Saving energy is not only good for the environment, but is good for a business. A couple of years ago I was introduced to the Property Assessed Clean Energy (PACE) program here in MO. I believe the financial benefits of the PACE program, especially from a financing perspective, are not well known among Controllers and CFO’s.
Basically, the program provides a unique financing program for clean energy retrofits, allowing the upgrades to be financed through property taxes. In the case of our project several years ago, a $600,000 retrofit for lighting, roofing and HVAC upgrades, the advantages were:• Ease of qualification. Working with a consulting firm that specializes in PACE financing, the process was fast and simple.
- 100% financing. We were able to finance the entire amount of our project.
- Stand-alone financing. The PACE financing had no impact on our already existing term debt, availability of our working capital line-of-credit, or our borrowing covenants with our lender.
- Repayment. The loan is re-payed through a property tax assessment, allowing us to extend the loan time frame (10 years) over the normal 5 year balloon for maintenance capital financing.
- Transferable. If we ever sell the building, the loan accompanies the building, as it is part of the property tax assessment.
We are a growing company, and are constantly evaluating the best way to deploy our working capital. In the case of PACE, it allowed us to make some critical building improvements without impacting the availability of that working capital to fund our future growth. If you are considering energy retrofits for lighting, HVAC or building envelope, I would strongly encourage looking into PACE.