If you make a PACE loan, the local government will assign the proceeds from the assessment to you. The form of that contract can be found here:
PACE in Texas is open-market, and consequently a wide range of parties can make PACE loans. Eligible third-party lenders may include:
- Any federally insured depository institution such as a bank, savings bank, savings and loan association and federal or state credit union;
- Any insurance company authorized to conduct business in one or more states;
- Any registered investment company, registered business development company, or a Small Business Administration small business investment company;
- Any publicly traded entity; or
- Any private entity that:
- Has a minimum net worth of $5 million;
- Has at least three years’ experience in business or industrial lending or commercial real estate lending (including multifamily lending), or has a lending officer that has at least three years’ experience in business or industrial lending or commercial real estate lending; and
- Can provide independent certification as to availability of funds.
All lenders must have the ability to carry out, either directly or through a servicer, the bookkeeping and customer service work necessary to manage the assessment accounts.
Note that the Texas PACE Authority neither recommends nor endorses any particular PACE Service providers. This directory is provided solely for convenience in consolidating a list of PACE service providers. If you would like to be listed as a PACE lender, please contact Texas PACE Authority
If your client wants to do a PACE project, they will need your consent to put an assessment in place. There are a number of reasons that might allow this, which we’ve outlined below. In short, PACE can both increase your borrowers ability to repay (Debt Service Coverage Ratio) and increase the value of your collateral (lowering LTV).
An overview of why a lender would consent:
Finally, a list of institutions nationally that have consented:
The goal of the TPA is to have a well-funded, efficient, and financially healthy organization, while keeping costs to a minimum and operating in a lean fashion. To that ends, initially the TPA will charge two types of fees as part of administration, an application fee and an ongoing interest rate residual. These fees cover the basic administrative service to complete a PACE project as well as the ongoing reporting program to municipalities that enact a PACE district.
- Application Fee
- Amounting to 1% of total project cost
- Initial $500 to be paid at application. Balance to be paid as part of loan closing as an origination fee.
- Ongoing Residual Fee
- Amounting to 10 basis point interest rate adder.
- To be paid as part of annual assessment.
- Note: This fee can be capitalized and paid in full at closing.