Texas Commercial PACE Program: Protecting Borrowers and Creating Economic Benefits

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January 11, 2017

Today The Wall Street Journal published a front page article about the California residential PACE program highlighting problems relating to consumer protection and other issues. Fortunately, none of these problems or issues are relevant to, or cause for concern under, the Texas PACE program for the reasons listed below:

  • The purpose of the Texas PACE statute is to enable energy-efficiency financing for commercial and industrial properties.

  • Residential PACE loans are not permitted in Texas.

    • The Texas PACE statute does not authorize single-family residential PACE loans.

    • PACE financing for residential property is available only to borrowers who are in the business of operating multi-family properties containing 5 or more units.

  • The Texas PACE statute includes multiple layers of protection for commercial property owners and lenders, including:

    • Commercial property with a mortgage is not eligible for a PACE loan without the written consent of the mortgage holder. This approach protects preexisting lien rights of the mortgage holder.

    • Prior to closing a PACE loan, an independent professional engineer must confirm that projected savings are consistent with applicable technical standards.

    • Upon completion of the project, an independent professional engineer must confirm that the equipment was properly installed and is operating as intended.

    • The term of the commercial PACE assessment cannot exceed the projected useful life of the improvements.

    • Private, open-market lenders provide all PACE financing in Texas. The Texas PACE program does not utilize government bonds or public funds.

    • All PACE programs established in Texas are administered by the Texas PACE Authority, a non-profit organization whose sole purpose is to operate PACE programs for local jurisdictions. This arrangement is unique to Texas and avoids conflicts that can arise when the PACE administrator is a for-profit organization that receives compensation for both facilitating the program and arranging the loans.

    • Lenders, contractors and other service providers for all PACE projects in Texas are selected independently by the property owners in a free-market, competitive environment not restricted to any particular or favored contractors or lenders.

The Texas commercial PACE program was designed by a group of more than 130 stakeholder-volunteers dedicated to ensuring that the problems and issues highlighted in The Wall Street Journal article will not arise in Texas.

For more information about the Texas PACE program, visit www.KeepingPACEinTexas.org and www.TexasPACEAuthority.org, or contact Charlene Heydinger at charlene.heydinger@KeepPACE.org.

Nueces County Adopts PACE

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This morning, Nueces County became the 11th local government to establish a Texas PACE program.  The commissioners court adopted the PACE in a Box model and selected the Texas PACE Authority to administer the program.  This action brings PACE to the entire county, including its significant industrial sector and beautiful coastal cities of Corpus Christi and Port Aransas.

Nueces County experienced significant operational savings resulting from energy efficiency and water saving retrofits to the courthouse and the county jail.  The Nueces County PACE program enables the county’s commercial, industrial and multifamily property owners to also access long term affordable financing to update their properties and facilities and to increase their operating income.  For more information contact the Texas PACE Authority at www.texaspaceauthority.org 

 

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3 Projects, 2 Counties, 1 Day | Simon Property Group Closes Deals in Travis and Williamson Counties

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For Immediate Release

September 30, 2016

 

Travis and Williamson counties’ PACE programs close $3 million In Pace Projects with the Simon Property Group  

Barton Creek Square Mall - Austin, TX

Barton Creek Square Mall – Austin, TX

 

AUSTIN – The Travis and Williamson counties’ PACE programs closed their first commercial projects today, totaling $3 million in financing for energy and water saving retrofits to three Simon Property Group malls:  Barton Creek Square in Austin, Lakeline Mall in Cedar Park, and the Round Rock Premium Outlets.   

 

“These projects are exactly what we had in mind when the legislature created PACE,” said Texas Rep. Jim Keffer, chairman of the House Natural Resources Committee and the PACE bill author. “The upgrades will save water and energy, improve the tax base in these communities, and provide long-term financing for the property owners. Truly a win-win-win for Texas.”  

 

PACE, which stands for Property Assessed Clean Energy, is an innovative financing program –completely free of government mandates and public funding – that enables non-profit, commercial, industrial, multi-family, and agricultural property owners to obtain up to 100 percent of the project financing from low-cost, long-term loans for water conservation, energy efficiency, and onsite generation projects.

 

Barton Creek Square and Lakeline Mall will be retrofitted with LED lighting and H-VAC energy saving improvements and water conserving low-flow fixtures.  Round Rock Premium Outlets will be updated with LED lighting and low-flow water fixtures.

 

Travis County Commissioner Gerald Daugherty, who championed Travis PACE program with fellow Commissioner Brigid Shea, said he is pleased to learn that Simon Properties is taking advantage of the program. “It is great news about the Simon Properties coming on board with the PACE program,” he said. “Hopefully, this will be the impetus for other organizations to see the merit of the PACE program!”

 

For Shea, a longtime environmental activist, it is important to see as many commercial businesses as possible use PACE to decrease their carbon footprint. “Simon properties will be a real role model for other commercial properties,” she said. “I hope they inspire many more to follow them.”

 

Lakeline Mall - Cedar Park, TX

Lakeline Mall – Cedar Park, TX

The Barton Creek Square project is the largest project since March 2015 when the Travis County Commissioners Court unanimously approved the program, making it the first county in the state to adopt PACE.    

 

“I am very pleased to approve the Simon Properties application to launch the largest PACE project in Texas,” said Bruce Elfant, the Travis County tax assessor-collector, who signed the paperwork for the project on Friday. “This Simon Properties PACE project sets the ‘pace’ throughout Texas for reducing energy and water costs and extending these limited and increasingly costly resources.”

 

The Lakeline Mall and the Round Rock Premium Outlets projects are the first PACE projects under the Williamson County PACE program established by the Williamson County Commissioners Court on April 5, 2016.  

 

“I am excited to see the PACE program working for Simon Properties.  The program is a win for Simon and the community.  I look forward to seeing more businesses take advantage of the program,” said Williamson County Commissioner Cynthia Long, who brought the PACE program before the commissioners court.  

 

“I’m pleased that Simon Properties is using the PACE program to improve their energy efficiency.  Not only does the PACE program give them access to capital, but it also helps them protect the natural resources of Texas,” noted state Rep. Tony Dale.

 

The Simon Property Group, Inc., the world’s largest commercial property owner, is the first business to utilize the PACE program in Texas.  “We’ve worked with numerous PACE authorities in multiple states over the past several years,” said Kristene Canady, President of ECAS, consulting firm to Simon.  “To orchestrate three closings in two different counties on the same day is evidence of how the Texas PACE in a Box model successfully streamlines an otherwise cantankerous process.”  

 

Financing for this three-property closing was provided by Petros PACE Finance of Austin, Texas.  Petros PACE Finance is one of the leading specialty finance firms in the U.S. dedicating all of its resources to the commercial PACE market nationwide.

Round Rock Premium Outlets - Round Rock, TX

Round Rock Premium Outlets – Round Rock, TX

 

“Being able to simultaneously provide the financing to retrofit these 3 Simon properties is a testament to the simplicity of the Texas PACE program,” said Mansoor Ghori, CEO of Petros PACE Finance. “These projects deliver significant energy and water savings to Simon in their quest to diminish their carbon footprint.”

 

Texas PACE programs are based on the PACE in a Box model program designed by over 130 volunteer stakeholders. This user-friendly model has been uniformly adopted in Texas in Cameron, El Paso, Fort Bend, Travis, Willacy, and Williamson Counties and the Cities of Dallas and Houston.  

 

“One property owner and one lender closed three projects in two counties in one day, proving the Texas PACE in a Box concept – uniform, market-friendly, and flexible design for businesses across Texas,” said Charlene Heydinger, president, Texas PACE Authority.

 

All PACE programs are administered uniformly by the non-profit Texas PACE Authority, www.TexasPACEAuthority.org.    

 

For more information, contact:

Charlene Heydinger, Texas PACE Authority president, charlene.heydinger@KeepPACE.org
Jonathon Blackburn, Texas PACE Authority managing director, Jonathon@TexasPACEAuthority.org

 

Dallas adopts PACE program & selects Texas PACE Authority as administrator

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This morning the Dallas City Council unanimously adopted the PACE in a Box program and selected the Texas PACE Authority to administrator the program.

Businesses in the City of Dallas now have access to alternative financing for energy and water efficiency and on site generation upgrades to their properties. With long term PACE financing, these businesses can lower utility costs, improve operating income, and be cash flow positive in the process.

Karl Zavitkovsky, Director of the City’s Economic Development Office, saw the value of PACE in early 2012 and became a staunch supporter of bringing the economic development activity to Dallas. The City supported PACE legislation in the 2013 legislative session. Heather Lepeska and Kevin Spath in the Economic Development Office spent hundreds of hours in the stakeholder group that developed the PACE in a Box program and then in the City’s adoption process. We are grateful to these forward thinking public servants.

To learn more and to request PACE presentations for your organizations, contact the Texas PACE Authority at 1-855-738-PACE; admin@TexasPACEAuthority.org; www.TexasPACEAuthority.org

PACE Mentioned on Houston Matters 12/9/15

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How Will Paris Climate Talks Affect Industry and the Environment in Houston? by Houston Matters | Free Listening on SoundCloud.

The world has been watching Paris in recent days as the city hosts the United Nations Conference on Climate Change, known as COP21. But, since we’re a show that focuses on Houston, we wondered how might climate change decisions made at the summit affect industry here?

We talk with several guests on this subject: First an eye-witness to the Paris summit, Rives Taylor, a principal architect with the Houston office of the architecture firm Gensler. Then we hear from our own energy and environment reporter Dave Fehling along with Kathleen Hartnett White, director of the Armstrong Center for Energy and Environment at the Texas Public Policy Foundation.

Paris Climate Talks Paris Climate Talks climate change COP21 news Houston Texas industry oil and gas energy economy jobs Dave Fehling News 88.7 Rives Taylor Gensler architecture sustainable design sustainability Kathleen Hartnett White Texas Public Policy Foundation