Brian Belli packed up his 40,000-square-foot antique mall at 1039 S. Second St. last fall and moved to a larger, older building in Milwaukee’s Walker’s Point neighborhood, changing his store’s name to Antiques on Pierce.
The change has been good, Belli said. At 71,118 square feet, the new store at 1512 W. Pierce St., is much larger and the move still allowed him to stay in the neighborhood.
But with a 104-year-old boiler being held together by wire and bubblegum, Belli had to make some repairs.
“Between the loan for renovations and the purchase price on the building, we were pretty close to the max on what we could borrow,” Belli said.
He called the City of Milwaukee, which turned him on to PACE, a financing option to encourage building owners to reduce their energy use and greenhouse gas emissions.
Belli qualified for a $220,000 loan from PACE, which he used to pay for a new HVAC system for his building.
“We are conservative with borrowing and don’t want to extend ourselves too far,” Belli said. “PACE was good at keeping us within our comfort level. Without them, we would have been running on that old boiler.”
In 2009 and 2011, the state Legislature passed two bills allowing municipalities to offer the PACE program, which stands for Property Assessed Clean Energy, to commercial property owners.
In July 2013, the City of Milwaukee passed a resolution authorizing PACE. A handful of other Wisconsin municipalities have passed similar resolutions.
Since 2014, the Milwaukee PACE program has approved more than $10.8 million in energy efficiency projects in Milwaukee. These include the Mackie Building renovation, the new Westin Hotel, SpringHill Suites Hotel in the Commerce Building, Antiques on Pierce and The University Club of Milwaukee. PACE is collectively saving these buildings $885,000 annually on operating costs.
“Energy efficiency projects in buildings are important to grow our economy and reduce our environmental footprint,” said Milwaukee Mayor Tom Barrett. “PACE financing unlocks private capital to help commercial building owners upgrade their buildings while creating local jobs and a more vibrant community.”
Beau Engman started PACE Equity at the end of 2013, after heading up the commercial energy solutions business for Johnson Controls for three years.
PACE Equity works with private equity to bring money to the table to help pay for energy and water efficiency improvements. The city then acts as the collection agent, via a special charge on the building owner’s tax bill, and remits the money back to PACE, typically over a 20-year period. Tax dollars are not used to pay for any of the improvements.
“This isn’t about putting money to work, it’s about satisfying our customers and helping them accomplish their business plan for their building,” Engman said.
In 2015, PACE Equity started with three people working in three states; by the end of the year, there were 15 people working in eight states. The plan is to grow as municipalities continue to approve PACE legislation, said Engman, who oversees PACE Equity nationally, based out of Milwaukee.
“The city likes this because it creates jobs, helps with business development in terms of attracting investment in the community and helps the city hit sustainability goals,” Engman said. “It is a way to modernize the building stock, which can be a challenge.”
Developers like it, too, because it gives them an incentive to make energy improvements to a building and a 20-year, fixed rate loan to do so.
PACE financing is a $1.7 million component in the $13.4 million project developer Joshua Jeffers is currently working on to redevelop the historic Mackie Building in downtown Milwaukee.
Jeffers is using the PACE money to purchase a new HVAC system for the building.
“I joke with people that it is so energy efficient it’s from the year 2060,” Jeffers said. “PACE has worked out so well, because the Mackie building was tough to get financed. This fit in nicely with our capital stack. It not only closed the gap, but it’s a solution for the next 20 years.”
