Congregation Beth David, the largest of San Luis Obispo County’s three Jewish synagogues, is in foreclosure and will be auctioned off May 17 if it is unable to raise $1.3 million.
The congregation, which built a new home four years ago near the corner of Los Osos Valley Road and Foothill Boulevard in San Luis Obispo, defaulted on a $3.3 million loan owed to Mission Community Bank late last year.
The lavishly designed building has been named the country’s only green-certified synagogue, but the cost of that recognition is now being felt.
The synagogue’s leaders say the economic downturn and other factors made it impossible to pay the $18,000 monthly mortgage payment. The last payment was made a year ago.
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The bank is willing to forgive $1 million in principal. The congregation must now come up with $2.3 million by May 5 or vacate the property.
On Monday, Gregg Loberstein, co-president of the board of directors, walked around the synagogue proudly discussing the building’s green design with straw-bale walls, skylights and photovoltaic panels.
The congregation spent nearly $6 million on the design and construction of the building, which is nestled on a 92-acre parcel of agricultural land valued at about $1 million.
Loberstein pointed to classrooms used by youth during services, a playground and various rooms made available for community gatherings and explained how it had long been the congregation’s dream to have those facilities all under one roof.
But his tone changed when discussing the future of the congregation — knowing that within weeks, those plans might be moot.
“We were definitely overzealous in the need to build and design,” Loberstein said. “Yes, we got ourselves into this, but not without thinking it through quite a bit.”
Congregation Beth David, which now has 200 families in its membership, was founded in 1959 but didn’t have a permanent home until 1962, when the Reform Jewish congregation was dedicated on 2932 Augusta St. After more than two decades of searching, the congregation purchased in 2001 the property where it is now.
The building, completed five years later in December 2006, is 16,190 square feet and features a 337-seat sanctuary, social hall, classrooms, gift shop and library.
It was the first synagogue in the nation to receive Leadership in Energy and Environmental Design certification from the U.S. Green Building Council.
At the time that it was built, Loberstein said, the economy was thriving.
The original intention when purchasing the land was to sell off three parcels — zoned for agriculture — to help pay the $3.3 million bank loan.
It was felt at the time, Loberstein said, that those agricultural lands would be profitable.
But soon the real estate market plunged, the congregation lost a $200,000 line of credit it intended to use to get the parcels ready for market, and it became apparent that the plan wouldn’t work.
To add to the financial conundrum, membership projections fell way short, Loberstein said, adding that the economy played its hand in that, too.
Members pay dues to the congregation, up to $1,000 a year, to help with its $350,000 operating budget. Today, there are about 200 families paying dues, compared with the 500 families that the synagogue’s leaders anticipated.
Of those families paying dues, about half of them are now paying less because they are struggling financially, Loberstein said.
“We did a lot of thinking and planning, but there were also a lot of things we didn’t foresee,” he said.
In 2009, the directors realized it was going to be nearly impossible to make the $18,000 interest-only loan payments.
Leaders of the congregation also knew that the seven-year loan would balloon in 2014. They sought a lower interest rate and refinancing options. When that failed, they stopped making payments in April 2010.
Loberstein said Mission Community Bank has since offered to reduce the loan’s principal by $1 million and waive more than $200,000 in overdue interest payments.
Anita Robinson, chief executive officer of Mission Community Bank, would not discuss the loan conditions, citing confidentiality guidelines.
Robinson did say there is no written agreement but confirmed that the bank has been negotiating with Congregation Beth David for the past six months.
“It is not easy on them or on the bank,” Robinson said. “But we do have real money at stake with bank investors and customers relying on us to lend money in a facedown manner and collect it. Those are things we don’t take lightly.”
The congregation’s directors have since received pledges totaling $1 million from member families as a nonregistered offering, which would be used to form a corporation to pay off the loan and extend it another 20 years.
But an additional $1.3 million must be raised by May 5, and Loberstein said he is looking to the community for its support.
“We have a very caring community, which has always been very supportive of this temple,” Loberstein said. “No one wants to see a house of worship go down. We got ourselves in this, but we can’t get out alone.”
Susan Dressler, a 10-year member of the temple and past board president, said she is confident in Congregation Beth David’s future, despite how it might be much different than its members envisioned.
“I don’t know how all of this is going to turn about, but we’ve been a congregation for over 50 years and will continue to be a congregation whether we are in that building or not,” she said. “We had good intentions, good plans, good commitment, and then life changed.”
“We have a lot of money invested in that property, but we also have a lot of money raised and a big challenge ahead of us,” Dressler said.
Reach AnnMarie Cornejo at 781-7939. Stay updated by following @a_cornejo on Twitter.