Program helps facilities finance energy-saving upgrades

By: Terry Oparka | Troy Times | Published July 27, 2016


TROY — A Troy-based machine tool company is the first manufacturer in Michigan to finance energy upgrades through a 2010 state-authorized program that allows municipalities to fund energy-efficiency improvements through a special assessment on a property. 

This past February, the Troy City Council voted unanimously to join Lean & Green Michigan’s Property Assessed Clean Energy, or PACE, program. 

“Thanks to everyone who worked on this,” said Mayor Dane Slater at the Feb. 8 meeting. “It’s a good thing for the city.”

No taxpayer money is involved. 

PACE enables up to 100 percent financing and 15- to 20-year terms for the life of the project by guaranteeing payment on the financing. If the borrower defaults on a loan payment, the local municipality places a lien against the property through a special assessment, guaranteeing payment to the lender. 

Andy Levin, president of Lean & Green Michigan, explained that the program is a property tax mechanism controlled by local governments. He said 19 counties and nine cities and/or townships in Michigan have joined the PACE program as PACE districts that are similar to special assessment districts. 

“Commercial loans are typically due in three to five years,” Levin said. He said that the financial payback or savings from enacting energy-efficient measures can be 15-20 years. 

“It’s a complete game-changer,” Levin said of the program. “It gives a tool to businesses to finance the entire cost. Each year, the companies or organizations save more in reduced energy costs then they’d spend repaying the loan.” 

The program also is available to commercial and industrial building owners and houses of worship. 

Levin said the Heller project was the fourth PACE project in Michigan, “our biggest yet at just under $1 million, the first manufacturing facility to take advantage of the program, and the first company in Troy to take advantage of the program.”

PACE Finance funded 100 percent of the $978,600 required to retrofit the 100,000-square-foot Heller Machine Tools plant. Improvements will include replacing the heating and cooling system and controls, energy-efficient lighting throughout the facility, compressed air upgrades, server room cooling, and partial replacement of the roof. These upgrades are expected to reduce energy consumption and related costs by 23 percent. 

“As a global company, we recognize the positive environmental impact we can have by retrofitting our facilities with energy-efficient upgrades,” said Keith Vandenkieboom, CEO of Heller Machine Tools, in a prepared statement. “When ABM Building Solutions brought this new PACE tool to our attention and introduced us to (Petros) PACE Finance, we were happy to learn that our substantial retrofit project could take place without a large outlay of operating capital. It was an easy decision.”

Troy Economic Development Specialist Glenn Lapin explained that under the terms of the program, local government enforces this assessment like any other property tax obligation, and lenders feel secure in providing fixed-interest loans with terms of up to 20 years.

Heller’s project is set to be completed in the fall of 2016. The work will be done by ABM, an international provider of facility services for more than 100 years. These improvements are projected to save the company $1.6 million over 15 years. 

“We’re supportive of anything to help and encourage businesses to improve energy efficiency in their buildings, improve property values and encourage the company to continue to grow here,” Lapin said. “Now there’s a lot of interest from other companies here in Troy to take advantage of the program.”