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- Cambria Hotel in Detroit is being redeveloped using special energy efficiency funding stream
- About $6.8 million of the $49 million total development cost will come through PACE program
- Cambia is expected to open in 2020
The new Cambria Hotel development in downtown Detroit has received $6.8 million in lower-cost energy efficiency funding from PACE Equity LLC as part of its $49 million mixed-use redevelopment project, Crain’s has learned.
A local development group announced plans in March to build the 154-room Cambria Hotel at 600 W. Lafayette Blvd. The hotel will be part of a project that includes restaurants, a rooftop lounge and retail tenants. Construction is expected to be completed in 2020.
Under the Property Assessed Clean Energy program, or PACE, such construction projects as Cambria Hotel that use energy-efficient HVAC, LED lights, insulation, appliances, windows and such water saving measures as faucets, shower heads, toilets, urinals and hot water systems, can be eligible for special loans.
It works like this: PACE allows business property owners to receive long-term loans for energy upgrades at fixed interest rates by working with local taxing bodies to repay the loans through their property tax bills.
Working with PACE administrator Lean & Green Michigan, PACE Equity funded the Cambria Hotel project. It is believed to be the largest PACE project in Michigan, PACE officials said. Approximately 14 percent of the funding for the redevelopment project came from PACE.
“PACE Equity funding is a great tool for developers to bring in additional, low-cost funding to revitalize communities by either preserving functionally obsolete buildings, adaptively re-using existing buildings or constructing new buildings in an environment where capital resources are scarce,” Sonya Delley, Michigan managing director with PACE Equity, said in a statement.
Energy-efficiency improvements at the Cambria Hotel will include plumbing and domestic hot water improvements, HVAC, lighting and electrical system upgrades and building envelope improvements. These include roofing, windows, masonry and air barrier protections.
Over 20 years, the property owner is expected to save $6.5 million in utility and operational savings, together with nearly $3.5 million in tax benefits, resulting in a savings of nearly $10 million.
The Cambria Hotel project is a partnership between Choice Hotels International Inc. (NYSE: CHH) and 600 Ventures II LLC, a joint venture that includes The Means Group Inc. and Holdwick Land Development LLC, both based in Detroit, and Troy-based Koucar Management.
“PACE Equity has been a great partner through the process of bringing this new construction PACE project to life here in Detroit,” said Bali Kumar, CEO of Lean & Green Michigan. “We are thrilled that PACE financing is proving that when building beyond the minimum baseline of code, you don’t have to choose between cost-effectiveness and energy efficiency.”
At least 32 local governments in Michigan have approved PACE, including St. Clair, Wayne, Macomb, Oakland and Washtenaw counties, to participate along with 10 such cities as Southfield, Royal Oak and Troy. Local taxing districts must approve PACE because payments for the projects are collected as if they are property taxes.
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