Nation’s largest PACE project nears completion in Minnesota

By: Frank Jossi

In downtown St. Paul the historic First National Bank Building and two neighboring properties have been collectively retrofitted with new heating, cooling and lighting technology paid for through the largest energy efficiency financing packages likely ever assembled in the country.

The energy savings alone from the project would, according to one estimate from Xcel Energy, power 1,235 average residential homes, a population greater than many Minnesota communities.

The First National Bank Building, right, and the U.S. Bank building in St. Paul are part of what’s believed to be the largest PACE-funded efficiency project in the U.S.

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Covering more than two million square feet, the more than $12 million project is being financed through a property assessed clean energy (PACE) program managed by the St. Paul Port Authority. Energy expenditures for the three buildings will plummet by an expected 35 to 40 percent annually.

The PACE program allows building owners to pay off energy improvements on their property assessments over a 20 year period at competitive interest rates. Dozens of states are encouraging PACE financing because it allows building owners the luxury of time to pay off new equipment, solar installation, LED lighting and other energy-related technology.

At 32 stories, the landmark First National Bank building is the third tallest in St. Paul. The other buildings involved are the 26 story U.S. Bank Center and the smaller 375 Jackson. The project will be completed in November.

James Crockarell, who owns the buildings through his firm Madison Equities, Inc., said all the properties’ mechanical systems had reached the end of their lives and he sought advice from the St. Paul Port Authority and Xcel Energy on what to replace and how to pay for it.

The Port Authority helps companies with financing through PACE and its Trillion BTU Conservation Program. Xcel’s Turn Key program, meanwhile, offers onsite energy efficiency assessments.

PACE financing was not familiar to Crockarell until he spoke to Peter Klein, the Port’s vice president of finance. “We had heating and air conditioning equipment in all three buildings that had reached the end their useful lives,” Crockarell said. “This was a major undertaking to finance that and this looked like a good way to do it.”

One landmark that had to be restored as part of the project was the red “1st” sign atop the First National Bank Building. After Madison owned the property for only a year, a wind storm blew through St. Paul and knocked out many lights on the sign.

“We had a structural analysis of the problems with sign and looked at removing it and the cost of supporting the sign with LED lights,” Crockarell said. “This was a St. Paul icon and there would have been a lot of disappointment if we had taken the number 1 sign off the building. I think (replacing) it was a good decision.”

Considering the cost of the retrofit, another partner was needed for the financing. Petros PACE Financing of Austin, Texas stepped in to provide more than $10 million in equity. Around half the money went to the First National Bank Building, the rest to the other properties.

The remaining financing came from the Port Authority, with $600,000 chipped in through tax credits.

The advantage of PACE financing for Madison Equities is that the building owner can share the cost of the project through property assessments added to their Ramsey County real estate taxes, Klein said. It’s a line item on the tax bill, he said.

However, the increase in taxes to pay for the improvements will be more than offset by the decrease in energy costs. “They’ll save more energy than their share of property tax will be,” Klein said.

The Port Authority has done more than 50 PACE projects, two-thirds being for financing small scale commercial solar installations of 40 to 80 kilowatts, he said.

The success of the Madison Equities project may bring more interest for using PACE for energy efficiency, Klein said, because more and more companies plan to only lease office space in the future in energy efficient buildings.

Crockarell has two more large downtown projects involving the renovation of an office building into apartments and transforming a vacant retail space into a hotel.

While he liked using PACE for the three buildings, he’s uncertain whether the apartment and hotel project will enroll in the program or whether he’ll simply include energy efficiency technology in a traditional construction loan package.

Michael E. Hepfler, an Xcel energy efficiency specialist, worked with Madison Equities’ energy contractor, Minnesota Controls, Inc., on a plan that in the one million square foot First National Bank Building alone would retrofit 7,400 light fixtures and replace 17,400 lights, he said. At U.S. Bank it was 4,600 light fixtures.

New heating and cooling equipment updated 1970s technology, he said. One weekend a crane lifted heating and cooling equipment 25 stories up to the roof of the U.S. Bank Building.

A sophisticated building automation system is being installed to allow building managers to see how equipment – cooling towers, heating systems – are operating.

Tenants can set their own temperature and humidity in rooms, Hepfler said. The system can detect issues at the level not just of a floor, but a room, he said.

And the building can be managed remotely. “They’ll be able to control those buildings while sitting on a beach in Florida – from their phones,” he said. “It’s pretty impressive.”

The project comes at a time of growing interest in employing energy efficiency as a way to reduce greenhouse gas emissions. The built environment accounts for 39 percent of carbon emissions, with commercial properties constituting 18 percent of that total. Better efficiency results in less demand on often fossil-fuel based generation.

Hepfler said a confluence of factors made the project special, starting with a timetable that moved much faster than normal. The First National Bank Building warranted its own case study on Xcel’s website. All told, Madison Equities will receive nearly $1 million in rebates and bonuses, with the other buildings likely to add another $500,000 to the total.

“It was the perfect storm of having the right customer with the right motivation, the right building, the right timing and the right resources,” he said. “It all came together.”

 

Originally published on Energy News Network

Barton Creek Square, Lakeline Mall, Round Rock outlets receive $3M in PACE funding

By: Caitlin Perrone

Three shopping centers owned by Simon Property Group—Barton Creek Square in Austin, Lakeline Mall in Cedar Park and Round Rock Premium Outlets—will be the first to install energy and water saving projects through an energy-efficiency program in Travis and Williamson counties.

Lakeline Mall is one of the three shopping centers utilizing the PACE program in Texas. (Simon Property Group)

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Williamson County adopted the Property Assessed Clean Energy program, or PACE, in April, and Travis County adopted the program in March 2015, according to a news release from the Texas PACE Authority. The program allows nonprofit, commercial, industrial, multi-family and agricultural property owners to receive financing from a lender for energy-efficient projects and repay the lender through annual assessments to their property tax bill.

The Simon Property Group is the first business to utilize the PACE program in Texas and received $3 million in funding. Financing for the projects was provided by Petros PACE Finance of Austin.

“I am excited to see the PACE program working for Simon Properties. The program is a win for Simon and the community,” said Williamson County Commissioner Cynthia Long. “I look forward to seeing more businesses take advantage of the program.”

With the funding, Lakeline Mall and Round Rock Outlets will receive LED lighting and water conserving low-flow fixtures. Lakeline and Barton Creek will install heating, ventilation and air conditioning, or HVAC energy saving improvements, and Barton Creek Square will also receive LED lighting, according to the news release.

“These projects are exactly what we had in mind when the legislature created PACE,” said State Rep. Jim Keffer, chairman of the House Natural Resources Committee and author of the PACE bill, in the release. “The upgrades will save water and energy, improve the tax base in these communities, and provide long-term financing for the property owners. Truly a win-win-win for Texas.”

Certain property owners in Williamson and Travis Counties are able to make energy-efficient improvements to their businesses with funding through the PACE program. (via Caitlin Perrone)

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Originally published on Community Impact

Simon Property Group Closes Deals in Travis and Williamson Counties

3 Projects, 2 Counties, 1 Day | Simon Property Group Closes Deals in Travis and Williamson Counties

AUSTIN – The Travis and Williamson counties’ PACE programs closed their first commercial projects today, totaling $3 million in financing for energy and water saving retrofits to three Simon Property Group malls:  Barton Creek Square in Austin, Lakeline Mall in Cedar Park, and the Round Rock Premium Outlets.

“These projects are exactly what we had in mind when the legislature created PACE,” said Texas Rep. Jim Keffer, chairman of the House Natural Resources Committee and the PACE bill author. “The upgrades will save water and energy, improve the tax base in these communities, and provide long-term financing for the property owners. Truly a win-win-win for Texas.”

PACE, which stands for Property Assessed Clean Energy, is an innovative financing program –completely free of government mandates and public funding – that enables non-profit, commercial, industrial, multi-family, and agricultural property owners to obtain up to 100 percent of the project financing from low-cost, long-term loans for water conservation, energy efficiency, and onsite generation projects.

Barton Creek Square and Lakeline Mall will be retrofitted with LED lighting and H-VAC energy saving improvements and water conserving low-flow fixtures.  Round Rock Premium Outlets will be updated with LED lighting and low-flow water fixtures.

Travis County Commissioner Gerald Daugherty, who championed Travis PACE program with fellow Commissioner Brigid Shea, said he is pleased to learn that Simon Properties is taking advantage of the program. “It is great news about the Simon Properties coming on board with the PACE program,” he said. “Hopefully, this will be the impetus for other organizations to see the merit of the PACE program!”

For Shea, a longtime environmental activist, it is important to see as many commercial businesses as possible use PACE to decrease their carbon footprint. “Simon properties will be a real role model for other commercial properties,” she said. “I hope they inspire many more to follow them.”

The Barton Creek Square project is the largest project since March 2015 when the Travis County Commissioners Court unanimously approved the program, making it the first county in the state to adopt PACE.

“I am very pleased to approve the Simon Properties application to launch the largest PACE project in Texas,” said Bruce Elfant, the Travis County tax assessor-collector, who signed the paperwork for the project on Friday. “This Simon Properties PACE project sets the ‘pace’ throughout Texas for reducing energy and water costs and extending these limited and increasingly costly resources.”

The Lakeline Mall and the Round Rock Premium Outlets projects are the first PACE projects under the Williamson County PACE program established by the Williamson County Commissioners Court on April 5, 2016.

“I am excited to see the PACE program working for Simon Properties.  The program is a win for Simon and the community.  I look forward to seeing more businesses take advantage of the program,” said Williamson County Commissioner Cynthia Long, who brought the PACE program before the commissioners court.

“I’m pleased that Simon Properties is using the PACE program to improve their energy efficiency.  Not only does the PACE program give them access to capital, but it also helps them protect the natural resources of Texas,” noted state Rep. Tony Dale.

The Simon Property Group, Inc., the world’s largest commercial property owner, is the first business to utilize the PACE program in Texas.  “We’ve worked with numerous PACE authorities in multiple states over the past several years,” said Kristene Canady, President of ECAS, consulting firm to Simon.  “To orchestrate three closings in two different counties on the same day is evidence of how the Texas PACE in a Box model successfully streamlines an otherwise cantankerous process.”

Financing for this three-property closing was provided by Petros PACE Finance of Austin, Texas.  Petros PACE Finance is one of the leading specialty finance firms in the U.S. dedicating all of its resources to the commercial PACE market nationwide.

“Being able to simultaneously provide the financing to retrofit these 3 Simon properties is a testament to the simplicity of the Texas PACE program,” said Mansoor Ghori, CEO of Petros PACE Finance. “These projects deliver significant energy and water savings to Simon in their quest to diminish their carbon footprint.”

Texas PACE programs are based on the PACE in a Box model program designed by over 130 volunteer stakeholders. This user-friendly model has been uniformly adopted in Texas in Cameron, El Paso, Fort Bend, Travis, Willacy, and Williamson Counties and the Cities of Dallas and Houston.

“One property owner and one lender closed three projects in two counties in one day, proving the Texas PACE in a Box concept – uniform, market-friendly, and flexible design for businesses across Texas,” said Charlene Heydinger, president, Texas PACE Authority.

All PACE programs are administered uniformly by the non-profit Texas PACE Authority, www.TexasPACEAuthority.org.

 

Originally published on Keep PACE In Texas

For more information, contact:

Charlene Heydinger, Texas PACE Authority president, charlene.heydinger@KeepPACE.org
Jonathon Blackburn, Texas PACE Authority managing director, Jonathon@TexasPACEAuthority.org

 

 

 

Iconic First National Bank in Saint Paul boosts energy performance using PACE

The 417-foot, 32-story First National Bank Building in downtown Saint Paul was constructed in 1931 and competed with New York City’s Empire State Building for construction materials. Madison Equities, the new owner of the building as of winter 2015, worked with Petros PACE Finance and the Saint Paul Port Authority to make $6.8 million in energy efficiency upgrades ($5M from Petros and $1.8M from SPPA), including energy management, HVAC, LED lighting, and occupancy sensors. These improvements are expected to reduce energy consumption and related costs by 35-40%.

Property-Assessed Clean Energy (PACE) is a new way to finance energy efficiency and renewable energy upgrades to the buildings of commercial property owners. Energy-saving measures pursued by the owners receive project financing and are repaid as a separate item on their property tax assessment for a set period. PACE eliminates the burden of upfront costs by providing low-cost, long-term financing. In the case of the First National Bank building the assessment is placed and managed by Ramsey County.

“PACE will allow Madison Equities to pass the costs (PACE assessment payments) on to the tenants that are going to see the reduction in energy costs,” noted Peter Klein who runs Saint Paul Port Authority’s PACE program. “Otherwise, this would be a big negative cash outflow to the building owner, making it unlikely that they would go ahead with the project. That is why PACE is such a good solution for multi-tenant buildings. It is also positive cash flow to the tenants since the energy savings will be greater than the PACE assessment payments.”

We talked to Chris Droske, an Energy Advisor with Franklin Energy Services, to learn more about the building and it’s energy-efficient transformation.

The First National Bank in downtown Saint Paul is an iconic building (and sign!). What were some of the highlights about working on this project?

The First National Bank building is one that nearly every motorist sees as they pass through downtown Saint Paul on any given night due to the large flashing “1st” sign atop the building. Some of my favorite parts of the energy auditing and project implementation process was finding ways to optimize the facility’s energy performance while maintaining its historic and iconic appearance. One of the first projects that was an area of focus was converting the rooftop sign from neon to LED. While saving energy and reducing maintenance costs were large priorities to Madison Equities, maintaining the appearance of the sign was equally important and we had to work together to find vendors that could replicate the neon look with the new LED technology.

Where were some of the greatest energy savings found?

In the First National Bank, significant energy savings were found in both lighting opportunities and HVAC upgrades. Upgrading fluorescent and incandescent fixtures to LEDs was one of the first projects pursued due to the quick payback and relative ease of implementation. Much of the HVAC equipment was several decades old and Madison Equities decided that they would like to bring the building up to more modern control strategies and replace core equipment to increase reliability. The key projects here involved upgrading to a new centrifugal chiller, converting their air handling equipment from a constant volume system to a variable air volume system, and upgrading from pneumatic to direct digital controls for their automated control system. These new systems will allow them to adjust airflow and the amount of heating and cooling provided based upon building occupancy and demand.

How was it working on a project of this magnitude?

This may well be the largest building I have every had the privilege of performing an energy audit at and definitely one of the most historic. Whenever you work on projects of this magnitude there are a lot of parties involved that all need to agree on the next steps to make forward progress, and on this project that is exactly what happened. Xcel Energy, Madison Equities, and several vendors worked to define and redefine the scope, find available incentives and financing, and ensure they could get projects done within the one year timeline to receive the additional 30% bonus that is offered through the Turn Key program. I think to all of us working on the project, it brings a smile to our faces knowing the environmental and monetary impact of the energy savings from projects implemented. It is exciting, knowing we are helping to preserve such a historic building in downtown Saint Paul while minimizing its overall energy usage.

Originally published on Clean Energy Resource Teams

El Paso County approves PACE program to spur redevelopment of aging buildings

El Paso County approves PACE program to spur redevelopment of aging buildings

EL PASO, Texas – County commissioners unanimously approved a new voluntary program proponents say will make it easier to improve aging and out-of-date buildings with new and more efficient infrastructure and utilities like lighting, plumbing, fixtures and HVAC systems.

Most importantly, it would come with savings to businesses and property owners by stretching financing out over a long term period so operational cost savings would be more than the costs of the financing, with no money down.

Called the property-assessed clean energy or PACE program, it relies on the county to guarantee the provisions and requirements of the program, but does not require any county funding. The loan is put into place as a lien on the land itself, and would be transferred to any new owner.

That is intended to ensure the terms are kept stable to give lenders confidence they will be paid back over the long term loans of the program. Charlene Heydinger, president of the Texas PACE Authority, says the savings from the improvements are passed along as well.

“El Paso County is taking great leadership in Texas to create an economic development opportunity for local business. And it reaches all corners of the county,” Heydinger said, “We’re very excited about that. The businesses include industrial, which includes agriculture; commercial, which includes non-profits; and multi-family properties which include at least five units.”

Private lenders have expressed interest in supporting the program. Joseph Edgar with Austin-based Petros Pace Finance say they have $250-million set aside for PACE in El Paso County, raised from private investors interested in supporting the program.

“You wind up saying ‘everybody wins, so what’s the catch?'” Edgar said. “And we get that a lot. The catch is it takes educating. So if you don’t understand how this works, then it’s an entire new way to look at financing. Traditionally, if you get a loan on your building, you have it until you own it. When you sell that building, somebody else’s loan pays you off and you pay that loan off. So that’s just the way the mindset is.”

 

Originally published on KVIA

CleanTX Forum: Property Assessed Clean Energy (PACE) Financing Comes to Texas

March 24th marked a milestone for Texas’ clean energy economy. On that day, Travis County voted to adopt a Property Assessed Clean Energy (PACE) program, making it the first county in Texas to do so. By adopting PACE, Travis County has unlocked a powerful economic mechanism for financing energy/water efficiency and clean energy technologies in upgrading Texas buildings.

What is PACE?

PACE, enacted in the 2013 Texas Legislature with support from both sides of the aisle, has the potential to unlock a considerable amount of private funding for clean energy and water conservation projects in the state. Specifically, PACE is an innovative financing program—completely free of government mandates and public funding–that enables commercial, industrial, multi-family, and agricultural property owners to obtain low-cost, long-term loans for water conservation, energy-efficiency, and renewable energy projects. Participants will then repay these loans through a county assessment on the property.

A PACE loan simultaneously offers building owners cheaper financing options and lenders secure repayment terms. In exchange for funds provided by a private lender to pay for the project, the property owner voluntarily requests that the local government place an assessment secured with a senior lien on the property until the assessment is paid in full.

Benefits to Businesses

PACE has great potential to directly affect the bottom lines of small and medium sized businesses. To be eligible for PACE financing, a project must show that the savings in utility costs will offset the cost of the project. In most instances, this will result in an immediate positive cash flow. This mechanism can be used to equip buildings with the latest in efficiency technology, including lighting, HVAC, and water conservation tools. In addition, PACE can be used for renewable energy additions, such as roof-top solar panels.

Nationally, almost 75 percent of PACE projects were less than $250,000 in size, demonstrating PACE’s popularity as a tool for small and medium-size businesses. Further, these project installations lead to increased property value and lower utility bills, making PACE projects attractive for both property owners and tenants alike.

State Program, County Project, Local Support

Travis County Commissioners Gerald Daugherty (R) and Brigid Shea (D) united to cosponsor the resolution advocated since 2012 by County Tax Assessor Collector Bruce Elfant with tremendous support from a large local coalition of PACE advocates in Travis County.

This means that within the next several weeks, private funding for water and energy efficiency upgrades as well as renewable energy projects in Travis County will be unleashed for local businesses. This program will be administered by the nonprofit Texas PACE Authority, an organization created to administer PACE programs in an efficient, low-cost manner – facilitating a marketplace for lenders, property owners, and contractors to put together financially sensible building upgrade projects.

The Future of PACE in Texas

Texas now has its first PACE program. But it shouldn’t stop here in Travis County. The state of Texas accounts for 12 percent of the entire country’s energy use, and Texas’ unique PACE framework makes implementation across the state easy and predictable. In the next few months, we’ll be looking to help other counties follow with uniform PACE programs of their own.

 

Originally published on Texas PACE Authority