Company/Division/Operating Group Description:

Keeping PACE in Texas (KPT) is a 501(c)(6) organization tasked with advocating PACE programs in Texas. Established in January 2012, KPT succeeded in it's goal of enacting PACE legislation (SB 385), and worked with stakeholders (property owners, contractors, lenders and others) to design a model PACE tool kit to be given at no charge to all Texas counties and municipalities. The coalition is now encouraging local governments (counties and municipalities) to work together to establish regional PACE programs to enable private lenders to offer affordable, long term funding for water conservation, energy efficiency and renewable/distributed generation retrofits to commercial and industrial property.

Business Issue to be Addressed:

The new PACE statute, SB 385, authorizes municipalities and counties in Texas to work with private sector lenders and property owners to finance qualified improvements using contractual assessments voluntarily imposed on the property by the owner. The term of a PACE loan may extend up to 20 years, resulting in utility cost savings that exceed the amount of the assessment payment. As a result, improvements financed through PACE generate positive cash flow upon completion with no up-front, out-of-pocket cost to the property owner. If the property is sold before the full amount of the PACE loan is repaid, the repayment obligation automatically transfers to the next owner because the lien securing the PACE assessment follows title to the property.
Counties and municipalities that create PACE programs have the potential to foster economic activity through the improvement in commercial and industrial property infrastructure. Delayed maintenance plagues these properties because of market barriers to capital investment. Local governments can help business overcome these barriers by establishing a PACE program that will create a new lending product for the financial community, create jobs for contractors and engineers, and otherwise unlock a blocked market for equipment manufacturers and distributors. Communities will benefit from improved building stock, increased sales tax, improved environment, avoidance of clean air non-attainment, etc. Business retention and expansion are benefited by PACE programs that can finance improvements of existing facilities without requiring a down payment or other funds from the property owner.

Specific Scope for this McCombs Project

Communities ask "What's in it for us?" or "What do we get out of the investment in creating a PACE program?" The benefits to Texas during the drought and strain on the power grid seem obvious, but quantifying the economic value to local communities tasked with creating PACE programs if they so choose, will help them understand the potential economic benefits and justify the effort of creating a PACE program.