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Financing, tax credits revealed for peanut shelling plant

News Staff Writer

Officials of Atmore-based UB Community Development (UBCD) announced recently that a total of $60 million in New Markets Tax Credit (NMTC) allocations have been committed, by United Bank and four entities outside Alabama, for the peanut shelling plant being built here.
The federal tax credits, $10 million of which were pledged by UBCD, will be a vital component of the financing plan for the new facility, which represents a total capital investment of $84.6 million. UBCD and international advisory, tax and assurance firm Baker Tilly joined in securing an additional $50 million in NMTC allocations for the project from the other Community Development Entities (CDE).
The additional credits were pledged by MuniStrategies, part of Philadelphia’s Clark Capital Management Group ($5 million); Rural Development Partners of Forest City, Iowa ($15 million); Irvine, Cal.’s Waveland Capital Group ($15 million), and National Impact Fund, location unknown, also $15 million.
The NMTC program features the investment of private capital into low-income communities by permitting individual and corporate investors to receive a federal tax credit equal to 39 percent of the original investment over a period of seven years in exchange for making equity investments in specialized financial intermediaries. A CDE is a domestic corporation or partnership that serves as an intermediary for the provision of loans, investments or financial counseling in low-income communities.
Alex Jones, president of UBCD, negotiated the financing plan. He pointed out that the complexity of the financing took a cooperative effort on several levels.
“It is not often that you get to support a project that will have such extensive impact,” Jones said. “UBCD and United Bank are honored that Coastal Growers and over 100 farm families trusted us to guide them through the process of sourcing and structuring a project of this scope. This (took) a team effort at the city, state and federal levels to pull such a complex project together.”
Officials of the cooperative agribusiness mirrored those sentiments, saying the shelling plant probably wouldn’t be locating in Atmore had it not been for the local bank’s effort.
“Without the continuing support of Alex Jones and the team at UB Community Development, Coastal Growers would still merely be a dream,” said Brad Smith, president of the farmer-owned cooperative. “Their dedication to the project during times of uncertainty with COVID-19 and political upheaval show their commitment to the community. Simply put, without UBCD, Coastal Growers would not exist, nor would the jobs it has created and the ones it will create in the near future.”
Coastal Growers also was promised $937,000 of contributed value for workforce development from the Alabama Industrial Development Training program, as well as $8.2 million in investment tax credits over a 10-year period.
The new 475,000-square-foot facility will process peanuts from farms within a 200-mile radius of Atmore, from farms in Alabama, Mississippi, Georgia and Florida. The project is expected to create more than 100 permanent jobs (with training and career advancement opportunities), in addition to 95 construction jobs. Plant officials anticipate shelling 140,000 tons of peanuts annually, for domestic and international markets.
Coastal Growers currently works with 100 regional farms with a $4.8 million payroll. Upon completion of the Atmore facility, the company anticipates it will be working with 130 regional farms, helping support almost $8 million of wages.
Other pieces of the financing puzzle were furnished by city officials and a quasi-government regional economic development organization.
Atmore City Council members approved an abatement of non-educational ad-valorem taxes for 10 years, as well as an initial abatement on construction-related non-educational sales and use taxes on construction materials and equipment.
Also, Delta Regional Authority (DRA) recently announced it had included $307,071 in its $2.2 million economic development funding package to help fund a proposed rail spur and transload yard. The rail spur-transload yard will serve the peanut processing plant as well as nearby businesses and will allow for future construction of a blancher at the project site.