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$17 Million in Innovative Financing Brings 100+ New Jobs to Libby, Montana

Senator Max Baucus http://baucus.senate.gov/ , the Montana Community Development Corporation http://www.mtcdc.org and Goldman Sachs http://www2.goldmansachs.com close deal for the Stinger Welding http://www.deckjoint.com/ plant in Libby Montana, returning a major industrial employer to this rural Montana community.

The Montana Community Development Corporation (MCDC) announced today the closing of $17 million in financing to complete the construction of a new fabrication plant for Stinger Welding Inc. in Libby, Montana. U.S. Senator Max Baucus, MCDC, Stinger Welding Inc. and the Urban Investment Group at Goldman Sachs each played a critical role to complete the financing of the plant, which will create over 100 new jobs at Stinger’s plant, returning a major industrial employer to Libby.

The Stinger project in Libby will be a great benefit to this former mining town turned Superfund site, where hundreds of former residents have lost jobs and been stricken with health problems related to the town’s history of vermiculite mining.

Stinger Welding Inc. is a fabricator of major steel and bridge components currently operating in Libby with a workforce of 43. Stinger also operates a large steel fabrication plant in Coolidge, Arizona, where it is the premier steel bridge component fabricator for the Southwest. Stinger chose Libby over several other plant locations because of its proximity to potential markets in the Northwest, direct access to rail lines in the Kootenai Industrial District, lower comparable labor costs for skilled labor and the economic incentive package offered by Lincoln County, Libby, and the State of Montana.

"We are excited to move forward in the completion of our new fabrication plant in Libby," said Stinger President Carl Douglas. "Libby’s workforce is full of the type of tough, hardworking and highly skilled individuals it takes to fabricate major steel bridges in the United Sates. We are proud of the support from the people of Libby, Lincoln County, and the State of Montana."

Stinger will hire workers at various skill levels, with wages ranging from a $13.55 per hour minimum to $16.00 average hourly wage. Salaried positions will also be available. The Flathead Valley Community College (FVCC) added welding classes at its Kalispell and Libby locations and graduated 20 welding students in April of 2011 targeted to meet Stinger’s workforce requirements. Hiring has begun with applications taken through the Kootenai Job Service in Libby.

The new 105,000 square foot Libby plant will provide steel for bridge infrastructure projects in the Northwest. Current operations in Libby have already produced steel products for use in projects in Spokane, Portland and Seattle. Stinger expects the new construction to be complete in August.

Production should begin in the fall with a ramp-up to full capacity varying with market demand. Major equipment will be delivered and put into operation over the next two months.
Construction of the new facility began in 2009, but has been delayed due to financing challenges. The deal came together as a result of a federal financing program written by U.S. Senator Max Baucus and through Senator Baucus’ efforts to profile Montana’s business opportunities to national investors including Goldman Sachs Inc at his 2010 Economic Development Summit.

The tax credit financing was made possible through MCDC’s 2010 allocation of New Markets Tax Credits. The New Markets Tax Credit program is a federal tax credit tool that provides incentives for private investment in projects that help revitalize low-income areas. Prior to 2008, the program had been used primarily in larger urban areas. Due to changes in the program, spearheaded by Senator Baucus in 2007, a portion of the tax credits were required to be invested in rural states.

The tax credits will fill the financing gap and make the project possible. In addition to the tax credit financing, the project came together with the help of a significant equity investment by Stinger Welding, Inc., $3.2 million from a previous insurance settlement reached by the Libby industrial district, an $800,000 Community Development Block Grant and a $400,000 grant from the Big Sky Trust Fund.
"Folks in Libby need jobs more than ever and I couldn’t be more pleased to see this opportunity going to work for a community that deserves an economic boost.

MCDC has done a great job making the New Market Tax Credits program a viable option for Montana businesses to grow and prosper," said Baucus. "I’m thrilled they were able to impress one of the world’s largest financial firms at our jobs summit and come up with this innovative way to create good-paying jobs here in Montana. This is great news for Libby and the future of Stinger Welding in the region."

MCDC received its first-ever allocation of $40 million in NMTC in 2008 and a second award of $56 million in 2010. The Libby project came out of MCDC’s 2010 NMTC allocation and its partnership with the Urban Investment Group at Goldman Sachs.
"This is an ideal project for us to expand from our traditional expertise of urban investing to a rural community because of the rapid and significant impact it will have on the ongoing revitalization of Libby, Montana and the surrounding areas," said Alicia Glen, Managing Director and Head of the Urban Investment Group at Goldman Sachs. The Urban Investment Group is the tax credit investor for the Stinger project.

U.S. Senator Jon Tester, who has sponsored Senate legislation to extend and expand the NMTC program, says "the expansion of Stinger Welding is welcome news because it will pave the way to new opportunities for Libby jobs through new manufacturing opportunities that will benefit the entire region. The Montana Community Development Corporation has a proven track record of making smart investments in communities like Libby and the people who call it home, and the expansion of Stinger Welding is no exception."

MCDC President David Glaser says that the Libby project is a perfect example of the New Markets Tax Credits at work. "This is a project that will have a huge impact in turning around the fortunes of this town that has seen its share of hardships. But it’s a town that has so much potential. The business and community leaders of Libby recognize this potential, and with the help of the New Markets Tax Credit program they have been able to put their innovative plans to work for the whole community. MCDC is pleased to deliver the benefit of this program that Senator Baucus fought so hard to bring to Montana."

The Stinger Welding plant is MCDC’s 6th New Markets Tax Credit Project overall with previous projects completed in Missoula, Butte, Bozeman and Helena. For information related to eligible New Markets deals contact Heidi DeArment 406.728.9234 x 213 or [email protected].

About New Markets Tax Credits

The New Markets Tax Credit program is a tool for job-creation and economic revitalization in areas that struggle to attract investment because of poverty, unemployment and a lack of opportunity. The tax credits can be used towards a variety of community revitalization efforts in designated low- income areas. Financing can be applied toward construction costs, working capital, machinery and equipment, fixed assets and certain development of commercial, industrial and mixed commercial and housing real estate.

The NMTC program works by allowing equity investors in local business development projects to receive credits against federal income taxes for their investments into qualified community development projects. Entities such as MCDC help organize and manage the financing aspects of the project by matching the equity investors with local banks to provide additional project funds. While investors receive a 39% tax credit on their funds, realized over seven years, the overall impact to the financing package is that the project is infused with investment capital that would not be in play without the tax credits.

The tax credits are attractive to investors looking for new business opportunities with enhanced returns and are attractive to debt providers, such as local banks, which earn traditional returns while broadening their market. The end result for communities is infusion of capital for worthwhile projects that create economic opportunities for people and places that need it most.

About MCDC:

The MCDC mission is to provide business financing that can transform the lives of individuals and strengthen community prosperity. Since 1986, MCDC has served thousands of entrepreneurs with loans, consulting and training. MCDC has lent more than $25 million to over 400 businesses, and has now funded $64.5 million in New Markets Tax Credits projects in low-income areas of Montana. With its financing and consulting tools, MCDC helps business owners grow their companies, sustain their local communities and provide jobs throughout Montana.

About Goldman Sachs:

The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.

Goldman Sachs established the Urban Investment Group (UIG) in 2001 to deploy the firm’s capital by making investments and loans through comprehensive community development platforms that benefit underserved communities in the United States. UIG has committed more than $1.35 billion, facilitating the creation and preservation of approximately 9,400 housing units – 75% of which are affordable to low, moderate and middle-income families – as well as over 730,000 sq. ft. of community facility space and approximately 1,000,000 sq. ft. of commercial and retail space. To learn more about UIG, visit http://www.gs.com/uig.

Contact:

Dave Glaser, President MCDC (Montana Community Development Corporation) Phone: 406.728.9234 #211 Fax: 406.542-6671 [email protected] http://www.mtcdc.org

Lynn Dankowski Marketing Manager MCDC (Montana Community Development Corporation) Phone: 406.728.9234 # 215 Cell: 406.370-8727 [email protected]

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