Innovative Financing Tool Helps Property Owners Cut Costs, Increase Efficiency


Mayor Sylvester Turner and the Texas PACE Authority today announced the launch of a commercial Property Assessed Clean Energy or PACE program in Houston, providing an additional tool for Houston property owners to finance energy efficiency, renewable energy, and water conservation projects.

“We are thrilled to launch Houston’s PACE program,” said Mayor Sylvester Turner. “PACE is an innovative way to help spur efficiency investments in Houston’s building infrastructure that would otherwise have been capital intensive. Between the long-term utility savings and the energy and water conservation benefits, it’s a win-win for our community.”  

PACE is a nationally-renowned, voluntary financing program that allows owners of commercial, industrial, and multi-family residential properties (with five or more dwelling units) to obtain low-cost, long-term loans for water conservation, energy-efficiency improvements, and distributed generation.

In exchange for funds provided by a private lender to pay for the improvements, the property owner voluntarily requests that the local government place an assessment secured with a senior lien on the property until the assessment is paid in full. As PACE assessment payments are generally offset by the project’s utility cost savings and the term of PACE assessments may extend up to the projected life of the improvement, improvements financed through a PACE program may generate positive cash flow upon completion without up-front, out-of-pocket costs to the property owner.

The State of Texas authorized municipal and county PACE Programs in 2013. Houston City Council adopted a resolution establishing a Houston PACE program on November 4, 2015. To date, PACE programs are being set up in four Texas counties (Travis, Williamson, Cameron, and Willacy) and two cities (Houston and Dallas).

To learn more about Houston’s PACE program or submit an application, visit

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Mid-Year 2016 LEED Rankings – Houston Totals 461 Certified Projects

Mid-Year 2016 LEED Rankings – Houston Totals 461 Certified Projects

In the first six months of 2016, Houston added 29 LEED certified commercial projects, a 6.71% increase, for a total of 461 projects. The top 50 U.S. cities added 508 LEED certified commercial projects, an exact 6.00% increase over project totals at the end of 2015. Currently, the top 50 U.S. cities now host a total of 8,891 certified commercial projects.

In the same six months, the Houston Metropolitan Statistical Area (MSA) added a total of 36 LEED certified commercial project, a 6.63% increase. The top 50 US MSAs added 1,098 certified commercial projects, a 6.68% increase.

The Top 50 Metropolitan Area certified projects increased 1,098 or 6.68% to a total of 17,539 LEED certified commercial projects. The top 50 U.S. project square footage in city limits increased 111.2 million square feet or 6.79% to a total of 1.749 billion sq. ft. and square footage in metropolitan areas increased 177.7 million sq. ft. or 7.00% to a total of 2.716 billion sq. ft.

The numbers almost uniformly show a slight dip in certifications compared to last year’s totals. For example, Houston is on track to certify 58 projects this year, compared to a total of 63 in 2015.

There were also two cities that dropped in the number of certifications from the end of 2015. I don’t see that year-end data was faulty, but I can’t account for the drop either. It could possibly be because of LEED-EB projects not recertifying and losing their certifications.

The data below is for LEED commercial projects and excludes LEED for Homes and LEED-Neighborhood Development projects.

Number of Certified Projects in City Limits

Houston reaches the midpoint of 2016 with an additional 29 LEED certified projects for a total of 461 LEED certified projects. Houston is still ranked #5, following behind NYC, Washington D.C., Chicago and San Francisco. NYC was the biggest gainer with 56 (8.3%) new certifications with Washington DC close behind with 52 new certifications. The Top 9 all stayed the same, but Boston moved up one spot to #10, Denver moved up one spot to #11 and Portland made the room by falling from #10 to #12. The biggest percentage increases were made by San Antonio (9.76%), Nashville (9.71%), Boston (8.75%) and San Francisco (8.52%).

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How PACE Funding Will Reshape Houston's Sustainability Efforts

When people think of Houston, they don't think of sustainability. That will soon change. A new financing tool is coming to our great city, Property Assessed For Clean Energy Funding. PACE will enable property owners to obtain long-term non-recourse fixed-rate financing for up to 100% of the cost of energy improvements to their properties.

Senior adviser in the Mayor's Office of Sustainability Marina Badoian-Kriticos (here with CoStar's Ryan Dame and Kim Eoff at Bisnow's real estate tech and sustainability event yesterday) said the goal of the city is to make it more than the energy capital of the world. Houston can also be the efficiency capital of the world. The key to achieving that is through improvements in construction, renovation and property management. That's where PACE comes in. 

PACE Houston president Tim Crockett broke it down for us. Sustainability and business are inconsistent. Capital improvements and investment decisions often work against each other. PACE is a new financing concept to solve that problem. Started about eight years ago, fairly new to Texas, and brand-new to Houston, the program allows property owners to access 100%, fixed-rate, long-term non-recourse financing on building improvements that conserve energy or water. The loans require the savings be greater than the cost of implementation, so they're actually self-funding. This effort isn't about being green, it’s not about decreasing electricity or saving water. It’s about increasing NOI. Economics is the primary driver, but sustainability and efficiency are the primary benefits. Think this sounds like a great idea? So do others. Harvard named PACE one of the top five breakthrough ideas and Scientific American named PACE one of the 20 best ideas in the world.

Texas was actually already at the forefront of green building, so this push could make us one of the leaders in the space. The US Green Building Council ranked Texas eighth in the country (to many's surprise, we're sure) largely due to sustainability efforts in Houston. As a country, we've made great strides. Skanska chief sustainability officer Elizabeth Heider (with the mic) shared the stats: In 2005, Doge (at the time, McGraw-Hill), found only 2% of real estate was green. By next year, between 48% and 54% of the market will be green. She says sustainability is no longer a fad, it is a trend.

JLL EVP of sustainability, energy and safety Robert Best (speaking above) knows firsthand that the property management industry is changing. It’s not just about keeping things operating anymore. You have to make the tenants happier, healthier, more productive. That burden is falling on building managers.  

Robert spoke about some astounding findings in the scientific community. Not only does sustainability help your bottom line and the environment, but it can also improve productivity. All nine cognitive aspects that make up productivity (like memory, mental acuity and math ability) are improved by sustainable efforts, according to research. A study about kids taking the SAT found they do consistently better when they take the test in a room filled with daylight. Minimizing CO2 in the workplace is another focus of the USGBC. A study by three Harvard professors found a stunning correlation in how people perform across the nine cognitive area while in the presence of varying levels of C02.

These can have a major impact on your bottom line. Energy savings at best are a few dollars per SF, but if you can improve productivity, it blows energy savings out of the water. That's the potential building owners and managers are dealing with. 

Concrete is of huge concern in the sustainability movement because the industry is one of the biggest polluters. TrueGrid CEO Barry Stiles (above with colleague Nathan Wood and Boxer Property president Justin Segal) shared his company's unique approach to solving an often overlooked problem—parking lots. True Grid is a form of permeable pavement made from a unique design of plastic and gravel that not only saves concrete, but also functions as stormwater retention. Businesses all around Houston have seen the benefit, and True Grid is in talks to work with the largest building in the world, the 13.1M SF Tesla factory. Because of potential cost savings on land required for stormwater retention, True Grid is a prime candidate for PACE funding.

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Green Sports Alliance leads GADOS volunteers at Houston’s Yes Prep Northside

Houston's Yes Prep Northside charter school was the first Green Apple Day of Service flagship project for 2016.

As we gear up to celebrate the 2016 Green Apple Day of Service on Sept. 24, let’s take some inspiration from the communities who have come together to make a difference in their schools thus far. 

The first Green Apple Day of Service flagship project of the year took place this past June, in conjunction with the 2016 Green Sports Alliance Summit, one of the largest gatherings for the sports community aimed at improving the environmental performance of large public spaces. The Green Sports Alliance teamed up with Connor Sports and partners HOKExcel Dryer and USGBC Texas for a school makeover project at Yes Prep Northside charter high school in Houston, Texas. 

"It's important that we engage with the communities where we host the Summit each year and make a positive impact," said Justin Zeulner, Green Sports Alliance executive director. "The collaboration between the organizations involved in this year's Green Apple Day of Service truly exemplified 'The Power of Partnerships' theme for this year's Summit." 

More than 50 volunteers constructed raised-bed planters and made improvements to schoolyard green spaces for Yes Prep’s Garden Club. The project also included upgrades to the school’s physical education storage and weight training facilities in support of student health and wellness. 

“We’re incredibly proud of the team that came together to improve Yes Prep’s school grounds and physical education facilities,” said Anisa Baldwin Metzger, school district sustainability manager of the Center for Green Schools at USGBC. “Projects like this are providing much-needed transformation of school facilities while advancing a culture of sustainability and health for our children.” 

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