Owatonna People's Press - County adopts agreement for new energy efficiency incentives

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by William Morris
Wednesday, February 21, 2018

OWATONNA — Business owners in Steele County will soon have a new tool to make upgrades to their buildings, or finance new development.

On Feb. 13, the County Board voted to enter a joint power agreement with the St. Paul Port Authority, which under state statute is the administrative body to oversee Property Assessed Clean Energy (PACE) loans. The agreement will make PACE financing available to businesses and nonprofits throughout the county.

Steele County Planning and Zoning Administrator Dale Oolman said the goal is to enable applicants to reduce energy costs at their properties.

“What it is is basically another tool that can be used for commercial or nonprofits to finance energy upgrades, energy-saving measures,” he said. “What the tool does is allows the financing of these things, if they qualify, to be assessed onto the property taxes and paid back through a property tax assessment.”

Peter Lindstrom, local government outreach coordinator for the public-private Clean Energy Resource Teams, explained the program to county leaders at a Jan. 23 meeting. On Wednesday, he said the Port Authority funds the projects in collaboration with private financiers, and relies on the county to collect repayment through property tax payments.

“There’s always an energy assessment associated with these projects, and that assessment identifies energy conservation measures these businesses can do, lighting, insulation, whatever it might be,” he said. “Then the savings from those improvements help pay back the loan. The term typically is 10 years, and the interest is typically 4.5 percent.”

PACE projects generally involve improvements to existing buildings, although they can be applied to new projects, or even farmland, Lindstrom said, with solar panel installations being a popular option. The only limitation, other than the Port Authority’s lending capacity, is that funds are capped at 20 percent of a property’s assessed value.

“The theory there being, if you’re doing energy improvements, you’re saving enough money to make your payments,” Oolman said. “Over time, you would save enough money that would pay for the financing of those energy improvements.”

Lindstrom said between 50 and 60 counties or other local governments currently offer PACE funding, including all other counties in southern Minnesota. Oolman said that was one reason the county is acting now, with another being several projects underway that have sought to utilize PACE. The most prominent is the proposed hotel and civic center development in downtown Owatonna, for which the city in January approved a letter of understanding that included the city’s promise of support for the developers in obtaining PACE funds.

City Community Development Director Troy Klecker said he and his department were new to the program but will fully support developers in whatever way is needed.

“I am not sure that we would have to do anything beyond [a letter of support],” he said. “If there are more steps we have to do, we would certainly be in favor of doing that to move these projects forward. We have not utilized this at all, or have any experience with it, so it’s hard to know. … We’re a little green on this one.”

While the hotel development is the only project Klecker knows of to be actively pursuing PACE funds, he said it will be beneficial to future development efforts as well.

“It’s an incentive that most other counties are adopting now,” he said. “To be competitive, we need to have this as one of the tools in our toolbox as well.”

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