18-91 - RTOWN OF PROSPER, TEXAS
RESOLUTION NO. 18-91
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER,
TEXAS, HEREBY ESTABLISHING THE TOWN OF PROSPER PROPERTY
ASSESSED CLEAN ENERGY PROGRAM ("TOWN OF PROSPER PACE") AND
FINDING THAT FINANCING QUALIFIED PROJECTS THROUGH
CONTRACTUAL ASSESSMENTS PURSUANT TO THE PACE ACT IS A VALID
PUBLIC PURPOSE; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the 83rd Regular Session of the Texas Legislature enacted the Property
Assessed Clean Energy Act, Texas Local Government Code Chapter 399 (the "PACE Act"), which
allows the governing body of a local government, including a municipality, to designate an area
of the territory of the local government as a region within which an authorized representative of a
local government and the record owners of commercial, industrial, and large multifamily
residential (5 or more dwelling units) real property may enter into written contracts to impose
assessments on the property to repay the financing by the owners of permanent improvements
fixed to the property intended to decrease water or energy consumption or demand; and
WHEREAS, the installation or modification by property owners of qualified energy or water
saving improvements to commercial, industrial, and large multifamily residential real property in
the Town of Prosper will further the goals of energy and water conservation without cost to the
public; and
WHEREAS, the Town Council finds that financing energy and water conserving projects
through contractual assessments ("PACE financing") furthers essential government purposes,
including but not limited to, economic development, reducing energy consumption and costs, and
conserving water resources; and
WHEREAS, the Town Council adopted a Resolution of Intent to establish a PACE
program for the Town of Prosper on September 25, 2018, including a reference to the report on
the proposed program prepared as required by Section 399.009 of the PACE Act and made the
report available to the public on the Town website and for inspection in the Town office; and
WHEREAS, the Town Council finds that the administration of the PACE program by a
qualified non-profit organization as an independent third -party Authorized Representative
contracted by the Town and compensated by application and administration fees paid by the
participating property owners, will enable the program to be administered without use of Town
resources, will assure the objectives of impartiality and confidentiality of owner information, and
will be convenient and advantageous to the Town; and
WHEREAS, the Town Council also finds that because no Town funds will be expended
for PACE financing of the Authorized Representative's services, the selection of such an
independent third -party Authorized Representative is not subject to the Professional Services
Procurement Act or other Town purchasing requirements; and
WHEREAS, the Town Council held a public hearing on October, 23, 2018 at 6:00 p.m. in
the Town Council chambers, 200 South Main Street, at which the public could comment on the
proposed program, including the report available for public inspection as mentioned above and
as required by Section 399.008(a)(2); and
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, THAT:
SECTION 1
The Recitals to this Resolution are true and correct and are incorporated into this
Resolution for all purposes.
SECTION 2
The Town of Prosper hereby adopts this Resolution Establishing the Town of Prosper
Property Assessed Clean Energy Program ("Town of Prosper PACE"), herein called "the
Program," and finds that financing qualified projects through contractual assessments pursuant
to the PACE Act is a valid public purpose and is convenient and advantageous to the Town and
its citizens.
SECTION 3
The Town of Prosper will, at the property owner's request, impose contractual
assessments on the property to repay PACE financing for qualified energy and water conserving
projects available to owners of privately owned commercial, industrial, and large multifamily
property.
SECTION 4
The following types of projects are qualified projects for PACE financing that may be
subject to such contractual assessments: Projects that (a) involve the installation or modification
of a permanent improvement fixed to privately owned commercial, industrial, or residential real
property with five (5) or more dwelling units, and (b) are intended to decrease energy or water
consumption or demand, including a product, device, or interacting group of products or devices
on the customer's side of the meter that uses energy technology to generate electricity, provide
thermal energy, or regulate temperature. An assessment may not be imposed to repay the
financing of facilities for undeveloped lots or lots undergoing development at the time of the
assessment or the purchase or installation of products or devices not permanently fixed to real
property.
SECTION 5
The boundaries of the entire geographic area within the Town's jurisdiction are the
boundaries of the region where PACE financing and assessments can occur.
SECTION 6
The Financing for qualified projects under the Program will be provided by qualified third -
party lenders chosen by the owners. Such lenders will execute written contracts with the
Authorized Representative to service the debt through assessments, as required by the PACE
Act. The contracts will provide for the lenders to determine the financial ability of owners to fulfill
the financial obligations to be repaid through assessments, advance the funds to owners on such
terms as are agreed between the lenders and the owners for the installation or modification of
qualified projects, and service the debt secured by the assessments, directly or through a servicer,
by collecting payments from the owners pursuant to financing documents executed between the
lenders and the owners. The Town of Prosper will maintain and continue the assessments for
the benefit of such lenders and will enforce the assessment lien for the benefit of a lender in the
event of a default by an owner. The Town of Prosper will not, at this time, provide financing of
any sort for the Town PACE program.
Resolution No. 18-91, Page 2
SECTION 7
The Town Council will designate a non-profit organization to act as the Authorized
Representative with authority to enter into written contracts with the record owners of real property
in the Town of Prosper to impose assessments pursuant to the PACE Act to repay the financing
of qualified projects on the owners' property, to enter into written contracts with the parties that
provide third -party financing for such projects to service the debts through assessments, and to
file written notice of each contractual assessment in the real property records of the County,
depending on the location of the property, all on behalf of the Town of Prosper. The Town
Manager or his designee will be the liaison with the Authorized Representative.
SECTION 8
The Town will enforce the collection of past due assessments and may contract with a
qualified law firm to assist in collection efforts.
SECTION 9
The final report on the Town of Prosper PACE program, prepared in accordance with
Section 399.009 of the Texas Local Government Code is attached and incorporated into this
resolution. The Town will post the resolution and report on the Town's website.
SECTION 10
The Town Council may amend the Town of Prosper PACE Program by resolution.
However, another public hearing is required before the Program may be amended to provide for
Town financing of qualified improvements through assessments.
DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, THIS 63R❑ DAY OF OCTOBER, 2018.
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APPROVED AS TO FORM AND LEGALITY:
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Terrence S. Welch, Town Attorney
Resolution No. 18-91, Page 3
REPORT REQUIRED BY TEXAS LOCAL GOVERNMENT CODE SECTION 399.009
FOR PROPOSED TOWN OF PROSPER, TEXAS
PROPERTY ASSESSED CLEAN ENERGY (PACE) PROGRAM
This Report is adopted by the Town Council for the Town of Prosper, Texas Property Assessed
Clean Energy (PACE) Program (the "program") in accordance with the requirements of the
Property Assessed Clean Energy Act (the "PACE Act") as set forth in Texas Local Government
Code Chapter 399.
The Town of Prosper and its constituents benefit when older existing buildings are modified with
new technology and equipment that increases energy efficiency and reduces water consumption.
As described in this Report, the Town of Prosper is establishing the commercial PACE Program
to encourage private sector investment in energy efficiency and water conservation. The PACE
program will be offered to property owners on a strictly voluntary basis and will not require the
use of any public funds or resources.
Authorized under the PACE Act enacted in 2013, the PACE program is an innovative financing
program that enables private sector owners of privately owned commercial, industrial, and multi-
family residential properties with five or more dwelling units to obtain low-cost, long-term loans
to pay for water conservation, energy -efficiency improvements, and renewable energy retrofits.
PACE loans provide up to 100% financing of all project costs, with little or no up -front out-of-
pocket cost to the owner. The 2015 legislative session streamlined the process.
Loans made under the PACE Program will be secured by assessments on the property that are
voluntarily imposed by the owner. Assessments may be amortized over the projected life of the
improvements. The annual utility cost savings derived from improvements financed with PACE
loans are expected to exceed the amount of the annual assessment payments. In turn, these
improvements are able to generate positive cash flow upon installation because the debt service
will be less than the savings.
PACE assessments are tied to the property and follow title from one owner to the next. Each
owner is responsible only for payment of the assessments accruing during its period of
ownership. When the property is sold, the payment obligation for the remaining balance of the
assessment is transferred automatically to the next owner. As a result, the program will help
property owners overcome market barriers which often discourage investment in energy
efficiency and water conservation improvements.
1. Eligible Properties
The Town of Prosper PACE program is a strictly voluntary program. All private sector owners of
Eligible Properties located within the Town's PACE region may participate in PACE financing.
Resolution No. 18-91, Page 4
"Eligible Properties" include commercial, industrial, and multi -family residential properties
with five or more dwelling units. Government, residential', and undeveloped property and
property undergoing development at the time of the assessment are not Eligible Properties.
2. Qualified Improvements
PACE financing may be used to pay for Qualified Improvements to Eligible Properties.
"Qualified Improvements" are permanent improvements intended to decrease water or energy
consumption or demand, including a product, device, or interacting group of products or devices
on the customer's side of the meter that use energy technology to generate electricity, provide
thermal energy, or regulate temperature. Under the PACE Act, products or devices that are not
permanently fixed to real property are not considered to be Qualified Improvements.
The following items may constitute Qualified Improvements:
• High efficiency heating, ventilating and air conditioning ("HVAC") systems
• High efficiency chillers, boilers, and furnaces
• High efficiency water heating systems
■ Energy management systems and controls
• Distributed generation systems
• High efficiency lighting system upgrades
• Building enclosure and envelope improvements
• Water conservation and wastewater recovery and reuse systems
• Combustion and burner upgrades
• Heat recovery and steam traps
• Water management systems and controls (indoor and outdoor)
• Iligh efficiency irrigation equipment
3. Benefits of PACE to Property Owners
The PACE program will enable owners of Eligible Properties to overcome traditional barriers to
capital investments in energy efficiency and water conservation improvements, such as
unattractive returns on investment, split incentives between landlords and tenants, and
uncertainty of recouping the investment upon sale of the property.
By financing Qualified Improvements through the program, property owners may achieve utility
cost savings that exceed the amount of the assessment and reduce their exposure to utility price
volatility. As a result, the value of the property will be enhanced, and the owner will only be
obligated to pay the assessment installments that accrue during its period of ownership of the
property. Additionally, by investing in energy efficiency and water conservation with PACE;
financing, property owners may also qualify for various rebate, tax credit, and incentive
programs offered by utility providers and state or federal governmental authorities to encourage
these types of investments.
This encompasses single family residential and any multi -family properties less than five units.
2
Resolution No. 18-91, Page 5
4. Benefits of PACE to the Town
Among other things, projects financed through PACE will:
• Enable property owners and occupants to save substantial amounts in utility costs
• Reduce demand on the electricity grid
• Mitigate greenhouse gas emissions associated with energy generation
• Enhance the value and efficiency of existing buildings
• Boost the local economy by creating new job opportunities for laborers and new business
opportunities for contractors, engineers, commercial lenders, professionals, and
equipment vendors and manufactures
• Increase business retention and expansion in the PACE region by enabling cost effective
energy and water saving updates to existing property
■ Improve productivity through optimized energy usage
• Support the State's water conservation plan
• Better enable the Town to meet its water conservation goals
Finally, EPA regulations have significant impacts on air quality standards in Texas. For example,
the recent adjustment in the NAAQS to a lower standard increased the difficulty for the area to
maintain its attainment status. Being non -attainment for priority pollutants in the Clean Air Act
endangers federal transportation funding. Through the reduction in energy consumption, as a
result of the PACE program, there will be a decreased demand for power resulting in lower
emissions from power plants.
The PACE program requires minimal support from the Town. It is designed to be self-sustaining.
Furthermore, because the PACE program is tax neutral, it achieves all of the benefits listed in
this Report without imposing a burden on the Town's general fund.
The 841h Texas Legislature added a provision that explicitly shields the Town and its employees
members of the governing body of a local government, employees of a local government, and
board members, executives, employees, and contractors of a third party who enter into a contract
with a local government to provide administrative services for a program under this chapter.2
5. The Benefits of PACE to Lenders
PACE loans are attractive to lenders because they are very secure investments. Like a property
tax lien, the assessment lien securing the PACE loan has priority over other liens on the property.
Therefore, the risk of loss from non-payment of a PACE loan is low compared to most other
types of loans. PACE assessments provide lenders with an attractive new product to assist
existing and new customers in addressing an almost universal pent-up demand for needed
commercial and industrial property equipment modernization. In order to protect the interests of
2 TX. Local Gov't Code §399.019. In the 85th legislature, HB 2654 clarified that the personal immunity
provisions apply to all elected officials performing rights and duties under chapter 399 of the Local Government
Code.
Resolution No. 18-91, Page 6
holders of existing mortgage loans on the property, the PACE Act requires their written consent
to the PACE assessment as a condition to obtaining a PACE loan.
6. The Benefits of PACE to Contractors, Engineers, and Manufacturers
PACE loans provide attractive sources of financing for water and energy saving retrofits and
upgrades, thereby encouraging property owners to make substantial investments in existing
commercial and industrial buildings. As a result, PACE will unlock business opportunities for
contractors, engineers, and manufacturers throughout the commercial and industrial sectors.
7. Administration of the PACE Program
Under the PACE Act, the establishment and operation of the program are considered to be
governmental functions. The PACE Act further authorizes the Town of Prosper to enter into a
contract with a third party to provide administrative services for the PACE program (the
"Authorized Representative'. The Town of Prosper may delegate administration of the PACE
program to a qualified, non-profit organization that can administer the program at no cost to the
Town.
The Authorized Representative's role is oversight of the program to ensure best practices and
consumer protections at the lowest possible cost to the property owner. The administrator's role
does not include selecting participants (other than setting objective standards to maintain quality
control). The Authorized Representative may not offer services that compete with the PACE
market the authorized representative is responsible for overseeing.
The Authorized Representative will be funded by administrative fees paid by the property
owners establishing a PACE project, charitable grants or other sources of revenue. The
Authorized Representative will not receive compensation or reimbursement from the Town. The
Authorized representative may not impose any fees directly or indirectly not authorized in
advance by the Town in writing. The Authorized Representative is prohibited from charging
fees to participate in the program.
Periodic updates to the standard form documents (described in Section 9) will be necessary as
the program evolves, incorporating best practices and standardizing the PACE contracts across
various PACE programs. The Authorized Representative will be tasked with maintaining the
form contracts and making technical and conforming updates as necessary so long as the changes
are consistent with the resolution to establish the PACE program and the statute.
8. Eligible Lenders
The PACE Act does not set criteria for financial institutions or investors to be PACE lenders.
The Town will follow best practices of other PACE programs by recommending that lenders be:
■ 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;
Resolution No. 18-91, Page 7
■ Any registered investment company, registered business development company, or a
Small Business
■ Small business investment company;
■ Any publicly traded entity; or
■ Any private entity that:
o Has a minimum net worth of $5 million; and
o 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
o Can provide independent certification as to availability of funds; and
■ 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.
Any lender can participate in the PACE program as long as it is a financially stable entity with
the ability to carry out, either directly or through a servicer, the bookkeeping and customer
service work necessary to manage the assessment accounts. The property owner, not the Town
or the Authorized Representative, selects the lender.
The Authorized Representative will not guarantee or imply that funding will automatically be
provided from a third -party lender, imply or create any endorsement of, or responsibility for, any
lender; or create any type of express or implied favoritism for any eligible lender.
9. Components of the PACE Program
As required under Section 399.009 of the PACE Act, the following describes all aspects of the
PACE Program:
a. Man of Region. A map of the boundaries of the region included in the
program is attached to this Report as Exhibit 1. The region encompasses the
Town limits.
b. Form Contract With Owner. A form contract between the Town of Prosper and
the record owner of the Eligible Property is attached as Exhibit 2. It specifies the
terms of the assessment under the PACE program and the financing to be
provided by an Eligible Lender of the property owner's choosing.
c. Form Contract with Lender. A form contract between the Town of Prosper and
the Eligible Lender chosen by a property owner is attached to this Report as
Ex i t) i 13. It specifies the financing and servicing of the debt through assessments.
Form Notice of Contractual Assessment Lien. A form Notice of Assessment Lien
to be filed by the Town of Prosper with the County Clerk, depending on where the
Eligible Property is located, is attached to this Report as Exhibit 4.
Resolution No. 18-91, Page 8
d. Ouali f ed Improvement. The following types of projects are qualified
improvements that may be subject to contractual assessments under the PACE
program:
Projects that (a) involve the installation or modification of a
permanent improvement fixed to privately owned commercial,
industrial or residential real property with five (5) or more
dwelling units;3 and (b) are intended to decrease energy or water
consumption or demand by installing a product, device, or
interacting group of products or devices on the customer's side of
the meter that uses energy technology to generate electricity,
provide thermal energy, or regulate temperature. 4
A sample list of potential Qualified Improvements appears in Section 2 above.
The PACE program may not be used to finance improvements to undeveloped
lots or lots undergoing development at the time of the assessment, or for the
purchase or installation of products or devices not permanently fixed to real
property.5
e. Authorized Representative. HB 3187 was signed into law on June 16, 2015. It
authorizes the Town of Prosper to delegate administration of the PACE program
to a third -party "representative." The Town may delegate all official
administrative responsibilities, like the execution of individual contracts with
property owners and lenders, to an Authorized Representative. This relationship
will be monitored and maintained by the Town Manager or his designee.
f. Plans for Insuring 5ufi`icicnt Canital'5. Lenders will extend loans to finance
Qualified Improvements. Financing documents executed between owners and
lenders will impose a contractual assessment on Eligible Property to repay the
owner's financing of the Qualified Improvements. The lenders will ensure that
property owners demonstrate the financial ability to fulfill the financial
obligations to be repaid through contractual assessments.
g. No Use of Bonds or PUblic Funds. The Town of Prosper does not intend to issue
bonds or use any other public monies to fund PACE projects. Property owners
will obtain all financing from the Eligible Lenders they choose.
h. Limit on Length of Loan. One of the statutory criteria of a PACE loan is that the
assessment payment period cannot exceed the useful life of the Qualified
a TX. Local Gov't Code §399.002(5).
' TX. Local Gov't Code §399.002(3).
' TX. Local Gov't Code §399.004.
6 The Texas PACE Authority's website (www.texasnaceauthorimore) offers a non -exhaustive list of
interested and qualified lenders to assist property owners in funding PACE projects in Texas.
Resolution No. 18-91, Page 9
Improvement that is the basis for the loan and assessment. As part of the
application process, the property owners will submit a third -party review showing
the water or energy baseline conditions and the projected water or energy savings.
This review will aid the Authorized Representative in making a determination that
the period of the requested assessment does not exceed the useful life of the
Qualified Improvement.
i. AvOication Process. The Authorized Representative will accept applications
from property owners seeking to finance Qualified Improvements under the
program. Each application must be accompanied by the required application fee
and must include:
(1) A description of the specific Qualified Improvements to be installed or
modified on the property,
(2) A description of the specific real property to which the qualified
improvements will be permanently fixed, and
(3) The total amount of financing, including any transaction costs, to be
repaid through assessments.
Based on this information, the Authorized Representative may issue a preliminary
letter indicating that, subject to verification of all requirements at closing, the
proposed project appears to meet program requirements. Based on this
preliminary letter, the property owner may initiate an independent third -party
review of the project and submit the project to Eligible Lenders for approval of
financing.
Once the above processes are completed, the property owner will submit the
application to the Authorized Representative to obtain preliminary approval. The
property owner is expected to produce the following documentation prior to
closing on the PACE loan:
(1) A Report conducted by a qualified, independent third party, showing
water or energy baseline conditions and the projected water or energy
savings, or the amount of renewable energy generated attributable to the
project;
(2) Such Cnancial information about the owner and the property as the
lender chosen by the owner deems necessary to determine that the owner'
has demonstrated the financial ability to fulfill the financial obligations to
be paid through assessments; and
(3) All other information required by the Authorized Representative.
j. Financial EIip-ibility Requirements. The Authorized Representative will
determine whether the owner, the property and the improvements are eligible for
financing under the program. The Eligible Lender chosen by the owner will
determine whether the owner has demonstrated the financial ability to repay the
financial obligations to be collected through contractual assessments. The
Resolution No. 18-91, Page 10
statutory method? for ensuring such a demonstration of financial ability must be
based on appropriate underwriting factors, including the following:
(1) verification that the person requesting to participate in the program is
the legal record owner of the benefitted property,
(2) the applicant is current on mortgage and property tax payments,
(3) the applicant is not insolvent or in bankruptcy proceedings,
(4) the title of the benefitted property is not in dispute; and
(5) there is an appropriate ratio of the amount of the assessment to the
assessed value of the property.
k. Mortgage Holder Notice and Consent. As a condition to the execution of a
written contract between the Authorized Representative and the property owner
imposing an assessment under the program, the holder of any mortgage lien on
the property must be given notice of the owner's intention to participate in the
program on or before the 30" day before the date the contract is executed, and the
owner must obtain the written consent of all mortgage holders.$
1. Imoosition of Assessment. The Authorized Representative will enter into a
written contract with the property owner, only after:
(1) The property owner delivers to the Authorized Representative written
consent of all mortgage lien holders;
(2) The Authorized Representative's determination that the owner and the
property are eligible to participate in the program, that the proposed
improvements are reasonably likely to decrease energy or water
consumption or demand, and that the period of the requested assessment
does not exceed the useful life of the Qualified Improvements; and
(3) The Eligible Lender notifies the Authorized Representative that the
owner has demonstrated the financial ability to fulfill the financial
obligations to be repaid through contractual assessments.
The contract will impose a contractual assessment on the owner's Eligible
Property to repay the lender's financing of the Qualified Improvements. The
Eligible Lender will file "A Notice of Contractual Assessment Lien," in
substantially the form in Exhibit 4 in the Official Public Records of the County,
depending on where the Eligible Property is located, as notice to the public of the
assessment, from the date of filing. The contract and the notice must contain the
amount of the assessment, the legal description of the property, the name of the
property owner, and a reference to the statutory assessment lien provided under
the PACE Act.
m. Collection of Assessments. The execution of the written contract between the
Authorized Representative and the property owner and recording of the Notice of
Contractual Assessment Lien incorporate the terms of the financing documents
TX. Local Gov't Code §399.009(b).
TX. Local Gov't Code §399.010.
Resolution No. 18-91, Page 11
executed between the property owner and with the lender to repay the financing
secured by the assessment. The third -party lender will advance financing to the
owner, and the terms for repayment will be such terms as are agreed between the
lender and the owner. Under the form lender contract attached as Exhibit 3, the
lender or a designated servicer will agree to service the debt secured by the
assessment.9
With funds from the lender, the property owner can purchase directly the
equipment and materials for the Qualified Improvement and contract directly,
including through lease, power purchase agreement, or other service contract, for
the installation or modification of the Qualified Improvements. Alternatively, the
lender may make progress payments to the property owner as the Qualified
Improvement is installed.
The lender will receive the owner's assessment payments to repay the debt and
remit to the Authorized Representative any administrative fees. The lender will
have the right to assign or transfer the right to receive the installments of the debt
secured by the assessment, provided all of the following conditions are met:
(1) The assignment or transfer is made to an Eligible Lender, as defined
above;
(2) The property owner and the Authorized Representative are notified in
writing of the assignment or transfer and the address to which payment of
the future installments should be mailed at least 30 days before the next
installment is due according to the schedule for repayment of the debt; and
(3) The assignee or transferee, by operation of the financing documents or
otherwise, written evidence of which shall be provided, assumes lender's
obligations under the lender contract.
n. Verification Review. After a Qualified Improvement is completed, the
Authorized Representative will require the property owner to provide verification
by a qualified independent third -party reviewer that the Qualified Improvement
was properly completed and is operating as intended.I ° The verification report
conclusively establishes that the improvement is a Qualified Improvement and the
project is qualified under the PACE program.
o. Marketinsl and Education Services. The Town of Prosper may subsequently
enter into agreements with one or more other local governments or non-profit
organizations that promote energy and water conservation and/or economic
development to provide marketing and education services for the PACE program.
The Program Administrator will provide service provider training workshops for
contractors, engineers, property managers and other stakeholders, provide
9 The servicer will be responsible for maintaining payment records, account balances, and reporting to the
Authorized Representative as required.
10 TX. Local Gov't Code §399.011.
9
Resolution No. 18-91, Page 12
outreach and education for all stakeholders including presentations, conference
booths and individual meetings, and provide written and electronic materials such
as case studies, flyers, and webinars.
p. Ouality Assurance and Antifraud Measures. The Authorized Representative will
institute quality assurance and antifraud measures for the Program. The
Authorized Representative will review each PACE application for completeness
and supporting documents through independent review and verification
procedures. The application and required attachments will identify and supply the
information necessary to ensure that the property owner, the property itself, and
the proposed project all satisfy PACE program underwriting and technical
standard requirements. Measures will be put in place to provide safeguards,
including a review of the energy and water savings baseline and certification of
compliance with the technical standards manual from an independent third -party
reviewer (ITPR), who must be a registered professional engineer, before the
project can proceed. This review will include a site visit, report, and a letter from
the ITPR certifying that he or she has no financial interest in the project and is an
independent reviewer. After the construction of the project is complete, an ITPR
will conduct a final site inspection and determine whether the project was
completed and is operating properly. The reviewer's certification will also include
a statement that the reviewer is qualified and has no financial interest in the
project.
q. Delinauencv. Under the terms of the form lender contract attached as Exhibit 3,
if a property owner fails to pay an agreed installment when due on the PACE
assessment, the lender will agree to take at least the following steps to collect the
delinquent installment:
(1) Mail to the owner a written notice of delinquency and demand for
payment by both certified mail (return receipt requested) and first class
mail, and
(2) Mail to the owner a second notice of delinquency and demand for
payment by both certified mail (return receipt requested) and first class
mail, at least 30 days after the date of the first notice if the delinquency is
continuing.
If the owner fails to cure the delinquency within 30 days after mailing the second
notice of delinquency, the lender may notify the Authorized Representative of the
owner's default. Pursuant to Texas Local Government Code Section 399.014(c),
the Authorized Representative will initiate steps for the Town to enforce the
assessment lien in the same manner as a property tax lien against real property
may be enforced, to the extent the enforcement is consistent with Section 50,
Article XVI, of the Texas Constitution. Delinquent installments will incur
penalties and interest in the same manner and at the same rate as delinquent
property taxes, according to Texas Local Government Code Section 399.014(d),
and such statutory penalties and interest will be due to the Town to offset the cost
of collection.
10
Resolution No. 18-91, Page 13
If the Town of Prosper files suit to enforce collection, the Town may also recover
costs and expenses, including attorney's fees, in a suit to collect a delinquent
installment of an assessment in the same manner and at the same rate as in suit to
collect a delinquent property tax. If a delinquent installment of an assessment is
collected after the filing of a suit, the Town will remit to the lender the net amount
of the delinquent installments and contractual interest collected and remit to the
Authorized Representative the amount of any administrative fees collected but
will retain any statutory penalties, interest, and attorney's fees collected.
11
Resolution No. 18-91, Page 14
Resolution No. 18-91, Page 15
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Resolution No. 18-91, Page 17
EXHIBIT 2
FORM OWNER CONTRACT
PACE OWNER CONTRACT
THIS PROPERTY ASSESSED CLEAN ENERGY ("PACE") OWNER CONTRACT
("Owner Contract") is made as of the day of , by and between
the Town of Prosper, Texas ("Local Government"), and
("Property Owner").
RECITALS
A. The Property Assessed Clean Energy Act ("PACE Act"), Texas Local
Government Code Chapter 399, authorizes the governing body of a local government to establish
a program and designate a region within the local government's jurisdiction within which an
authorized representative of the local government may enter into written contracts with the
record owners of commercial, industrial, and large multifamily residential (5 or more dwelling
units) real property to impose assessments on the property to finance the cost of permanent
improvements fixed to the property intended to decrease water or energy consumption or
demand.
B. Local Government has established a program under the PACE Act pursuant to a
resolution dated , adopted by the Town Council (the "PACE Program"),
and has designated ("Authorized Representative") as
the representative authorized to enter into the Assessment, Owner Contract and Lender Contract
described herein, and has designated the entire territory within the Town of Prosper's jurisdiction
as a region ("Region") within which the Authorized Representative and the record owners of
such real property may enter into written contracts to impose assessments to repay the financing
by owners of qualified improvements on the owner's property pursuant to the PACE Program.
C. Property Owner is the legal and record owner of the qualified "real property," as
defined in Section 399.002 of the PACE Act, within the Region located at
Texas, (the "Property").
D. Pursuant to Application number , Property Owner has applied
to Local Government to participate in the PACE Program by installing or modifying on the
Property certain permanent improvements which are intended to decrease water or energy
consumption or demand, and which are or will be fixed to the Property as "qualified
improvements", as defined in Section 399.002 of the PACE Act (the "Qualified
Improvements"). The installation or modification of such Qualified Improvements on the
Property will be a "qualified project" as defined in Section 399.002 of the PACE Act (the
"Project"). Property Owner has requested that Local Government enter into this Owner Contract
pursuant to the PACE Act and the PACE Program and has requested Local Government to
impose an assessment (the "Assessment") on the Property as set forth in the Notice Of
Contractual Assessment Lien Pursuant To Property Assessed Clean Energy Act to be filed in the
in the Official Public Records of County, Texas (the "Notice of Contractual
v. 110617GENERIC AR ONLY PACE Owner Contract
Resolution No. 18-91, Page 18
Assessment Lien"), a copy of which is attached hereto as Exhibit A and made a part hereof, to
repay the financing of such Qualified Improvements. The Property, Qualified Improvements and
Assessment are more fully described in the Notice of Contractual Assessment Lien.
E. The financing of such Qualified Improvements will be provided to Property
Owner by ("Lender"), a qualified lender selected by Property
Owner, pursuant to a written contract executed by Lender and Local Government as required by
Section 399.006(c) of the PACE Act and by the PACE Program (the "Lender Contract"). The
financing will include only those costs and fees for which an assessment may be imposed under
the PACE. Act. Local Government has agreed to maintain and continue the Assessment for the
benefit of Lender until such financing is repaid in full and to release the Assessment upon notice
from Lender of such payment, or foreclose the lien securing the Assessment for the benefit of
Lender upon notice from Lender of a default by Property Owner.
F. As required by Section 399.010 of the PACE Act, Property Owner notified the
holder(s) of any mortgage liens on the Property at least thirty (30) days prior to the date of this
Owner Contract of Property Owner's intention to participate in the PACE Program. The written
consent of each mortgage holder to the Assessment was obtained prior to the date of this Owner
Contract and is attached hereto as Exhibit B and made a part hereof.
AGREEMENT
The parties agree as follows:
1. Imposition of Assessment. In consideration for the financing advanced or to be
advanced to Property Owner by Lender for the Project under the PACE Program pursuant to the
Lender Contract, Property Owner hereby requests and agrees to the imposition by Local
Government of the Assessment in the amount of $ , as set forth in the Notice of
Contractual Assessment Lien, including all interest, fees, penalties, costs, and other sums due
under and/or authorized by the PACE, Act, PACE Program and the financing documents between
Property Owner and Lender (the "Financing Documents") which are described or listed on
Exhibit C attached hereto and made a part hereof by reference. Property Owner promises and
agrees to pay such amount and interest to Local Government, in care of or as directed by Lender,
in satisfaction of the Assessment imposed pursuant to the Owner Contract and the PACE Act.
Accordingly, Local Government hereby imposes the Assessment on the Property to secure the
payment of such amount, in accordance with the requirements of the PACE Program and the
provisions of the PACE Act.
2. Maintenance and Enforcement of Assessment. In consideration for Lender's
agreement to advance financing to Property Owner for the Project pursuant to the Financing
Documents, Local Government agrees to maintain and continue the Assessment on the Property
for the benefit of Lender until the Assessment, including all interest, fees, penalties, costs, and
other sums due under and/or authorized by the PACE Act, PACE Program and the Financing
Documents are paid in full, and to release the Assessment upon notice from Lender of such
payment. Local Government agrees to undertake reasonable efforts to enforce the Assessment
against the Property for the benefit of Lender in the event of a default by Property Owner. Local
v. 110617GF,NF.RIC AR ONLY PACE Owner Contract 2
Resolution No. 18-91, Page 19
Government agrees to send an annual notice of assessment to the Property Owner each year there
is a PACE lien balance.
3. Installments. The Assessment, including the amount financed and contractual
interest, is due and payable in installments as set forth in the Notice of Contractual Assessment
Lien and the Financing Documents ("Installments"). The Assessment shall include: (1) an
application fee paid by Property Owner to Authorized Representative at loan closing, and (2) a
recurring administration fee paid by Property Owner to the Authorized Representative. The
recurring administration fee amount shall be collected by Lender and paid to the Authorized
Representative within thirty (30) days of receipt by Lender, unless otherwise agreed to in writing
by the Program Administrator. The amounts due to the Authorized Representative are identified
in Exhibit C hereto. As required by Section 399.009(a) (8) of the PACE Act, the period during
which such Installments are payable does not exceed the useful life of the Project. When the
Assessment together with any prepayment premium, and/or default penalties and interest, if any,
has been paid in full, Local Government's rights under this Owner Contract will cease and
terminate. Upon notice from Lender that all amounts owing have been paid in full, Local
Government will execute a release of the Assessment and this Owner Contract. Thereafter, the
Authorized Representative will record the release.
4. Assignment of Riaht to Receive Installments. Lender will have the right to assign
or transfer the right to receive the Installments of the financing secured by the Assessment,
provided all of the following conditions are met:
(a) The assignment or transfer is made to a qualified lender as defined in the
Lender Contract;
(b) Property Owner and Authorized Representative are notified in writing of
the assignment or transfer and the address to which payment of the future Installments
should be mailed at least 30 days before the next Installment is due according to the
payment schedule included in the Notice of Contractual Assessment Lien and the
Financing Documents; and
(c) The assignee or transferee, by operation of the Financing Documents or
otherwise, written evidence of which shall be provided to Authorized Representative,
assumes Lender's obligations under this Lender Contract.
Upon written notice to Property Owner and Authorized Representative of an assignment or
transfer of the right to receive the Installments that meets all of these conditions, the assignor
shall be released of all of the obligations of the Lender under such Lender Contract accruing after
the date of the assignment assumed by and transferred to such assignee or transferee and all of
such obligations shall be assumed by and transferred to the assignee. Any attempt to assign or
transfer the right to receive the Installments that does not meet all of these conditions is void.
Lien Priority and Enforcement. Pursuant to Section 399.014 of the PACE Act,
(a) Delinquent Installments of the Assessment will incur interest and penalties
in the same manner and in the same amount as delinquent property taxes, viz., a
delinquent Installment incurs a penalty of 6% of the amount of the Installment for the
v. 1 10617GENERIC_AR ONLY PACE Owner Contract
Resolution No. 18-91, Page 20
first calendar month it is delinquent plus 1% for each additional month or portion of a
month the Installment remains unpaid prior to July 1 of the year in which it becomes
delinquent. However, an Installment delinquent on July 1 incurs a total penalty of 12%
of the amount of the delinquent Installment without regard to the number of months it has
been delinquent. A delinquent Installment will also accrue interest at the rate of 1% for
each month or portion of a month that the Installment remains unpaid. Statutory penalties
and statutory interest payable under this paragraph will be retained by Local Government
to compensate it for the cost of enforcing the Assessment. Additional interest at any
default rate imposed by Lender pursuant to the Financing Documents, along with any
other fees and charges that become due pursuant to the Financing Documents may be
assessed by Lender and retained by Lender.
(b) The Assessment, together with any penalties and interest thereon,
(1) is a first and prior lien against the Property from the date on which
the Notice of Contractual Assessment Lien is filed in the Official Public Records
of County, Texas as provided by Section 399.014 of the PACE Act,
until the financing secured by the Assessment and any penalties and interest are
paid; and
(2) such lien has the same priority status as a lien for any other ad
valorem tax, pursuant to Section 399.014(a)(2) of the PACE Act.
(c) The lien created by the Assessment runs with the land, and according to
Section 399.014(b) of the PACE Act, any portion of the Assessment that has not yet
become due is not eliminated by foreclosure of. (i) a property tax lien, or (ii) the lien for
any past due portion of the Assessment. In the event of a sale or transfer of the Property
by Property Owner, the obligation for the Assessment and the Property Owner's
obligations under the Financing Documents will be transferred to the succeeding owner
without recourse on Local Government or the Authorized Representative.
(d) In the event of a default by Property Owner in payment of the Installments
called for by the Financing Documents, the lien created by the Assessment will be
enforced by Local Government in the same manner according to Texas Tax Code Secs.
33.41 to 34.23 that a property tax lien against real property may be enforced by a local
government, to the extent the enforcement is consistent with Section 50, Article XVI,
Texas Constitution.
(e) In a suit to collect a delinquent Installment of the Assessment, Local
Government will be entitled to recover costs and expenses, including attorney's fees in
the amount of 15% of the total amount of the delinquent Installment, penalties, and
interest due, in the same manner according to Texas Tax Code Sec. 33.48 as in a suit to
collect a delinquent property tax. Lender shall be entitled to any additional sums due to it
under the Financing Documents in connection with a suit to collect a delinquent
Installment of the Assessment.
v. 110617GENERIC _AR -ONLY PACE Owner Contract 4
Resolution No. 18-91, Page 21
(f) After written notice of the Assessment is recorded in the real property
records of the county in which the Property is located as provided under Section 399.013
of the PACE Act, the lien created by the Assessment may not be contested on the basis
that the improvement is not a "qualified improvement" or the project is not a "qualified
project", as such terms are defined in Section 399.002 of the PACE Act.
6. Written Contract Reauired by PACE Act. This Owner Contract constitutes a
written contract for the Assessment between the Property Owner and Local Government as
required by Section 399.005 of the PACE Act. The Notice of Contractual Assessment Lien will
be recorded in the Official Public Records of as notice of the contractual
Assessment, in accordance with the requirements of Section 399.013 of the PACE Act.
7. Oualited Improvements. Property Owner agrees that all improvements
purchased, constructed and/or installed through financing obtained pursuant to this Owner
Contract shall be permanently affixed to the Property and will transfer with the Property to the
transferee in the event of and sale or assignment of the Property.
8. Water or EnerQ_ v Savings. For so long as the Assessment encumbers the Property,
Property Owner agrees on or before January 31st of each year, to report to Authorized
Representative the water or energy savings realized through the Project in accordance with the
reporting requirements established by the Local Government.
9. Construction and Definitions. This Owner Contract is to be construed in
accordance with and with reference to the PACE Program and PACE Act. Terms used herein,
and not otherwise defined herein, shall have the meanings ascribed to them in: (1) the PACE
Program, and/or (2) the PACE Act.
10. BindinQ Effect. This Owner Contract inures to the benefit of Local Government
and is binding upon Property Owner, its heirs, successors, and assigns.
11. Notices. All notices and other communications required or permitted by this
Owner Contract shall be in writing and mailed by certified mail, return receipt requested,
addressed to the other party at its address shown below the signature of such party or at such
other address as such party may from time to time designate in writing to the other party, and
shall be effective from the date of receipt.
12. Governing Law, This Owner Contract shall in all respects be governed by and
construed in accordance with the laws of the State of Texas.
13. Entire Aureement. This Owner Contract constitutes the entire agreement between
Local Government and Property Owner with respect to the subject matter hereof and may not be
amended or altered in any manner except by a document in writing executed by both parties.
14. Further Assurances. Property Owner further covenants and agrees to do, execute
and deliver, or cause to be done, executed, and delivered all such further acts for implementing
the intention of this Owner Contract as may be reasonably necessary or required.
v. 110617GENERIC AR ONLY PACE Owner Contract
Resolution No. 18-91, Page 22
15. Camians. Paragraph and section titles are for convenience of reference only and
shall not be of any legal effect.
16. Interest. Interest and penalties in the event of default, as provided above, are
explicitly authorized by Section 399.014(d) of the PACE Act. However, in no event will the
total amount of interest on the Assessment, including statutory interest payable to Local
Government and contractual interest payable to Lender under the Financing Documents, exceed
the maximum amount or rate of nonusurious interest that may be contracted for, charged, or
collected under Texas law (the "usury limit"). If the total amount of interest payable to Local
Government and Lender exceeds the usury limit, the interest payable to Local Government will
be reduced and any interest in excess of the usury limit will be credited to the amount payable to
Local Government or refunded. This provision overrides any conflicting provisions in this
Owner Contract.
17. Counterparts. This Owner Contract may be executed in any number of
counterparts, each counterpart may be delivered originally or by electronic transmission, all of
which when taken together shall constitute one agreement binding on the parties,
notwithstanding that all parties are not signatories to the same counterpart.
18. Costs. No provisions of this Owner Contract will require Local Government to
expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder.
19. Construction Terms. If the Lender Contract includes requirements related to
construction of the Project and disbursement of Financing, such requirements are set forth in
Exhibit D attached hereto and incorporated herein by reference. Such requirements may include,
among other things, (1) the disbursement schedule and (2) any holdback amount to be funded
following verification of final project completion.
v. 110617GENERIC_AR_ONLY PACE Owner Contract 6
Resolution No. 18-91, Page 23
PROPERTY OWNER:
By:
Name:
Title:
Address:
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF
This PACE Owner Contract pursuant to Property Assessed Clean k :berg} Act was
acknowledged before me on by
, on behalf o #'
(print name)
NOTARY PUBLIC, STATE OF TEXAS
SIGNATURE PAGE TO
P46W9 WW9i1IW"gV24
LOCAL GOVERNMENT:
TOWN OF PROPSER, TEXAS
11y:
AUTHORIZED REPRESENTATIVE
Pursuant to Tex. Local Gov't Code §399.006(b)
Name:
Title:
Address:
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF
This PACE Owner Contract pursuant to Property Assessed Clean Energy Act was
acknowledged before me on by
, on behalf of Texas.
(print name)
NOTARY PUBLIC, STATE OF TEXAS
SIGNATURE PAGE TO
PA%MWW9.W- V, K& 25
EXHIBIT A
NOTICE OF CONTRACTUAL ASSESSMENT LIEN
PURSUANT TO
PROPERTY ASSESSED CLEAN ENERGY ACT
Resolution No. 18-91, Page 26
EXHIBIT B
MORTGAGE HOLDER(S) CONSENT
Resolution No. 18-91, Page 27
EXHIBIT C
FINANCING DOCUMENTS
Assessment Payment Schedule
Assessment Total:
Payment Frequency:
Payment Total Payment
Date
Principal Paid Interest Paid
Financing Documents
Administration Remaining
Fee Balance
Document Title I Parties I Date Executed
Resolution No. 18-91, Page 28
EXHIBIT D
CONSTRUCTION TERMS
[if applicable]
Date Draw down purpose
Amount
Resolution No. 18-91, Page 29
EXHIBIT 3
FORM LENDER CONTRACT
PACE LENDER CONTRACT
THIS PROPERTY ASSESSED CLEAN ENERGY ("PACE") LENDER CONTRACT
(the "Lender Contract") is made as of the day of by and
between the Town of Prosper, Texas ("Local Government") and
("Lender").
RECITALS
A. The Property Assessed Clean Energy Act ("PACE Act"), Texas Local
Government Code Chapter 399, authorizes the governing body of a local government to establish
a program and designate a region within the local government's jurisdiction within which an
authorized representative of the local government may enter into written contracts with the
record owners of commercial, industrial, agricultural, and large multifamily residential (5 or
more dwelling units) real property to impose assessments on the property to finance the cost of
permanent improvements fixed to the property intended to decrease water or energy consumption
or demand.
B. Local Government has established a program under the PACE Act pursuant to a
resolution dated , adopted by the Town Council (the "PACE Program"), and
has designated ("Authorized Representative") as the
representative authorized to enter into the Assessment, Owner Contract and Lender Contract
described herein, and has designated the entire territory within the Town of Prosper, Texas
jurisdiction as a region ("Region") within which the Authorized Representative and the record
owners of such real property may enter into written contracts to impose assessments to repay the
financing by owners of qualified improvements on the owner's property pursuant to the PACE
Program.
C. Pursuant to Application number ,
("Property Owner") has applied to Local Government to participate in the PACE Program with
respect to certain real property located at , , Texas,
(the "Property") by installing or modifying on the Property certain permanent
improvements which are intended to decrease water or energy consumption or demand, and
which are or will be fixed to the Property as "qualified improvements", as defined in Section
399.002 of the PACE Act (the "Qualified Improvements"). The installation or modification of
such Qualified Improvements on the Property will be a "qualified project" as defined in Section
399.002 of the PACE Act (the "Project").
D. Property Owner and Local Government have entered into a written contract as
required by Section 399.005 of the PACE Act, a copy of which is attached hereto as Exhibit A
and made a part hereof (the "Owner Contract"), in which Property Owner has requested that
Local Government impose an assessment (the "Assessment") on the Property as set forth in the
Notice Of Contractual Assessment Lien Pursuant To Property Assessed Clean Energy Act to be
v.110617GENERIC_AR_ONLY PACE Lender Contract 1
Resolution No. 18-91, Page 30
filed in the in the Official Public Records of County, Texas (the "Notice of
Contractual Assessment Lien"), a copy of which is attached to the Owner Contract as Exhibit
A, to repay the financing of such Qualified Improvements. The Property, Qualified
Improvements and Assessment are more fully described in the Notice of Contractual Assessment
Lien.
E. Financing for the Project (the "Financing") will be provided to Property Owner
by Lender in accordance with financing documents which are described or listed on Exhibit B
attached hereto and made a part hereof (the "Financing Documents"). Such Financing includes
only those costs and fees for which an assessment may be imposed under the PACE Act. This
Lender Contract is entered into between Local Government and Lender as required by Section
399.006(c) of the PACE Act to provide for repayment of the Financing secured by the
Assessment.
F. As required by Section 399.010 of the PACE Act, Property Owner notified the
holder(s) of any mortgage liens on the Property at least thirty (30) days prior to the date of the
Owner Contract of Property Owner's intention to participate in the PACE Program. The written
consent of each mortgage lien holder to the Assessment was obtained prior to the date of the
Owner Contract, as shown by the copy of such consent(s) attached as Exhibit B to the Owner
Contract.
AGREEMENT
The parties agree as follows:
1. Maintenance and Enforcement of Assessment. Lender agrees to provide the
Financing for the Project in the total amount of $ , according to the terms set
out in the Financing Documents attached hereto as Exhibit B. In consideration for the Financing
provided or to be provided by Lender for the Project, and subject to the terms and conditions of
this Lender Contract, Local Government agrees to maintain and continue the Assessment for the
benefit of Lender until the Financing, all contractual interest, any prepayment premium,
additional penalties and interest imposed by the Lender under the Financing Documents
according to the Financing Documents, and any statutory penalties, interest, attorney's fees, or
costs accrued in the event of default are paid in full. Local Government will not release the
Assessment until which time Lender notifies Local Government that all amounts owing have
been paid in full. Local Government shall not sell, assign or transfer the Assessment or the
assessment lien against the Property to any third party without the prior written consent of the
Lender. Local Government agrees to enforce the assessment lien against the Property for the
benefit of Lender in the event of a default by Property Owner in accordance with the provisions
set forth in paragraph 6. Local Government shall have no obligation to repurchase the assessment
and no liability to Lender should there be a default or an event of default in the payment thereof
or should there be any other loss or expense suffered by Lender or under any other
circumstances.
2. Installments. The Assessment, including the amount financed and contractual
interest, is due and payable to Lender in installments as set forth in the Notice of Contractual
Assessment Lien and Financing Documents ("Installments"). The Assessment shall include: (1)
v.l 10617GENERtC AR ONLY PACE Lender Contract
Resolution No. 18-91, Page 31
an application fee paid by Property Owner to Authorized Representative at loan closing, and (2)
a recurring administration fee paid by Property Owner to the Authorized Representative. The
recurring administration fee amount shall be collected by Lender and paid to the Authorized
Representative within thirty (30) days of receipt by Lender, unless otherwise agreed to in writing
by the Program Administrator. The amounts due to the Authorized Representative are identified
in Exhibit B. hereto. As required by Section 399.009(a)(8) of the PACE Act, the period during
which such Installments are payable does not exceed the useful life of the Project.
Notwithstanding the foregoing, in event of default by Property Owner resulting in an
Installments payment delinquency, Lender will, upon notice to Program Administrator, stay any
amounts due to Program Administrator until such default has been cured and payments are
received from Property Owner. Lender agrees that any stay in payments due to Program
Administrator shall not reduce the total payments due to Program Administrator under the
Financing Documents. When the Assessment together with any prepayment premium, and/or
default penalties and interest, if any, has been paid in full, Local Government's rights under this
Lender Contract will cease and terminate. Upon notice from Lender that all amounts owing have
been paid in full, Local Government will execute a release of the Assessment and this Lender
Contract. Thereafter, the Authorized Representative will record the release.
3. Assianment of Riaht to Receive Installments. Lender will have the right to assign
or transfer the right to receive the Installments of the Assessment, provided all of the following
conditions are met:
(a) The assignment or transfer is made to a qualified lender, which may be
one of the following:
(1) Any federally insured depository institution such as a bank,
savings bank, savings and loan association and federal or state credit union;
(2) Any insurance company authorized to conduct business in one or
more states;
(3) Any registered investment company, registered business
development company, or a Small Business Administration small business
investment company;
(4) Any publicly traded entity; or
(5) Any private entity that:
(i) Has a minimum net worth of $5 million;
(ii) 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;
v.I 10617GENERIC_AR_ONLY PACE Lender Contract
Resolution No. 18-91, Page 32
(iii) Can provide independent certification as to availability of
funds; and
(iv) Has the ability to carry out, either directly or through a
servicer, the bookkeeping and customer service work necessary to
manage the assessment accounts
(6) A financially stable entity with the ability to carry out, either
directly or through a servicer, the bookkeeping and customer service work
necessary to manage the assessment accounts.
(b) Property Owner and Authorized Representative are notified in writing of
the assignment or transfer and the address to which payment of the future Installments
should be mailed at least 30 days before the next Installment is due according to the
payment schedule included in the Financing Documents; and
(c) The assignee or transferee, by operation of the Financing Documents or
otherwise, written evidence of which shall be provided to Authorized Representative,
assumes Lender's obligations under this Lender Contract.
Upon written notice to Property Owner and Authorized Representative of an assignment
or transfer of the right to receive the Installments that meets all of these conditions, the
assignor shall be released of all of the obligations of the Lender under this Lender
Contract accruing after the date of the assignment and all of such obligations shall be
assumed by and transferred to the assignee. Any attempt to assign or transfer the right to
receive the Installments of the Assessment that does not meet all of these conditions is
void.
4. Financirna Resvonsibility. Lender assumes full responsibility for determining the
financial ability of the Property Owner to repay the Financing and for advancing the funds as set
forth in the Financing Documents and performing Lender's obligations and responsibilities
thereunder.
5. Lien Prioritv and Ftiforcement. As provided in the Owner Contract and Section
399.014 of the PACE Act:
(a) Delinquent Installments of the Assessment incur interest and penalties in
the same manner and in the same amount as delinquent property taxes, viz., a delinquent
Installment incurs a penalty of 6% of the amount of the Installment for the first calendar
month it is delinquent plus 1 % for each additional month or portion of a month the
Installment remains unpaid prior to July 1 of the year in which it becomes delinquent.
However, an Installment delinquent on July 1 incurs a total penalty of 12% of the amount
of the delinquent Installment without regard to the number of months it has been
delinquent. A delinquent Installment also accrues interest at the rate of 1 % for each
month or portion of a month the Installment remains unpaid. Statutory penalties and
statutory interest payable under this paragraph will be retained by Local Government to
compensate it for the cost of enforcing the Assessment.' Additional interest at any default
v.110617GENERIC AR ONLY PACE Lender Contract 4
Resolution No. 18-91, Page 33
rate imposed by Lender pursuant to the Financing Documents, along with any other fees
and charges that become due pursuant to the Financing Documents may be assessed by
Lender and retained by Lender.
(b) The Assessment, together with any penalties and interest thereon,
(1) is a first and prior lien against the Property from the date on which
the Notice of Contractual Assessment Lien is filed in the Official Public Records
of County, Texas, as provided by Section 399.014 of the PACE Act,
until the Assessment and any penalties and interest are paid; and
(2) such lien has the same priority status as a lien for any other ad
valorem tax, pursuant to Section 399.014(a)(2) of the PACE Act.
(c) The lien created by the Assessment runs with the land, and according to
Section 399.014(b) of the PACE Act, any portion of the Assessment that has not yet
become due is not eliminated by foreclosure of: (i) a property tax lien, or (ii) the lien for
any past due portion of the Assessment. In the event of a sale or transfer of the Property
by Property Owner, the obligation for the Assessment and the Property Owner's
obligations under the Financing Documents will be transferred to the succeeding owner
without recourse on Local Government or the Authorized Representative.
(d) In the event of a default by Property Owner in payment of the Installments
called for by the Financing Documents, the lien created by the Assessment will be
enforced by Local Government in the same manner according to Texas Tax Code Secs.
33.41 to 34.23 that a property tax lien against real property may be enforced by a local
government, to the extent the enforcement is consistent with Section 50, Article XVI,
Texas Constitution.
(e) In a suit to collect a delinquent Installment of the Assessment, Local
Government will be entitled to recover costs and expenses, including attorney's fees in
the amount of 15% of the total amount of the delinquent Installment, penalties, and
interest due, in the same manner according to Texas Tax Code Sec. 33.48 as in a suit to
collect a delinquent property tax. Lender shall be entitled to any additional sums due to it
under the Financing Documents in connection with a suit to collect a delinquent
Installment of the Assessment.
(f) After written notice of the Assessment is recorded in the real property
records of the county in which the Property is located as provided under Section 399.013
of the PACE Act, the lien created by the Assessment may not be contested on the basis
that the improvement is not a "qualified improvement" or the project is not a "qualified
project", as such terms are defined in Section 399.002 of the PACE Act.
6. Servicine and Enforcement of Assessment.
(a) Servicina. The Assessment payments will be billed, collected, received,
and disbursed in accordance with the procedures set out in the Financing Documents.
Lender will be responsible for all servicing duties other than those specifically
v.110617GENERIC AR ONLY PACE Lender Contract 5
Resolution No. 18-91, Page 34
undertaken by Local Government in this Lender Contract. Local Government agrees to
send an annual notice of assessment to the Property Owner each year there is a PACE
lien balance.
(b) Remittances. Each of the parties covenants and agrees to promptly remit
to the other party any payments incorrectly received by such party with respect to the
Assessment after the execution of this Lender Contract.
(c) Default and Enforcement. In the event of a default in payment of any
installment of the Assessment as specified in the Financing Documents, Lender agrees to
take at least the following steps to collect the delinquent Installment:
(1) Mail a written notice of delinquency and demand for payment to
the Property Owner by both certified mail, return receipt requested, and first class
mail; and
(2) Mail a second notice of delinquency to the Property Owner by both
certified mail, return receipt requested, and first class mail at least 30 days after
the date of the first notice if the delinquency is continuing.
If the Property Owner fails to cure the delinquency within 30 days after the mailing of the
second notice of delinquency, the Lender or its designated servicer may notify the
Authorized Representative who will certify to the Local Government in writing of a
default by the Property Owner, and upon receipt of such certification and after doing its
own due diligence, Local Government will enforce the assessment lien for the benefit of
Lender pursuant to Tex. Local Gov't Code Sec. 399.014(c), in the same manner as a
property tax lien against real property may be enforced, to the extent the enforcement is
consistent with Section 50, Article XVI, Texas Constitution.
(d) Final Pavment and Release. When the Assessment has been satisfied and
paid in full, together with all interest and prepayment premiums, if any, provided under
the Financing Documents and all costs, fees, penalties, and interest applicable under the
PACE Act and payable to Lender or Local Government, Local Government's rights
under the Owner Contract will cease and terminate. Upon notice from Lender that all
amounts owing have been paid in full, Local Government will execute a release of the
Assessment and the Owner Contract. Thereafter, the Authorized Representative will
record the Release.
(e) Limitations on Local Government's Actions. Without the prior written
consent of Lender, Local Government will not enter into any amendment or modification
of or deviation from the Owner Contract. Local Government will not institute any legal
action with respect to the Owner Contract, the Assessment, or the assessment lien without
the prior written request of Lender.
(f) Limitations of Local Government's Obligations. Local Government
undertakes to perform only such duties as are specifically set forth in this Lender
Contract, and no implied duties on the part of Local Government are to be read into this
Lender Contract. Local Government will not be deemed to have a fiduciary or other
v. I 10617GENEIUC_AR_ONLY PACE Lender Contract
Resolution No. 18-91, Page 35
similar relationship with Lender. Local Government may request written instructions for
action from Lender and refrain from taking action until it receives satisfactory written
instructions. Local Government will have no liability to any person for following such
instructions, regardless of whether they are to act or refrain from acting.
(g) Costs. No provisions of this Lender Contract will require Local
Government to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder.
7. Lender's Warranties and Representations. With respect to this Lender Contract,
Lender hereby warrants and represents that on the date on which Lender executes this Lender
Contract:
(a) Lender is a qualified lender under the PACE Program, as defined in
paragraph 3(a) above, and is fully qualified under the PACE Program to enter into this
Lender Contract and the Financing Documents;
(b) Lender has independently and without reliance upon Local Government
conducted its own credit evaluation, reviewed such information as it has deemed
adequate and appropriate, and made its own analysis of the Owner Contract, the Project,
and Property Owner's financial ability to perform the financial obligations set out in the
Financing Documents; and
(c) Lender has not relied upon any investigation or analysis conducted by,
advice or communication from, or any warranty or representation by Local Government
or any agent or employee of Local Government, express or implied, concerning the
financial condition of the Property Owner or the tax or economic benefits of an
investment in the Assessment.
8. Written Contract Required by the PACE Act. This Lender Contract constitutes a
written contract between Local Government and Lender, as required under Section 399.006 (c)
of the PACE Act.
9. Construction and Definitions. This Lender Contract is to be construed in
accordance with and with reference to the PACE Program and PACE Act. Terms used herein,
and not otherwise defined herein, shall have the meanings ascribed to them in: (1) the Notice of
Contractual Assessment Lien, (2) the Owner Contract, (3) the PACE Program, and/or (4) the
PACE Act.
10. Sindins Effect. This Lender Contract is binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives, successors, and assigns.
11. Notices. All notices and other communications required or permitted hereunder
shall be in writing and mailed by certified mail, return receipt requested, addressed to the other
party at the address stated below the signature of such party or at such other address as such
party may from time to time designate in writing to the other party, and shall be effective from
the date of receipt.
v.I 10617GENERIC AR ONLY PACE Lender Contract 7
Resolution No. 18-91, Page 36
12. Governina Law. This Lender Contract shall in all respects be governed by and
construed in accordance with the laws of the State of Texas.
13. Entire Aereernent. This Lender Contract constitutes the entire agreement between
the parties with respect to the subject matter hereof and shall not be amended or altered in any
manner except by a document in writing executed by both parties.
14. Cautions. Paragraph and section titles are for convenience of reference only and
shall not be of any legal effect.
15. Countemarts. This Lender Contract may be executed in any number of
counterparts, each counterpart may be delivered originally or by electronic transmission, all of
which when taken together shall constitute one agreement binding on the parties,
notwithstanding that all parties are not signatories to the same counterpart.
16. Interest. Interest and penalties in the event of default, as provided above, are
explicitly authorized by Section 399.014(d) of the PACE Act. However, in no event will the
total amount of interest on the Assessment, including statutory interest payable to Local
Government and contractual interest payable to Lender under the Financing Documents, exceed
the maximum amount or rate of nonusurious interest that may be contracted for, charged, or
collected under Texas law (the "usury limit'). If the total amount of interest payable to Local
Government and Lender exceeds the usury limit, interest payable to Local Government will be
reduced and any interest in excess of the usury limit will be credited to the amount payable to
Local Government or refunded. This provision overrides any conflicting provisions in this
Lender Contract.
17. Certification. Local Government certifies that the PACE Program has been duly
adopted and is in full force and effect on the date of this Lender Contract. Property Owner has
represented to Lender and Local Government that the Project is a "qualified project" as defined
in the PACE Program and Section 399.002 of the PACE Act. The Assessment has been imposed
on the Property as a lien in accordance with the PACE Owner Contract and the PACE Act.
Local Government has not assigned or transferred any interest in the Assessment or the PACE
Owner Contract.
18. Construction Terms. If this Lender Contract includes requirements related to
construction of the Project and disbursement of Financing, such requirements are set forth in
Exhibit C attached hereto and incorporated herein by reference. Such requirements may include,
among other things, (1) the disbursement schedule and (2) any holdback amount to be funded
following verification of final project completion.
v. 110617GENERIC AR ONLY PACE Lender Contract 8
Resolution No. 18-91, Page 37
LENDER;
Fay:
Name:
Title:
Address:
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF
This PACE Lender Contract pursuant to Property Assessed Clean Energy Act was
acknowledged before me on by
, on behalf of
(print name)
NOTARY PUBLIC, STATE OF TEXAS
SIGNATURE PAGE To
PA49"M IGi�. "I WO 38
LOCAL GOVERNMENT:
TOWN OF PROSPER, TEXAS
By:
AUTHORIZED REPRESENTATIVE
Pursuant to Tex. Local Gov't Code §399.006(b)
Name:
Title:
Address:
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF §
This PACE Lender Contract pursuant to Property Assessed Clean Energy Act was
acknowledged before me on by
. on behalf of Texas.
t print name)
NOTARY PUBLIC, STATE OF TEXAS
SIGNATURE PAGE TO
PA WrFAb 1V-442P$db 39
EXHIBIT A
OWNER CONTRACT
Resolution No. 18-91, Page 40
EXHIBIT B
FINANCING DOCUMENTS
Assessment Payment Schedule
Assessment Total:
Payment Frequency:
Payment Total Payment
Date
i
Principal Paid Interest Paid
Financing Documents
Administration Remaining
Fee Balance
Document Title Parties Date Executed
Resolution No. 18-91, Page 41
EXHIBIT C
CONSTRUCTION TERMS
[if applicable]
Date Draw down Purpose
Amount
Resolution No. 18-91, Page 42
Resolution No. 18-91, Page 43
EXHIBIT 4
FORM NOTICE OF CONTRACTUAL ASSESSMENT LIEN,
PURSUANT TO PROPE'RTY ASSESSED CLEAN ENERGY ACT
NOTICE OF CONTRACTUAL ASSESSMENT LIEN
PURSUANT TO
PROPERTY ASSESSED CLEAN ENERGY ACT
STATF, OF TEXAS §
TOWN OF PROSPER §
RECITALS
A. The Property Assessed Clean Energy Act ("PACE Act"), Texas Local
Government Code Chapter 399, authorizes the governing body of a local government to establish
a program and designate a region within the local government's jurisdiction within which an
authorized representative of the local government may enter into written contracts with the
record owners of commercial, industrial, agricultural, and large multifamily residential (5 or
more dwelling units) real property to impose assessments on the property to finance the cost of
permanent improvements fixed to the property intended to decrease water or energy consumption
or demand. Unless otherwise expressly provided herein, all terms used herein have the same
meanings ascribed to them in the PACE Act.
B. The Town of Prosper ("Local Government") has established a program under the
PACE Act pursuant to a resolution dated , adopted by the Town Council (the
"PACE Program"), and has designated ("Authorized Representative") as
the representative authorized to enter into and enforce the Assessment, Owner Contract and
Lender Contract described herein, and has designated the entire territory within the Town of
Prosper's jurisdiction as a region ("Region") within which the Authorized Representative and
the record owners of such real property may enter into written contracts to impose assessments to
repay the financing by owners of qualified improvements on the owner's property pursuant to the
PACE Program.
C. ("Property Owner") is the legal and record owner of
the qualified "real property," as defined in Section 399.002 of the PACE Act, within the Region
located at Texas, and more fully described in Exhibit A
attached hereto and made a part hereof (the "Property").
D. Property Owner has applied to Local Government to participate in the PACE
Program by installing or modifying on the Property certain permanent improvements described
in Exhibit B attached hereto and made a part hereof, which are intended to decrease water or
energy consumption or demand, and which are or will be fixed to the Property as "qualified
improvements", as defined in Section 399.002 of the PACE Act (the "Qualified
Improvements"). The installation or modification of such Qualified Improvements on the
Property will be a "qualified project" as defined in Section 399.002 of the PACE Act (the
Qualified Project"), Property Owner has entered into a written contract (the "Owner
Contract") with Local Government pursuant to the PACE Act and the PACE Program and has
v. 110617AR PACE Notice of Contractual Assessment Lien
Resolution No. 18-91, Page"
requested Local Government to impose an assessment on the Property to repay the financing of
such Qualified Improvements.
E. The financing of such Qualified Improvements will be provided to Property
Owner by I ("Lender"), a qualified lender selected by Property Owner,
pursuant to a written contract executed by Lender and Local Government as required by Section
399.006(c) of the PACE Act and by the PACE Program (the "Lender Contract"). Lender will
be responsible for all servicing duties other than those specifically undertaken by Local
Government in the Lender Contract.
THEREFORE, Local Government hereby gives notice to the public pursuant to Section
399.013 of the PACE Act that it has imposed an assessment on the Property in the amount of
$ , as set forth on Exhibit C attached hereto, which together with all interest,
fees, penalties, costs and other sums due under and/or authorized by the PACE Act, PACE.
Program and the financing documents between Property Owner and Lender (the "Financing
Documents") is herein referred to as the "Assessment".
Pursuant to Section 399.014 of the PACE Act,
1. The Assessment, including interest and any penalties, costs, or fees accrued thereon,
(i) is a first and prior lien on the Property from the date that this Notice of
Contractual Assessment Lien is recorded in the Official Public Records of
County, Texas, until such Assessment, interest, penalties, costs, and fees are paid in full;
and
(ii) such lien has the same priority status as a lien for any other ad valorem tax,
pursuant to Section 399.014(a)(2) of the PACE Act.
2. The lien created by the Assessment runs with the land, and according to Section
399.014(b) of the PACE Act, any portion of the Assessment that has not yet become due
is not eliminated by foreclosure of (i) a property tax lien, or (ii) the lien for any past due
portion of the Assessment. In the event of a sale or transfer of the Property by Property
Owner, the obligation for the Assessment and the Property Owner's obligations under the
Financing Documents will be transferred to the succeeding owner without recourse on
Local Government or the Authorized Representative.
After this Notice of Contractual Assessment Lien is recorded in the real property records
of the county in which the Property is located as provided under Section 399.013 of the
PACE Act, the lien created by the Assessment may not be contested on the basis that the
improvement is not a Qualified Improvement or the project is not a Qualified Project.
v. 110617AR PACE Notice of Contractual Assessment Lien 2
Resolution No. 18-91, Page 45
EXECUTED on
LOCAL GOVERNMENT:
The Town of Prosper, Texas
Name:
Title:
AUTHORIZED REPRESENTATIVE
Pursuant to Tex. Local Gov't Code §399.006(b)
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF
This Notice of Contractual Assessment Lien pursuant to Property Assessed Clean Energy
Act was acknowledged before me on by
on behalf of
Texas.
(print name)
NOTARY PUBLIC, STATE OF TEXAS
v.110617AR PACE Notice of Contractual Assessment Lien
Resolution No. 18-91, Page 46
EXHIBIT A
PROPERTY DESCRIPTION
v.110617AR PACE Notice of Contractual Assessment Lien
Resolution No. 18-91, Page 47
EXHIBIT B
OUALIFIED IMPROVEMENTS
v. 110617AR PACE Notice of Contractual Assessment Lien
Resolution No. 18-91, Page 48
Payment
Date
v.110617AR
EXHIBIT C
ASSESSMENT
Assessment Payment Schedule
Assessment Total:
Payment Frequency:
Interest Rate:
Total Payment Principal Paid Interest Paid Administration
Fee
PACE Notice of Contractual Assessment Lien
Resolution No. 18-91, Page 49
Remaining
Balance
INDEXING INSTRUCTION:
Grantor:
Grantees:
After recording, return to-
Property Owner
Local Government
Lender
v.I 10617AR PACE Notice of Contractual Assessment Lien
Resolution No. 18-91, Page 50