CleanTX Forum: Property Assessed Clean Energy (PACE) Financing Comes to Texas

Posted by on September 9, 2016 |

March 24th marked a milestone for Texas’ clean energy economy. On that day, Travis County voted to adopt a Property Assessed Clean Energy (PACE) program, making it the first county in Texas to do so. By adopting PACE, Travis County has unlocked a powerful economic mechanism for financing energy/water efficiency and clean energy technologies in upgrading Texas buildings.

What is PACE?

PACE, enacted in the 2013 Texas Legislature with support from both sides of the aisle, has the potential to unlock a considerable amount of private funding for clean energy and water conservation projects in the state. Specifically, PACE is an innovative financing program—completely free of government mandates and public funding–that enables commercial, industrial, multi-family, and agricultural property owners to obtain low-cost, long-term loans for water conservation, energy-efficiency, and renewable energy projects. Participants will then repay these loans through a county assessment on the property.

A PACE loan simultaneously offers building owners cheaper financing options and lenders secure repayment terms. In exchange for funds provided by a private lender to pay for the project, the property owner voluntarily requests that the local government place an assessment secured with a senior lien on the property until the assessment is paid in full.

Benefits to Businesses

PACE has great potential to directly affect the bottom lines of small and medium sized businesses. To be eligible for PACE financing, a project must show that the savings in utility costs will offset the cost of the project. In most instances, this will result in an immediate positive cash flow. This mechanism can be used to equip buildings with the latest in efficiency technology, including lighting, HVAC, and water conservation tools. In addition, PACE can be used for renewable energy additions, such as roof-top solar panels.

Nationally, almost 75 percent of PACE projects were less than $250,000 in size, demonstrating PACE’s popularity as a tool for small and medium-size businesses. Further, these project installations lead to increased property value and lower utility bills, making PACE projects attractive for both property owners and tenants alike.

State Program, County Project, Local Support

Travis County Commissioners Gerald Daugherty (R) and Brigid Shea (D) united to cosponsor the resolution advocated since 2012 by County Tax Assessor Collector Bruce Elfant with tremendous support from a large local coalition of PACE advocates in Travis County.

This means that within the next several weeks, private funding for water and energy efficiency upgrades as well as renewable energy projects in Travis County will be unleashed for local businesses. This program will be administered by the nonprofit Texas PACE Authority, an organization created to administer PACE programs in an efficient, low-cost manner – facilitating a marketplace for lenders, property owners, and contractors to put together financially sensible building upgrade projects.

The Future of PACE in Texas

Texas now has its first PACE program. But it shouldn’t stop here in Travis County. The state of Texas accounts for 12 percent of the entire country’s energy use, and Texas’ unique PACE framework makes implementation across the state easy and predictable. In the next few months, we’ll be looking to help other counties follow with uniform PACE programs of their own.


Originally published on Texas PACE Authority