"The Slab" in Kingsland, TX, a feature of the LLano River

Texas is no stranger to big challenges, but few loom larger than securing enough water to sustain our state’s booming population and thriving economy. As Texans work to maintain our economic strength while protecting our natural resources, one innovative tool created by the Legislature in 2013 continues to prove its value: the Property Assessed Clean Energy (PACE) Act, codified as Chapter 399 of the Local Government Code.

TX-PACE opens the door for local governments, private lenders, and commercial property owners to partner on financing building upgrades that cut operating costs and conserve essential resources. Administered by the nonprofit Texas PACE Authority (TPA), the program now spans 110 city and county jurisdictions without using a single taxpayer dollar.

A Smarter Way to Finance Conservation

Unlike traditional economic development incentives, TX-PACE requires no public funds, no deferred tax revenues, and no government subsidy. Instead, it offers an alternative financing tool: long-term, fixed-rate loans from private lenders that are repaid through utility savings generated by the upgrades themselves. If the savings outweigh the payments, the project pays for itself.

Originally launched nationally in 2008 to promote energy efficiency, PACE quickly gained recognition as a tool capable of addressing an even more urgent Texas priority: water conservation. State leaders wisely incorporated water-saving measures into the Texas PACE Act, positioning TX-PACE as a critical resource for meeting Texas’ future water needs.

A Sobering Water Reality

The recently completed 89th Texas Legislature devoted significant attention to the state’s water crisis. According to the state water plan, Texans must develop or conserve 7.7 million acre-feet of additional water by 2070, a monumental undertaking estimated to cost $154 billion.

This November, Proposition 4 gave voters the chance to boost the Texas Water Fund with up to $1 billion in annual sales tax revenue for 20 years, beginning in 2027. The overwhelming public support for water supply and conservation funding was made clear with the passage of Proposition 4 by over 70%. These funds will support new supplies, infrastructure upgrades, desalination, flood mitigation, and conservation.

Yet, even this historic investment won’t be enough on its own. More than 36% of Texas’ future water supply is expected to come from conservation, meaning we need to save nearly 2.75 million acre-feet of water every year. It’s clear: the cheapest water available is the water we already have, and conserve.

Why TX-PACE Matters

Texas cannot meet its long-term water goals without the private sector. TX-PACE brings private capital into the solution to fund improvements that reduce demand for water and energy while enhancing the long-term value of commercial properties.

A qualifying TX-PACE project must generate enough savings to offset its costs. That means:

• Property owners gain positive cash flow.
• Lenders gain new, secure investments.
• Local governments gain economic activity, stronger tax bases, and reduced strain on utilities without raising tax rates.
• The State of Texas gains preserved water supplies that directly strengthen our long-term resilience.

A Decade of Growth and Untapped Potential

Since TPA began administering TX-PACE programs in 2015, the program has expanded steadily. Today, well more than half a billion dollars in private capital has been invested in energy and water conservation across more than 100 jurisdictions. Because TX-PACE projects pay for themselves, that same half-billion dollars represents more than $600 million returned to Texas property owners.

And the benefits extend beyond energy savings. TX-PACE projects have already prevented more than 145 million gallons of annual retail water consumption, creating a meaningful start toward meeting Texas’ conservation goals. (Click here to explore water-saving project examples.)

Still, this progress represents only a fraction of what’s possible. Even thousands of acre-feet saved will not fully solve Texas’ needs, but failing to use every cost-effective tool available is simply not an option. Texans are already facing a “new normal” of severe water restrictions, rising water costs, delayed development, and dramatic impacts on landscapes and livelihoods.

TX-PACE costs local governments nothing. It uses only private capital. And it pays for itself. At a time when water scarcity threatens our economic future, not using this tool more broadly would be a missed opportunity Texans cannot afford.

The Path Forward

At Texas PACE Authority, our mission is clear: empower property owners across the state to invest in infrastructure that saves money, conserves resources, and strengthens local communities. As a nonprofit, we partner with more than 100 local governments to make TX-PACE easy, accessible, and effective for businesses, nonprofits, and industrial facilities alike. We are your trusted experts in all things PACE.

To learn more about how TX-PACE can help meet Texas’ water and energy goals, contact the Texas PACE Authority at admin@texaspaceauthority.org,  visit www.TexasPACEAuthority.org, and follow Texas PACE Authority on LinkedIn.