Setting the PACE: Edina First in MN to Implement Commercial PACE Program

ARTICLE | Nov 7, 2013

An interview with Ross Bintner on Edina's PACE Program

Property Assessed Clean Energy (or PACE) provides money to finance energy efficiency, water conservation, and renewable generation improvements to existing homes and business properties via a special voluntary property tax assessment. Read below how Edina, MN has implemented PACE and what this means for the future. 

What is the background of PACE? 

It is a conduit financing mechanism where the city issues a bond to pay for improvement in a commercial or industrial building. The bond buyer puts up funds that will be used for an energy efficiency or renewal project. Our city energy and environmental commission brought the idea to our attention. This type of program originated in the San Francisco Bay area, but its success has caused it to spread from coast to coast, which Edina being the first community in Minnesota to implement PACE. The administrative guidelines, which includes the program requirements, various tracks for participation, surveys and evaluations and more can be found here. The eligible list of improvements can be accessed here.

Since the launch of our program, PACE has generated some interest from the local chamber of commerce in building energy efficiency, which long-term could create more momentum for energy efficiency improvements as engagement and conversation continues. Edina’s effort to put a program in place was also supported by the City’s Energy Commission, the Minnesota Pollution Control Agency, the Minnesota Solar Energy Industries Association, and the Minnesota Department of Commerce. The total cost of implementing the program was just $11,400.

What makes PACE innovative?

Generally, local governments don’t have much of a say in or a voice in energy efficiency matters because it is often left to the utility companies. PACE offers one of the only methods to give local governments a role in promoting energy efficiency. It also produces another financing opportunity for business by creating an economic development incentive and giving us an opportunity to teach businesses about energy improvements, as well as how to maintain them to reduce cost. These same lessons are very transferable to all major building owners and their competitiveness in reducing cost. It opens a door to have a conversation with businesses that we didn’t previously have.

In order to participate, the project cost must exceed $2,500, the property must undergo an energy audit or an evaluation, and the property owner must be current on all property taxes. The application period takes less than 15 business days.

What challenges have you faced?

The folks who are most interested in sustainability expected more activity than we’ve seen. They may think this reflects poorly on the program, but the reality is that those who are looking to reduce their business costs may be shopping for tools and other financing solutions of less cost. We aren’t here to compete with other tools, but rather to provide another option for businesses. PACE is really just a financing tool, a tool which happens to promote sustainability. That in and of itself makes it an easier sell, as opposed to just selling sustainability.

What does the future hold?

I’m not sure if we would be interested in expanding the tool just in Edina. But recently, as other cities such Maplewood and Eagan have become involved, we have looked into partnering with the Saint Paul Port Authority to manage the program regionally and have the Authority coordinate it. They already have funding in place which could help as well. Combining all of the funding into a regional administrative body will better help manage and expand the program in the future.

How can others start a similar program?

In Minnesota, they can work with the Saint Paul Port Authority, as we are doing. Otherwise, we are happy to share our story and discuss how we moved forward with our program. But I would also suggest any organization interested in PACE to contact their local energy commissions or utility companies, who can help share ideas to improve energy efficiency in the community as well. PACE programs offer both flexibility and incentive for financing sustainable building, they are possible for an individual organization to implement or can be undertaken as a regional or collaborative effort. In Edina, PACE is off to a good start, but we are still waiting to see what the future holds.

Learn more about Edina at http://www.edinamn.gov.

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