KANSAS, MO.—The Show Me PACE Clean Energy District has announced approval of the first hotel project in Missouri to use Property Assessed Clean Energy (PACE) financing for energy and water improvements. The downtown Kansas City building is also the first in the state to combine the use of PACE with historic tax credits.
After sitting vacant for years, the blighted Brookfield Building is being transformed into a boutique hotel with luxury apartments. The use of $2.1 million in PACE funds filled the gap in financing the property owners needed to make this a viable project. As a result, a public nuisance is becoming a valuable downtown asset and the 86-year-old Brookfield Building is being restored to its historic grandeur.
The owners—Brookfield Hotel Investment LLC of Madison, Wis.—plan to open a 118-room Hotel Indigo, with 27 Fairfax Lofts apartments early next year. The $36 million Brookfield project is expected to create 80 to 110 construction jobs and 30 to 40 permanent jobs.
Importance of PACE Financing in Hospitality Industry
“Show Me PACE played a small but vital role in bringing this revitalizing project to fruition by filling an all-too-frequent funding gap for energy efficiency components,” noted Josh Campbell, Chairman of Show Me PACE. “At Brookfield, the property owners, tenants, and community as a whole will benefit from the more than 448,000 kWh of savings a year and $1.1 million savings over the life of the assessment.”
“Show Me PACE is proud to lead the way in Missouri of demonstrating that PACE can be used both in the hotel industry and with historic properties,” Campbell said. “Missouri is home to hundreds of Main Streets which can be re-energized with renovation and upgrades of their historic buildings. PACE can play a vital role for these projects in conjunction with use of historic tax credits.”
Energy Measures Include Lighting & HVAC
PACE financing paid for the following energy improvements to the 12-story Brookfield Building:
- Lighting retrofit;
- HVAC system retrofit;
- Temperature controls; and
- Water heater improvements.
These improvements will save the property owner $2.3 million in energy and operational expenses during the 20-year term of the PACE financing. They also will provide a comfortable environment for hotel guests and apartment residents.
Advantages of PACE Financing
The Brookfield project was financed by CleanFund PACE Capital, Inc., a leading national provider of long-term financing for energy efficiency, renewable energy and water conservation improvements. PACE Sage of Overland Park served as PACE project consultant for the project.
Established by state statute, PACE uses private capital to pay for energy and water improvements to a property. The fixed interest rate loans for up to 20 years are repaid through annual property tax assessments.
Show Me PACE, administered by the nonprofit Missouri Energy Initiative, is an open-market program that uses multiple capital providers and has low-cost overhead.
“PACE is very attractive to commercial property owners because it offers up to a 20-year fixed interest rate and can be considered ‘off-book,’” Campbell added. “More importantly, PACE in Missouri requires energy savings to offset the cost of the assessment, so the projects are cash-flow positive. PACE is a fiscally-responsible way for property owners and developers to pay for energy and water improvements, whether they’re retrofitting an existing building like Brookfield or building new.”
