You can upgrade your Austin space without draining cash flow. The trick is stacking local rebates, flexible financing, and smart tax planning so your tenant improvements pay you back. Whether you own the building or lease it, you have options to lower upfront cost and smooth payments. In this guide, you’ll learn how to combine Austin Energy and Austin Water rebates with PACE, tax incentives, SBA loans, and cash, plus the steps to get it done. Let’s dive in.
Funding snapshot in Austin
Austin gives you several paths to fund a TI:
- Utility rebates that cut project cost for lighting, HVAC, controls, and water systems through Austin Energy’s commercial offerings and Austin Water’s Onsite Water Reuse Systems page.
- Long-term, property-secured PACE financing through Travis County’s program for energy and water measures.
- Federal incentives like the 179D energy-efficient buildings deduction and clean energy credits outlined by the EPA’s IRA summary.
- Traditional lending, SBA 7(a)/504 loans, equipment or TI financing, or paying cash. SBA programs are often used by owner-occupants and small businesses; see SBA guidance.
Utility rebates that lower cost
Austin Energy rebates
Austin Energy offers prescriptive and custom incentives for lighting, HVAC, controls, EV chargers, and more. Small businesses, nonprofits, and houses of worship often qualify for a bonus on many commercial rebates, plus bundled, low-cost packages. Incentive structures are commonly based on savings per kilowatt for lighting and verified energy reductions for other measures. Start early and contact the Commercial Rebates team during design to confirm eligibility and pre-approval steps through the commercial offerings page.
Austin Water incentives and OWRS
Austin Water supports efficiency through programs like Bucks for Business, rainwater harvesting rebates, water audits, and the Onsite Water Reuse Systems pilot. Some projects may qualify for incentives tied to permitting and expedited review. Apply early and verify program limits and documentation on the Onsite Water Reuse Systems page.
PACE financing in Travis County
What PACE funds
Travis County’s PACE program supports permanently affixed energy and water improvements. Eligible measures include HVAC upgrades, high-efficiency lighting, controls and EMS, envelope improvements, chillers, solar, cooling tower work, and onsite water reuse systems. Review program scope on Travis County’s PACE page.
How it works
PACE provides private capital repaid through a property assessment recorded on the tax roll. Projects are underwritten on projected savings and property value, often funding up to 100 percent of qualifying costs with terms aligned to useful life. Mortgage holder consent is required if you have an existing mortgage, and the assessment runs with the property, which can affect sale or refinance. See owner guidance in the Texas PACE Authority’s property owner FAQ.
Pros and cautions
- Pros: Long terms, potential to be cash-flow positive, and works well with utility rebates.
- Cautions: Requires mortgagee consent, adds documentation and time, includes program and origination fees, and can create sale or refinance considerations if not planned early.
Federal incentives to stack
179D deduction
Section 179D provides a deduction for energy-efficient building systems such as lighting, HVAC, service hot water, and envelope. Amounts vary with energy savings per square foot and can increase if prevailing wage and apprenticeship rules are met. Owners usually claim the deduction, and tax-exempt owners can sometimes allocate it to designers. Learn how it works on the DOE’s 179D overview.
Clean energy credits
Commercial solar and certain clean energy systems may qualify for federal investment tax credits, with potential adders for wage, apprenticeship, domestic content, and location factors. These credits require tax capacity or third-party structures. Get an overview in the EPA’s IRA energy credits summary.
Planning tips
Tax incentives reduce net cost but do not provide upfront cash. Coordinate early with your tax advisor and your design and energy-modeling team to document eligibility and plan timing with your financing.
Loans, SBA, and cash
Paying cash
Cash is fastest and avoids interest and fees. You should still secure rebates and claim eligible tax incentives to reduce your net spend.
Bank loans and construction draws
Banks can provide construction-to-permanent or term financing for larger buildouts. Expect standard draws, inspections, and documentation throughout construction.
SBA 7(a) and 504 loans
SBA 7(a) can fund leasehold improvements and working capital, while SBA 504 is often used when purchasing and improving owner-occupied real estate. Each program has eligibility rules and occupancy thresholds; review fit with your SBA lender and the SBA program guide.
Equipment and TI financing
Specialty lenders can finance HVAC, lighting, controls, or broader TI packages when you want to preserve cash or avoid property liens. Terms vary by vendor, collateral, and credit.
Lease tools to shift cost
Negotiate a Tenant Improvement Allowance expressed as dollars per square foot or as a lump sum, paid at completion or amortized into rent. Define allowed uses, documentation, approvals, and timing in your lease. For basics, see this TI allowance glossary.
How to stack your funding
Follow this order to capture the most value and avoid delays:
- Screen scope for rebate and PACE eligibility. Flag lighting, HVAC, controls, envelope, water reuse, and any renewables. Use Austin Energy and Austin Water program guidance from the commercial offerings and OWRS pages.
- Contact Austin Energy and Austin Water before purchasing equipment. Many incentives require pre-approval and pre- and post-install inspections.
- If considering PACE, confirm eligibility, identify a PACE capital provider, and start mortgagee consent early. PACE underwriters typically apply utility rebates as credits against project cost when sizing the assessment. See the Texas PACE Authority property owner FAQ.
- Coordinate tax planning for 179D and potential clean energy credits with your tax advisor and design team using the 179D overview.
- Choose financing and model cash flow. Remember tax incentives lower net cost but arrive at tax time, not at closing.
Timelines to expect
- Utility rebates: weeks to a few months depending on pre-approval, inspections, and verification.
- PACE underwriting and consent: several weeks to a few months depending on lender responsiveness and documentation.
- Construction draws: based on your contractor schedule and lender inspections.
Quick decision guide
- Use cash if speed is essential and you want to minimize paperwork.
- Use PACE to fund deep energy and water upgrades with long amortization and potential cash-flow positivity, but plan early for mortgage consent and future sale or refinance.
- Use bank or SBA loans for larger, owner-occupied projects or when you want traditional structures and relationship banking.
- Use equipment or TI financing to preserve cash and avoid property liens when PACE is not a fit.
- Negotiate a TI allowance to shift upfront spend to the landlord, with clear lease language on timing and documentation.
Local notes for Austin tenants and owners
Small businesses in Austin may qualify for bonus rebates and near turnkey bundles through Austin Energy. See how the utility has supported local organizations in this small-business and nonprofit update. If you plan to pass PACE assessments through under a commercial lease, confirm that your lease allows it and document the mechanics in advance using guidance from the Texas PACE Authority property owner FAQ.
Ready to map a funding stack that fits your buildout and lease strategy? Let’s align your scope, rebates, financing, and timelines so you keep momentum. If you want a practical plan rooted in local process and neighborhood context, connect with Lead Commercial for a conversation.
FAQs
Can you combine Austin Energy rebates with PACE in Austin?
- Yes, PACE underwriters typically apply utility rebates as credits against project cost when sizing the assessment, so document incentives and confirm with your PACE lender using the Texas PACE Authority owner guidance.
Will a PACE assessment affect an Austin sale or refinance?
- A PACE assessment runs with the property and mortgagee consent is required, so plan early with your lender and consider payoff or transfer mechanics during sale or refinance.
Who can claim 179D or the solar ITC on a commercial TI?
- Building owners commonly claim 179D and system owners typically claim clean energy credits, though allocations for tax-exempt owners and third-party structures may apply, so coordinate with your tax advisor early.
As a tenant in Austin, how can I get my landlord to fund my TI?
- Negotiate a Tenant Improvement Allowance tied to scope and schedule, and define approval, documentation, and timing in the lease, including whether any costs are amortized into rent.
What are the first steps to fund a TI in Austin?
- Define eligible measures, contact Austin Energy and Austin Water for pre-approval, explore PACE and start mortgagee consent if applicable, coordinate tax planning for 179D and credits, and gather contractor and modeling quotes to build your financing package.
