Legislative Analysis
PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAMS Phone: (517) 373-8080
http://www.house.mi.gov/hfa
Senate Bill 302 as reported from House committee
Analysis available at
Sponsor: Sen. Darrin Camilleri http://www.legislature.mi.gov
Senate Bill 303 (S-1) as reported from House committee
Sponsor: Sen. Kristen McDonald Rivet
House Committee: Energy, Communications, and Technology
Senate Committee: Energy and Environment
Revised 7-28-23
(Enacted as Public Acts 106 and 107 of 2023)
SUMMARY:
Senate Bills 302 and 303 would amend the Property Assessed Clean Energy (PACE) Act,
which enables local units of government to facilitate long-term financing for the owners of
commercial or industrial property for projects related to renewable energy, energy efficiency,
or water efficiency. Among other things, the bills would do the following:
• Expand the scope of the act to include agricultural property.
• Allow environmental hazard projects to be financed under a PACE program.
• Allow a property owner to waive a guarantee that the amount of savings from a project
will exceed the amount of the investment.
• Define a project category called new construction energy projects, which would be
exempted from the requirement that savings exceed investment. These energy projects
would have to exceed applicable requirements of the Michigan Uniform Energy Code.
The act currently allows a local unit of government (county, city, village, or township) to
establish a PACE program under which it can contract with the record owner of privately
owned commercial or industrial property located in the local unit to finance or refinance one
or more energy projects on the property. These loans are paid back under a special assessment
agreement that can spread project costs over up to 25 years. The costs of repaying a loan are
less than the savings created by the energy or water efficiencies that the loan made possible.1
Senate Bill 303 would expand the act to apply to privately owned agricultural property, in
addition to the commercial and industrial property already included in the act.
The bill also would allow environmental hazard projects to be financed under a PACE
program, in addition to the energy projects already included in the act. To this end, the bill
would define the term project to mean either an environmental hazard project or an energy
project, and several provisions that now refer to an energy project would be amended to include
environmental hazard projects by using the term project instead.
Environmental hazard project would mean the acquisition, installation, replacement,
or modification of equipment, devices, or materials intended to address environmental
hazards, such as measures to do any of the following:
• Mitigate lead, heavy metal, or PFAS contamination in potable water systems.
• Mitigate the effects of floods or drought.
1
https://leanandgreenmi.com/about-pace/how-pace-works/
House Fiscal Agency Page 1 of 4
 • Increase the resistance of property against severe weather.
• Mitigate lead paint contamination.
Energy project would mean 2 the acquisition, installation, replacement, or modification
of any of the following:
• Equipment, devices, or materials intended to decrease energy consumption,
such as any of the following:
o Insulation in walls, roofs, floors, foundations, or heating and cooling
distribution systems.
o Storm windows and doors; multi-glazed windows and doors; heat-
absorbing or heat-reflective glazed and coated window and door
systems; and additional glazing, reductions in glass area, and other
window and door system modifications that reduce energy
consumption.
o Automated energy control systems.
o Heating, ventilating, or air-conditioning and distribution system
modifications or replacements.
o Caulking, weather-stripping, and air sealing.
o Lighting fixtures.
o Energy recovery systems.
o Day lighting systems.
o Electrical wiring or outlets to charge a motor vehicle that is fully or
partially powered by electricity.
o Measures to reduce the usage of water or increase the efficiency of
water usage.
o Any other equipment, devices, or materials approved as a utility cost-
savings measure by the governing body of the local unit.
• A renewable energy system.
• An anaerobic digester system.
Renewable energy system means a fixture, product, device, or interacting group of
fixtures, products, or devices on the customer’s side of the meter that use one or more
renewable energy resources to generate electricity. Renewable energy system includes
a biomass stove 3 but does not include an incinerator or digester.
Renewable energy resource would mean 4 a resource that naturally replenishes over a
human time frame, rather than a geological time frame, and whose conversion to a
usable form of energy minimizes the output of toxic materials. Renewable energy
resource would not include petroleum, nuclear material, natural gas, or coal. The term
would include at least all of the following:
• Biomass.
• Solar and solar thermal energy.
2
Despite some revisions, the bill’s definition, given here, appears to have the same substantive meaning as the one
already in the act.
3
https://www.energystar.gov/about/federal_tax_credits/biomass_stoves
4
The bill’s definition, given here, reworks the one now in the act largely by moving things around, although the bill
would delete language that says that a renewable energy resource “comes from the sun or the thermal inertia of the
earth” and “is ultimately derived from solar power, water power, or wind power.”
House Fiscal Agency SBs 302 and 303 (S-1) as reported Page 2 of 4
 • Wind energy.
• Geothermal energy.
• Methane gas captured from a landfill.
Anaerobic digester energy system would mean an anaerobic digester and the devices
used to generate electricity or heat from methane produced by the anaerobic digester
or to store the methane for the future generation of electricity or heat. 5
Anaerobic digester would mean a facility that uses microorganisms to break down
biodegradable material in the absence of oxygen, producing methane and an organic
product. 6
Finally, the act now allows local units of government to issue bonds or notes to finance projects
under a PACE program, and it declares that those bonds or notes further essential governmental
purposes, such as reduced energy costs, reduced greenhouse gas emissions, economic
stimulation and development, improved property valuation, and increased employment. The
bill would add “improved public health” and “protection against climate hazards and other
environmental hazards” to this declaration of essential governmental purposes.
MCL 460.933
Senate Bill 302 would amend provisions of the act that prescribe requirements that must be
included in a local unit of government’s PACE program.
Currently, a project financed with more than $250,000 in assessments under a PACE program
must include in the contract for installation of the project a guarantee by the contractor that the
project will generate more in savings than the amount invested. The contractor must agree to
annually pay to the record owner of the property any shortfall in savings below that level.
Under the bill, the above guarantee could be waived by the record owner and would no longer
be required to be included in the installation contract. In addition, the above provisions would
not apply to a new energy construction project.
As defined in SB 303, new construction energy project would mean an energy project
that occurs at a newly constructed building or structure or consists of significant
modifications to an existing building or structure.
The bill would add that a PACE program must require, for a new construction energy project,
that the building or structure exceed applicable requirements of the Michigan Uniform Energy
Code. 7
Finally, the act now provides that a PACE program must require a baseline energy audit to be
conducted before an energy project is undertaken, so as to establish future energy savings. The
5
Where the bill’s definition, given here, has methane, current law has biogas.
6
This is the bill’s definition. Under current law, anaerobic digester is defined as “a device for optimizing the anaerobic
digestion of biomass for the purpose of recovering biofuel for energy production.”
7
Parts 10 and 10A of the Construction Code, R 408.31059 to R 408.31071a and R 408.31087 to R 408.31099 of the
Michigan Administrative Code. Revisions to update these rules are currently pending.
House Fiscal Agency SBs 302 and 303 (S-1) as reported Page 3 of 4
 bill would allow either a baseline energy audit or baseline energy modeling to be conducted
for that purpose at that time.
MCL 460.939
Neither bill can take effect unless both bills are enacted.
BACKGROUND:
The bills are similar to HBs 5011 and 5012 of the 2021-22 legislative session. Those bills
would have statutorily extended PACE program eligibility to multifamily residential property
with four or more dwelling units. 8
FISCAL IMPACT:
Generally, the bills would have a minimal fiscal impact on local governments that have or
establish a PACE district. The fiscal impact for each local unit of government would be directly
related to the local government’s usage of the expanded offerings in its PACE plan and their
impact on development and property values. Local units of government retain discretion
regarding the creation of PACE programs.
POSITIONS:
Representatives of the following entities testified in support of the bills (6-14-23):
• Michigan Energy Innovation Business Council (EIBC)
• Lean and Green Michigan
• C-PACE Alliance
• PACE Loan Group
• Michigan Conservative Energy Forum
The following entities indicated support for the bills:
• Department of Environment, Great Lakes, and Energy (6-14-23)
• Michigan League of Conservation Voters (6-14-23)
• Michigan Environmental Council (6-14-23)
• Michigan LCV (6-21-23)
• Clean Water Action (6-21-23)
The following entities indicated opposition to the bills (6-14-23):
• Mackinac Center for Public Policy
• Home Builders Association of Michigan
Legislative Analyst: Rick Yuille
Fiscal Analyst: Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
8
Those properties might qualify already as commercial properties, as do nonprofit organizations and houses of
worship. See https://leanandgreenmi.com/wp-content/uploads/2023/02/PACE-Program-Manual.pdf (p. 10).
House Fiscal Agency SBs 302 and 303 (S-1) as reported Page 4 of 4


Statutes affected:
Substitute (S-1): 460.933
Senate Introduced Bill: 460.933
As Passed by the Senate: 460.933
As Passed by the House: 460.933
Public Act: 460.933
Senate Enrolled Bill: 460.933