Large Urban, population 600,000


To improve the energy efficiency of commercial and industrial buildings by 20%


Lack of access to project capital; split incentive when property ownership term is shorter than project payback


The city created a PACE financing option that allows building owners to pay for energy improvements over time through a voluntary municipal special charge which is attached to the property, not the owner.


Milwaukee closed its first PACE deal in September 2014 to retrofit the University Club of Milwaukee. Annual operating savings from the project are predicted to approach $60,000, roughly 30%.



Implementation Model:
Property Assessed Clean Energy (PACE) Program


In order to facilitate energy efficiency improvements of commercial and industrial buildings in its jurisdiction, the City of Milwaukee implemented a property assessed clean energy (PACE) program which allows building owners to repay loans for clean energy improvements over time through a special assessment on their property tax bill attached to the property, not the owner. If the owner sells the property before the end of the loan term, the new owner inherits the loan along with the energy improvements, which reduces the risk of financing to building owners. This financing option removes barriers of access to capital and split incentives when property ownership term is shorter than project payback by availing additional financing options to building owners.

The PACE program is part of the broader Milwaukee Energy Efficiency (Me2) program, which also offers financing for home energy efficiency projects. The city pursued PACE because it helps owners finance improvements that serve the general welfare of the community by increasing property values, stimulating local economic activity, and providing environmental benefit.



In July 2013, the City of Milwaukee passed Resolution 121591authorizing City Ordinance 304-26.5. This ordinance facilitates owner-arranged financing with a third-party lender for commercial property owners making renovations to improve the energy efficiency to their properties by levying annual installments as a special charge onto their property tax bill.

Before Milwaukee could do this, the State of Wisconsin first had to pass enabling legislation to allow municipalities to offer PACE programs. The Wisconsin state legislature passed two pieces of related legislation, SB642 in 2009 and SB425 in 2011, which enabled Milwaukee to move forward with PACE. The state code now allows political subdivisions to make loans or enter into loan repayment agreements with a third party to an owner or lessee of a building within their jurisdiction for the purposes of completing energy and water efficiency improvements as well as renewable energy installations.

Milwaukee is utilizing an open market model whereby private lenders can provide PACE loans on an individual basis (rather than the City bundling projects and selling PACE bonds).




The City of Milwaukee published its first sustainability plan, ReFresh Milwaukee, in July 2013. The plan development process was kicked off shortly after the Mayor affirmed his desire to work with the community to build a stronger city in his 2012 State of the City address. ReFresh Milwaukee articulates goals, specific targets, and strategies across a suite of focus areas, including energy.

Of particular relevance are targets in the plan that aim to improve the energy efficiency of 1,000 commercial/industrial businesses in 5 years and to reduce the city's portfolio-wide building energy use 20 percent by 2020. One of the strategies identified to improve the energy efficiency of residential and commercial buildings in Milwaukee is to create innovative financing options for clean energy projects. In addition to PACE, the plan recommends advocating for other financing options via utilities, the state public services commission, and state lawmakers in addition to incorporating financing options into technical community assistance initiatives.



A number of parties are involved in the financing and construction of projects under Milwaukee’s PACE program, making strategic partnerships a key element to success.

Four primary parties are involved in a PACE transaction – the building owner or borrower, the City of Milwaukee, a financial institution that lends the borrower funds for their project and the construction contractor. The borrower arranges project finance through a financial institution of its choice before applying to the city for the PACE repayment program. While PACE is currently open to any lender that wants to participate, Milwaukee is presently partnering with PACE EquityClean Fund and the Milwaukee Economic Development Corporation (MEDC) to provide private capital to the program.

In addition to the financial transaction itself, there are parties involved in the execution of the actual construction work funded through the PACE vehicle. All projects financed through Milwaukee’s PACE program must be completed by commercial contractors approved through the Me2 program. The commercial contractors can serve as:

  • General contractors, to install a range of energy efficiency services,
  • Subcontractors to provide individualized services, or
  • Performance guarantee contractors, required for projects over $250,000.

Contractors can apply to the Me2 program, which includes PACE, by submitting a request for qualifications and participation agreement. Through this process, the City approves contractors that understand practical solutions to improving businesses’ energy efficiency performance and who are committed to the economic vitality of the City of Milwaukee as reflected in a Community Workforce Agreement (CWA) approved by the Mayor and the Milwaukee Common Council. The CWA contains provisions on technical qualifications, labor standards, and project requirements.

Relationship of Parties on PACE Transaction





The City of Milwaukee Office of Environmental Sustainability (OES) in partnership with the Milwaukee Economic Development Corporation and the City Treasurer administer the PACE program. To access PACE financing, a building owner first submits information on the company, building, and proposed project to OES via the Me2 PACE Financing Interest Form. This form ensures that the property owner fully understands the program requirements prior to developing a project and full application.


In order to be eligible, projects must be for commercial and industrial properties within the City of Milwaukee that have a useful life of at least five years. Eligible improvement measures are detailed inAppendix B of the Program Manual under three categories: energy efficiency, water efficiency, and on-site clean energy production.

  • Projects costing over $250,000, the contractor must provide a performance contract and have a savings to investment ratio greater than one
  • Projects costing less than $250,000 require the submittal of a professional energy and/or water audit that meets ASHRAE level 1 standards.

For all projects, the cost financed through PACE cannot exceed 20% of the total property value for commercial properties. Property owners must also certify that they are solvent, current on all property payment obligations, and have no involuntary liens or notices of default on the property.

Program organizers review interest using an Excel-based project review form to determine if the proposed project meets eligibility requirements. Eligible building owners are then contacted to completeMe2 Commercial PACE Application with supporting documentation including a signed bid from a participating Me2 contractor, documenting energy, water, maintenance, and operations savings and an energy savings performance contract (for projects over $250,000).

Better Building Challenge Participation

At this point, applicants are also asked to join Milwaukee’s Better Buildings Challenge by adopting a 20% by 2020 energy intensity improvement goal and tracking and sharing energy performance data through EPA’s Portfolio Manager. In addition to offering financing, Me2 provides step-by-step guidance on how to share buildings’ Portfolio Manager records with Milwaukee which in turn is shared with the national DOE BBC program.


Building owners then provide written consent from the property’s existing mortgage holder(s) to treat the payments under PACE as special charges by completing a Request for Lender Acknowledgement and Notice of Proposed Contractual PACE Special Charge form. These documents are then submitted to OES for review and approval, assuming the project meets all program terms. OES notifies the property owner applicant and proposed third party lender in writing to either accept or reject the project within 30 business days of completed application submittal.

Lastly, if approved, the property owner, PACE lender, and city close the financing, which requires standard bank loan documents plus thePACE Financing Program Agreement, a tri-party agreement that provides for the special charge levying. Once a project is approved, any change orders on the project must be pre-approved by the city.




As part of the city’s education and outreach strategy, OES makes owners of non-residential properties and multifamily buildings located within Milwaukee aware of the energy and water savings opportunities available from the PACE program. The City has conducted outreach events in partnership with BOMA Wisconsin and Johnson Controls, and is planning additional outreach with its Better Buildings Challenge partners, including the Downtown Business Improvement District and Wisconsin Green Building Alliance. The Me2 website is designed to get building owners into the program. Here users can access information on how the program works, eligibility requirements, lien holder consent form, submit a full application, download a program manual, or find contact information.



Data Management

Owners accessing Milwaukee’s PACE financing agree to enroll their building in the Milwaukee Better Buildings Challenge and to track and share the building’s energy data through EPA’s Portfolio Manager. Me2provides step-by-step guidance on how to share buildings’ Portfolio Manager information. Buildings are included in the portfolio that Milwaukee shares with DOE’s Better Buildings Challenge annually. DOE works with Milwaukee to analyze the data to measure the performance of municipal buildings, private buildings, and the combined portfolio each year.


Measuring Success

Milwaukee has a goal of closing five large PACE projects that save an average of 20% or more worth a combined $2-3 million annually. To measure their success, OES will track the number of projects closed, dollar amount of projects, and energy savings of participating buildings as reported in Portfolio Manager. The program is also tracking jobs created as a result of PACE projects with information from theResidential Preference Program & Wage Reporting Form that participating contractors need to complete.



Milwaukee closed its first PACE deal in September 2014 to retrofit theUniversity Club of Milwaukee. The building owner financed over $660,000 worth of energy efficiency improvements including HVAC repairs, interior LED lighting installations, window upgrades, and steam trap repairs. The project is expected to reduce energy use by roughly 30% and result in annual operating savings of $60,000. The City looks forward to completing additional PACE deals currently in its pipeline.

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