New Hampshire Town and City
Capital Regional Development Council Statewide Economic Development Solutions
New Hampshire Town and City, May 2008
By Stephen A. Heavener
The Capital Regional Development Council, known as CRDC, is a statewide nonprofit economic development corporation with more than 50 years of success offering a variety of economic development and business financing services. CRDC is a collaborative organization that partners with a variety of communities, agencies and businesses to facilitate job-creating and tax-base-improving projects. CRDC has played a financing or development role in the Grappone Conference Center, the Airport Business Park in Concord, the Capital Commons office building in Concord, the Mid-State Health Center in Plymouth, the Webster Place Treatment Center in Franklin, and has provided loans to dozens of regional commercial and industrial companies. CRDC is successful because of its strong partnerships with the financial community and municipalities along with local, regional and state economic development groups.
CRDC focuses on three core delivery areas: financing, real estate development and economic development consulting. Collaborators include: lenders; small businesses and manufacturers; developers; town, city and county governments; nonprofit organizations, such as Main Street Concord, Concord 20/20 and CATCH Neighborhood Housing; and the New Hampshire Community Loan Fund. CRDC also partners on a regular basis with economic development service providers, including the New Hampshire Department of Resources and Economic Development, City of Concord development staff, City of Claremont development team, Grafton County Economic Development Council, Belknap County Economic Development Council, Greater Concord Chamber of Commerce, Franklin Business and Economic Development Corporation, Southern New Hampshire Planning Commission, Central New Hampshire Regional Planning Commission and various economic development committees throughout the region.
Small Business Loans
CRDC provides creative financing to small businesses to ensure their successful start-up, expansion and growth. The intent of all financing resources is to add value to projects that otherwise might not occur without CRDC assistance. The loan programs are designed to complement a bank’s involvement in a project. For example, if a bank has a long-term and successful relationship with a company, they often will lend upwards of 80 percent of funds needed to acquire a building or new equipment. In the event that the bank, through its standard underwriting process, determines that it might be able to only lend 50 to 60 percent of the needed financing, CRDC is brought in by the bank to provide 30 to 40 percent of the total financing needs. CRDC maintains various pools of funds targeted to various geographic areas, and is a certified SBA 504 lender, enabling CRDC to tailor loans to the specific needs of the company. This is an illustration of the partnership between the lending community and CRDC; growing New Hampshire businesses that create new jobs and add to a community’s tax base are the direct beneficiaries.
As noted above, CRDC is a Small Business Administration (SBA) certified development company and is licensed to provide SBA 504 loans to any small business in New Hampshire. This program requires the borrower to have a lending relationship with a bank. In a typical 504 deal, the bank loans 50 percent of the required financing and CRDC loans 40 percent of the financing. The program is generally used for real estate construction and equipment financing. CRDC has approximately 125 loans in its SBA portfolio, totaling nearly $40 million. All types of companies are eligible for participation in the program. CRDC has assisted restaurants, hotels, manufacturers, convenience stores, medical practices, retail stores, golf courses and other commercial and retail ventures.
CRDC also manages a variety of revolving loan funds, many of which have been financed by federal Housing and Urban Development (HUD) sponsored Community Development Block Grant (CDBG) funds and U.S. Department of Agriculture (USDA) Rural Development programs. These are targeted to assist growing companies in various communities throughout the region. CRDC manages loan funds targeted at businesses in Merrimack County, Sullivan County and downtown Concord.
Project Highlight: Grappone Conference Center
CRDC was actively involved in the development and financing of the Grappone Conference Center at Horseshoe Pond in Concord. CRDC partnered with the New Hampshire Community Development Finance Authority (CDFA) to provide financing for the Conference Center. The partnership between CDFA and CRDC involved a major community-wide effort to raise in excess of $4 million in tax credits utilizing the CDFA Community Development Investment Program (CDIP). The CDIP enables New Hampshire businesses to contribute funds to offset 75 percent of their New Hampshire business profits, and business enterprise and insurance premium taxes. CDFA is attracted to innovative projects that show a high degree of community support, build partnerships and leverage other funds. Legislation permits CDFA to accept donations of up to $5 million in each state fiscal year in exchange for $3.75 million in state tax credits for CDFA approved community development projects. There are several thresholds that the project must meet, including the ability to demonstrate that the CDIP is necessary to the successful completion of the proposed project and adequate funding is determined to be unavailable in traditional capital markets. The Conference Center project was a proactive community-wide effort, involving dozens of community members and businesses that invested in an important project that benefits New Hampshire.
In addition to the CDIP resources injected into the project, the City of Concord enacted a tax increment financing district (TIF) to assist with the development of the Conference Center. TIF legislation permits a city or town to designate a certain geographic area as eligible for TIF assistance. Future tax revenue from the new “incrementally assessed value" (over the originally assessed value of the real estate prior to the new investment) is used to pay the debt service on bonds used to finance public improvements. Only real property taxes collected from the new development are used to service bond debt. The city must determine that the designation of a TIF district is “a viable means of financing public improvements that encourage economic expansion and hence is in the public’s interest and serves a public purpose." A TIF district can be established for a specific project, such as the Grappone Conference Center, where strong projections can be made to support the cost/benefit analysis. The City of Concord knew when it approved the TIF district what the costs of infrastructure improvements would be and could estimate the new tax revenue generated from the new development in Horseshoe Pond, the area included in the TIF district. Four new office buildings, a hotel and conference center with assessed values exceeding $40 million were the direct result of the TIF district designation. A district can also be established to encourage business expansion without knowing the exact nature and value of the total future development. This is an important tool to improve utilities in a neighborhood targeted for development and tax base expansion. TIF districts have been used in Keene for downtown parking improvements, in Peterborough for downtown revitalization and in Concord for the Corporate Center at Horseshoe Pond and the Capital Commons project.
The resources of the CDIP funds were loaned to the Grappone Conference Center under competitive terms to enable the development of a much-needed asset for central New Hampshire. As the loan is repaid, the payments are being used to capitalize the Opportunity Corridor Redevelopment Fund (OCRF). The fund is designed to encourage comprehensive redevelopment of downtown Concord and the ongoing revitalization of the central business district. Funds can be used to eliminate environmental conditions, including Brownfield sites; to eliminate blight; to improve the city’s visual image from the I-93 and I-393 corridors; to improve the aesthetics of the gateway entrances to the city; to generate new tax base in the city; to generate quality jobs for the residents of Concord; to encourage economically feasible reinvestment in historic properties; and to offer creative solutions to otherwise marginally feasible projects. One of the early beneficiaries of the OCRF is a tenant in the recently completed Capital Commons office project, built on the site of the former Sears store on South Main Street in Concord. CRDC provided financial assistance to the Red River Theatre, an arts film theatre located in Capital Commons.
Intermediary Relending Loan Fund
CRDC recently kicked off a new loan program targeted to businesses located in communities with populations under 25,000 in Hillsborough and Merrimack Counties. This program is funded by USDA Rural Development and offers loans of up to $150,000 to growing businesses. The loan is restricted to no more than 50 percent of the total project financing and is designed to provide between 10 and 30 percent of a project’s needs. Loan funds are generally eligible to finance land, buildings, machinery, equipment, raw materials, inventory and other components of working capital. All of the loan programs typically require bank participation and most of the debt is provided by CRDC in a subordinated position.
New Market Tax Credits
CRDC has partnered with Coastal Enterprises, Inc. (CEI) of Portland, Maine to package New Market Tax Credit (NMTC) projects. CEI is an experienced, mission-driven economic development organization that provides innovative financing to complex projects throughout the U.S. The NMTC program was established to attract capital to historically underserved projects and communities. It provides an incentive to debt and equity investors in the form of a 39 percent federal income tax credit over a seven year period for investing capital into qualified projects in eligible targeted areas. The U.S. Treasury’s CDFI Fund has awarded a combined allocation of $129 million in NMTC investment capacity to CEI in recent years. CRDC has been selected by CEI as its sole New Hampshire partner to identify and structure suitable projects. CRDC used this innovative program to finance the construction and development of a building in Plymouth, which is leased to the Mid State Health Center. The creative financing enabled CRDC to construct the project with competitively priced financing, thus enabling the offering of a lower than market lease rate to the nonprofit health center. Plymouth is a medically underserved community, so NMTC financing resulted in the provision of a much needed service to the Plymouth community that otherwise might not have occurred.
Real Estate Development
CRDC develops multi-tenant business parks, commercial buildings and build-to-lease facilities in order to attract businesses and jobs to New Hampshire communities. The real estate investment policy requires that the local community invite CRDC to participate in a project, and that the municipality demonstrates the institutional and physical infrastructure to support economic development. It also requires that the community participate at some level in the financing of the project. CRDC is currently targeting real estate activities in the city of Concord and in Merrimack, Sullivan, Grafton and Belknap counties, but can evaluate other areas as market opportunities evolve.
A good example of a successful collaborative real estate project includes the acquisition and development of the initial three phases of the Airport Business Park in east Concord. The City of Concord and CRDC shared infrastructure and acquisition costs, and CRDC has sold dozens of lots to expanding and relocated manufacturers. CRDC is in the process of evaluating a 17-acre parcel, which if developed will provide the final phase to the Airport Business Park. As noted previously, CRDC has also constructed a medical office building in Plymouth that is leased to the Mid State Health Center.
CRDC recently engaged an economic development consultant to identify potential projects for collaborative development throughout its four county target area: Merrimack, Sullivan, Belknap and Grafton counties.
Economic Development Assistance
CRDC provides technical assistance to communities to help stimulate economic development throughout the Granite State. Most small New Hampshire communities do not have economic development departments with experienced economic development staffs, but still need the services of economic development professionals from time to time. The Community Economic Development Assistance Program (CEDAP) is fee-based and provides direct technical assistance in implementing important community-based economic development initiatives on a project-by-project basis. Forms of assistance include grant writing, financial packaging, project coordination, site evaluation, economic development education, regional marketing and strategic planning for economic development.
CRDC has been instrumental in several high profile projects. They include:
- Assisting the Hopkinton Economic Development Committee in evaluating development opportunities for an industrial zoned area. CRDC did a detailed site analysis that evaluated access, topographic and the market potential of a several hundred acre site adjacent to I-89.
- Advising the Town of Loudon and the Bow Business Development Commission regarding the formation of nonprofit local development corporations and the preparation of development strategies. Many communities have established local development corporations to enable the community to buy and sell real estate and negotiate with selected companies.
- Assisting the Town of Northfield to secure $500,000 in CDBG funds to construct a street to several major manufacturers. The road expansion resulted in additional tax base expansion and the creation of additional jobs by growing manufacturers. CRDC performed grantwriting to fund the road expansion.
- Securing a $500,000 CDBG grant to assist with the renovation of a historic mill in downtown Claremont.
- Preparing development financing programs in support of establishing TIF districts in the City of Franklin for an industrial park expansion, the City of Claremont for industrial park infrastructure, the Town of Plymouth for downtown revitalization and the City of Laconia for downtown revitalization.
As illustrated throughout this article, CRDC has a proven record of creative and innovative financing and project development. CRDC is a collaborative organization. Its programs are designed to complement private sector and governmental initiatives. CRDC does not exist to compete with lenders and private developers, but has proven its ability to fill the financing gap and provide real estate assistance when the private sector is unwilling or unable to meet the demands of the market.
Stephen A. Heavener is Executive Director for Capital Regional Development Council, based in Concord, NH.