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More Green Roofs for Michigan?

Easy PACE loans could support a rising, energy-saving technology

PACE | December 1, 2014 | By Jim Dulzo

About the Author


Jim Dulzo is the Michigan Land Use Institute’s senior energy policy adviser. Reach him at jimdulzo@mlui.org.
 

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Grand Traverse County’s Lean & Green Michigan PACE ordinance could ease the way for more green roof construction in the county, saving businesses and tax payers significant energy and infrastructure dollars.
Grand Traverse County’s Lean & Green Michigan PACE ordinance could ease the way for more green roof construction in the county, saving businesses and tax payers significant energy and infrastructure dollars. 

TRAVERSE CITY—Green roofs—roofs covered with soil, grasses, and plants rather than shingles or metal—could soon become a more common sight in Grand Traverse County and other parts of the state.

The increasingly popular roofs can save energy dollars by effectively insulating buildings from heat and cold. They can also save tax dollars by cutting the costs of storm water management, and even make solar panels mounted on them more productive.

These environmentally benign, money-saving wonders do have a catch, however: They can cost about twice as much as conventional roofs.

Nate Griswold has installed more than 1,000 green roofs around the country and recently moved back to hometown Traverse City to start his own sustainable building and landscape design company, Inhabitect LLC. He said green roofs definitely make economic sense—the challenge is finding financing and proper design integration that make the projects' numbers work. So he was pleased by what he heard at a recent training session on the intricacies of the Lean & Green Michigan ordinance that Grand Traverse County and other local government in Michigan have adopted.

The ordinance allows a local unit of government to treat large, private loans for efficiency and clean energy projects like special property tax assessments for commercial, industrial, and institutional buildings. That is why the loans are known as Property Assessed Clean Energy, or PACE, financing.

“I didn’t expect to learn how diversified the opportunities for PACE financing are—what it can help pay for, what qualifies. That was a big one,” Griswold said of the recent four-hour training session, which attracted several dozen entrepreneurs, building owners, and contractors to Northwestern Michigan College’s University Center Campus.

PACE treats private loans as property taxes, so their risk is quite low and lenders are willing to provide remarkably long terms—up to 20 years—with very low monthly notes.

The training convinced Griswold that such loans would work for properly designed green roof projects because the energy savings from the roofs’ exceptional insulation—combined with savings from other, more traditional efficiency improvements within a building—would very likely more than cover the unusually low notes from day one.

“I’m very intrigued by PACE’s versatility,” he said after the training. “It is a unique program and a unique opportunity to help fund solutions to energy problems that I’m pushing. Once I get this rolling and tied into solar panels and other green things in the buildings, it will be very complementary.”

Griswold said the only problem with PACE is that it’s not yet in effect in every Michigan county. He believes, however, that when other counties see that PACE can save building owners money, put efficiency contractors to work, and sometimes also save tax dollars, they will embrace the program.

PACE in Michigan

So far, three Michigan cities and nine Michigan counties, including Grand Traverse, have adopted the Lean & Green ordinance.

Andy Levin, a former state economic development official and founder of Levin Energy Partners, wrote the ordinance and has crisscrossed the state for several years urging local governments to adopt it. Lean & Green is based on a 2010 state law allowing local units to either make and administer bonds for large, commercial efficiency and renewables projects, or administer private loans via their special property tax assessment authority.

So far, Levin has used the ordinance to facilitate three major, private loans of about $500,000 each—for the 1-800-LAW-FIRM building and the Star Lincoln auto dealership in Southfield, and for a building in Eaton County that the Michigan Public Service Commission will soon occupy.

The law firm and MPSC buildings are including solar power system in their projects.

All three projects are good for the buildings’ owners—it increases the value of their property and, because of Lean & Green’s guarantees, reliably shrinks their overall operating budgets. Because the Eaton County project will do that for the building that MPSC is leasing, it saves taxpayer dollars, too.

And Griswold pointed to a way green roofs could save major infrastructure dollars, too.

Powerful Combinations

Although he wouldn’t name names, Griswold said that some local government planners and engineers are excited about seeing green roofs go up on private buildings because they absorb and hold much of the rain or snow that falls on them, rather than sending the water gushing directly into storm sewers.

“Increasing water quality, lowering water turbidity and suspended solids, reducing the volume of water going into the pipes, lowering erosion,” Griswold said, ticking off some of the good things green roofs do for water in general and storm drains in particular. “So, it’s about quality, quantity, and treating water where it drops rather than pumping it into the local system and treating it there. Municipalities really like that.”

That is why, he said, some local units are considering offering tax incentives for installing green roofs.

Griswold’s green roof background is strong, and includes consulting for Green Roofs for Healthy Cities, an industry trade group, where he reviewed and documented green roof incentive programs from around the U.S. About 120 cities have such programs, he said. He added that the combination of PACE financing and local tax incentives could be a powerful impetus for future green roof construction in his county.

But, he said, even before PACE arrived in Grand Traverse, and even without local tax incentives, he’s finding some good business in the region. Griswold is installing a green roof on Cherry Capital Food’s new building; he’s contracted for efficiency work on several Munson Medical Center buildings; and he just closed a deal to install green roofs on the Uptown Riverfront Townhomes development, easing some locals’ fears about runoff from the new building into the adjacent Boardman River. 

Now, with Lean & Green Michigan, Griswold believes the best is yet to come for his company. The challenge is to explain how PACE and green roofs work to owners of large buildings, since the ordinance is designed for projects costing more than $250,000.

“With a little more studying on my end, and working with folks who do this every day, to boil the concept down to just five or six slides, or show them Andy’s Lean & Green 90-second video, they should be able to understand it,” Griswold said. “That is my goal; I see this as an opportunity to help building owners.”

Griswold said he’s reluctant to predict a general return on investment for green roof projects, either by themselves or in conjunction with other efficiency and renewable energy projects that a Lean & Green Michigan PACE loan could finance. But the ordinance does require guaranteeing enough savings to make any project immediately cash flow-positive.

“I really think that each project is so unique that it is hard to put an exact number to how it would work,” he cautioned. “I’m waiting for my next project to try to implement PACE for its financing. I see it as another arrow in my quiver.”

Griswold, whose company can also provide traditional landscape planning and energy efficiency services, said that anyone dealing with construction, design, or architecture should be aware of PACE “because it’s a tool that can help the engine run a lot better.”

He offered an example of the power of combining several energy projects under one PACE loan: “Solar panels work better with green roofs, because they keep the back of the panels cool, which allows them to operate more efficiently.”

“I quit a very lucrative job elsewhere because I saw opportunity here,” he added. “PACE will help perpetuate my growth. My company has tripled in the last 18 months, and I’m creating jobs. So, yes, I do look at this through my own narrow lens, but in northern Michigan, this is a big thing.”

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org.

1 Comment

589 days ago, 4:27pm | by Rob DeLay | Report Comment

Green roof projects for Michigan must include opportunities for individual homeowners,not just multi-home landholders. In particular, benefits and loan opps for farmers should be a high priority. Just my 2 cents worth, not that the political or economic mindset in Michigan at the moment will consider these ideas.

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