Community Development Investment Grant and New Markets Tax Credit
With summer upon us, we are eager to start construction. The schedule has construction crews on the ground the week of June 25. We’ll keep you posted on our progress and hope to stay on track!
With construction on the horizon, we wanted to fill you in on two aspects of financing for our project that are vital to making it a reality.
Throughout the winter and early spring, the VFC worked with the City of Viroqua to apply for a $250,000 Wisconsin Economic Development Corporation (WEDC) Community Development Investment (CDI) Grant for the expansion project. The CDI grant program’s purpose is to "transform communities by supporting local development that is as unique as the communities in Wisconsin.” CDI Grants help businesses by providing financial incentives for shovel-ready projects with emphasis on, but not limited to, downtown community-driven efforts. Projects that are granted CDI funds must demonstrate significant and measurable benefits in job opportunities, property values and/or leveraged investment by local and private partners.
While looking at this grant application, we saw that the VFC expansion project fit well. The City of Viroqua agreed! Each municipality may only apply for one CDI grant annually, and the City picked our project for 2017. They recognize the positive impact it will have on our community in terms of job creation and building of our local economy.
Thank you to the City of Viroqua for picking our project and working with us on the application process! We should hear shortly if we will receive a CDI grant for the expansion.
New Markets Tax Credit (NMTC)
Over the past few months, we also applied for a U.S. Department of Treasury Community Development Financial Institutions Fund New Markets Tax Credit Program (NMTC) for the VFC expansion. The NMTC Program helps economically distressed communities attract private capital by providing investors with a Federal tax credit. Investments made through the NMTC Program are used to finance businesses, breathing new life into neglected, underserved low-income communities.
In the past few years, food co-ops across the country have applied and received NMTC for expansion projects, and in all honesty, food co-ops are great candidates for receiving the gap funding. VFC followed in the footsteps of other Midwest food co-ops and applied for the program. The application for NMTC is daunting and the process after applying is demanding. Currently, Jan Rasikas, VFC General Manager, is spending many hours a week on conference calls with the expansion finance team and NMTC representatives to get everything in order for receiving the funds.
The result of this complicated process adds $2 million of gap funding to the VFC expansion. VFC pays interest only on this amount for seven years and, after that time, the $2 million is forgiven to the Co-op. Currently, we are on track to complete the NMTC process.
Both the CDI Grant and NMTC Program represent huge opportunities for the VFC expansion project! If we receive both the grant and the tax credit, it helps us fulfill the highest potential of our Market Study and stretches our expansion project farther than what we can finance on our own. In turn, this allows us to expand our building in a way that will last at least 10 more years, like our relocation and expansion in 2005. This is the best way to spend our collective commonwealth!
Thank you again, VFC Owners, for your patience. You can rest assured that the VFC Board and GM are doing their due diligence behind the scenes to make sure our coming expansion is a success.