Carver County hears CPACE financing update; staff to return revised joint powers agreement Nov. 4

Carver County commissioners heard an update Thursday from Brad Hansel, manager of environmental services, and Holly Houston, MN PACE program representative for the Saint Paul Port Authority, on the Commercial Property Assessed Clean Energy program, known as CPACE.

CPACE is a financing mechanism that places voluntary, project-specific loans on a property's tax assessment to fund energy efficiency, renewable energy and resiliency improvements. "It's paid with the property tax assessment. It's collected by the county. And then as the administrator, it's sent to me and I send it to the lender," Holly Houston told commissioners during the work session.

The program allows long-term, fixed-rate financing for eligible improvements and can cover up to 100% of the project cost. Under Minnesota rules described in the presentation, loans may run up to 30 years (the useful life of the improvement) and can reach as much as 30% of a property's value. An energy study completed by a certified energy auditor is required for each project, and mortgage-holder sign-off is required and must be notarized before an assessment is placed on the tax roll.

Houston said Minnesota adopted enabling PACE legislation in 2010 and that the state has one of the largest counts of projects nationally, consisting largely of smaller deals: "over 83% of our portfolio is under a million dollars," she said. She told the board MN PACE had facilitated 451 loans through 2024, works with about 25 lenders statewide and reported what she described as annual energy savings of 84,000,000 (the transcript did not specify units). She listed major capital providers active in the local market, including PACE Loan Group, Blaze Credit Union, Highland Bank and Sunrise Bank.

Local activity and examples

Hansel said Carver County signed a joint powers agreement (JPA) with the Saint Paul Port Authority in 2015 to enable MN PACE to administer assessments on county tax rolls. Houston said the county is currently collecting and forwarding PACE payments for nine projects in Carver County. She highlighted a $3.5 million new-construction senior-living project in Chaska; she said PACE-related tax assessments for that project are expected to begin in 2027 and that the project is estimating roughly $96,000 in annual energy savings tied to building-envelope, HVAC, water systems and controls improvements.

Houston also cited local retrofit examples she reviewed for the county, including lighting work at Aspire Bakery, a roof and solar installation for a Carver County commercial property, and a solar installation at an agricultural property associated with Wayne Painting.

Changes in eligible projects and program mechanics

Houston reviewed recent legislative changes that expanded eligible project types and terms. She said new construction, water conservation and water-quality measures and resiliency projects (flood mitigation, fire suppression and similar work) were added to the statute in recent years. She described a change to the energy-savings requirement that makes eligibility more flexible for electrification projects: "Previously, it had to be the savings; and now that has become more flexible. So as long as you're saving energy, it is a case eligible expense," she said.

Proposed county workflow and next steps

Hansel described a proposed clerical and workflow update to the county's JPA implementation: environmental services would remain the initial point of contact for MN PACE requests and would prepare the County Board resolution and approval, but property tax staff would take over ongoing administration and coordination with MN PACE going forward. Hansel told the board staff are preparing an updated JPA for review and said they expect to return it to the County Board as a consent item on Nov. 4. He summarized: staff want to "refine and standardize some terminology in the JPA" and reflect legislative changes and the county's current workflow.

No formal county action was taken at the work session. Hansel framed the proposed November item as a consent-item return rather than new policy: "We're looking at doing is, potentially bringing that JPA back to the County Board for a consent item on the November 4 County Board date," he said.

Why it matters

County staff and MN PACE argued the program provides a low-cost, long-term financing option that can help property owners—particularly small businesses and nonprofits that lack upfront capital—fund HVAC, envelope, solar and resiliency projects without the county incurring debt. Houston said the county's administrative role is limited to placing the special assessment on the tax roll and forwarding payments to MN PACE, which administers enrollment, compliance and lender payments. She emphasized the program is a "limited obligation" loan mechanism: "You're not responsible for paying it back," she said.

Outlook

If the County Board places the revised JPA on the Nov. 4 consent agenda and approves it, county staff expect the updated document to reflect recent statute changes, clarify roles between environmental services and the property tax office, and standardize terminology. MN PACE staff encouraged property owners, lenders and contractors to contact MN PACE for information and said the program remains open to additional lenders entering the market.