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< Previous9 | September 2024 NMTC: Marvin Composite’s Window of Opportunity Marvin Composites (previously known as Tecton Products LLC) was founded in Fargo in 1990 as a partnership with Marvin, a nationwide, family-owned and led company whose roots began in Warroad, MN more than 112 years ago. The company has made it their purpose to create better ways of living through the building of windows and doors using composite materials. With more than 30 years of innovation and growth under their belt, see how Marvin Composites has used their success to keep moving their legacy forward…starting right in their own community. Leveraging Growth with NMTC The COVID-19 pandemic brought many challenges to businesses – Marvin Composites included. Despite these challenges, Marvin Composites also experienced remarkable growth due to the rising demand for windows and doors and began looking for ways to expand. It was then that the Greater Fargo Moorhead Economic Development Corporation (GFMEDC) introduced them to Dakota Business Lending (DBL) and the New Markets Tax Credit (NMTC) program. In 2022, the company used a $7.5 million NMTC allocation to construct a 150,000 square foot expansion to their existing Fargo location, allowing them to increase their product line capacities, upgrade and expand their tool and die equipment, and add office space. Second Time’s a Charm The expansion didn’t stop there! After Marvin Composites’ first NMTC allocation, demand and opportunities for growth continued to rise. The company decided to partner with DBL a second time and secure an additional $10 million NMTC allocation – this time to further upgrade and expand their equipment. “The NMTC allocations have allowed us to further expand our facilities, create numerous jobs, and deliver a tangible sign of commitment to the community. We couldn’t have grown the way we did without them.” - Tom Gohdes, General Manager – Marvin Composites Marvin Composites qualified for NMTC financing due to its location in a qualifying, highly distressed, low-income area. Through the program, the company has been able to actively create more than 140 quality and accessible jobs in a variety of areas, including research and development, composite production, manufacturing, logistics, and distribution. Being a Part of the Marvin Family As a family-owned and led company, Marvin Composites has a strong commitment to their mission and core values. Employees enjoy a complete benefit package with competitive wages and several opportunities for training and education. In addition, Marvin Composites puts safety first and is certified under OSHA’s Voluntary Protection Program (VPP). This certification requires thorough onsite evaluation by safety and health professionals, strengthening Marvin Composites’ strong commitment to the health and safety of their team. dakotabusinesslending.com | 10 Spreading the Impact Marvin Composites’ commitment to the Fargo/Moorhead area goes far beyond the growth and expansion of their company. In 2023, the company delivered a “pay-it-forward” donation to several local community organizations, including Lake Agassiz Habitat for Humanity, the New Life Center, the YMCA of Cass and Clay Counties, and YWCA Cass Clay. The concept is a unique part of DBL’s effort to maximize the impact of the NMTC program on the community and pass along direct financial assistance to others in need. “The NMTC program brings value to our community by helping companies like Marvin create good paying jobs within manufacturing, while allowing us to continue to grow and invest in our community along the way”. – Tom Gohdes, General Manager What’s Next for Marvin Composites? Fueled by community commitment, innovation, and employee well-being, and strengthened by the NMTC program, Marvin Composites looks ahead with excitement as their recent expansion brings the company to an even greater level. As they look forward to what comes next, one thing is for certain: Marvin Composites’ growth will be aimed at furthering their commitment to the Fargo/Moorhead area – the community they’ve served for the past 30 years. For more information on Marvin Composites, visit their websites at: www.tectonproducts.com | www.marvin.com “At Marvin Composites, we take the safety of our employees extremely seriously…When you work with us, we want to make sure you leave work just as healthy as when you came in.” - Tom Gohdes, General Manager11 | September 2024 ?? Ask Dakota Business Lending: As a key resource for business owners, Dakota Business Lending (DBL) wants to help you find the answers you need to reach your goals and fulfill your dreams. That is why we are answering YOUR questions about all things financing, entrepreneurship, and small business. In this issue, let’s dive into some commonly asked questions and things you should know about the New Markets Tax Credit (NMTC) program…. What NMTC opportunities exist in North Dakota? Dakota Business Lending is currently the only North Dakota-based financing entity that administers the NMTC program with allocations specifically for use in North Dakota. Recognizing an opportunity to fill a gap, DBL brought this program to ND in 2021 to support businesses in low-income and distressed areas across this state and further their mission of driving economic growth throughout their footprint. Have a question about the NMTC program or other financing programs? Visit our website or contact our team so we can help you get the answers you need to take your business to the next level. New Markets Tax Credit Program What is the “but-for” element of NMTC? An essential component of the NMTC program is the “but for” element. This means that all projects must demonstrate that “‘but for’ the NMTC program, the project would not be possible.” This criterion ensures that NMTC funding is directed to projects that fill a unique financing gap and that the tax credits are effectively used to generate transformative community impact. “ www.dakotabusinesslending.com/loans/new-markets-tax-credit ? dakotabusinesslending.com | 12 Can the NMTC program be combined with other financing programs? Absolutely – it is possible for the financing stack to include other programs in addition to NMTC. In 2024, Dakota Business Lending used the NMTC program in conjunction with both the SBA 504 and Community Impact Loan programs to support Superior Walls in Bismarck, ND. (Read their story in this issue!) In this case, the NMTC program was used for operating expenses, inventory, and startup costs, while the SBA 504 loan program funded the purchase of real estate and the Community Impact Loan program was used as a bridge loan for the purchase of equipment prior to funding of the NMTC. This collaborative approach filled multiple financing gaps and enhanced the project’s overall impact. “ What is a Community Development Entity (CDE)? Community Development Entities (CDEs) are certified by the U.S. Department of Treasury’s Community Development Financial Institution (CDFI) Fund to participate in the NMTC program. Dakota Business Lending’s CDE - DBL Equity Partners - is a wholly owned subsidiary established for this specific purpose. DBL Equity Partners is the CDC that receives the NMTC allocation, but don’t worry! When you work with DBL on a NMTC project, you are working with the same dedicated and experienced team you know and trust. I have a project in mind that NMTC might be able to help …what are my next steps? If you have a project you believe could benefit from NMTC funding, it is crucial to reach out to DBL as soon as you can - even if the project is in very early or preliminary stages - to be added to the project pipeline. NMTC is a highly competitive program, and the project pipeline is continuously revised and reprioritized based on demand, estimated impact, and NMTC allocation available. By contacting our team early, you can ensure your project is considered for potential NMTC support. “13 | September 2024 Joel Kostelecky – From the Desk of a Leverage Lender Why Invest in NMTC: Insights from Local Banks Cole Keney – NMTC: A Transformative Program Cole Keney, Senior Business Advisor at Alerus, has been deeply involved with Dakota Business Lending (DBL) and the NMTC program. His experience as a lender and a member of both DBL’s Board of Directors and NMTC Governing Board gives us an overarching view of how the program benefits lending institutions and the communities they work to serve. “NMTC is a highly effective federal program created to jumpstart investments in low-income and distressed areas. Investors receive tax credits for their participation, which encourages participation in projects that might otherwise not be able to move forward and positively impact local and regional economies.” Benefits to Banks Cole highlighted the key benefits for banks who participate in the NMTC program. “For banks who serve as a leverage lender on a NMTC project, they get to offer a creative financing option for their customers and continuing work with them. For banks or entities that invest in the tax credits, they can receive tax benefits and tie their investment in with existing CRA activities.” Economic Development and Growth Not only does the NMTC program benefit banks, but also the local communities and economies the projects are in. “NMTC presents a huge potential and positive impact for job creation in local economies through increased sales tax, workforce attraction/retention, and more. The impact is even greater given that it is designed to benefit low-income communities, where it is often difficult to attract investments.” Joel Kostelecky has been in the commercial lender role for over 21 years. Joel and his team provided close to 60% of the financing as a leverage lender in one of DBL’s recent NMTC projects. His experience offers valuable insight into the NMTC process and the benefits banks received from this type of investment. “The responsibilities on the leverage lender side were very similar to any other traditional lending and, for the most part, I was able to look at the project the same as I would any other banking project. I got to continue to work with my borrower and provide them a financing solution that they would otherwise not have access to.” Leverage Lender Benefits Joel shared some of the benefits his bank received from serving as a leverage lender in the NMTC project. There are two avenues that banks are involved in the NMTC process: as a leverage lender and as an investor. We gathered some insights from local lenders to get a better idea of these roles that banks play and why their investment is beneficial. dakotabusinesslending.com | 14 “From a banking standpoint, using the NMTC program significantly reduces the bank’s potential risk. Our investment also fulfills several community needs, creating quality and accessible jobs in our area. We received CRA credit due to the location of the project.” Challenges of a Leverage Lender One of the most challenging aspects as a leverage lender for Joel was understanding the program and all the pieces that bring it together. “The NMTC program can be complex. We had an entire team working with us, so we all had to make sure we were on the same page. DBL had so many knowledgeable and experienced members on their team who were able to guide us through the process. They met with us and had many in-depth conversations when all the decision makers were in the room.” Dan Blocher – An Investor’s Viewpoint Dan Blocher works as a Business Development Officer at U.S. Bancorp Impact Finance – a major NMTC investor. His experience in the NMTC world gives us a look into the investment side of the program and how this aligns with broader banking strategic goals. “I’ve been working in the NMTC space for over 14 years, and this program aligns perfectly with our investing and lending goals. It’s a very targeted program that focuses on low-income and distressed census tracts, so we’re able to invest dollars into areas that need it most.” Investor Benefits In 2023, U.S. Bancorp Impact Finance invested in more than 120 projects across the country. To date, Impact Finance has invested in all $60M of DBL’s NMTC allocations across two different award rounds. In 2023, Impact Finance also provided an EQ2 investment of $880,000 to DBL. “The NMTC program allows us to not only receive tangible tax benefits but invest in economic development projects to help build thriving communities. These investments can close income and access gaps, drive business growth, create jobs, and pour capital into historically underserved areas that need it most.” Measuring the Impact U.S. Bancorp Impact Finance, as well as many other NMTC investors, measure the impact of their NMTC investments through comprehensive data collection and analyses. “There are two touchpoints that help us measure the tangible impact these investments have. On the front end, we capture a lot of the expected outcomes throughout an intake form. We also capture this data through a Community Benefits agreement at closing. This helps us, leverage lenders, CDEs like DBL, and all other parties involved to track and measure the impact of the program.” 15 | September 2024 Navigating NMTC Eligibility: Basic Application Checklist and Impact Requirements The New Markets Tax Credit (NMTC) program is highly competitive and has several specific eligibility requirements. It is important that businesses give Dakota Business Lending (DBL) detailed and comprehensive information so it can be determined whether the project is eligible for NMTC and if it meets the program requirements. Below is a basic overview of the essential elements you’ll need for your application. Basic Application Checklist To apply for NMTC, DBL will require some basic information to understand the project, its scope, and its potential eligibility. Items may include: General Business Information – Business name, location, business type, contact information, etc. Project Description – Industry, type, costs, timeline, location, total square footage, overall summary, etc. Community Benefits – Impact/importance to community, jobs created/retained and wages/benefits, community redevelopment/economic impact, additional investments into community/increased goods or services available to low-income populations, etc. Attachments – Project Narrative, Borrower Pro-Forma Financing or Projections, Appraisals, Project Details/ Renderings/Budget, Proposed Construction Schedule, Financial Statements, Community and Economic Impact Details, Support Letters, Term Sheets/Commercial Bank Commitments, etc. Impact Requirements Every Community Development Entity (CDE), like DBL, that administers NMTC has specific impact requirements. DBL’s include: Located in Low-Income or Distressed Census Tract – The project must be located in a low-income or distressed area as indicated in the NMTC Eligibility Map. (Found here: https://bit.ly/NMTC-ND-2020) Creation of Quality and Accessible Jobs – The project must create or retain jobs that are quality, meaning they provide good wages and benefits, and accessible, meaning they are available to low-income and limited education populations or individuals. Increase of Community Goods and/or Services – The project should increase the availability of goods and/or services to low-income areas or populations. This checklist is a basic guide to help you get started. For more information, download DBL’s NMTC Project Intake Form on their website or contact their team directly. www.dakotabusinesslending.com/loans/new-markets-tax-credit *NMTC is a highly competitive program with limited allocation, so the earlier you bring DBL into a potential project, the more likely it is to be considered. Please do not hesitate to reach out to the DBL team, even if the project is the preliminary stages and doesn’t have all of the specifics listed above. dakotabusinesslending.com | 16 Vault: Unlocking a New Chamber and New Opportunities In 2022, Dakota Business Lending unlocked the first chamber of the Vault, holding all of North Dakota’s small business financing resources. But we didn’t stop there…. This year, we unlocked a NEW chamber filled with non-financing business resources...helping entrepreneurs connect with even more opportunities to transform their business. Resource Chamber Co-Sponsors Thank you to one of the top resource providers in the state, the ND Small Business Development Centers, for co-sponsoring this chamber. The Vault is a comprehensive library of small business financing programs and resources that exist throughout North Dakota. WHAT’S INSIDE? • Loan programs, grants, and tax credit options of all shapes and sizes • COVID-19 and disaster relief programs • Premium business assistance resources • Tools to help propel start-ups or small businesses Financing Programs • Local business start-up and growth resources • Networking groups and business cohorts • Business advising and counseling • Special topics such as financing, marketing, succession planning, and more Business Resources (NEW!) Inside the Vault, you will find... Financing programs to assist start-up/existing businesses 250+ Resource providers to help businesses grow All available in one customized, online library 170+ 1 Add Your Resources Have a financing program or business resource to include? Click “Submit” in the main menu to add to the Vault. www.vaultnd.com What is the Vault?17 | September 2024 NMTC: Building Superior Walls of North Dakota In every business, there are hurdles to jump and problems to solve…but for Art Goldammer, accepting average solutions was never an option. When his business, Verity Homes, undertook a growth project supported by the New Markets Tax Credit (NMTC) program, Art moved forward with one thing in mind: to ensure his company could provide affordable, high- quality homes to rural areas. A Legacy of Innovation For over 20 years, Verity Homes has been a key player in the home building industry. The company was founded and is currently led by Art Goldammer and operates several entities specializing in production home building, modular home building, and land development. Known for its proactive approach and vertical integration, Verity Homes manages multiple pieces of the construction process, allowing them to minimize costs and enhance overall efficiency. “We operate under three core values: to be legendary, to protect it, and to find the win. These values are deeply meaningful…rooted in real stories and guiding our actions.” - Art Goldammer, Owner of Superior Walls of North Dakota Discovering Superior Walls for Rural Projects One of the primary challenges Verity Homes has faced is meeting the demand for new homes in rural communities. With construction in these areas often proving cost- prohibitive due to the added expense of transporting crews and equipment over long distances, Art recognized a need for action. Through a networking group of builders, Art discovered Superior Walls, a precast foundation wall company known for their versatility, installation performance, and cost efficiency. These advantages are especially beneficial for rural projects, where traditional methods are both cumbersome and expensive. There was just one problem: Superior Walls’ closest facility was in Michigan, resulting in high transportation costs if delivered to North Dakota. “Superior Walls offered remarkable versatility and performance. From installation to placing foundation walls in diverse locations, they excelled. We just needed to get them closer to North Dakota…” - Art Goldammer, Owner Financing Solutions Beyond the Mold Verity Homes needed a unique financial opportunity to bring Superior Walls to North Dakota. Working in partnership with Dakota Business Lending (DBL) and First Western Bank, Verity Homes explored various funding options and decided to use DBL’s New Market Tax Credit (NMTC) program. This program offered the financial boost needed to offset initial costs and establish a Superior Walls franchise in North Dakota. dakotabusinesslending.com | 18 Breaking New Ground Due to the significant project’s size, Art still needed additional financing. That’s when DBL had an idea…. What if there was a way to combine the NMTC with a Community Impact Loan and an SBA 504 loan—DBL’s staple financing option that they know and love? They decided to take the leap and see what they could do. In 2024, DBL created a custom financing structure that combined the NMTC, SBA 504, and Community Impact Loan programs into one project. This unique financing package allowed Art to take Verity Homes to the next level. By utilizing the SBA 504 loan to acquire real estate for Superior Walls, leveraging the NMTC allocation to cover operating expenses, inventory, and start-up costs., and incorporating a Community Impact Loan as a bridge loan to fill a gap before the NMTC loan funded, Art was able to advance the project with efficiency. “The NMTC program significantly alleviated our cost constraints, particularly during the first years of operation, the SBA 504 helped us purchase the building with an interest rate and down payment we could afford, and the Community Impact Loan program served as a bridge loan to help fill a gap. Without these programs, we would have faced much higher capital requirements to start the project.” - Art Goldammer, Owner Cementing Success The new Superior Walls facility is set to be completed in September of 2024, enhancing Verity Homes and providing advanced construction solutions along with significant economic benefits to the region. The project qualified for NMTC funding due to its location in a low-income and distressed area and is expected to create over 30 full-time jobs, contributing positively to the local economy. As part of DBL’s “Pay It Forward” initiative, aimed at amplifying the NMTC program’s community impact, Verity Homes/Superior Walls will contribute $50,000 in donations to local non-profits and organizations. This support includes allocated funds to the Abused Adult Resource Center (AARC) and the establishment of two internship programs: the Rehabilitated Felon Internship and the At-Risk Youth Internship. These programs aim to support the reintegration of formerly incarcerated individuals and provide valuable opportunities for at-risk youth. “We are working closely with the Transition Center to support formerly incarcerated individuals. We already have a few staff members from this program who are excelling. This initiative offers opportunities beyond construction including technology, skill development, and more.” - Art Goldammer, Owner Laying the Foundation for Future Projects When navigating complex programs like the NMTC, Verity Homes has one key piece of advice: have patience. Art stressed the importance of relying on the support of those on your financing team and giving them the time and space needed to get the deal done. And while the process isn’t easy, it was all worth it in the end. “Patience is key. Allow extra time for approvals and rely on the expertise of your support team. This was critical for the success of this project, especially when dealing with complex financing structures.” - Art Goldammer, Owner For more information on Superior Walls, visit their website. https://www.superiorwalls.com/north-dakota/ Next >