SOUTH PADRE ISLAND, RGV – A Travis County Commissioner who made her name in Texas as an environmental activist is recommending counties in the Rio Grande Valley adopt a program that helps commercial property owners finance energy-efficient improvements to their buildings.
Brigid Shea, a co-founder of the Save Our Springs Alliance in Austin, spoke at a conference on South Padre Island recently in support of the Keeping PACE in Texas program.
“This is a program where the government really does get to help the business community. It is important for counties to adopt the PACE program,” Shea said, at a PACE conference hosted by the Lower Rio Grande Valley Development Council and held at the Isla Grand Beach Resort.
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.
Hidalgo County Commissioners Court will consider a resolution in support of PACE at a meeting today. Cameron County Commissioners will consider a similar resolution on Sept. 10. Willacy County Commissioners Court has already adopted such a resolution. The LRGVDC is the administrative agent for PACE in the three counties.
In the keynote address at the LRGVDC conference, Shea said PACE can help municipalities stretch their water supplies, provide financial incentives for commercial property owners to upgrade their buildings and bring jobs to a community.
With regard to saving water supplies, Shea pointed out that about 50 percent of the water used in large buildings is for air conditioning. Often times, she said, the water used for air conditioning is treated drinking water. Installing a “purple pipeline” can save money, Shea said. “The State Capitol uses about 300 million gallons of water a year, most for air conditioning. Air conditioning does not need to be drinking water standard. You can shift from treated drinking water to treated waste water. You can swap out the water,” Shea said.
Shea said UT-Austin uses about 300 million gallons of water a year. Combine UT’s use and the State Capitol’s use and about 600 million gallons of water is consumed. In addition, four large county buildings in downtown Austin use about 12 million gallons of drinking water. She said converting to a “purple pipeline” can pay for itself in six years. Shea also identified about 90 commercial property buildings in downtown Austin that could convert from treated drinking water to treated waste water. “This is where government and commercial interests meet. The PACE program makes it financially worthwhile for these commercial property owners to convert. It is worth looking into. It also provides work for engineers and construction workers,” She said.
Regarding an incentive to get commercial property community to upgrade their buildings, Shea said she tried to get a coalition going a few years ago to improve energy efficiency. When she encountered resistance she said she found the “dirty little secret” about most commercial property owners.
“Most of the owners do not pay the utility bills so they don’t care how much it costs. They do not care if the building wastes energy. They do not care if the building wastes water. They do not pay the utility bills. They do not get a financial return if they put money into upgrading their energy and water,” Shea said. Some old buildings even run heating and air conditioning at same time, she said.
“What PACE does is it allows the commercial property owners to put that cost – that loan – on the property assessment and then it can be passed along to the tenant. It solves that problem of it not being in their financial self-interest. Effectively, they get to upgrade their building on somebody else’s nickel. The benefit to the tenant is they get savings on their utilities. So, it comes out about equal for them. The increase in the cost of the property assessment that is passed on to them through their lease is offset by a reduction in their utility bill. So, it beautifully solves that self-interest problem,” Shea said.
In order to get commercial property owners to participate in PACE, Shea said Simon Properties were asked to get involved. “We had a lot of commercial property owners in that briefing wanting to hear why Simon, the most successful mall developer in the country, liked the PACE program so much. She (an official from Simon) delivered. It was impressive to the room when she said they (Simon) were going to spend $500 million on PACE programs in the next five years, a lot in Texas,” Shea said.
“Simon are going to spend a lot of money on these upgrades because it is in their financial self-interest to do it. That will create a lot of jobs. That is just one property owner. Imagine what would happen in your communities if other commercial property owners suddenly realized, hey, this is going to be good for me as well. The job opportunities in this program are really substantial. It is one of those rare win-win situations where the environment benefits, the economy benefits, and everyone in the community benefits.”
In answer to a question from the audience, Shea pointed out that her resolution that Travis County Commissioners Court adopt PACE was not a party political issue. She said the one Republican on the court, Gerald Daugherty, was a co-sponsor of the resolution. Shea said PACE has been endorsed by the Texas Association of Business and the Sierra Club. “It is a clear example of where, doing something for your environment is good for your economy,” Shea said.
The Keeping PACE in Texas program came about thanks to Senate Bill 385, authored in the 2013 legislative session by then-state Sen. John Carona, R-Dallas. 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.
Here is Heydinger’s list in full:
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.
• 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.