The Heights, the future residential and commercial community planned at the former site of the Hillcrest Golf Course on St. Paul’s East Side, will soon be able to rely on Mother Earth for heating and cooling.

The newly-created Minnesota Climate Innovation Finance Authority awarded a $4.7 million loan — its first loan ever — to The Heights Community Energy, which plans to construct and operate one of the largest geothermal energy systems in the state.

A development agreement requires future multi-family housing and light-industrial buildings at The Heights to be connected to the low-carbon energy system, which would then be funded by the private sector’s utility payments. It will be the first aquifer-based district geothermal energy system in Minnesota.

“It’ll be a $12 million project, but this bridge loan will enable us to start getting that infrastructure in as housing moves forward this summer,” said St. Paul City Council Member Nelsie Yang on Wednesday.

The geothermal system will heat and cool buildings by extracting water from subsurface aquifers to cool buildings in the summer. Heat from the buildings will warm the water, which will then be injected into the aquifer for storage. The heated water can be then be accessed in the winter to warm the same structures.

The system is designed to reduce utility bills for future property owners while helping them to reduce their carbon emissions. To fund environmental infrastructure, the Minnesota Legislature last year created and funded MnCIFA, which is structured as a publicly accountable financing authority, otherwise known as a “green bank.”

The goal is to use public financing to fill in the gaps left by traditional financing for clean energy projects.

The Heights Community Energy will own and operate the geothermal system under the direction of District Energy St. Paul, the city’s long-standing nonprofit utility partner, and the St. Paul Port Authority, the owner and master developer of The Heights.

“This system will go a long way toward achieving our goals around the creation of a carbon neutral community at the Heights,” said Port Authority President Todd Hurley, in a written statement.

Chelsea DeArmond, founder of St. Paul 350, called the district system “a catalyst for more community-scale climate action for new and existing St. Paul neighborhoods.” The neighborhood-led environmental advocacy group has advocated for clean energy at The Heights over the past five years of planning.

Sherman Associates, the JO Companies and Twin Cities Habitat for Humanity plan 1,000 new housing units at The Heights, which is also expected to produce 1,000 living wage jobs, according to the St. Paul Port Authority.

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