Travis County Launches Texas’ Inaugural PACE Program, Unleashes Private Funding for Energy and Water Efficiency

travis CTY Today marked a milestone for Texas’ clean energy economy. Travis County voted to adopt the Property Assessed Clean Energy (PACE) program, making it the first county in Texas to do so. This means Austin and the surrounding area will soon reap the economic and environmental benefits from giving energy-intensive, thirsty Texas a reprieve with water efficiency and clean energy.

"The US Business Council for Sustainable Development ignited interest in PACE in 2011 after working on its implementation in Connecticut and California. Two attorneys with the Thompson and Knight law firm, Jim Morriss and Stephen Block, learned of this innovative energy financing concept at a Tucson meeting of the US BCSD and became infected with the idea of making it happen in Texas," said Andrew Mangan, executive director of the US BCSD.

"Together we created a new organization called Keeping PACE in Texas, hired an executive director, Charlene Heydinger, who prepared the way for legislative action in the 2013 session. And now, after years of hard work, Travis County has stepped up as the first government in Texas to launch a PACE energy efficiency in buildings program," Mangan said.

What is PACE?

PACE, enacted during 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 projects in the state. Specifically, it 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 for clean energy projects through their property tax bill.

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. The assessment is owed to the local government, which forwards the payments to the private lender.

State Program, County Project, Local Support

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

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.

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 installing 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.

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 about 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 PACE programs of their own. If you’d like to bring PACE to your county in Texas, please contact Keeping PACE in Texas.

BlogDaniel Kietzer