The U.S. Department of Housing and Urban Development (HUD) formally approved the Texas PACE Authority’s request to offer its energy and water-saving financing tool. The funds involve HUD and Federal Housing Administration (FHA) multifamily properties in Texas, according to a release from the Texas PACE Authority.
The approval, received after a multi-year review process, comes at a key juncture as Texas confronts an enormous gap in affordable housing and rising interest rates that are making new development projects more expensive.
“This authorization is a huge win for low-income populations in Texas that are desperate for affordable and sustainable housing in rural and urban areas alike,” Texas PACE Authority President Charlene Heydinger said in the release. “Adding the PACE financing tool will dramatically increase the number of multi-family projects built with energy- and water-saving features, which will lower tenant utility bills while also achieving environmental benefits, including water conservation.”
HUD’s approval was issued Dec. 23, 2022, after carefully reviewing the Texas PACE Authority’s eligibility criteria, standardized contracts, and underwriting standards.
Approved by the state legislature in 2015, and established by 83 local governments, the Texas PACE Authority’s programs, according to the release, enable building owners to lower their operating costs and use the savings to pay for eligible water conservation, energy efficiency, resiliency, and distributed generation projects. Owners gain access to private, affordable, long-term (typically 10-20 years) financing that is not available through traditional funding avenues.
Since 2013, the Texas PACE Authority helped mobilize more than $362 million of PACE financing for energy and water efficiency projects across Texas. More than a third of that amount, over $125 million, was used for multifamily properties. Many of these projects also received historic tax credits and other incentives.
With additional energy efficiency tax deductions offered under the Inflation Reduction Act and other federal incentives also on the table, Heydinger said the addition of PACE for HUD and FHA multifamily properties “will be a much-needed game changer for scaling efficiency efforts in affordable housing in Texas.”