HOUSTON — HJ Simshas arranged $2.8 million PACE financing, a government program that funds energy efficiency and renewable energy improvements on private property, on behalf of StoneCreek Real Estate Partners.
The financing will help fund construction of The StoneCreek of Copperfield, a 104-unit redevelopment of the Copperfield Racquet and Health Club, a longtime landmark of Northwest Houston for more than 30 years.
The 104-unit independent living, assisted living and memory care project was announced in January. The operator will be Civitas.
While assisting StoneCreek in its search for financing alternatives, Sims proposed the use of Property Assessed Clean Energy (PACE) financing, a voluntary, low-cost, non-recourse assessment placed on a property based on the qualified energy efficiency, renewable energy, water conservation, residency improvements and related costs contributed by the project.
The program finances 100 percent of the energy efficiency, renewable energy, water conservation, resilience improvements and the related costs for ground-up new construction and renovations/retrofits up to 20 percent of the property’s appraised value. The financing is collected with regular local real estate taxes and assessment payments are amortized at a fixed rate throughout the useful life of the project.
Sims coordinated with StoneCreek, Civitas, the PACE provider and the Texas PACE Authority to obtain approval for PACE from the senior construction lender. In place of typical mezzanine debt with interest rates between 12 and 15 percent, StoneCreek implemented the PACE to fund $2.8 million in construction financing at an interest rate of 5.85 percent.
The project is also supported by a $19.6 million construction loan from a traditional lending partner.