Navy Yard energy hub attracts Philadelphian and his firm home

The last time he worked at the Philadelphia Navy Yard, Thomas A. Mills Jr.'s goals were basic: "To pick up some book-and-beer money."

It was 1983-84. The Northeast Philadelphia native had served five years in the Navy as a nuclear-engineering officer and was on another adventure - to earn an M.B.A. in finance from the Wharton School. His Navy Yard work was as a part-time driller with a reserve group.

At 55, he has returned to the same Delaware River port, this time with loftier ambitions than pulling in some spending money.

As president and chief executive officer of PaceControls L.L.C., Mills' objective is to expand his small company into a formidable provider of energy-efficiency services. In business since 2005, PaceControls develops and manufactures energy-saving retrofit kits for commercial, industrial, and residential heating, cooling, and refrigeration systems.

The company of seven originated in Chestnut Hill and spent the last two years with headquarters in York, Pa.

But on March 1, PaceControls moved back to Philadelphia - into 2,200 square feet on the second floor of Building 101 at the work-in-progress Navy Yard. Built in 1911, the three-story, historically renovated onetime Marine barracks now is office space.

About 500 of the Navy Yard's 1,200 acres are the focus of a plan to transform the site into 20 million square feet of office, research, and manufacturing space. The redevelopment process is seven years in the making. But it was an announcement just last August by the U.S. Department of Energy that inspired Mills to move his company there.

DOE said it intended to award up to $122 million over the next five years to a consortium of researchers led by Pennsylvania State University to establish an energy-innovation hub at the Navy Yard. Three other federal agencies, including the Small Business Administration, are kicking in $7 million more.

The mission of the hub - better known as the Greater Philadelphia Innovation Cluster, or GPIC - is the research, development, and commercialization of technologies to make buildings more energy-efficient.

"We're really looking forward to this opportunity to be cheek-by-jowl" with others working on energy-efficiency research and product development, Mills said during a recent phone interview from his home in Washington.

It's the type of collaboration envisioned by GPIC organizers, said Jim Gambino, leader of its technology-deployment and commercialization section and a vice president at Ben Franklin Technology Partners of Southeastern Pennsylvania, also based at the Navy Yard.

"PaceControls will have a wonderful opportunity . . . they will be here hearing about the advancements we make," Gambino said. "That is directly related to their business."

Word of GPIC's formation came just as PaceControls officials were considering where in Pennsylvania it made sense to manufacture the next phase of its product line. Besides York, the company has been manufacturing near Pittsburgh, and at sites in Maryland and New York.

Part of the Navy Yard's appeal, Mills said, was its ability to accommodate growth - namely, for manufacturing and assembling PaceControls' retrofit kits. He anticipates moving from Building 101 to one of two "flex" structures that Liberty Property Trust and Synterra Partners broke ground on in January at the western edge of the Navy Yard, just north of the new Tasty Baking Co. facility.

Flex buildings are typically one-story structures with interiors designed as flexible space - easily adaptable to suit tenants' requirements. The new buildings' core and shell are expected to be completed by August.

PaceControls' lease at Building 101 is for five years. But the policy of the Philadelphia Industrial Development Corp., managing agent for the Navy Yard, is "if you're ready to lease a larger facility at the Navy Yard, we'll tear your lease up," said John Grady, executive vice president of real estate services. "Whatever it takes for that company to continue to grow, we're willing to support that growth."

Mills would not disclose his company's financials other than to say 10,000 retrofit systems have been installed, with the typical unit costing between $800 and $1,000.

What makes PaceControls' product unique, he said, is that it makes heating, ventilation, and air-conditioning systems run more efficiently without requiring purchase of new HVAC equipment or "spending tens to hundreds of thousands of dollars to run a building-management system through the building."

Joe Cianfrani Jr., director of technical operations at Kaiserman Co. Inc., a Philadelphia-based real estate management firm, said PaceControls retrofits at two of its 14 properties - PNC Bank Center in Wilmington and Kevon Office Center in Pennsauken - had reduced HVAC costs 30 percent.

That's a trend any property owner would welcome, Cianfrani said.

PaceControls plans to hire at least six people this year for jobs in engineering, information technology, and administration. How many local manufacturing jobs the company will create has not been determined, Mills said.

He acknowledged one worry about something that could interfere with his company's growth goals. He described it this way in an e-mail:

"The country's focus on energy. It's Economics 101: When energy costs go up, we pay more attention; when they go back down, we lose it again."

But for now, the onetime Navy lieutenant and son of a former outspoken Philadelphia school board member (whose name he shares) plans to enjoy the Navy Yard again. He intends to visit "a lot," he said.

PaceControls' offices don't face any of the retired ships in port, but, Mills added with enthusiasm, "to the north we can see the [Wells Fargo] Center and Lincoln Financial Field."