Executive Summary: PACE refers to a financing program that enables property owners to obtain long-term non-recourse fixed-rate financing for up to 100% of the cost of energy improvements to their properties. A PACE loan is repaid through a voluntary annual property tax assessment. The Owner uses the cash flow generated by the conservation measures to repay the loan. Because a PACE loan is attached to the property, the loan remains with the property along with the improvements that it financed. The annual assessments cannot be accelerated even in default because the repayments are treated like an annual tax assessment which cannot be accelerated.
Thirty-three states including Texas (S.B. 385 as amended by H.B No. 3187) have passed umbrella legislation enabling commercial building owners to install energy performance upgrades and finance 100% of the project costs for up to the weighted average useful life of the equipment being financed, typically 10-30 years.
The mechanism used involves private funds that are repaid via an annual tax bill and the program is thus a public-private initiative.
Qualifying Property Types Include: office buildings, industrial, manufacturing, warehouse, apartments, hotels, motels, retail, hospitals and nonprofits. Qualifying Improvements Include: HVAC, (including: Cooling Towers, Chillers, Air Handlers, Variable Drive Fans, Ductwork, Boilers, Smart Thermostats, Energy Management Systems), Refrigeration, Insulation, "Cool Roofs", Lighting Retrofits (both interior, exterior & garage), Windows, Window Coverings, Glazing, Elevators, Water Conservation: (including Low Flow Toilets & Showers, Rainwater Collection, Drip Irrigation), Renewables: (Solar, Wind, Fuel Cell, Geothermal, Car Charging Stations, Bike Racks). Demand response measures such as thermal storage, controls, on site generators, and batteries.
According to the terms of the program, all related fees including: architectural, engineering, facilitation and financing fees may be included in the financing. Not-for-Profits also qualify to benefit from PACE. Typically excluded or non-qualifying projects: New Construction, Raw Land, Single Family, Duplex, Four-plex, Government Owned Properties, Non-Proven Technology, Equipment that is not attached to real property and properties located outside of an approved participating jurisdiction.
If you are new to PACE, we suggest you start with our PACE 101 page.
An MEP engineer may be used to determine the optimal combination of improvements. For complex projects, a project manager may be used to ensure a successful construction and installation process. PACE Houston will work with you to identify and summarize your needs and evaluate your alternatives.
This Texas PACE Authority program creates new investment opportunities, drives economic growth, reduces air pollution and greenhouse gas emissions, increases economic efficiency and productivity, creates jobs, and advances national energy security.
Whether considered on a Cash Flow, NOI, Net Present Value or Building Valuation basis, participating in the Property Assessed Clean Energy program can enhance your property’s value and your tenant's satisfaction.
PACE - good for the country, the environment and business.
Houston and Fort Bend County PACE Districts
The City of Houston and Fort Bend County have now established PACE districts. Properties located in Fort Bend County, the City of Houston and the Houston Extraterritorial Jurisdiction can now access the PACE program. It should be noted that the Houston ETJ does not include cities within the Houston ETJ, other than Houston. For instance, the City of Bellaire, Piney Point and Jersey Village are not eligible for PACE. There are about 26 excluded smaller cities surrounded by the much larger Houston ETJ.
When a county approves a PACE district it is simple to know if your property is in a PACE district. However, it is more complex for the Houston area. To see if your property is in the Houston City Limits or the Houston ETJ ("in the Houston PACE District"), please go to our FAQ page for instructions and click there or CLICK HERE and type in your address.
Case Studies of typical PACE projects may be found by clicking HERE.