10 - Expansion of Property Assessed Clean Energy (PACE) Program Presentation & Discussion

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Phase 2 — Set up administration of the local PACE Program The PACE Program can be administered in one of several ways: (1) via the local government itself, (2) by implementing a program jointly with another local government, or (3) by contract with a third -party administrator. Administration of the program would include the application process, application review, and possible servicing functions also. The administration process will include the requirements of Section 399.009(a)(9)-(11) and (15)- (16) of the LGC: (9) description of the application process and eligibility requirements for financing qualified projects to be repaid through contractual assessments under the program; (10) the method described below for ensuring that property owners requesting to participate in the program demonstrate the financial ability to fulfill financial obligations to be repaid through contractual assessments; and (11) explanation of the manner in which property will be assessed and assessments will be collected ... (15) a description of quality assurance and antifraud measures to be instituted for the program; and (16) the procedures for collecting the proposed contractual assessments. All of these elements are required to be addressed in some manner in the Report. Per the Report requirements of Section 399.009(b) of the LGC, there are requirements that the method for ensuring a demonstration of financial ability of the property owners under Subsection (a)(10) be based on appropriate underwriting factors, including: (1) providing for verification that the property owner requesting to participate under the program is the legal owner of the benefitted property, is current on mortgage and property tax payments, and is not insolvent or in bankruptcy proceedings; and the title of the benefited property is not in dispute; and (2) requiring an appropriate ratio of the amount of the assessment to the assessed value of the property. The state permits a local government to impose fees to offset the costs of administering a program (See Section 399.008(e).) Fees authorized by this subsection are to be assessed as: (1) a program application fee paid by the property owner requesting to participate in the program; (2) a component of the interest rate on the assessment in the written contract between the local government and the property owner; or (3) a combination of (1) and (2). Phase 3 — Financing and Project Completion The primary operative document for each program, is the "program agreement" or "Owner Contract", which is required by the Section 399.005 of the LGC. The Owner Contract creates the property assessments and senior lien and must obtain written consent of any existing mortgage lenders as a condition precedent to this agreement. Below are each of the statutory requirements to entering into the Owner Contract, third -party lender financing, and review of the proposed and completed project, all of which comprise Phase 3 of the local PACE Program. 1. Owner Contract between Pace Program and Property Owner (Required by Section 399.005)