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Picking up the PACE:Sun Saluters2014 Better Buildings Case Competition
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
Current Landscape: Sluggish Participation
The stubborn facts: Only 12 states and Washington DC have
active PACE programs Financed approximately 200 projects
totaling nearly $63 million Web traffic to PACEnow.org and
a2energy.org show that awareness and demand is insufficient
Our Research: Information gathering, including articles,
blogs, and primary sources Discussions with building owners, real
estate professionals, building contractors, and real estate & development professors
Multiple rounds of interviews aimed at information gathering and solution refinement with Matt Naud, the City of Ann Arbor‘s Environmental Coordinator (runs PACE program)
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
Potential Breakthrough
Reason for optimism: Commercial buildings consumer 20% of all US energy These buildings require annual energy expenditures
of $200 billion 20% reductions in energy use is typical post retrofit Significant energy savings and job creation potential
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Projected Energy Sav-ings (TBtu annually)Total Investment Needed ($B)
In the following slides, we will show that:
The system needs improvement – too many burdens on local government and general lack of program awareness
The solution – take financing and administration to the state and encourage greater contractor involvement
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
PACE: Current Market
Summary of ShortcomingsA. Requires intensive
outreach from City employees to start the process, but the City employee already has many competing responsibilities and little timeB. Requires the building owner to find and secure their own quote/contractorC. Slow process as the Municipality must wait for critical mass
These shortcomings made the Sun Saluters question
several procedural aspects of the program.
Matthew NaudEnvironmental Coordinator Responsible for PACE - City of Ann Arbor, MI
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
PACE: Proposed Market
Property taxes are still assessed and managed at a local level, so the municipality will still be required to collect the PACE assessments locally and pass through to the state.
Summary of ImprovementsA. Contractors are
motivated to create new business, and will set the cycle in motion once they are aware of the programsB. Increased volume allows the State Government to raise money faster, more cheaply and have a more professional staff
C. The only increased burden on the local government staff is to properly collect the riding assessment
Through these improvements, the Sun Saluters believe the program will be more widely adopted, faster, easier
and ultimately save far more energy.
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
How the Program is Facilitated
• Commercial Building Owners• Standardized application template• Opt-in energy reporting initiatives
• Contractors• PACE education seminars at trade shows• Easy accreditation process• PACE awareness through online mediums
• State Government• PACE project database• Preferred contractor database• Eventually maintain a revolving fund for
easy-access capital• Support energy audits when buildings are
sold
• Local Government• State-administered webinar training
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
Benefits to State and Local Municipalities
Benefits to State Government:
1. Minimum resources committed to maximize revenue-generating and energy-saving opportunities state-wide.
2. Streamlined application and funding process that promotes efficient process for capital and energy-efficient investments.
3. Uniform education and communication with local municipalities and third-party contractor services.
4. Increased participation in the PACE financing program that generates increased revenue for the state from a marginal interest rate spread (i.e. 50 basis points).
Benefits to Local Municipalities:
1. Reduced administrative burden of limited employee resources.
2. Improved access and communication with commercial businesses and third-party contractor services.
3. Increased participation in PACE financing and energy-efficiency investment spurring local business and job growth.
4. Potential for increased tax revenues generated by increased long-term value of properties.
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
Benefits to Local Contractors and Commercial Businesses
Benefits to Contractors:
1. Increased understanding of PACE financing and incentives for personal business growth.
2. Increased support and recognition from state government and local municipalities endorsing contractors’ services and qualifications.
3. Increased access to portfolio of commercial businesses to solicit energy-efficiency audits and capital improvements.
4. Increased business opportunities enabling future job growth and expanded operations.
Benefits to Commercial Businesses:
1. Increased understanding of PACE financing and utilizing energy-efficiency infrastructure improvements for increasing bottom-line performance.
2. Increased availability to capital for financing long-term cost-saving infrastructure improvements, likely at rates better than a municipality could borrow at.
3. Increased access to government-supported third-party contractor services educated in PACE financing and energy-efficiency initiatives.
4. Increased mobility of business operations and opportunities for future growth.
2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters
THANK YOU
University of MichiganRoss School of BusinessSchool of Natural Resources & Env’tFord School of Public Policy
TeamJohn Serron, MS/MBAJohn Dooley, MS/MBABrian Rassel, MS/MBAChris Wolff, MPP/MBAMiriam Fuchs, MS/MBA