Baker Tilly Capital, LLC, a boutique investment bank, recently sourced a $1.5 million Property Assessed Clean Energy (PACE) loan to help turn a vacant warehouse into a new hotel in Madison, Wisconsin, the first closed deal for the PACE Wisconsin program.
After 15 years of vacancy, a 102-year old warehouse and former home to Mautz Paint and Kleuter & Co. will undergo extensive renovation and a five-story addition to become Hotel Indigo Madison. The PACE loan will be used in the overall capital structure of the project to meet energy efficiency goals.
PACE is a financing program enabled by state and local legislation that provides long-term funding for energy efficiency, renewable energy and other qualifying improvements made to a property.
In a rapidly evolving city and neighborhood, the project is significant to Madison’s industrial East side, located a few blocks from Wisconsin’s State Capitol building. Keeping the historic five-story brick façade and addressing energy efficiency were two goals of the project. Given the additional costs associated with these goals, the PACE Wisconsin program provided necessary funding to accomplish energy efficient benchmarks.
Hotel Indigo Madison will feature new historic replica windows, energy efficient aluminum window wall glazing systems and other insulation measures. In addition, guest comfort will be facilitated by high efficiency HVAC and lighting systems.
The project secured a $1.5 million PACE loan and $5.1 million in Historic Tax Credits (HTC). Both financing methods were key in closing a critical gap in the capital structure and support energy efficient components of redeveloping the building and creating an authentic and unique destination for downtown Madison.
