By Mansoor Ghori, CEO, Petros PACE
Detroit Landmark Epitomizes the Fulfillment of the C-PACE Vision
Petros PACE Finance closed one of the first Commercial Property Assessed Clean Energy (C-PACE) transactions in Michigan. The low-cost, long-term financing enabled the owner of a historic Detroit landmark to invest in the critical energy efficiency improvements needed to make the 123-year-old building and its signature fine dining restaurant both environmentally and fiscally sustainable.
Five years and many transactions later, The Whitney remains one of my favorite Petros projects in part because I love beautiful old buildings, but also because it so clearly epitomizes how C-PACE financing has lived up to its promise. Unaffordable with traditional financing, the energy efficiency retrofits that Petros funded were a gamechanger for this civic-minded property owner and the historic building that he bought to preserve, protect and share with the community.
The High Cost of Inefficiency
The Whitney represented the height of luxury when it was completed in 1894, but by the time Bud Liebler bought the 52-room mansion in 2007, it had fallen far behind modern standards for comfort and sustainability.
Cold air seeped through the old storm windows lining the dining rooms, prompting customer complaints and table changes. The 30-year-old heat pump system needed to be replaced and, with no central air conditioning, the portable units brought in each summer often proved inadequate for the dining rooms and special event spaces.
With just 40 percent of the 21,000-square-foot building properly climate controlled, Liebler’s company was spending $100,000 on operations and maintenance annually and another $115,000 for utilities.
“We had to get the building up to modern standards, but as a small business owner, there was no way I could afford to do what had to be done,” said Liebler.
A New Type of Affordable Financing
In 2016, Newman Consulting Group advised Liebler that he could fund a wide range of energy efficiency improvements with no out-of-pocket expenses with Commercial Property Assessed Clean Energy (C-PACE) financing. Currently available in 37 states, the program allows commercial property owners to retrofit their buildings with renewable energy and energy efficient systems by borrowing money from a private lender and repaying the financing via a special assessment on their local property tax bill.
With the qualifying planned projects estimated to save his company a net $450,000 in utilities, operations, and maintenance expenses over the fixed-rate, 20-year term of the fixed-rate assessment, Lieber thought it sounded too good to be true. It wasn’t.
A short time later, his company The New Whitney Real Estate, LLC closed on a $863,130 C-PACE assessment with Petros through Michigan’s Lean and Green C-PACE program.
Over the next 12 months, Liebler installed a new HVAC system and two high-efficiency stoves. He upgraded the building’s electrical system, replaced 214 storm windows and converted 1,865 incandescent light bulbs to more efficient and longer lasting LED lighting.
From Skeptic to True Believer
Liebler estimates that his company saved thousands of dollars in the first few months on heating costs alone. Just as importantly, the upgrades enabled him to open the large portion of the building previously closed off due to high heating and cooling costs.
Today diners and special event guests can move about and comfortably experience different areas of the mansion for drinks, dinner, and desert regardless of the weather while additional prep stations provide kitchen staff with more room to work.
“I believe it’s paid off big time,” Liebler said. “I’m a big proponent of the C-PACE program and have personally recommended it to others. The biggest advantage is that you don’t have to take money out of your pocket. You have 20 years to pay it back, and you’re paying it back through cost savings on utilities.”