pay for an energy efficiency, water conservation or renewable energy project with a voluntary property tax assessment. The loans typically range from 15 to 25 years and always at a fixed interest rate. The level of PACE funding is determined by the value of saved energy or conserved water.
“If you’re only building to code, you’re missing out on tremendous savings. This energy and water savings would improve both the return on investment for the property owner and the overall experience for the tenant.” Bali Kumar
Bali Kumar, CEO of Lean and Green Michigan, noted that the five primary benefits of PACE financing for building owners are:
- 100% project financing
- Can fund energy efficiency as well as water conservation and renewable energy
- Must create a positive cash flow on projects greater than $250,000 (resultant energy savings must exceed total project costs)
- The loans “runs with the land.” If the property is sold, PACE allows for a seamless transfer of the assessment obligation to the purchaser
- The loan may be considered “off-balance-sheet.” This means the loan is an expense rather than a long-term liability, freeing up the owner’s borrowing capacity for other projects
E3 Prime Environments’ President, Curt Monhart provided information to event attendees that highlighted some of the additional benefits that ultimately appeals to those communities (such as the 2030 Districts) when they embrace and promote PACE.
Monhart’s list included:
- Creates economic development opportunities using zero taxpayer funding
- Provides property owners with capital for funding building improvements
- Creates jobs for contractors, architects, vendors and the trades
- Supports modernization of outdated and underutilized buildings
- Upgrades improve tenant acquisition, satisfaction and retention
- Modernized buildings increase property values and marketability
- Third party administration of PACE underwriting does not negatively impact the county or municipality’s budget. There’s no liability on their part whatsoever.
The PACE Summit proved that the path to Zero Net Energy is now possible for Michigan’s aging real estate. By incorporating cutting edge technology along with energy-specific financing options, achieving sustainability goals and the adoption of clean energy are now possible through the creation of powerful public-private partnerships bringing together local governments, property owners, lenders, and contractors. As the awareness of projects like The Zero Net Energy Center grows, so too will the number of energy projects for those building owners and communities with a focused energy saving vision.