CHEYENNE – The federal Property Assessed Clean Energy program uses financial incentives to encourage developers to make their properties more energy efficient, but it also helps cover steep upfront costs that come with new developments.
Following suit with municipalities across the country, the Cheyenne City Council and Mayor Patrick Collins are considering it as a tool to encourage development in town.
During a work session Friday afternoon, Collins said his conversations with developers have shown that the PACE program is an attractive benefit, noting that he’s talked with two developers in the last two days who are interested in the program for downtown development projects. He directed the City Attorney’s Office to begin putting together a PACE financing proposal to go before the council.
Council President Jeff White agreed with that initiative, saying, “It does seem something that’s popular and would be used, if given the opportunity. So that’s why we’re here today, and hopefully, with the approval of council, something like this could be developed here in our town.”
Specifically for Cheyenne, one of the biggest benefits of PACE financing would be offering financial incentives to help cover upfront redevelopment costs.
While Cheyenne has no shortage of buildings that need to be redeveloped, a major hurdle faced by developers is bringing historic structures up to date. Big projects like the Hynds Building could cost millions of dollars for necessary upgrades to lighting and HVAC.
Under this program, the developer would receive funding from PACE financing to cover the initial costs of energy-related upgrades. The city connects those seeking funding for energy efficient improvements with third-party lenders, and the city then manages the PACE loans.
Since the loans are connected to the property and managed by the city, they are very secure and attractive for lenders.
The program does come with additional legwork for city staff, especially to get it off the ground.
Even so, deputy city attorney Alessandra McCoy Fakelman said, “It’s a great economic development tool. It can help developers bridge a gap for funding mechanisms – so if a project costs $10, and they only have $8 … if they agree to do some energy efficiencies, they can sometimes gain those few extra dollars through the PACE program.
“It lowers the cost of doing business in Cheyenne; it directly impacts the bottom line of projects, not just because there’s more financing available, but with clean, energy-efficient technology, the projects can cost less over time.”
With PACE, energy improvements will be tied to the property, rather than the property owner, which alleviates the risk of losing their investments in the property if they decide to sell it. For those who opt into the program, the PACE payments can be transferred to the buyer in the case of a property sale.
In order to bring this program to life, the city, Black Hills Energy and other utility providers would collaborate on an Energy Improvement Area for the program, as well as identify third-party lenders to provide the initial PACE funding that will eventually be paid back by developers.
“Cheyenne is really desperate for some answers to redeveloping buildings that are already existing,” McCoy Fakelman said.
While the timeline isn’t exactly clear, McCoy Fakelman said the proposal could go before the council this spring.