Travois New Markets recently helped the Bois Forte Community Redevelopment Corporation (BFCRC) secure New Markets Tax Credit (NMTC) funding for its new, energy efficient Community and Government Services Facility, which is currently under construction in Nett Lake, Minn.
Wells Fargo placed a $3.7 million New Markets Tax Credit investment in the project combined with an additional $9.1 million in construction financing to build and manage the 48,852-square-foot Community and Government Services Facility, which will be home to community meeting space, Bois Forte Tribal Government offices and a financial service center such as a credit union or branch bank.
“We were pleased with the financial acumen and knowledge of Indian Country that Travois brought to this project,” said Bois Forte Tribal Chair Kevin Leecy. “Our focus is on diversifying and strengthening our economy. Creative financing tools like New Market Tax Credits are versatile tools for Tribes to utilize.”
The need for a new building became even more urgent this spring when a fire destroyed a Tribal Government building that had served as an anchor in the community since 1976. As a consultant to BFCRC, Travois assisted the development team in closing the investment with a leverage loan from the Band and NMTC allocation and equity from Wells Fargo. This is Wells Fargo’s third NMTC transaction involving a Tribal entity; Wells Fargo provided the first-ever NMTC financing to an American Indian tribe in May 2005.
”The NMTC program financing structure provided Bois Forte a source of long-term funding to the project that is substantially cheaper and on more favorable terms that would be conventionally available,” explains Lee Winslett of Wells Fargo’s Community Lending and Investment group. “This creates a domino effect that allows Bois Forte to rent space at below-market lease rates, and tenants increase their benefits to end users: members of the Bois Forte Band of Chippewa.”
Though it acted as a consultant on this project, Travois New Markets is also a nationally certified CDE, and it was recently awarded $80 million in New Markets Tax Credits to invest in other Indian Country economic development projects.
“We are proud of every aspect of this transaction,” said Phil Glynn, director of Travois New Markets. “First, we are always interested in community facility projects and will be seeking to use our own new allocation in similar projects on other reservations. Second, we are always excited to be involved in projects when the Tribal government is the leverage lender. Bois Forte has employed a financing strategy that should be a model for Indian Country.”
Projected community impacts include 139 construction jobs created and 70 permanent jobs retained. The groundbreaking was held in August, and construction is scheduled to be complete in August 2010.
The NMTC program was created in December 2000 and is administered through the Community Development Financial Institutions Fund (CDFI Fund) by the U.S. Department of the Treasury. The NMTC program serves as a catalyst to encourage investment of private equity capital into low income communities and allows taxpayers, such as Wells Fargo, to receive a credit against federal income taxes for making equity investments in designated CDEs. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. The CDE provides a qualified equity investment under favorable terms, such as a below-market interest rate and a longer-than-standard period of interest-only payments, to the qualified active low income community business.
About Travois New Markets
Travois New Markets, a nationally certified Community Development Entity (CDE), is dedicated exclusively to meeting the needs of American Indians in low-income communities. Travois New Markets received an $80 million allocation of New Markets Tax Credits in 2009, which it is working to invest in qualified projects. With its $30 million allocation from 2007, Travois New Markets has supported three projects: the construction of two electrical substations for the Navajo Tribal Utility Authority; the renovation of the historic Hotel Andaluz in downtown Albuquerque, which will set aside 20 percent of hotel jobs for American Indians; and the construction of the Goodnews Bay Regional Plant in Platinum, Alaska. The Travois family of companies offers development assistance, compliance support, design services and comprehensive training to the nation’s Native population with clients across the United States from Alaska to Maine. For more information on Travois’ New Markets Tax Credit projects, click here.
About Wells Fargo
Wells Fargo’s Community Lending and Investment division provides debt and equity capital for economic development, job creation and affordable housing in areas of need nationwide. Wells Fargo was recently awarded a $90 million allocation of New Markets Tax Credits by the U.S. Treasury Department, making Wells Fargo the largest bank recipient to date. For more about Wells Fargo and New Markets Tax Credits: wellsfargo.com/nmtc.
Wells Fargo & Company is a diversified financial services company with $1.2 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally. The Company promotes economic growth and self-sufficiency, education, social services, the arts and the environment in thousands of communities across North America. In 2008, the Company gave $226 million in grants to 14,000 nonprofits. Team members contributed 1.4 million volunteer hours and served on 16,000 nonprofit boards. The merger of Wells Fargo and Wachovia makes our presence twice as strong in the communities we serve. For more about Wells Fargo’s achievements in Social Responsibility: www.wellsfargo.com/about/csr.