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Houston PACE offers an immense opportunity for
investment in green, resilient, sustainable and healthy Cumulative Impact of the Houston
buildings that increase net operating capital, generate PACE Program Projects
higher internal rates of return and significantly improve
asset value without using core capital.
“PACE capital providers are focused on Texas as the
state has one of the most robust and dynamic economies
in the country. By providing capital for PACE, we can play
an active role in reducing the state’s carbon footprint as
its economy and population continue to grow. Develop-
ers find PACE attractive as it provides 100% long-term,
fixed-rate, non-recourse financing for qualified energy
efficiency, resiliency, water conservation and sustainabil-
ity improvements incorporated in their projects. This,
in turn, allows them the opportunity to further upgrade
their building materials and mechanical systems, which
enhances the project’s operating cost savings and sus-
tainability,” explains Mark McClure, executive director,
Counterpointe Energy Solutions, Hannon Armstrong
Sustainable Real Estate.

Reimagining and Repurposing Property in a Post-COVID-
19 City
COVID- 19 is causing a global rethink of the commercial
real estate market that won’t return to the pre-pandemic
status quo. Long-term changes are ahead as businesses
and individuals plan for eventual recovery. Investors are
waiting for space to become available at accessible prices.
Enterprises are looking to reshape office and retail space—
rethinking how much and where they need it. Society is
rethinking everything—how we live, how we work, how we
play—all centered around built environment. We are in a
transformative period, and Houston’s PACE program opens
doors to this opportunity.

Plugging the Hole in a Capital Stack vs. Shortening It
TX-PACE has financed retrofits and adaptive reuse of a
wide range of facilities, including historic office buildings,
a cotton gin and a mercantile warehouse with projects Continental BEFORE
ranging from $5 million to $24 million (including a $21 Gin Building
million adaptive reuse project in Houston). $5.25 M
The capital stack necessary to purchase and underwrite Deep Elum,
the adaptive reuse of historic property was assembled for Dallas, Texas
each of these projects. “Developers recognize the benefit
that PACE offers as a lower-cost capital stack alternative in
lieu of higher-cost mezzanine financing and/or preferred
equity,” comments Mark McClure. AFTER
More often than not, the available capital is insufficient
or too costly to justify the initial investment in high-per-
formance energy and water-saving measures. Omitting
these measures to cut costs condemns the facility to
unnecessarily high operating costs, resource waste,
unhealthy interior space and environmental damage over
the building’s life. Combining historic tax credits and The City of Dallas’s PACE program facilitated energy and water saving
other incentives with the Houston PACE program enables upgrades including roofing, glass/glazing, mechanical/HVAC, electri-
investors to imagine and finance quality retrofits and cal/LED lighting, exterior walls, elevators and utilities. The installation
adaptive reuse of vacant buildings. Without TX-PACE, of solar PV panels will enable power to be created onsite.

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