“Enabling local governments to rely on one program administrator overseen by the Comptroller’s Office and within it the State Energy Conservation Office (SECO) gives me comfort that the program will be administered ethically and with the highest underwriting and technical standards. This, too, is necessary to make the program available in areas where local governments may not have the resources to individually establish a program of this type.”

– Hon. Scott Felton, McLennan County Judge

“I support Chairman Birdwell’s bill, SB 1282, because it promotes the expansion of the PACE program in Texas while protecting counties and cities with best practices in oversight, underwriting, technical standards and also public accountability. This balance is critical and I encourage you to keep the protection of local governments in mind and not weaken the oversight of this program at our expense by allowing competing motives that could pose unnecessary risk of project failure on local governments…

SECO’s track record with the LoanSTAR program demonstrates that it will serve the best interests of local governments first. If we had the funding, SECO could administer PACE inhouse. But to avoid a fiscal note, SB 1281 calls for this oversight to be provided by an independent organization selected through a competitive RFP process. If local governments provided the PACE program inhouse we would only have one office managing oversight. It should be no different if we outsource the oversight function at the state level.

We only have one PUC and we should only have one PACE oversight administrator. The idea that businesses can shop around to see which administrator will give them the best deal threatens local governments and property owners.”

– Hon. Brigid Shea, Travis County Commissioner

“Local governments must be protected by the best single administrator selected through a competitive RFP process. I do not support the idea of multiple administrators, because they will be forced to spend their energy competing with each other in what is likely to be a race to the bottom and a focused chase for the biggest most profitable projects. Instead, SB 1281 will provide oversight as a public service, providing the highest quality service at the lowest possible cost to protect local governments and make the program available to all businesses regardless of size and location. If the administrator does not live up to this expectation, then it won’t be successful when the RFP is rebid a few years later.”

– Hon. Robert Dye, Mayor, Farmers Branch

“Create a role for statewide leadership that will promote program consistency. The statute should create a role for a state agency or other entity that organizes a statewide program or district that local governments can opt into. A single PA operating across the state will promote uniform program rules that increase uniformity and efficiency, provided the PA adopts best practices. In such statewide programs, it remains important to ensure local enforcement of the tax lien.“

– Elements of a well-designed C-PACE Statute and Program to Attract Private Capital and Foster Greater Transact (VERSION 2.0), March 14, 2019 (Petros PACE Finance, LLC, CleanFund, Twain, PLG, Counterpointe SRE, and more)

“National best practices also suggest that a statewide or standardized approach that utilizes a single program administrator, providing standard documentation and project services to governments and capital providers across multiple jurisdictions leads to greater standardization, lower administrative burdens for local jurisdictions, economies of scale, and greater program uptake.”

– Mid Atlantic PACE Alliance (MD, DC, VA stakeholders, funded by. DOE), June 2018

“I do not subscribe to the idea that oversight and performance standards are anti-competitive, particularly where the tax base is involved. I see great potential danger of unsupervised fee- based and self-dealing lenders cutting out local lenders and diminishing the protections designed by the Texas business community and local governments. If the State of Texas lowers administrator standards, the current uniform Texas market may become a mess of overlapping inconsistent PACE programs.”

– Michael Gromacki, president, Dixie Chemical, Pasadena, TX

“Based on over 10 years of experience in the C-PACE landscape, Greenworks Lending has learned which programs are the most attractive for our clients, and most effective and efficient for us. Single Administrators operating in state-wide programs sponsored by or administered within state agencies have proven to be the best option for scalable and profitable PACE programs that uphold public policy goals, and Greenworks Lending would enthusiastically look forward to engaging with such in the state of Texas. We strongly urge the passage of SB 1281.”

– Greenworks Lending, March 26, 2019

SB 1281, Author: Chairman Birdwell
To Perfect and Protect the Texas PACE Act –
Economic Development, Energy and Water Efficiency

SB 1281 will protect and perfect TX-PACE by creating a uniform Texas-wide program overseen by the State Energy Conservation Office (SECO) in the Comptroller’s Office (at no cost to the state or local governments) and administered by the best qualified third party organization selected through an RFP process. Local governments wishing to participate can opt-into the program without the current burdensome process of individually standing up their own separate programs.

SB 1281

• Provides easier access for local governments to voluntarily opt into TX-PACE giving rural counties and communities water, energy, and economic benefits for all of Texas.

• Keeps TX-PACE uniform to:
  • Increase efficiency and reduce transaction and overhead cost for all participants who need only learn one program, system, set of documents, etc.
  • Enables local banks and credit unions to more easily participate
• Oversight from SECO in the comptroller’s office will ensure that:
  • TX-PACE is administered as a public service ethically, professionally, cost-effectively, and with best practices in financial and technical standards
  • Ensure that PACE assessments on private property are justified by and exceeded by the resulting water and energy use reduction cost savings
  • Data on energy and water saved is uniformly measured and collected.

Background: The Texas PACE Act (2013, 83R, SB-385, Carona/Keffer) promotes private sector energy and water saving measures to free up Texas’ natural resources in response to population growth and drought. A model program, “PACE in a Box” was created by over 130 volunteers from business, lending, local governments and environmental groups led by well-respected Texans. The TX-PACE program has become a national model.

26 local governments reaching over 43% of the state population have established TX-PACE programs thus far. TX-PACE enabled $42.7 million in new investment in 17 projects in urban and rural Texas since 2016. It’s time to take the program to the next level. For more information, contact Charlene Heydinger, Keeping PACE in Texas, charlene.heydinger@keeppace.org.

SB 1281 Click here

Looking for a deeper dive into TX-PACE 2.0? Click here

Organizations Supporting SB 1281 As of March 25, 2019

• Ameresco
• Building Owners and Managers Association – Texas (BOMA)
• CCG PACE Funding, LLC
• Conservative Texans for Energy Innovation
• Dixie Chemical
• Environmental Defense Fund (EDF)
• Greenworks Lending
• Independent Bankers Association of Texas (IBAT)
• Keeping PACE in Texas
• Lone Star Chapter Sierra Club
• Navarro County
• MM Solar Advisory
• NetZero USA of Austin
• PACE Equity LLC
• Public Citizen
• R Street Institute
• Solar Smart Living
• Texas Association of Business (TAB)
• Texas Bankers Association (TBA)
• Texas Association of Manufacturers (TAM)
• Texas Mortgage Bankers Association (TMBA)
• Texas Municipal League (TML)
• Texas Solar Power Association
• US Green Building Council (USGBC)

With 254 counties and over 1,200 municipalities, it is not efficient to keep asking each local government to establish its own program, create uniform documents and policies and oversee a local program in order to bring state-wide uniform benefits to its local business community.

A common sense adjustment/evolution is to establish and administer one state-wide PACE program of best practices and invite local governments to opt-in if they so choose.

The program will be overseen by the State Energy Conservation Office (SECO) in the Comptroller’s Office using its existing authority. By amending the PACE Act to rely on SECO to issue an RFP selecting a third-party to administer the program, this bill will create the most efficient, cost effective way to bring the Texas sized PACE Economic Development program to all of Texas.

By eliminating the burdens of establishing and administering local programs and enabling local governments, instead, to opt into one inclusive program, this bill is intended to expedite the availability of the PACE program in all parts of Texas, so that rural and urban businesses can take advantage of PACE to address deferred maintenance with energy and water saving improvements.

One uniform program has significant advantages:

• Eliminating multiple local program overheads will spread costs to a more efficient, larger market, reducing cost for all participants
• Ease of use and lower transaction costs result when stakeholders have to learn only one program; avoids confusion when programs differ along county/city lines
• Owners of property throughout Texas can close multiple PACE projects in multiple jurisdictions with ease and economies of scale
• One Texas market enable local lenders (banks and credit unions) to offer PACE financing to their customers and sell the long-term projects in a large scale secondary market, overcoming the challenges of holding the projects for 20+ years.
• Local lender participation will enable PACE financing to be more readily available in smaller communities, rural areas and agriculture

• Facilitate expansion into rural and border areas where standing up a local program in a small market is more difficult, yet vital; rural communities, farmers, and industrials – all market areas where water and energy savings can be significant to these businesses and the communities
• Uniform underwriting and technical standards across the state will result in uniform training, review of projects, quality control and application by keeping quality program protections in place;
• Uniform application of the program will enable uniform collection of statewide project data (resulting energy and water savings, impact on clean air, jobs, etc.) using the TX-PACE Energy and Emissions Tracker data base created by the Houston Advanced Research Center. The data will be valuable in establishing measurable energy efficiency improvements in Texas.

Oversight by SECO in the Comptroller’s Office has significant advantages:

• SECO can execute the RFP and oversee the third party administrator using existing statutory authority and with deep expertise of energy and water efficiency, on demand and distributed generation technologies and implementation.
• SECO has deep expertise in oversight of energy and water saving projects in the public sector. SECO has administered the LoanSTAR Revolving Loan Program, for over 20 years. The program has loaned over half a billion dollars with a zero default rate.
• SECO leadership chaired the working group that designed the Technical Standards for the PACE in a Box program and has a deep knowledge of the TX-PACE program
• Oversight of this financing program by SECO in the will ensure the highest ethics to ensure that the third-party administrator is acting only as a government representative and does not engage in any market activity that it oversees.
• Because the PACE in a Box market is already underway reflecting SECO’s expert advice, oversight will require minimal staff time and should not result in a minimal fiscal note, if any.

So why change the current system?

The current expansion of the PACE program one local government at a time is inefficient, is burdensome to local governments, and is beginning to strain the commitment to the core principles of the PACE in a Box model program.

SB 1281 will protect the PACE in a Box goals of uniformity, ethical administration, high bar of UNIFORM underwriting and technical standards, one set of documents, ensuring that investment capital is focused solely on energy and water saving measures, ensuring that the PACE program is available across Texas.

Colorado took the TX-PACE in a Box model to the next level by issuing an RFP for a state-wide program administer reporting to the Colorado Energy Office in the Governor’s Office and counties desiring to participate can opt into the program. This is a good evolution for a Texas-sized economic development tool.

The Texas PACE Act (2013, 83R, SB-385, Carona/Keffer) promotes private sector energy and water saving measures to free up Texas’ natural resources in response to population growth and drought. A Plug and Play Model program, PACE in a Box (TX-PACE), was established in 2014 by over 130 volunteers (business organizations, local governments, contractors, property owners, lenders).

These volunteer stakeholders looked at best practices and lessons learned in other states and designed a turn-key solution (program, process, standards & documents) with a high bar of program design, underwriting, and technical standards protections while protecting local governments (no cost or liability) and minimizing impact on staff. This effort, the equivalent of a modern day barn raising, resulted in a flexible, free market PACE model that other states are copying.

Property Assessed Clean Energy (TX-PACE) is a proven financial tool that incentivizes Texas’ property owners to upgrade facility infrastructure with little or no capital outlay.

Approved by State legislation and established by 26 local governments, TX-PACE programs enable owners to lower their operating costs and use the savings to pay for eligible water conservation, energy efficiency, resiliency, and distributed generation projects. Owners gain access to private, affordable, long-term (typically 10-20 years) financing that is not available through traditional funding avenues. A county or municipality must establish a TX-PACE program before it is available. There is no cost to the local government, and the local government has no liability for PACE projects. Statute: Texas PACE Act, Chapter 399 of the Local government Code (R83, SB385)