1. Keeping PACE on
The Texas Border

2. PACE in Texas
83rd Session: SB 385, Sen. John Carona and Rep. Jim Keffer
The Coalition:
County Judges and Commissioners Association of Texas
Independent Bankers Association of Texas
Texas Association of Business
Texas Association of Counties
Texas Bankers Association
Texas Building Owners and Managers Association
Texas Combined Heat and Power Initiative
Texas Conference of Urban Counties
Texas Real Estate Council
Texas Manufactures Association
Texas Municipal League
Texas Renewable Energy Industry Association
US Green Building Council
Dozens of other organizations and companies

3. Energy Sector Consumption

4. Texas Drought Impact

5. Projected Texas Population
“More than 1,000 people…move to Texas every day.”
Gov. Rick Perry, 12/2012.

6. Increase Net Operating Income Bottom Line: Increased Building Value
Lower Utility Costs
PACE financing is a way for businesses to upgrade their buildings so they lower utility costs while at the same time increase their net operating income.
PACE financing is completely private – there is no government money involved. If you had a project you wanted to do using PACE, just like a conventional loan you would borrow money to complete the project and agree to pay it back. PACE differs from a conventional loan in that instead of being secured by the borrower, a PACE loan gets secured by a senior lien on the property itself, basically equivalent to the Property Tax. It’s like you’ve voluntarily agreed to pay back your loan through the same mechanism as a property tax.
If there is a mortgage on the property, the lender must grant consent before the property qualifies for PACE.
Bottom Line: Increased Building Value

7. Long Simple Payback? No Problem! Utility Savings cash flow REPAYMENT
The secure nature of PACE enables 20 year funding: Projects with paybacks as long as 12 years can now be implemented on a positive cash flow basis
-Increases Net Operating Income
-Increases Property Value
The difference between what you save in utilities and what you pay for the loan is Positive Cash Flow, or as I like to call it, “Happiness”.
REPAYMENT

8. Financial Impact of PACE - An Example
Commercial Office Building
Project involves a $1.1M energy efficiency retrofit
Annual energy and maintenance savings of $125,000 (8.8 years simple payback)
The project does not pass the Landlord’s hurdle rate for investment in energy efficiency
Conventional Funding for 5 years at 4.5%(20% down)
PACE funding available for 20 years at 6.5%.

9. Gross Lease Scenario

10. Cash Flows
Go over all the different lines

11. CAPITAL STACK APPROACH: DEVELOPER
Example: $25M conversion of industrial space to Class A office space
Then
Now
4.5%
4.5%
Traditional Debt
$10M
Traditional Debt
$10M
18%+
6.5%
PACE Financing
$6M
Partner Equity
$10M
18%+
Partner Equity
$4M 8% 8%
Owner Equity
$5M
Owner Equity
$5M
10.6% WACC
7.8% WACC

12. WHERE IS PACE? Live PACE Regions DFW: City of Dallas
Central Texas: Travis, Hays & Williamson Counties
South Texas: Nueces, Cameron, Hidalgo, & Willacy Counties
SE Texas: Brazos, Fort Bend, Jefferson Counties, City of Houston
West Texas: El Paso County

13. PACE ON THE BORDER

14. COUNTY ACTION

15. PACE is a WIN-WIN-WIN
Property Owners – lower utility bills, energy independence (CHP) energy efficiency, property value increase
Contractors – source of increase in business, more local hiring, best practices, keeping up with technology advancements
Lenders – new loans, steady & stable process, fully collateralized, Tax Assessment lien position, improved asset value
State of Texas – reduced peak demand, improved grid loading, renewables as source, improved air quality, better water conservation
Communities – increased economic development and jobs, improved building infrastructure, more appealing building stock