[Resilience Committee on August 25, 2025.]
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JUST FOR THIS PRESENTATION TODAY, I THINK IT WOULD BE A GREAT EDUCATION FOR, CERTAINLY WAS FOR ME, AND I THINK FOR MANY OF US.UM, WE HAVE STAFF FROM COUNCIL MEMBER CAYMAN'S OFFICE WHO'S, UH, UH, VICE CHAIR.
DO YOU HAVE ANY COMMENTS ON BEHALF OF COUNCIL MEMBER CAYMAN? I DO NOT.
UH, SO TODAY'S, UM, AGENDA, WE HAVE PRESENTERS FROM THE TEXAS PACE PROGRAM, WHICH IF YOU DON'T KNOW WHAT THAT STANDS FOR, THEY'RE GOING TO TELL YOU.
IT'S A, IT'S A GREAT PROGRAM THAT, UH, PROPERTY ASSESS CLEAN ENERGY AND IT TALKS, UH, THEY'VE GOT A LOT TO, TO EDUCATE US ON.
UM, SO WELCOME, UH, TELL A LITTLE BIT ABOUT YOURSELVES AND, UH, IF YOU'LL INTRODUCE YOURSELVES, WOULD BE GREAT.
MY NAME IS CHARLENE HEIDINGER.
I'M THE PRESIDENT OF TEXAS PACE AUTHORITY.
WITH ME TODAY IS JAMES CARGAS, OUR COUNCIL.
SOME OF YOU MAY REMEMBER JAMES, HE WAS COUNCIL FOR THE CITY WHEN THIS PROGRAM WAS CREATED BACK IN, UM, 20 15, 20 16.
SO WE'RE DELIGHTED TO BE HERE TODAY.
UM, I'D LIKE TO WELCOME, UH, COUNCIL MEMBER, VICE MAYOR, PRO TEM AMY PECK, COUNCIL MEMBER JULIAN RAMIREZ, AND THEN STAFF FROM COUNCIL MEMBER CAYMAN.
COUNCIL MEMBER THOMAS, COUNCIL MEMBER CASTILLO, COUNCIL MEMBER MARTHA CASTEX, TATER TATUM.
AND, UH, COUNCIL MEMBER SALLY ACORN'S OFFICE.
PLEASE PROCEED WITH YOUR PRESENTATION.
UM, SORRY TO BOTHER YOU WITH THIS, BUT HOW DO I ADVANCE SLOT? OH, IT'S ALREADY DONE.
UM, TEXAS PACE AUTHORITY IS A 5 0 1 C3 ORGANIZATION, A NONPROFIT ORGANIZATION.
WE WERE CREATED TO ADMINISTER PACE PROGRAMS FOR CITIES AND COUNTIES UNDER THE TEXAS PACE ACT.
UH, ONLY AFTER IT BECAME CLEAR THAT, UM, LOCAL GOVERNMENTS DIDN'T HAVE THE WHEREWITHAL TO, TO, UH, ADVANCE THIS PROGRAM.
SO WE HAVE A, WHAT'S KNOWN AS A LOCAL ADOPTION MODEL.
THE STATE GAVE CITIES AND COUNTIES THE ABILITY TO CREATE THIS PROGRAM, AUTHORIZED AUTHORIZATION, BUT NOT A LOT OF GUIDANCE.
UH, THERE IS NO OVERSIGHT OF THIS PROGRAM.
AND SO AFTER THE STATUTE PASSED IN 2013, UM, ON THE CONSENT CALENDAR, PRIMARILY BECAUSE OF DROUGHT, UM, WE HAD BUILT A HUGE BUSINESS COALITION.
WE WENT BACK TO THEM AND SAID, UM, IF WE WANT THIS TO WORK, WE NEED TO CREATE A VERY HIGH QUALITY, TRUSTED PROGRAM THAT WILL DELIVER THE ACTUAL ENERGY AND WATER SAVINGS, UH, WHICH IS THE PUBLIC BENEFIT THAT THE STATUTE WAS CREATED TO PROVIDE.
UH, BUT IT HAD TO BE EVERYTHING A LOCAL GOVERNMENT WOULD NEED, MODEL DOCUMENTS, PROCESS, UH, HOW TO CREATE THE PROGRAM, HOW TO CLOSE A PROJECT, ALL OF THE, ALL OF EVERYTHING THAT YOU WOULD NEED.
AND IT HAD TO BE TRUSTED AND IT HAD TO BE UNIFORM.
SO WE WROTE WHAT WE CALL PACE IN A BOX, UH, FOR COGS TO RUN.
AND OUR COUNCILS OF GOVERNMENT BASICALLY SAID, NO.
SO AS A LAST RESORT, THIS NONPROFIT WAS CREATED.
WE DO IT AS A PUBLIC SERVICE AT THE LOWEST POSSIBLE COST.
THE CHALLENGE WITH THAT IS THAT AS A SCRAPPY NONPROFIT, IT'S HARD TO GET THE RESOURCES TO GET THIS DONE.
WE DON'T RECEIVE REVENUE FROM A PROJECT WHEN, AND OUR REVENUE COMES FROM USER FEES.
AND WE GOT STARTED WITH GRANTS.
SO THE OWNERS WHO VOLUNTARILY USE THIS PROGRAM ARE THE ONES THAT, UH, FUND US.
UH, SO THERE ARE NO TAXPAYER DOLLARS USED AND THERE'S NO IMPOSITION ON YOUR STAFF.
SO GETTING THIS STARTED IN 2015 WAS A REAL CHALLENGE BECAUSE THIS IS AN ALTERNATIVE SOURCE OF FINANCING.
UM, AND MONEY WAS FREE AND WATER WAS FREE, AND POWER WAS FREE.
SO A LOT OF PEOPLE WERE LIKE, WHY WOULD WE EVER USE THAT? SO WE'RE BACK HERE TODAY SAYING, THIS IS ENORMOUSLY SUCCESSFUL, BUT WE HAVE NOT GAINED TRACTION IN HOUSTON THE WAY WE SHOULD.
AND WE REALLY NEED HELP WITH OUTREACH AND EDUCATION.
SO IF YOU DO NEWSLETTERS, IF THERE ARE BUSINESSES OR, UH, OTHER ORGANIZATIONS IN YOUR, UH, DISTRICTS THAT COULD BENEFIT FROM THIS, WE REALLY HOPE YOU WILL HELP US REACH OUT TO THEM.
SO THIS SLIDE IS, IS A DEMONSTRATION OF THE PROBLEM.
WE'RE TRYING TO SOLVE EQUIPMENT THAT MAKES PROPERTY MORE ENERGY AND WATER EFFICIENT, AND ALL OF THAT EQUIPMENT INCREASES THE RESILIENCY OF
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THESE BUILDINGS.BUT THIS, THIS, UH, ENERGY AND WATER SAVING EQUIPMENT IS VERY EXPENSIVE.
SO IF SOMEBODY'S GONNA INVEST IN A BUILDING THEY ALREADY OWN, OR A BUILDING THAT THEY'RE GONNA BUY, OR A BUILDING THAT THEY'RE GONNA BUILD, THEY'RE VERY COST CONSCIOUS.
SO IN ADDITION TO ASKING PRIVATE PROPERTY OWNERS BUSINESSES AND NON AND NON-PROFITS TO INVEST IN THEIR BUILDINGS BY SPENDING MORE MONEY UPFRONT, UH, TO MAKE MATTERS WORSE, THIS EQUIPMENT WILL BREAK EVEN.
IT WILL PAY FOR ITSELF WITH ENERGY SAVINGS, WITH LESS REPAIR, ET CETERA.
BUT IT HAS REALLY LONG ROI IT WILL TAKE YEARS TO BREAK EVEN.
INVESTORS WANT TO MAKE THEIR MONEY IN 18 MONTHS OR LESS.
SO THIS IS WHY WE HAVE DEFERRED MAINTENANCE.
THIS IS WHY SO MANY BEAUTIFUL BUILDINGS SIT EMPTY.
IT JUST COSTS TOO MUCH MONEY TO BRING THEM BACK TO LIFE, OR THEY'RE UNDERUTILIZED.
OR PEOPLE CONTINUE TO BUILD THE CHEAPEST BUILDINGS THEY CAN WHEN THERE'S AN ALTERNATIVE THAT THEY DON'T KNOW ABOUT.
SO FROM THE LENDER'S PERSPECTIVE, WE'RE TALKING ABOUT EQUIPMENT LOANS.
LOANS THAT BASICALLY HAVE NO COLLATERAL.
YOU CAN'T COME AND TAKE SOMEBODY'S ROOF IF THEY DON'T PAY, RIGHT? AND SO THE LENDERS WANNA REDUCE THEIR RISK BY GETTING PAID BACK QUICKLY.
SO YOU'LL SEE MOST EQUIPMENT LOANS WILL BE FIVE YEARS OR LESS.
OR THEY'LL SAY, WE'LL LOAN FOR A LONGER PERIOD OF TIME, BUT WE'RE GONNA REDO YOUR INTEREST EVERY, EVERY FIVE YEARS.
SO THE ON THE LEFT, YOU'LL SEE A CONVENTIONAL EQUIPMENT LOAN GETS PAID BACK IN FIVE YEARS.
I CALL THAT THE TOWER OF PAIN BECAUSE THERE ARE SAVINGS.
BUT YOU'VE GOTTA GO THROUGH A VERY PAINFUL CASH FLOW FIVE YEARS, UH, BEFORE YOU'RE GONNA GET TO THE SAVINGS.
SO THIS PROGRAM THAT YOU HAVE CREATED KNOCKS THAT TOWER OVER.
THE OWNER STILL HAS TO PAY BACK, BUT THEY PAY BACK WITH A LONGER, A LARGER NUMBER OF SMALLER INSTALLMENTS.
THEY GET ACCESS TO THE UTILITY SAVINGS IMMEDIATELY.
WE WILL NOT, UH, CLOSE A PROJECT ON BEHALF OF THE CITY OR ANY OTHER LOCAL GOVERNMENTS THAT WE SERVE, UNLESS AN INDEPENDENT THIRD PARTY ENGINEER VALIDATES THAT THE SAVINGS ARE GOING TO EXCEED THE COST OVER THE LIFE OF THE ASSESSMENT.
NOW, WHY, UH, HA HAVE LENDERS GONE FROM WE NEED TO GET PAID BACK IN FIVE YEARS OR LESS, AND NOW THEY'RE WILLING TO GO OUT AS LONG AS THE EQUIPMENT'S GONNA LAST.
THAT'S HOW LONG THESE CAN BE UNDER THE STATUTE.
IT'S BECAUSE THE CITY OF HOUSTON HAS STEPPED UP AND SAID, WE'RE NOT GONNA TOUCH THE MONEY.
WE'RE NOT GUARANTEEING THE MONEY, BUT WE WILL COLLECT A DEFAULTED PAYMENT IN THE SAME WAY THAT WE WOULD COLLECT BACK TAXES.
SO YOU'VE CREATED AN ECONOMIC DEVELOPMENT INCENTIVE.
UM, THINK OF THIS LIKE YOUR WASTEWATER ASSESSMENT.
YOU ARE ADDING VALUE TO THESE PROPERTIES BY GIVING THE OWNERS THE OPPORTUNITY TO ACCESS AFFORDABLE LONG-TERM SAVINGS.
AND YOU'VE SAID TO THE LENDER, WE'LL BACK YOU UP IF YOU NEED TO BE BACKED UP.
AND BECAUSE OF THE MECHANISM THAT THE CITY HAS CREATED, LENDERS WILL LOAN OVER A LONGER PERIOD OF TIME.
SO WE'RE REALLY SOLVING THE UPFRONT COST CASH FLOW PROBLEM.
AND WE'VE BEEN ABLE TO DO THAT WITHOUT IMPACTING ANY, UH, TAXPAYER REVENUE DOLLARS, YOUR BUDGET OR YOUR STAFF.
AND, AND SO THAT'S WHAT MAKES THE WHOLE PROGRAM WORK.
THAT'S WHY A LOCAL GOVERNMENT HAS TO BE INVOLVED.
ALRIGHT, SO THIS WAS OUR FIRST OFFICE BUILDING, AND THIS IS, WE SHOULD BE DOING 40 OF THESE A MONTH.
UM, THIS IS A 1980S OFFICE BUILDING.
UH, THE AIR CONDITIONING WAS DEAD, HAD THE OLD LIGHTS THAT WERE CREATING HEAT.
UM, THE OWNERS OF THIS BUILDING CONSIDERED IT A CASH COW, BUT IT WASN'T.
THE AIR CONDITIONING DIDN'T WORK.
AND THE PROPERTY MANAGER COULD NOT GET THE OWNERS TO INVEST IN THIS BUILDING.
AND HERE'S, HERE'S THE DIFFERENCE.
SO THIS PROPERTY WAS GOING TO SAVE $200,000 A YEAR BY REPLACING THE HVAC SYSTEM AND THE LIGHTING, BUT IT COST 1.3 MILLION TO INVEST.
SO THE YELLOW LINE IS WHAT WOULD'VE HAPPENED HAD THE OWNERS OF THIS BUILDING JUST PAID THE 1.3 MILLION UPFRONT.
THEY WOULD NOT HAVE BROKEN EVEN UNTIL ALMOST NINE YEARS HAD THEY BORROWED TRADITIONAL MONEY FROM A BANK.
NOW THEY'RE NOT GONNA BREAK EVEN UNTIL 10 YEARS.
THIS IS WHY WE HAVE DEFERRED MAINTENANCE ALL OVER THE COUNTRY, NOT JUST HERE, EVERYWHERE.
SO WITH PACE, NOW HERE'S THE, HERE'S THE KEY TO THIS PROJECT.
THEY PROBABLY WOULD'VE PAID FOR THIS EQUIPMENT AT 11 OR 12 YEARS, BUT THE STATUTE ALLOWS THEM TO BORROW OVER THE USEFUL LIFE OF THE EQUIPMENT BECAUSE WE NEED THAT EQUIPMENT OPERATIONAL TO CREATE THE SAVINGS SO THAT THEY CAN MAKE, PAY THE INSTALLMENTS BACK.
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OVER THE, WHEN THEY WOULD BREAK EVEN, THEY BORROWED OVER THE WHOLE 20 YEARS.SO THEIR PACE PAYMENT, THEIR ANNUAL PACE PAYMENT IS $120,000, BUT THEIR SAVINGS ARE $200,000.
SO THIS OWNER IS PUTTING $80,000.
IT'S ACTUALLY A LITTLE BIT MORE THAN THAT OF CASH FLOW OF ECONOMIC GROWTH INTO THAT BUILDING USING SOMEBODY ELSE'S MONEY WITHOUT SPENDING A DIME OF THEIR OWN.
SO TO MAKE THIS STORY EVEN BETTER, SO NOW THE BUILDING'S WORTH MORE, THE EQUIPMENT WORKS, THEY'RE NOW 90% OCCUPIED.
THEY'VE RAISED THEIR LEASE RATES.
THIS IS JUST A GREAT ECONOMIC STORY AND IT'S A BUILDING THAT PEOPLE WANNA BE IN.
NOW, THERE ARE THOUSANDS OF 1980S OFFICE BUILDINGS WITH DEAD HVAC AND LIGHTING, BUT THE OWNERS DON'T KNOW ABOUT THIS.
AND THE CHALLENGE IS WHEN TIMES ARE GOOD, THEY WANNA BE INVESTING THEIR MONEY IN SOMETHING THAT'S GONNA MAKE THEM MONEY.
WHEN TIMES ARE BAD, THEY DON'T HAVE MONEY TO DO THIS.
PACE SOLVES THE PROBLEM EITHER WAY.
OKAY, SO THIS IS NOT A NEW IDEA, ALTHOUGH TEXAS WAS ONE OF THE FIRST STATES TO DO IT.
SO THERE ARE 40 STATES NOW THAT HAVE PACE STATUTES IN ABOUT 38 THAT HAVE OPERATIONAL PROGRAMS. NEXT.
OKAY? SO WE ARE 10 YEARS OLD THIS YEAR.
YOU ARE THE FIRST CITY TO HAVE CREATED A PACE PROGRAM IN TEXAS.
SO WE ARE NOW REACHING ALMOST, UH, 80% OF THE TEXAS POPULATION.
BUT TO PUT THAT IN PERSPECTIVE, WE ONLY HAVE 195 COUNTIES TO GO
ALL OF THESE USE THE SAME DOCUMENTS IN THE SAME HIGH QUALITY PROGRAM.
UH, WE HAVE, UH, DONE OVER HALF A BILLION DOLLARS IN 10 YEARS.
LESS THAN 10% OF THAT HAS BEEN DONE IN THIS CITY.
IT SHOULD BE WAY MORE THAN THAT.
WE HAVE DONE ALMOST A QUARTER OF THIS IS IN THE CITY OF DALLAS.
AND THE DIFFERENCE IS WE REPORT TO THE CITY OF DALLAS ECONOMIC DEVELOPMENT OFFICE.
AND EVERYBODY THAT COMES IN ASKING FOR AN INCENTIVE OR A GRANT IS ASKED, WHAT ARE YOU GONNA DO WITH OUR PACE PROGRAM? AND THEY'VE LEVERAGED IT TO TAKE THEIR DOLLARS TO SPREAD IT OVER MORE PROJECTS.
UM, WE HERE, WE STARTED OUT IN, UM, UH, ADMINISTRATIVE AND REGULATORY AFFAIRS, LAWYERS, EXPANSION, WELL, LAWYERS, LAURA STARTED IT.
AND, BUT WHEN IT WAS, UH, ADOPTED AND THE CONTRACTS WERE SIGNED, WE REPORTED TO, UM, ADMINISTRATIVE AND REGULATORY AFFAIRS.
AND THEY'VE HELPED US AS MUCH AS THEY CAN.
AND THEN ABOUT A YEAR AGO, OR A LITTLE BIT LESS THAN A YEAR AGO, WE, UH, NOW REPORT TO THE RESILIENCY OFFICE AND THE MAYOR'S OFFICE, WHICH IS WONDERFUL.
UM, BUT WE'VE NEVER KIND OF HAD THE TRACTION THAT WE WOULD LOVE TO HAVE IN WORKING WITH ALL OF YOU.
WE REALLY, I KNOW THIS IS ENERGY AND WATER SAVINGS AND ENERGY AND WATER EFFICIENCY ISN'T QUITE RESILIENCY, BUT EVERYTHING WE DO FACILITATES A RESILIENT, UM, IMPROVEMENT TO, TO THESE BUILDINGS.
IT'S A WAY FOR THE PRIVATE SECTOR TO SUPPORT WHAT YOU ARE TRYING TO DO, RIGHT? WE CANNOT WORK ON GOVERNMENT BUILDINGS, BUT THERE'S A GREAT PROGRAM IN THE COMPTROLLER'S OFFICE, UH, IF YOU'RE NOT FAMILIAR WITH IT, UH, IT'S CALLED LONE STAR, L-O-A-N-S-T-A-R.
AND IT'S, IT'S A REVOLVING LOAN FUND, KIND OF LIKE PACE FOR PUBLIC BUILDINGS.
BUT WE CAN HELP THE PRIVATE SECTOR MEET THE GOALS OF THIS COMMITTEE AND SUPPORT THE GOALS OF THIS COMMITTEE BECAUSE NOW THERE'S A WAY TO PAY FOR IT.
AND SO WE'RE DELIGHTED TO, TO SHARE THIS INFORMATION WITH YOU TODAY.
UM, IF YOU HAD A CHANCE TO LOOK AT THESE, I KNOW THIS IS IN YOUR RECORD, SO I'M, I'M JUST GONNA SKIP THIS, BUT EXCEPT TO SAY THAT, UH, WE'VE BEEN HERE A WHILE, IT'S, UH, IT'S AN HONOR.
UH, AND, UM, UH, AND AGAIN, YOU WERE THE FIRST CITY TO CREATE THE PROGRAM.
ALRIGHT, SO WHAT DOES PAY STAND FOR PROPERTY ASSESSED CLEAN ENERGY? IT'S THE ASSESSMENT WORD, UH, THAT IS THE KEY TO THIS, BUT IT'S ALSO OFTEN MISINTERPRETED.
WE ARE NOT, UH, ASSESSMENT DOESN'T MEAN WHAT DOES THE CAD SAY? THIS PROPERTY IS WORTH.
ASSESSMENT HERE MEANS LIKE A BILL.
THE CITY OF HOUSTON HAS OFFERED AN ECONOMIC OPPORTUNITY TO BUSINESSES, BUT IT'S A PRIVATE PROPERTY THAT IS, THAT ISN'T NECESSARILY GONNA BENEFIT ALL OF YOUR CONSTITUENTS.
SO IF THE OWNERS OF THIS, IF THE OWNERS OF THIS BUSINESS PROPERTY OR NONPROFIT PROPERTY WANT TO WANNA TAKE ADVANTAGE OF THIS ECONOMIC OPPORTUNITY THAT YOU'VE CREATED, THEN THEY AGREE TO ALLOW THE CITY TO PLACE A LIEN ON THE PROPERTY FOR ALL OF THE HARD AND SOFT COSTS OF THIS IMPROVEMENT.
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HAS BEEN MADE POSSIBLE BY THE CITY.AND SO THAT PROPERTY IS OBLIGATED, IS ASSESSED, IT'S KIND OF LIKE A BILL, IT'S, OR AN INVOICE.
IT'S ASSESSED THE VALUE OF THE IMPROVEMENT, AND THAT IS TECHNICALLY DUE AND OWING TO THE LOCAL GOVERNMENT.
SO YOU PLACE A LIEN, YOU HOLD THE LIEN, AND YOU ENFORCE THE LIEN AS IF PEOPLE HADN'T PAID THEIR BACK TAXES.
SO THE OWNER FINDS LE A PRIVATE LENDER TO PROVIDE THE FUNDING, BUT YOU'VE CREATED THIS ECONOMIC ASSESSMENT MECHANISM THAT MAKES THE WHOLE THING WORK.
IT CAN ONLY BE USED, UH, BY COMMERCIAL PROPERTY, WHICH INCLUDES NON-PROFITS.
THEY'RE NON-TAX PAYING ENTITIES THAT OWN COMMERCIAL PROPERTY, UM, INDUSTRIAL PROPERTY, WHICH MAY BE THE HIGHEST AND BEST USE OF THIS PROGRAM, BUT THEY HAVEN'T.
UM, WE ARE JUST NOW GETTING THE ATTENTION OF THE INDUSTRIAL SECTOR AND THEN MULTIFAMILY WITH AT LEAST FIVE UNITS.
AND OUR MOST RECENT, UH, PROJECT IN, IN HOUSTON THAT I'LL TALK ABOUT IN A LITTLE BIT, IS AN OLD HOTEL THAT IS BEING TRANSFORMED INTO ACCESSIBLE, PRICED, AFFORDABLE PRICED, MARKET-BASED HOUSING.
WE ARE SO EXCITED ABOUT THAT, AND THIS IS LIKE A GREAT USE OF THE, OF WE CAN ACCOMPLISH MANY OF THE CITY'S GOALS, UH, WITH THIS PROGRAM.
SO JUST TO GIVE YOU AN IDEA, BASICALLY IF IT KEEPS THE HOT AIR OUT AND IT KEEPS THE COOL AIR IN, IT'S AN ENERGY EFFICIENCY PROJECT.
AND IF WE CAN TEACH BUSINESSES FOR THE FIRST TIME TO LOOK AT THEIR PROPERTIES HOLISTICALLY, NOT JUST PICKING OFF THE LITTLE STUFF, PUSHING THE EXPENSIVE STUFF OFF FOR ANOTHER YEAR, THEY CAN DO IT ALL AT THE SAME TIME.
IF THEY'RE WORKING WITH, UH, AN ENGINEERING FIRM OR AN ARCHITECT THAT, THAT WANTS TO GO ABOVE CODE AND REALLY DO THE PROJECT, RIGHT, AND THEY LOOK AT THE WHOLE THING HOLISTICALLY, THEN WE CAN ACCOMPLISH MORE THAN JUST ONE FOR ONE REPLACEMENTS.
IF YOU'VE GOT A NEW AIR, IF YOU'RE GONNA NEED TO REPLACE YOUR AIR CONDITIONER, BUT YOU'VE GOT A DARK ROOF THAT'S ABSORBING HEAT, YOUR WINDOWS ARE LEAKING AIR, YOU'RE AIR CONDITIONING THE PARKING LOT, YOU'VE STILL GOT OLD LIGHT BULBS THAT ARE CREATING HEAT.
IF YOU FIX ALL OF THOSE ENERGY EFFICIENCY ISSUES, YOU MAY BE ABLE TO BUY A SMALLER AIR CONDITIONING SYSTEM.
WE CAN REALLY HELP BUSINESSES BE SMART IF THEY'RE AWARE OF THE PROGRAM AND THEY HAVE ACCESS TO ENGINEERS AND ARCHITECTS AND OTHERS WHO UNDERSTAND, UH, THAT THEY CAN GO ABOVE CODE.
'CAUSE NOW THEY HAVE CUSTOMERS WHO, WHO GET IT, UH, AND THEY'RE TEACHING THEIR CUSTOMERS ABOUT IT.
SO WE HAVE FREE TRAINING, UH, FOR CONTRACTORS ON OUR WEBSITE.
UH, IT TAKES ABOUT AN HOUR AND A HALF.
WE WILL ADVERTISE THEM IN OUR SERVICE PROVIDER DIRECTORY AS, AS KNOWING ABOUT THE PACE PROGRAM AND BEING ABLE TO TALK TO THEIR CUSTOMERS ABOUT IT.
SO WE'RE REALLY NOT JUST CREATING AFFORDABLE, UM, LONG-TERM FINANCING FOR PROPERTY OWNERS.
WE'RE TRYING TO CREATE JOBS THROUGH THE ENTIRE CITY.
THE ROOFERS, THE PLUMBERS, THE ARCHITECTS, THE, UH, HVAC GUYS, EVERYBODY, UM, CAN BENEFIT FROM THIS PROGRAM.
SO WE ARE TRYING TO, UM, INCENTIVIZE YOUR COMMERCIAL AND NON-PROFIT FOLKS TO INVEST IN THEIR BUILDINGS.
AND WE CAN DO THAT BY ACTUALLY LOWERING THEIR COSTS IN THE PROCESS.
SO, UM, IT'S ECONOMIC DEVELOPMENT.
IT'S GOING TO USE LESS WATER AND LESS POWER, WHICH MEANS LESS WATER GOING THROUGH YOUR WASTEWATER TREATMENT SYSTEMS. UH, LESS POWER THAT YOU HAVE TO GO, THAT THEY HAVE TO GO OUT AND FIGURE OUT HOW THEY'RE GONNA GET.
UM, IT'S ALSO MAKING THEM MORE RESILIENT TO INCREASE COSTS.
INSURANCE COMPANIES ARE GONNA START PAYING A LOT MORE ATTENTION TO THE ABILITY OF A BUILDING TO RESIST A STORM OR TO REACT, UH, IN AN INDUSTRIAL SITUATION.
IF YOU HAVE TIME TO SHUT DOWN, YOU'RE GONNA HAVE LESS WASTE IN CLEANING OUT, UH, THE PRODUCT, UH, OIL AND GAS PRODUCT THAT HAS TO SIT THERE.
IF YOU LOSE POWER, IT'S SAFER FOR WORKERS, LESS LIKELY FOR OVERHEATING, UM, IF THEY HAVE, UM, COMBINED HEAT AND POWER OR OTHER SOURCES, UH, OR BATTERY STORAGE SO THAT IT CAN CONTROL THEIR SHUTDOWNS AND, AND BE SAFER.
OKAY, SO HERE'S WHAT WE DID IN TEXAS AND MOST OTHER STATES HAVE COPIED THIS MODEL.
WE WENT AND LOOKED IN 20 13, 20 14, WHAT WAS GOING ON IN THE REST OF THE COUNTRY.
THERE WEREN'T THAT MANY PROGRAMS AHEAD OF US, BUT THEY WERE VERY, UM, UNATTRACTIVE TO THE STATE OF TEXAS.
THEY WERE BOND FUNDED, KIND OF MONOPOLY PRICED, UH, AND, UM, OUR BUSINESS COMMUNITY AND OUR LOCAL BANKERS SAID, NO WAY.
SO WE SEXIFIED WE WENT OUT AND LOOKED AT WHAT WAS GOING ON, WE SEXIFIED IT.
AND SO A LOCAL GOVERNMENT, UH, CAN RUN THE PROGRAM ITSELF.
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NO, NONE IN TEXAS HAVE DECIDED TO DO THAT.SO WE WERE CREATED TO BE YOUR QUALITY CONTROL.
BUT THAT BLACK LINE BETWEEN THE GOVERNMENT ROLE AND THE PRIVATE ROLE IS A FIREWALL.
AND IT'S MADE IT HARDER TO, UH, GET THE PROGRAM OUT THERE BECAUSE WE'RE NOT TELLING EVERYBODY WHAT TO DO.
WE WILL NOT TELL SOMEBODY WHICH LENDER TO USE OR WHICH CONTRACTOR TO USE.
SO WE'VE HAD TO REALLY EDUCATE THE PRIVATE SECTOR.
THE PEOPLE WHO KNOW THE HIGHEST AND BEST USE OF THEIR BUILDING ARE THE PEOPLE THAT OWN THAT BUILDING, RIGHT? AND SO OUR JOB IS TO SUPPORT THEM, BUT THEY DECIDE WHICH LENDER THEY WANNA WORK WITH.
THEY DECIDE, UH, WHICH, WHICH PROJECT THEY WANNA DO.
UM, SO THE IDEA IN TEXAS IS TO HAVE A HIGH QUALITY, SMALL FOOTPRINT OF THE LOCAL GOVERNMENT PROJECT PROGRAM, BUT TO HAVE AS MUCH MARKETPLACE FLEXIBILITY AS WE CAN, UH, BECAUSE WE WANT, UH, EACH BUILDING'S GONNA BE DIFFERENT AND WE KNOW THAT THE PRIVATE SECTOR'S GONNA BE SMARTER ABOUT THIS, UM, IN THE LONG RUN AND TRUST THE PROGRAM MORE SO HIGH QUALITY PROGRAM, SMALL, UH, FOOTPRINT ON, ON OUR, THE MANDATES THAT WE HAVE.
ALREADY TALKED ABOUT ASSESSMENT FINANCING.
ALRIGHT, SO WHEN AN ASSESSMENT COMES FROM THE GOVERNMENT, AGAIN, THIS IS THE OBLIGATION, RIGHT? IT CANNOT ACCELERATE.
AND THIS IS THE SECRET TO THE SUCCESS.
THE ONLY THING THAT HOUSTON CAN COLLECT IF A PROJECT EVER DEFAULTED IS THE MISSED PAYMENT BECAUSE THE FUTURE PAYMENTS HAVEN'T HAPPENED YET.
SO UNLIKE A PRIVATE LOAN WHERE THE WHOLE LOAN WOULD COME DUE, IF YOU FAIL HERE, THE ONLY THING IS A MISSED PAYMENT.
SO IT'S ONE 20TH, ONE 30TH, ONE 10TH OF THE PACE LOAN.
THAT MAKES IT EASIER FOR THE SENIOR LENDERS BECAUSE THE GOVERNMENT GETS PAID FIRST.
SO YOU HAVE TO GET THE WRITTEN CONSENT OF THE SENIOR LENDER.
AND BANKS HAVE TAKEN A A MINUTE TO FIGURE THIS OUT AND REALIZE THAT THEY CAN REALLY BENEFIT FROM IT.
SO ONE OF OUR BIG EDUCATIONAL EFFORTS IS TO NOT ONLY HAVE BANKS GET COMFORTABLE WHERE THEY WILL CONSENT AND ALLOW PACE FINANCING ON A PROJECT THAT WHERE THEY ARE THE SENIOR LENDER OR ARE GOING TO BE THE SENIOR LENDER, BUT THAT THEY WILL BECOME SENIOR LEND THAT THEY WILL BECOME PACE LENDERS.
WE NEED OUR BANKS TO SEE THIS AS A PRODUCT THAT THEY CAN OFFER TO THEIR VERY BEST CUSTOMERS.
AND WE'RE GETTING THERE, BUT IT'S, IT'S, IT'S TAKING A WHILE.
OKAY? SO THESE SURVIVE FORFEITURE, SO, OR, AND THEY SURVIVE SALES.
SO IF YOU, UH, HAVE A BUILDING AND YOU'RE GETTING READY TO SELL IT AND YOU WANNA FIX IT UP, THE NEW OWNERS WILL MAKE THE REMAINING PAYMENTS WILL MAKE IT EASIER FOR YOU TO SELL BECAUSE IT'S A FIXED UP BUILDING, BUT YOU'RE NOT GONNA GET LOSE MONEY ON IT BECAUSE YOU'RE GONNA SELL IT RIGHT AFTER YOU FIX IT UP.
WE'VE GOTTEN RID OF A LOT OF, UM, UH, PRIVATE SECTOR LIMITATIONS TO PEOPLE OR DISINCENTIVES TO HAVE PEOPLE TAKE CARE OF THEIR PROPERTY.
YOUR TAXPAYERS DON'T PAY FOR IT.
THE OWNER WHO WANTS TO TAKE, TAKE ADVANTAGE OF THIS PAYS FOR IT.
THIS IS A FREE MARKET, NO MANDATE, NO TAXPAYER DOLLAR PROGRAM, AND IT SOUNDS TOO GOOD TO BE TRUE.
AND THAT HAS BEEN PART OF OUR PROBLEM IN GETTING THE PRIVATE SECTOR TO TAKE THIS SERIOUSLY.
FIRST IT WAS LIKE, THAT'LL NEVER WORK, AND THEN IT'S TOO GOOD TO BE TRUE.
WHAT WHAT AM I NOT TELLING YOU? WHEN'S THE OTHER SHOE GONNA DROP? IT'S WORKING.
WE'VE DONE A HALF A BILLION DOLLARS IN TEXAS WITH THIS PROGRAM.
OKAY, SO ONE OF THE WAYS THAT WE DON'T INTERFERE WITH THE PRIVATE SECTOR IS THE OWNER HAS TO FIND THEIR OWN LENDER AND THEY HAVE TO AGREE WITH THE LENDER.
WHAT'S THE INTEREST RATE GONNA BE? HOW LONG IS THE ASSESSMENT GONNA LAST? ALL THE OTHER TERMS THAT GO INTO A TRADITIONAL, UH, LOAN AGREEMENT, THAT'S ALL DONE WITHOUT THE CITY OF HOUSTON'S INVOLVEMENT.
WE WANT THE PRIVATE SECTOR TO HAVE AS MUCH FLEXIBILITY TO DO BUSINESS WITH THE PEOPLE THEY WANNA DO BUSINESS AND THE WAY THEY'RE USED TO DOING BUSINESS.
AND THAT INCLUDES THE LENDERS.
SO HERE'S WHERE YOU GET INVOLVED OR WHERE THE CITY GETS INVOLVED.
ONCE THERE IS AN UNDERLYING LOAN AGREEMENT AND AN APPLICATION HAS BEEN MADE, AND THE ENGINEERING, WE'VE RECEIVED THE ENGINEERING REPORT FROM A TEXAS LICENSED INDEPENDENT THIRD PARTY ENGINEER, THEY LITERALLY STAMP THEIR LICENSE STAMP ON THESE REPORTS.
AND THAT IS WHAT BUILDS THE TRUST BETWEEN THE LOCAL GOVERNMENTS, THE LENDERS AND THE PROPERTY OWNER, THAT THIS ISN'T JUST A, NOBODY'S BLOWING SMOKE.
THIS IS, THESE ARE LEGITIMATE SAVINGS THAT PEOPLE CAN COUNT ON.
OKAY? SO ONCE THAT'S ALL DONE, THERE IS A CONTRACT BETWEEN
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THE OWNER AND THE CITY WHERE THE OWNER SAYS, UM, WOULD YOU PLEASE PLACE THIS LIEN ON MY PROPERTY? AND I PROMISE TO PAY IT BACK? AND I UNDERSTAND THAT IF I DON'T PAY IT BACK, YOU'LL, YOU'LL COLLECT, UH, WITH, UM, ATTORNEY'S FEES, PENALTIES, INTEREST, ALL OF ALL OF THAT IS COVERED UNDER THE STATUTE.I ASK YOU TO, TO PUT THIS LIEN ON MY PROPERTY.
THAT CREATES THE SECURITY INTEREST.
THEN THE CITY TURNS AROUND AND SIGNS A CONTRACT WITH THE LENDER IN THAT CONTRACT.
THE CITY SAYS LENDER PAY LENDER IN EXCHANGE FOR PROVIDING THIS ECONOMIC OPPORTUNITY IN OUR CITY.
YOU GET THE RIGHT TO THE STREAM OF PAYMENTS AS THEY COME IN.
YOU GET THE RIGHT TO THE STREAM OF PAYMENTS AS THEY COME IN AND YOU'RE GONNA KNOW, AND YOU'RE GONNA KNOW IF YOU'RE NOT PAID BECAUSE WE ARE DELEGATING TO YOU THE JOB OF COLLECTING THE INSTALLMENTS.
INSTEAD OF PUTTING THESE ON THE TAX BILL AND CREATING A WHOLE LOT OF BUREAUCRACY AND SLOW TO GET PAID, WE DON'T PUT THESE ON THE TAX BILL.
YOU'VE DELEGATED TO THE LENDER THE JOB OF COLLECTING YOUR MONEY.
SO INSTEAD OF YOU COLLECTING IT AND SENDING IT ON TO THE LENDER, YOU JUST TELL THE LENDER TO COLLECT THE INSTALLMENTS AND LET YOU KNOW IF THEY'RE NOT PAID ON TIME.
AND IF THEY'RE NOT, THEY HAVE TO SEND TWO 30 DAY DEFAULT NOTICES TO BOTH THE, UM, PROPERTY OWNER AND THE SENIOR LENDER.
AND IF ALL OF THAT FAILS, THEN WE'LL VAL VALIDATE WHAT'S GOING ON.
AND MOST LIKELY YOUR TAX COLLECTION ATTORNEYS WOULD COLLECT THESE IN THE SAME SAME WAY.
SO, BUT, BUT THE STATUTE MAKES YOU WHOLE ON ALL OF THAT.
AND THAT HAS NOT HAPPENED IN, IN HOUSTON OR ANYWHERE ELSE SO FAR.
UM, I'M NOT SAYING IT WON'T, BUT WE MADE IT THROUGH COVID.
WE MADE IT THROUGH HIGHER INTEREST RATES SO FAR.
OH, AND THEN, AND THEN AFTER THOSE TWO ARE, ARE FILED, THEN WE, AFTER THOSE TWO ARE SIGNED, THEN WE RACE OVER AND FILE ON THE PROPERTY RECORDS SO THAT EVERYONE KNOWS THAT THAT PROPERTY HAS THIS LIEN.
THIS IS THE OPPOSITE OF TAX LIEN LENDING.
YOU MAY HAVE HEARD THAT SOMETIMES PEOPLE WILL BUY UP TAX LIENS WITH HIGH INTEREST RATES AND THEY SUCK ALL OF THE EQUITY OUT OF THOSE BUILDINGS TO THE DETRIMENT OF, OF THE OWNERS, BUT CERTAINLY TO THE DETRIMENT OF THE SENIOR LENDER.
THIS LIEN IS MAKING THE PROPERTY MORE VALUABLE.
WE'RE PUTTING EQUITY IN THE PROPERTY.
THESE PROPERTIES ARE GETTING FIXED UP WITH THIS MONEY, AND WE WILL NOT APPROVE A PROJECT UNLESS THE SAVINGS RESULTING FROM THAT EQUIPMENT EXCEEDS IS PROJECTED TO EXCEED THE PROJECTED COST OF THAT EQUIPMENT.
SO AS UTILITY RATES GO UP, AS WATER GOES UP, AS INSURANCE BILLS GO UP, THESE WE ARE PROTECTING THESE BUILDINGS AND INCREASING, WE ARE REDUCING THEIR RISK, WE ARE MAKING THEM MORE RESILIENT, UM, AND WE ARE INCREASING THE OPERATING INCOME.
OKAY, SAVINGS TO INVESTMENT RATIO.
THAT'S WHAT I'VE SAID A COUPLE TIMES.
YOU HAVE TO SAVE MORE THAN YOU SPEND A PACE LOAN, UM, CAN BE UP TO 25% OF THE CAD VALUE, BUT THERE IS A WAIVER FOR UP TO 35% OF THE APPRAISED VALUE ONCE THE PROPERTY IS COMPLETE.
SO WE ARE PROVIDING CAPITAL IN CAPITAL STACKS THAT ARE REALLY HARD RIGHT NOW FOR, UM, OWNERS AND DEVELOPERS TO, TO FILL OUT.
YOU HAVE TO HAVE MORTGAGE CONSENT AND THE ASSESSMENT CAN ONLY LAST AS LONG AS THE USEFUL LIFE OF THE EQUIPMENT.
SO WE NEED PEOPLE TO TAKE CARE OF THEIR EQUIPMENT AND WE'LL DO A WEIGHTED AVERAGE.
HVAC LASTS LONGER THAN LIGHTING, ET CETERA.
SO WE'LL DO A WEIGHTED AVERAGE.
UM, SO THERE ARE THREE WAYS THAT WE'RE SEEING PE-PEOPLE USE PACE.
ONE LIKE THIS SLIDE I SHOWED YOU BEFORE TO RETROFIT OLDER BUILDINGS.
WE SHOULD BE DOING SO MANY MORE OF THOSE, JUST KEEPING THESE BUILDINGS OPEN AND ALIVE, UM, AND KEEPING THE TENANTS IN THESE BUILDINGS AND KEEPING THE TENANTS HAPPY.
BECAUSE IF YOUR AIR CONDITIONING WORKS AND, AND YOUR AIR IS CLEANER, UM, ET CETERA, ET CETERA, PEOPLE ARE MORE PRODUCTIVE.
UM, NEW CONSTRUCTION OR GUT REHABS, UM, UH, WE CAN DO THAT.
AND THEN REFINANCING, WE WILL ALLOW A PROPERTY OWNER THAT DIDN'T KNOW ABOUT THIS PROGRAM, WHO HAS INVESTED ABOVE CODE AND, AND DONE THE RIGHT THINGS.
LATER, WE WILL GO BACK 24 MONTHS AND DO A REFINANCE, BUT NOT MORE THAN 20, 24 MONTHS.
OKAY? SO WHAT WE'RE TRYING TO SAY TO PEOPLE IS, IS PACE IS A WAY TO PAY FOR TODAY'S UPGRADES WITH TOMORROW'S SAVINGS.
WE'RE NOT ASKING YOU WE'RE, WE'RE TRYING TO SOLVE THE CASH FLOW PROBLEM.
OKAY, HERE'S WHERE IN HERE'S WHERE DEVELOPERS ARE LOVING THIS PROGRAM.
[00:30:01]
THAT A SENIOR LENDER WOULD FUND 80% OF A PROJECT, NOW THEY'RE FUNDING 50, 60, 70%, 70%.IF YOU'RE A REALLY GOOD CUSTOMER AND YOU'RE LUCKY, WHERE IS THAT OTHER 30% GONNA COME FROM? NOW THE SENIOR LENDER WANTS TO SEE EQUITY, THEY WANNA KNOW THAT THEIR OWNERS HAVE SKIN IN THE GAME.
SO THERE'S ALWAYS GONNA BE SENIOR LENDER AND EQUITY, BUT WHERE DO YOU GET THE REST OF IT? SO THIS WAS A NINE, A 2017 PROJECT IN DALLAS.
THIS IS, UM, A 1910 MERCANTILE WAREHOUSE ACROSS FROM CITY HALL.
BUSTED WINDOWS, PRETTY AWFUL SITUATION.
IT'S NOW TWO MARRIOTT PROPERTIES.
THEY ENTER FROM DIFFERENT STREETS, HIGH-END LOFT APARTMENTS, AND FIRST FLOOR RETAIL.
BUT LOOK AT THE BLUE CAPITAL STACK.
SO WHERE DO THEY GET THEIR MONEY? THEY HAVE SENIOR DEBT, THAT WAS EB FIVE.
THEY HAD HISTORIC TAX CREDITS, A GREAT INTEREST RATE ON THAT.
THEN THEY HAD THEIR 22 MILLION IN EQUITY, BUT THEY WERE GONNA TAKE OUT $22 MILLION MEZZANINE LOAN AT 15%.
THEY LEARNED ABOUT PACE FROM ONE OF THE PACE LENDERS AND WENT, WHOA, WE HAVE MORE THAN THE $22 MILLION THAT QUALIFIES FOR PACE.
SO THEY TOOK OUT A $24 MILLION PACE LOAN INSTEAD OF THE MEZZANINE LOAN, AND THEY DROPPED THEIR WEIGHTED AVERAGE COST OF CAPITAL.
THEY DROPPED THEIR INTEREST COSTS BY 20%.
THIS BUILDING ALSO HAS, UM, HUGE SAVINGS.
700,000 GALLONS OF WATER SAVED A YEAR.
UM, I THINK THEIR UTILITY BILL IS 30% LESS THAN IT WAS PROJECTED TO BE, UM, WITH TRADITIONAL JUST DO RE REPAIRING TO CODE.
SO NOT ONLY DO WE HAVE NEW PLACES TO LIVE AND, UM, QUALITY, UH, AND ALL THESE OPERATIONAL SAVINGS, BUT THE INTEREST SAVINGS ARE WHAT DRIVES, DRIVES DEVELOPER INTEREST IN THIS PROGRAM.
OKAY, HERE'S ANOTHER WAY TO LOOK AT IT.
I KNOW THIS LOOKS LIKE SPAGHETTI, SO HOPEFULLY YOUR, I WON'T CROSS.
BUT THIS IS ANOTHER WAY TO LOOK AT A CAPITAL STACK.
SO THIS IS A $5 MILLION PACE ASSESSMENT ON A, I THINK IT WAS LIKE 35 40.
AND, BUT, UM, THIS IS A HISTORIC COTTON GIN IN DEEP EL IN DALLAS.
SO LET'S SEE WHERE THE MONEY CAME FROM.
SO THE STATE TAX CREDIT, THAT'S A HISTORIC TAX CREDIT FEEDING INTO OPPORTUNITY ZONE FUNDING.
THERE'S TIFF MONEY FROM THE CITY, THERE'S A FEDERAL SOLAR TAX CREDIT, AND THEN FARTHER DOWN YOU'LL SEE THE PACE LENDER IN WITH THE SENIOR LENDER.
SO THESE CAPITAL STACKS ARE GETTING MORE COMPLICATED EVERY DAY, BUT PACE FITS ALL OF THESE DIFFERENT WAYS THAT YOU START LAYERING ON DIFFERENT FINANCING TO GET TO A HUNDRED PERCENT.
SO THIS WAS A $37 MILLION PROJECT.
AND EVERY, UH, BROKER WHO'S TRYING TO FIND FINANCING FOR THESE PROJECTS HAS TO HAVE WHAT ARE THE SOURCES? WHERE'S THE MONEY COMING FROM? THAT'S WHERE THE BROKER'S JOB IS, RIGHT? BUT THE DEVELOPER IS HAS TO SAY, THESE ARE WHAT I NEED THE MONEY FOR, THESE ARE MY USES.
AND WHAT WE'RE TRYING TO SAY TO PEOPLE IS, IF YOU ARE WILLING TO SPEND A LITTLE MORE MONEY ON YOUR USES, RIGHT? IF YOU'RE WILLING TO SPEND A LITTLE MORE MONEY ON THE BETTER AIR CONDITIONING SYSTEM, THE MORE, UM, UH, THE MORE RESILIENT AND, UH, ENERGY EFFICIENT ROOF AND WINDOWS LIGHTING, NEW TOILETS, UM, ALL OF THAT.
IF YOU'RE WILLING TO SPEND A LITTLE MORE MONEY ON YOUR USES, THEN YOU HAVE TO GO FIND MORE SOURCES, RIGHT? 'CAUSE NOW YOU'VE INCREASED THE COST OF YOUR PROJECT, BUT YOUR INTEREST COSTS AS A RESULT OF YOU'RE SPENDING A LITTLE MORE MONEY ON ENERGY AND WATER EFFICIENCY IS ACTUALLY GONNA MAKE YOUR PROJECT LESS EXPENSIVE.
SO THE IDEA IS TO GET THESE FOLKS WHO ARE OUT TRYING TO FIND MONEY FOR DEVELOPERS TO UNDERSTAND WHAT A HUGE SAVINGS THEY CAN ACCESS BY SPENDING A LITTLE MORE ON BETTER EQUIPMENT.
OKAY, HERE'S THE CITY OF HOUSTON.
WE'VE DONE 11 PROJECTS, $38 MILLION.
THE LARGEST ONE IS A LITTLE OVER 20 MILLION.
THE SMALLEST ONE IS A COUPLE HUNDRED THOUSAND DOLLARS, BUT WE ARE SAVING 36 MILLION GALLONS OF WATER EVERY YEAR.
WE'VE SAVED OVER, UH, 15.7 UH, KILOWATT HOURS OF ENERGY.
UM, THESE JOBS CREATED ARE THE CLEAN ENERGY JOBS.
IT DOESN'T TAKE INTO ACCOUNT THE PERMANENT JOBS THAT GO INTO A BUILDING THAT'S BROUGHT BACK TO LIFE.
UM, AND THOSE PERMANENT JOBS ARE, ARE CRITICALLY IMPORTANT TO, UH, TO THE CITY.
OH, AND, AND ON THAT SLIDE, UM, YOU HAVE YOUR OWN PACE PAGE ON OUR WEBSITE.
[00:35:01]
TO SHARE THIS INFORMATION WITH YOUR CONSTITUENTS, WE WOULDN'T LINK THEM TO OUR HOMEPAGE.WE WOULD LINK THEM TO THE CITY OF HOUSTON PAGE WHERE THEY CAN SEE THESE NUMBERS.
AND YOU CAN TAKE ADVANTAGE OF THESE NUMBERS.
WE TRACK ALL THE BENEFITS FOR THE CITY.
OKAY? SO THIS TOP 1 7 0 2 LLC, THAT'S THE HOTEL I WAS TELLING YOU ABOUT.
THAT'S GONNA BE SO THE FOLKS THAT ARE IN THIS HOTEL RIGHT NOW ARE, UM, PAYING A LOT OF MONEY.
UM, THEY'RE ONE STEP ABOVE HOMELESS TO LIVE IN A HOTEL, WHICH IS AN EXPENSIVE WAY TO LIVE, RIGHT? BUT THIS IS GONNA TURN, TURN INTO REALLY LOVELY APARTMENTS FOR THEM.
UM, SO THEY'RE GONNA END UP SAVING MONEY AND DRAMATICALLY INCREASE THE QUALITY OF THEIR LIVES.
HOUSTON AREA URBAN LEAGUE, I LOVE THIS.
WE HELPED THEM WITH, UH, THEIR, THEIR COSTS, UH, AT THEIR HEADQUARTERS.
SO THINK ABOUT WHAT WE CAN DO FOR NONPROFITS.
IF WE'RE LOWERING THE EXPENSES OF A NONPROFIT, WE ARE FREEING UP THEIR MONEY TO REINVEST IN THEIR CORE MISSIONS.
AND SO THAT'S ALSO THIS, UH, THE FIRST, UH, UNITED UNITARIAN CHURCH.
THIS WAS NEW CONSTRUCTION, ONE OF OUR FIRST NEW CONSTRUCTION PROJECTS FOR SENIOR LIVING, UH, THE WESTIN HOUSTON MEDICAL CENTER.
UM, WE'RE REALLY PROUD OF THAT.
THERE ARE, THEY DID THEIR PACE FINANCING IN TWO PHASES.
AN OLD YMCA IN SOUTHEAST HOUSTON IS NOW A WORLD GYM.
HBDI, THE HOUSTON BUSINESS DEVELOPMENT INCUBATOR.
WE'VE HELPED THEM, AGAIN, A GREAT NONPROFIT CORE MISSION.
OKAY, SO WE'VE GOT, UH, THE FIRST, UH, WESTIN MEDICAL CENTER, REGENCY INN.
THIS IS A OLDER HOTEL, MOTOR COURT HOTEL, UM, IN SOUTHEAST HOUSTON SOLAR PROJECT, ONE OF THE VERY FIRST PROJECTS IN TEXAS.
UH, WE'VE ALREADY TALKED ABOUT THE 1225 NORTHWEST LOOP AND THEN THE HOUSTON PREMIUM OUTLETS.
SO WE'VE DONE SIX, UH, MALL RENOVATIONS AND THREE OR FOUR MALL REPURPOSING.
THIS IS A GREAT PROGRAM FOR UGLY BUILDINGS THAT NEED A NEW LIFE AND NEED A NEW PURPOSE.
UM, AND THINK ABOUT THE IMPACT ON YOUR TAX ROLL WHEN THESE OLDER PROPERTIES ARE BROUGHT BACK TO LIFE.
THERE ARE SO MANY INDIRECT BENEFITS TO THE CITY.
SO EVERYTHING WE CAN DO TOGETHER TO MAKE THE HOUSTON BUSINESS DEVELOPMENT PROPERTY OWNER COMMUNITY AWARE OF THIS, UM, AND THAT IT IS ACTUALLY WORKING.
UM, BECAUSE WHAT WE'VE GOTTA DO IS SORT OF, UH, FIGURE OUT HOW TO REENGAGE PEOPLE WHO IN 2016 KIND OF ROLLED THEIR EYES AND SAID, THAT'LL NEVER WORK.
AND WE DON'T NEED MONEY 'CAUSE WE HAVE ALL THE MONEY WE CAN ACCESS, AND IT'S ONE STEP ABOVE FREE.
NONE OF THOSE THINGS ARE TRUE NOW.
AND SO IF WE CAN GO BACK AND GET IN FRONT OF THEM, WE NOW, INSTEAD OF TALKING ABOUT A GREAT IDEA IN THEORY, HAVE PROOF OF CONCEPT.
THERE'S REALLY NO DOWNSIDE TO THIS PROGRAM.
AND OUR BIGGEST CHALLENGE IS EDUCATION.
WE WOULD LOVE TO WORK WITH YOU AND ANSWER ANY QUESTIONS YOU HAVE.
I REALLY APPRECIATE YOUR ATTENTION TODAY.
SOMETIMES TALKING FINANCING IN THE CONTEXT OF RESILIENCY CAN BE QUITE DULL, BUT NOBODY'S FALLEN ASLEEP.
AND, UH, SO I THANK YOU FOR THAT
SO THERE'S NO SUCH THING AS A DUMB QUESTION.
ALTHOUGH I WILL TELL YOU NEXT TIME I, UH, SEE THE PRESENTATION, WE DON'T WANT ANY REFERENCES TO DALLAS.
WE WANT HOUSTON TO BE THE PREMIER FOR THESE PROJECTS.
UM, UH, CERTAINLY, UH, GREAT WORK.
UM, ANYWAY, WE CAN HELP YOU TO GET THE INFORMATION OUT THERE.
UM, I'M SURE YOU HAVE THE DIGITAL ASSETS THAT WE CAN PROMOTE ON SOCIAL MEDIA AND SUCH, BECAUSE I THINK IT IS AS A FAN OF, UM, RENOVATIONS AND REFURBISH AND, UH, YOU KNOW, WE TEND TO TEAR THINGS DOWN IN HOUSTON INSTEAD OF INSTEAD OF, UH, YOU KNOW, MAKING THE OLD NEW AGAIN.
AND SO I'M CERTAINLY A FAN OF, OF KEEPING SOME, UH, SOME OF OUR HISTORY TOGETHER.
SO THIS CERTAINLY RESONATES WITH ME.
UM, WE HAVE COUNCIL MEMBER RAMIREZ IS IN THE QUEUE FOR A QUESTION.
THANK YOU BOTH FOR THE PRESENTATION.
AND, UM, I, I COMMEND YOU FOR YOUR WORK AND UH, WOULD LOVE TO GET THE WORD OUT, UH, SO THAT MORE, UH, COMPANIES CAN TAKE ADVANTAGE OF THIS OR EVERYONE CAN TAKE ADVANTAGE.
SO, UM, TRYING TO, UH, COMPLETELY UNDERSTAND THIS, CAN THE ASSESSMENT BE VIEWED
[00:40:01]
AS A SORT OF, AS A LOAN PAYMENT? YES.AND SO YOU CAN LOOK AT THIS ONE OF TWO WAYS MM-HMM
UM, BECAUSE IT IS AN ASSESSMENT DUE AND OWING TO THE LOCAL GOVERNMENT.
UM, ARE YOU FAMILIAR WITH TRIPLE NET LEASES? YES.
SO UNDER A TRIPLE NET LEASE, UM, ORDINARILY PUTTING ON A NEW ROOF FOR REPLACING AN HVAC SYSTEM WOULD BE BUILDING MAINTENANCE THAT IS THE RESPONSIBILITY OF THE OWNER.
BUT THIS, WHAT IS THIS? THIS IS A CITY OF HOUSTON ASSESSMENT LEGALLY DUE AND OWING TO THE CITY OF HOUSTON.
AND UNDER A TRIPLE NET LEASE, THE TENANTS PAY THE OPERATING COSTS, WHICH INCLUDE TAXES AND FEES, UTILITIES, AND INSURANCE.
BECAUSE THIS IS AN ASSESSMENT DUE AND OWING THE CITY OF HOUSTON, MANY PROPERTY OWNERS, OFFICE PROPERTY OWNERS PASS IT THROUGH TO THE TENANTS AS, UH, UNDER THE TRIPLE NET LEASE BECAUSE IT'S DUE AND OWING THE LOCAL GOVERNMENT, EVEN THOUGH YOU NEVER TOUCH THE MONEY, THE, UM, TENANTS COME OUT AHEAD BECAUSE THEIR UTILITY BILLS ARE GONNA DROP.
SO, SO THAT'S ONE ADVANTAGE FOR IN THE OFFICE SITUATION, WHAT WE DON'T HAVE IS A GAP RULING, BUT GENERALLY, EXCEPT THAT ACCOUNTING PRINCIPLE RULING ON WHETHER BECAUSE THIS IS A GOVERNMENT ASSESSMENT, IT CAN GO OFF BOOK.
AND WE'VE SEEN COMPANIES HANDLE THAT BOTH WAYS.
DOES THAT ANSWER YOUR QUESTION? YES, I, I THINK SO.
AND SO I THINK YOU ALSO SAID THAT, UH, THE MONEY GOES DIRECTLY TO THE LENDER.
SO IN THE LENDER CONTRACT, THE MONEY IS DUE AND OWING THE CITY OF HOUSTON IN EXCHANGE FOR THE, UM, ACCESS TO THE FINANCING, RIGHT? IT'S AN ECONOMIC BENEFIT YOU'VE PROVIDED AND THE MONEY IS DUE AND OWING TO YOU.
AND WE ACTUALLY HAD TO GO GET A TEXAS AG OPINION CONFIRMING THAT UNDER THE STATUTE BEFORE HUD WOULD CONSENT.
SO TEXAS PACE AUTHORITIES ONE OF ABOUT 10, UH, PROGRAM ADMINISTRATORS ACROSS THE ENTIRE COUNTRY THAT CAN WORK WITH HUD.
IT TOOK US SIX YEARS TO GET THAT APPROVAL, BUT WE HAD TO GET A TEXAS AG OPINION CONFIRMING THAT THIS IS DUE IN OWING THE LOCAL GOVERNMENT AND TREATED LIKE TAX EVEN THOUGH IT'S NOT A TAX.
BUT, SO, SO I GUESS, UM, UM, DOES THE, DOES THE CITY SERVE SORT OF AS A PASS THROUGH OR DOES THE MONEY GO DIRECTLY TO THE, THE LENDER? SO EVERY STATE WE LOOKED AT WHEN WE FIRST GOT THIS PROGRAM GOING, PUT THESE ON THE TAX BILL AND OUR, AND OUR TAX ASSESSOR COLLECTOR ASSOCIATION TESTIFIED IN FRONT OF SUPPORT OF THE BILL.
BUT WHEN IT CAME TO FIGURING OUT HOW WE WERE GONNA COLLECT, THEY WENT, WE DON'T HAVE THE SOFTWARE, WE DON'T HAVE THE PEOPLE, WE DON'T HAVE THE FUNDING.
THERE'S NO WAY WE CAN PUT THESE ON THE TAX BILL.
SO I DIDN'T SLEEP THAT NIGHT TRYING TO FIGURE OUT IS THIS LIKE, IS ALL THIS EFFORT FOR NOTHING? AND THE NEXT DAY WE BROUGHT IT TO ONE OF THE WORKING GROUPS, CREATING THE MODEL PIECE IN A BOX PROGRAM.
AND ONE OF THE LENDERS SAID, OOH, OOH, OOH, CAN WE DO IT? WE WE SERVICE LOANS ALL THE TIME.
AND SO THAT'S WHERE THE IDEA CAME UP THAT IT EVEN THE MONEY IS DUE AND OWING THE LOCAL GOVERNMENT, THAT'S WHAT MAKES THE WHOLE THING WORK.
BUT IN THE LENDER CONTRACT BETWEEN THE CITY OF HOUSTON AND THE LENDER, THE CITY OF HOUSTON DELEGATES THE JOB OF COLLECTING THE INSTALLMENTS TO THE LENDER.
SO THE BILLS ARE SENT DIRECTLY TO THE LENDER.
AND, AND I GUESS THE PROPERTY OWNER AND THE LENDER WORK OUT WHAT THE ASSESSMENT IS OR THE MONTHLY PAYMENT, IF YOU WILL.
ALTHOUGH WE ARE, UH, DEEPLY, WE, WE ARE DEEPLY INVOLVED IN APPROVING, UH, THAT TO MAKE SURE THAT THE, WHATEVER THE PAYMENTS ARE GONNA BE, THAT THEY, UM, MEET THE REQUIREMENTS OF THE STATUTE.
AND OUR PROGRAM, INCLUDING THE SAVINGS, HAVE TO EXCEED THE COST AND THE PAYMENT SCHEDULE IS, UH, CONNECTED TO THE LIEN.
SO THEY DETERMINE THE INTEREST RATES, THEY DETERMINE THE AMOUNT, BUT WE VALIDATE THAT THAT AMOUNT IS STILL GONNA MEET THE SAVINGS TO INVESTMENT RATIO ISN'T MORE THAN 35% OF THE APPRAISED VALUE UPON COMPLETION, ET CETERA.
ARE, ARE THERE ANY CIRCUMSTANCES UNDER WHICH THE LOAN BECOMES FORGIVABLE, IF YOU WILL? THE WAY WE SOMETIMES DO FORGIVABLE LOANS WITH, YOU KNOW, HOUSING OR THE CITY ECONOMIC DEVELOPMENT? YOU KNOW, I CAN'T IMAGINE OKAY.
THAT, THAT WOULD HAPPEN BECAUSE THE MONEY COMES FROM LIFE INSURANCE COMPANIES AND PENSION FUNDS AND FUNDS, AND MOST OF THE PACE LENDERS ARE BROKERS OF THESE VARIOUS INVESTMENT FIRMS. AND THEY LOVE THESE BECAUSE THEY ARE LONG TERM, VERY SAFE INVESTMENTS.
AND, UM, I DON'T REALLY SEE WALL STREET AS A VERY FORGIVING GROUP.
AND LAST QUESTION, YOU MENTIONED THE, UH, HOTEL TO MULTIFAMILY.
[00:45:01]
YES, SIR.PROJECT, AND YOU PROBABLY KNOW WE HAVE A LOT OF EMPTY COMMERCIAL SPACE HERE IN HOUSTON.
AND SO, UH, COMPANIES HAVE BEEN LOOKING INTO CONVERTING OFFICE SPACE INTO RESIDENTIAL.
THIS IS THE MOST BRILLIANT USE OF PACE.
UM, AND I DIDN'T PUT A LOT OF, I PROBABLY USED TOO MANY WORDS IN THIS SLIDE AND NOT ENOUGH EXAMPLES, SO I WILL FOLLOW UP.
BUT WE HAVE, UH, THE FIRST TIME WE SAW THAT, UM, IT'S ACTUALLY A HOTEL, BUT THE BARFIELD BUILDING'S AN EMPTY DECREPIT 12 STORY BUILDING IN DOWNTOWN AMARILLO.
IT'S NOW A, A, A HOTEL, BUT WE HAVE SEVERAL HISTORIC BUILDINGS IN SAN ANTONIO THAT ARE NOW HOUSING IN HOTELS.
THIS IS THE, THIS IS, MOST PEOPLE WILL SAY REPURPOSING IS A GREAT IDEA, BUT IT COSTS TOO MUCH.
AND IT'S JUST, IT'S JUST NOT DOABLE.
WELL, PACE CAN MAKE IT DOABLE.
WHEN YOU THINK ABOUT TAKING AN OFFICE AND TURNING IT INTO APARTMENTS, THAT'S EFFICIENT.
A FIXED EQUIPMENT, IT'S TOILETS, IT'S, I MEAN, THERE'S SO MUCH WATER AND ENERGY SAVINGS.
THIS IS THE WAY TO PAY FOR IT.
THERE'S SO MANY EMPTY BUILDINGS THAT ARE UNDERUTILIZED BECAUSE WHEN A DEVELOPER LOOKS AT IT, THERE'S JUST NOT ENOUGH MONEY AND IT, IT DOESN'T PENCIL.
NOW WE HAVE UP TO 35% OF THE COST OR THE VALUE OF THAT BUILDING WHEN IT'S FINISHED ELIGIBLE FOR PACE, PROVIDED YOU HAVE ENOUGH ENERGY AND WATER SAVING MEASURES, ALL OF A SUDDEN THERE'S A HUGE SOURCE OF CAPITAL TO GET THIS DONE.
AND IT'S A LOWER INTEREST RATE THAN EQUITY OR MEZZANINE.
SO IF WE COULD JUST GET THE BUSINESS COMMUNITY TO TAKE ANOTHER LOOK AT THIS, NOW THAT IT'S PROVEN, WE COULD BE, IT WOULD MAKE NO SENSE TO DO A CONVERSION WITHOUT PACE.
UM, ANY MORE QUESTIONS? I DON'T SEE ANY, ANY OTHERS IN THE QUEUE? UH, WE DO HAVE ONE PUBLIC SPEAKER SIGNED UP.
THANK YOU FOR YOUR PRESENTATION.
I WANNA, UH, VISIT WITH YOU AFTER I'VE GOT A COUPLE OF QUESTIONS FOR YOU AS TO, UH, CONNECTIONS, POTENTIAL CONNECTIONS FOR YOU AND THE BUSINESS COMMUNITY.
JAMES, DID YOU HAVE SOMETHING? WELL, THANK YOU VERY MUCH AND I APPRECIATE THE TIME AS WELL.
UM, I JUST WANNA MENTION TOO THAT, YOU KNOW, CHARLENE MENTIONED IT'S A SEXIFIED MODEL.
A LOT OF OTHER STATES SUBSEQUENTLY COPIED TEXAS AND CHARLENE AND OUR CHIEF OPERATING OFFICER DO TAYLOR, HAVE RECEIVED NATIONAL AWARDS FOR THEIR WORK.
UM, WONDERFUL THROUGH PACE NATION AND WHAT THEY'VE DONE.
AND THANK Y'ALL FOR BEING HERE.
WE'RE READY FOR PUBLIC SPEAKERS.
IT LOOKS LIKE WE HAVE ONE SIGNED UP TO SPEAK.
UM, IF THERE'S ANYONE ELSE THAT IS HERE AND WOULD LIKE TO SPEAK, PLEASE, UM, LET US KNOW.
MS. MONIQUE MASON, COME ON UP.
MS. MASON, THANK YOU FOR COMING TODAY.
I AM WANTING TO INVITE EVERYONE, THE COUNCIL MEMBERS AS WELL AS THE RESILIENCE COMMITTEE TEAM TO THE TEXAS GRANDPARENTS RAISING GRANDCHILDREN'S DAY, WHICH WILL BE HELD THIS, UH, SEPTEMBER, SATURDAY, SEPTEMBER 13TH FROM 10 TO ONE AT THE TIME, BUS PARK PAVILION 14.
AND I HAVE THE FLYERS THAT I CAN SEND OUT.
THIS EVENT IS VERY IMPORTANT BECAUSE, UH, WELL IT'S VERY IMPORTANT THERE'S GONNA BE NEWS MEDIA, UH, DIFFERENT AGENCIES AND ORGANIZATIONS THAT SUPPORT GRANDPARENTS THAT ARE RAISING THEIR GRANDCHILDREN.
NOW, WE ALL KNOW THAT, UM, GRANDPARENTS RAISING GRANDCHILDREN CAN COME ABOUT IN DIFFERENT WAYS SUCH AS, UH, MAYBE THE PARENT HAS PASSED AWAY, UH, IN THE HOSPITAL OR MAYBE INCARCERATED.
IT DOES DIFFERENT, DIFFERENT REASONS.
OR IT CAN BE THAT THE PARENT IS JUST NOT AVAILABLE AND GRANDPARENTS ARE HOLDING THE RESPONSIBILITY OF RAISING GRANDCHILDREN AND THEY MAY NOT HAVE THE RESOURCES THAT ARE AVAILABLE TO THEM, SUCH AS A CUSTODIAL PARENT.
AND THAT'S WHERE TEXAS GRANDCHILDREN RAISED RAISING GRAND, I'M SORRY, TEXAS GRANDPARENTS RAISING GRANDCHILDREN CAME ABOUT.
AND THERE WILL BE AN ANNUAL EVENT ON SEPTEMBER 13TH, WHICH ON WHICH IS ON A SATURDAY AT TIME BASS PARK.
AND WE'LL LIKE TO INVITE THE COUNCIL MEMBERS AS WELL AS THE RESILIENCE COMMITTEE TEAM.
THANK YOU FOR BRINGING THIS FORWARD.
AND WE'VE MADE A NOTE OF SEPTEMBER 13TH FROM 10 TO ONE AT THE PARK.
[00:50:01]
AS A, AS A, UH, GRANDCHILD OF GRANDPARENTS WHO RAISED ME, I CERTAINLY APPRECIATE WHAT, WHAT GRANDPARENTS DO FOR THEIR GRANDCHILDREN.THEY STEP UP IN TIMES OF ABSENCE OF A PARENT.
SO GOD BLESS YOU FOR THE WORK YOU DO, AND THANK YOU FOR BRINGING THIS TO US.
UH, WE'LL GO AND CALL THE MEETING ADJOURNED.
IT'S 10:51 AM THANK YOU ALL FOR COMING.