Using a newly approved tax-based financing tool, Austin’s Congregation Beth Israel is undertaking a $452,000 clean energy project to upgrade its nearly 60 year old synagogue.
The financing, the first of its kind in Texas, was provided by Austin-based Petros PACE Finance, which makes loans that allow businesses and organizations to finance water and energy conservation without incurring up-front costs.
The lending program, called PACE, was approved by the Texas Legislature in 2013 as a way to make it easier for owners of commercial, industrial and non-profit facilities to finance the cost of conservation upgrades. Travis County approved PACE last year.
Under the program, loans are repaid over an extended period of time through special property tax assessments. If the property is sold before the loan is repaid, the repayment obligation automatically transfers to the next owner because the lien securing the tax assessment follows the title to the property.
To receive a PACE loan, the energy and water savings must be enough to cover the loan payments.
Thirty-two states and Washington D.C. have launched PACE programs.
Congregation Beth Israel will use the 20-year loan for improvements that include installation of two new chillers, a boiler and thin film on all its windows, which will reduce electricity and gas consumption and cut operating costs.
“We knew we had to make these upgrades and were trying to figure out the most efficient way to pay for them when Petros PACE Finance explained the PACE financing concept to us,” Jennifer Smith, executive director of Congregation Beth Israel said in a statement. “We didn’t have to come out of pocket at all for the project, they financed 100 percent of it.”
Petros PACE Finance was founded in 2014 and is led by Mansoor Ghori, formerly a venture partner at private equity firm Sentient Ventures. Petros recently named Tommy Deavenport, formerly founder and managing director of Square 1 Bank, as chief operating officer.
Ghori said Petros is one of the first specialty finance firms in the U.S. to be dedicated solely to the commercial PACE market nationwide.
The firm has closed on two projects in Michigan – a multi-family development in Greenville and beer distributor Powers Distributing in Orion Township – and is working on additional projects in Texas, California, Michigan and Florida, Ghori said.
“It’s just at the beginning of the wave,” Ghori said. “The Congregation Beth Israel project is the first of many here in Texas. Petros has allocated $100 million for other commercial projects in the state over the next two years, and we expect to be very busy.”