North Texas developers will soon have an easier path to financing sustainable projects with the launch of a new regional clean energy program.
The North Central Texas Council of Governments enlisted Frisco-based Lone Star PACE and Austin-based Texas PACE Authority to administer a streamlined Commercial Property Assessed Clean Energy program, or C-PACE, across its 16-county region, the Dallas Business Journal reported.
The initiative is meant to provide uniform access to long-term, fixed-rate funding for energy efficiency, water conservation and renewable energy upgrades, without upfront capital from developers.
C-PACE loans are repaid through property tax assessments over time and don’t require funding up front. They’re also backed by the value of the improvements, not personal guarantees. That structure has made the financing attractive to property owners seeking to align long-term savings from infrastructure upgrades with their costs.
“Because of that high level of security, lenders are willing to loan out for a long period of time that aligns with the useful life of the assets,” said Lone Star PACE President Lee McCormick, and at “competitive” interest rates.
The C-PACE program was enacted by the Texas Legislature in 2013. McCormick had worked for the last 12 years to bring a regional framework to North Texas, according to the outlet.
The program’s regional approach aims to replace the existing patchwork of city- and county-level C-PACE offerings with a more cohesive structure, while allowing local governments to opt in. For municipalities lacking the resources to build or manage their own programs, the centralized model could make green upgrades more accessible.
Private capital funds the program, not taxpayers, and updates to Texas’ C-PACE policy allow developers to borrow up to 35 percent of a project’s loan-to-value ratio, up from the previous 25 percent, so long as certain efficiency benchmarks are met, McCormick said.
Hotel and multifamily developers were early adopters of C-PACE, but since the pandemic, usage has spread to industrial and commercial properties as awareness of the tool grows. In one recent example, Hall Group’s Hall Arts Hotel, at 1717 Leonard Street in downtown Dallas, secured $27 million in retroactive C-PACE funding to recapitalize energy-saving upgrades.
With rising construction costs and political headwinds straining other sustainability programs, proponents say the initiative fills a gap.
The new regional framework is expected to go live within the next two months.
— Judah Duke
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