Texas PACE Program Boosts Property Value with Flexible Financing Solutions

The Houston Resilience Committee convened on August 25, 2025, to discuss the ongoing implementation and impact of the Property Assessed Clean Energy (PACE) program in Texas. The meeting focused on the program's structure, benefits, and the role of local government in facilitating private sector engagement.

The session began with an overview of the PACE program, emphasizing its unique approach that allows property owners to finance energy efficiency improvements without direct government mandates or taxpayer funding. The committee highlighted the importance of maintaining a clear boundary between government and private sector roles, ensuring that property owners retain the autonomy to choose their lenders and contractors. This flexibility is designed to foster trust and encourage participation from the private sector.

A key point of discussion was the financial mechanics of the PACE program. It was noted that in the event of a default, the government can only collect missed payments, which simplifies the process for senior lenders and reduces their risk. This structure aims to make PACE financing more attractive to banks, encouraging them to participate as both senior lenders and PACE lenders.

The committee also addressed the educational efforts required to familiarize banks with the PACE program, as many institutions initially viewed it with skepticism. The goal is to demonstrate the program's viability and benefits, which have already resulted in over half a billion dollars in financing across Texas.

Further discussions included the process for property owners to engage with the program. Once a property owner secures a loan agreement and submits an engineering report from a licensed third-party engineer, the city can place a lien on the property to secure the financing. This lien is intended to enhance property value by funding necessary upgrades, thereby increasing resilience against rising utility costs and improving overall building performance.

The meeting concluded with a review of the various applications of PACE financing, including retrofitting older buildings, new construction, and refinancing existing projects. The committee underscored the program's potential to alleviate cash flow challenges for property owners while promoting sustainable development in Houston.

Overall, the discussions reflected a commitment to enhancing Houston's resilience through innovative financing solutions, with an emphasis on collaboration between the public and private sectors to achieve shared goals in energy efficiency and sustainability. The committee plans to continue its outreach efforts to ensure broader understanding and participation in the PACE program moving forward.