PHARR, RGV – The Hidalgo County Commissioners’ Court this week approved a Resolution of Intent in support of the Property Assessed Clean Energy (PACE) program.

As mentioned in a previous interview with the Rio Grande Guardian, economic development director for the Lower Rio Grande Valley Development Council, Terrie Salinas said PACE is an innovative financing program that enables owners of commercial and industrial properties to obtain low-cost, long term loans for water conservation, energy-efficient improvements and renewable retrofits.

Eduardo 'Eddie' Cantu
Eduardo ‘Eddie’ Cantu

LRGVDC was the first council of government in Texas to take advantage of Senate Bill 385, authored in 2013 by then-Sen. John Carona, R-Dallas. The legislation allows 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. Cameron and Willacy counties have already passed resolutions in support of PACE.

Kenneth “Ken” Jones, executive director of LRGVDC, attended the Hidalgo County Commissioners’ Court last Tuesday, alongside Jonathon Blackburn, managing director of Texas PACE Authority.

The program was approved by Travis and Williamson counties and recently adopted by large cities such as Houston and Dallas, Blackburn said. He said the program is a way for commercial property owners in Hidalgo counties to finance improvements to their infrastructure.

“In Texas we think the potential for PACE uptake is pretty substantial. It’s a fairly new program to Texas, we’ve just completed our first two projects in Travis county and expect to complete a number of other projects over the next few months,” Blackburn told county commissioners.

“It’s a program that has a pretty enormous potential to impact your commercial real estate and your commercial sector here in Hidalgo County. We’ve been working very closely with Jones and with the development council down here to implement it.”

Eduardo “Eddie” Cantu, Hidalgo County Commissioner for Precinct 2, supports moving forward with PACE. He previously asked for examples of cities or counties in Texas that have successfully implemented PACE.

“I had a lot of questions back [then] and I asked a bunch of questions to a lot of the people that were involved and I didn’t quite get the answers at the beginning,” Cantu said. “I was looking for an example of where it had been done before.”

Cantu continued: “You just mentioned Travis county did a couple, but we really sat down; worked our way through the process and I got a little more comfortable. And now that there [are] examples, we can actually see how something went from soup-to-nuts and get a better understanding. Before it was just, ‘Approve it because another county approved it,’ wasn’t a good enough sell for us, but I might think that we’re ready to help you move the project forward.”

Last August, Charlene Heydinger, executive director of Keeping PACE in Texas, gave the Rio Grande Guardian a list of the benefits of PACE.

“The benefits are multi-faceted, leading to a win-win scenario for virtually all stakeholders. Improvements financed with PACE loans will enable commercial and industrial properties to achieve energy efficiency and help conserve the state’s water resources,” Heydinger said.

Heydinger said PACE is a voluntary program that enables property owners to upgrade their properties using savings from their utility bills to pay for the improvements that result in those very savings.”

Heydinger said that by creating this economic development tool, counties will enable businesses to reduce costs and improve their properties without taxpayer dollars or risk to the treasury.  “All the barriers that prevent property owners from improving their property are wiped away with PACE. Company bottom lines improve, buildings and manufacturing facilities improve, lenders make secure and profitable loans, and contractors have new jobs serving the private sector.  Everybody wins,” Heydinger said.

Heydinger told the Rio Grande Guardian that she gets asked a lot, “What’s the catch?” She said she answers them in this way: “There is no catch.  The worst thing that can happen is that nobody takes advantage of the program.  But that won’t happen in the Valley; I know of several big projects – industrial and commercial – that are just waiting for the counties to establish PACE programs.”

Heydinger said her organization created the PACE in a Box model program so that all counties could use the same documents and procedures to serve their constituents with best practices. “Our goal is to have all counties in Texas adopt the PACE in a Box program. It is designed to provide uniform, user-friendly, scalable and sustainable PACE administration. It’s the only PACE program in the country designed by stakeholders and it’s a market-based, efficient program. We are excited that the counties in the Valley will be among the first to create PACE programs and that they will work with the LRGVDC to administer the program uniformly and efficiently throughout the Valley.”

Here are some of the reasons to adopt the PACE program, Heydinger said:

For Local Governments
•    Improving property on the tax rolls creates jobs, increases property value and sales tax revenue, and encourages business retention and expansion.
•    Updated buildings have increased occupancy, rental rates and net operating income.
•    Risk of obsolescence of an aging building stock is reduced.
•    The community’s “clean city” reputation is improved, attracting workers and families.
•    There is no burden on the community’s general fund or borrowing capacity—private sector PACE financing is tax neutral.
   
For the Economy
•    PACE unlocks opportunities for contractors, manufacturers and engineering firms.
•    PACE retrofits improve the efficiency and competitiveness of existing building stock.

For Owners of Commercial, Industrial, and Large Multi-Family Properties
•    Money once spent on utilities can now be capitalized and used to pay for infrastructure upgrades, resulting in bottom-line savings.
•    Extended payback periods afford an immediate cost benefit. Assessments can be spread over multiple years, and the assessment remains with the property, allowing the utility savings to exceed the cost of the property assessment.
•    Businesses can utilize utility savings and hedge against increased costs.
•    With the application of power generation technologies, properties and operations can be protected from power blackouts or brownouts.

For Lenders
•    Because a PACE loan is secured by the assessment, lenders can leverage its value to better serve clients with property in need of infrastructure improvements.
•    PACE offers a new avenue for moving an influx of capital into the marketplace.
•    Lenders are protected because those with mortgages on existing property must give written consent before that property is eligible for a PACE assessment.
•    Local lending allows current mortgage holders an option to make the PACE loan.

For Our Water Resources and the Environment
•    Water- and energy-efficient buildings reduce stress on community resources, particularly the state’s water supply.
•    Energy-efficient buildings help communities meet clean air goals and requirements and provide healthier environments for their occupants.