Time flies when you are having fun. And it’s been fun to watch Coastal Village Region Fund (CVRF) create hundreds of jobs and millions in new earnings for Alaska Native fishing families.
Travois congratulates CVRF and its subsidiary Goodnews Bay Seafoods (GBS) for successfully exiting its New Markets Tax Credit (NMTC) transaction. GBS constructed the fish processing facility in the remote southwestern Alaskan village of Platinum with the help of $17.3 million of Travois’ first round of NMTC allocation. The plant buys the catches from local fisherman and, due to its location, cuts down on costly and dangerous trips across the bay to more remote fish buyers. Additionally, CVRF provides processing jobs to the community and scholarships to Alaska Native youth.
You may be asking yourself, “why the seven years?” Well, the NMTC program provides tax credits to investors who invest in economically distressed areas and those credits are spread out over a seven-year compliance period. Over the seven-year period, a healthy NMTC project:
- Must remain in a low-income census tract
- Must be an active business or operation
- We use the term “business” loosely. The project doesn’t have to sell widgets or services like a traditional business; it can also be a community center or administration building. Also “active” means that the business is performing its intended function, i.e. dental care, renewable energy, after-school programs, etc.
- Must keep separate books and records
- This is very important to ensure the separation between the tribe/developer and its subsidiary entity/business that receives the NMTC loan.
Once the compliance period is over, the investor has collected all of its tax credits. At this time, there is no longer any economic incentive to remain in the deal, and the investor transfers its interest in the transaction to an affiliate of the borrower, and the debt is essentially converted to project equity. This typically results in an economic benefit of 20-25 percent of the project cost.
The end of the seven-year compliance period also brings about a sad end to my annual site visits. While it was always a long hike out to Platinum from Kansas City, I enjoyed the short flights from Bethel in a Cessna 207, which is known as a “bush plane.” I also enjoyed watching the plant in operation, which really gives a sense of how diverse and rich the fishing resources are in Alaska. Lastly, I’ll miss the friends I made in Platinum who were always kind and welcoming.
Goodnews Bay was one of Travois’ first NMTC deals. We are proud of what CVRF has done all across rural Alaska, and we are proud of what Goodnews Bay has done for the fishermen and women around Platinum. In such a remote area, nonprofit organizations like CVRF are doing great work supporting traditional fishing practices and employment among Alaska Natives. We are honored to have been a part of the good work.