NMTC Case Study for Arris Manufacturing
On the northern border of South Carolina, deep in the heart of cotton country, Clio is home to some 900 people. This small town was once a thriving hub or agrarian commerce due to the successful cotton industry at the turn of the 20th century. The town’s population has shrunk over the last 100 years, and now over 70% of the population have no more than a high school diploma or GED. Roughly 60% of this non-metro, persistent poverty county’s population is minority, and unemployment rate remains stubbornly high (24.30% as of the 2015 census).
Marlboro County, which has a slightly better overall unemployment rate than Clio as a whole, ranks as the seventh lowest in employment opportunities out of the 64 South Carolina counties. The lack of employment was exacerbated in 2016 when Baldor Electric, one of the largest employers in the area, shuttered its mining equipment manufacturing facility, laying off its remaining 65 employees.
Arris Manufacturing has acquired the former Baldor Electric facility and will completely retrofit it to begin building modular housing units for multi- family housing. The sponsor is a multi-family housing developer in the Southeast and will use this facility to vertically integrate their modular unit manufacturing with their multi-family housing developments.
The project will create 134 new permanent quality jobs in Clio (82% of which will be accessible to employees with no more than a high school diploma or GED). The project sponsor has also implemented a Skills Incentive Program where employees can earn higher pay for learning new skills regardless of the ability to immediately progress to a higher position. The project involves $6.4MM in land and building, $2.2MM in equipment and $9MM for working capital, raw materials and inventory.
The approximately $19 million dollar project was financed utilizing sponsor equity and a loan from Renasant Bank to provide a self-leveraged structure, with NMTC equity from Capital One, N.A., $15 million of NMTC Allocation provided by The Innovate Fund and $3 million of NMTC Allocation provided by Capital One Community Reinvestment Fund.After acquisition, FC will renovate the four-story building, taking over more than one full floor as its new headquarters. The remaining space in the four-story building will be leased to other non-profits, government and other office users. Collectively, these groups will provide services to over 17,000 low-income Austinites annually, including, Communities In Schools assisting 5,000+ students overcome challenges to their educational success, and FC providing wrap-around services to 12,000+ low-income residents in their housing units.