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FEATURE

Texas Sets the PACE

CHARLENE HEYDINGER

exas’ transformation of Property TX-PACE Advantages for Businesses TX-PACE PROJECT HIGHLIGHTS
Assessed Clean Energy into TX- (and their Lenders)
TPACE is setting the stage as a na- TX-PACE enables property owners to TX-PACE serves urban and rural Texas
tionwide commercial & industrial (C & I) overcome traditional up-front cost bar- with projects big and small.
PACE model. riers for capital investments with long
ROI. Without PACE, property owners
What is TX-PACE?
delay maintenance and sell property with
TX-PACE is a financial tool that enables aging infrastructure, making the weak-
businesses to upgrade facility infrastruc- ened property the new owner’s problem.
ture. Property owners lower operating
TX-PACE programs enable investment
costs and use the savings to pay for eligi- while preserving capital and credit lines
ble water conservation, energy efficien-
cy, and distributed generation projects. 1 and empowering owners to retain their R.J. Liebe Athletic Lettering Company
available capital for revenue-generating – Corsicana, TX
TX-PACE financing is repaid through expenses. Since future PACE assess-
and secured by a voluntary proper- ments transfer to a new owner at sale, Investment: $324,559
Projected Utility Savings: $500,610
ty assessment imposed by a county or owners can address deferred mainte- Project completed August 2017
municipality with a TX-PACE program. nance without overinvesting.
PACE assessments attach to and follow
title to the property, are non-recourse, Why TX-PACE Matters to
and are not subject to acceleration upon Community Banks
sale or foreclosure. The assessment lien “A real benefit for independent bank-
securing the PACE loan has priority over ers is that with limited geographic mar-
other liens on the property. The PACE kets, they will likely only cover a limited
capital provider can only foreclose on number of municipalities with a PACE
installments that are past due and may program. This puts them for now in a RDM Pros – Bryan, TX
not accelerate future installments of the competitive advantage with regional Investment: $129,356
PACE loan. The property remains subject and national banks who face numer- Projected Savings: $240,000
to the assessment lien for future install- ous variations in local PACE programs Project completed January 2017
ments until the total PACE assessment across their entire market, making their
has been paid. active participation in PACE programs In September, the nation’s first rated
The length of a TX-PACE assessment less likely until true secondary markets commercial PACE securitization closed
can be stretched over any number of emerge for PACE loans,” notes Tom Nida, for $75 million. To date, $500 million
years not to exceed the projected use- Regional Executive of Washington, D.C. have been invested in PACE projects to
ful life of the improvements, provided for John Marshall Bank, a community improve over 1,000 commercial build-
the projected savings exceed the cost bank investing in several PACE projects. ings. C & I PACE investment in the U.S.
of the repayment. Projected savings are “Independent bankers can more effec- doubles every year. Eleven Texas PACE
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calculated using a rigorous Technical tively add PACE loans to their current projects ranging from $130,000 to $24
Standards Manual and two statutori- financial services offerings to compete million have facilitated $33.5 million of
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ly required reviews by an independent against their larger rivals.” new investment since TX-PACE began
third-party engineer. 34 months ago.

32 The Texas Independent Banker