WNC, Others, Kick in $55M to Finance Wood Pellet Plant

ALICEVILLE, AL-WNC & Associates Inc. has partnered with three community development organizations to provide Westervelt Co. with $55.5 million in New Markets Tax Credit financing for construction of a $71 million alternative energy wood pellet manufacturing plant. The financing and development are taking place with an eye toward jobs creation in this region, which has a poverty rate of approximately 27% and an unemployment rate flirting with 12%.

Construction began on the plant in late October, 2011, with completion anticipated by summer, 2013. Situated on 104 acres on SH 17 and along the Tenn-Tom Waterway, the site once held the former Huyck Felt Plant, which was acquired from the Industrial Development Board of Aliceville in 2011.  Westervelt estimates the plant will initially produce 250,000 metric tons of wood pellets per year, with the ultimate production goal of 500,000 metric tons per year.

According to a press release discussing the NMTC financing, Irvine, CA-based WNC & Associates has collaborated with Wells Fargo NA; Rural Development Partners and Coastal Enterprises. WNC is investing $6 million as part of the partnership. WNC also entered into a community benefits agreement with Westervelt Co., in which the latter will contribute $110,000 for community reinvestment services including employment training programs, educational support services for local youth and downpayment assistance to low-income people for affordable housing home ownership.

WNC executive vice president David Shafer says the investment marks the company's first New Market Tax Credit activity in Alabama, though WNC is no stranger to NMTC deals in general. He tells GlobeSt.com that three aspects are examined when it comes to NMTC investments; first, whether the investment will help create jobs for a community; second, if the locations under consideration are distressed with high poverty and unemployment and third, if the community in question has a need and demand for jobs.  "Aliceville is in one of those census tracts with high unemployment and poverty," he explains. "Bringing in a couple hundred jobs, as the plant will do, will benefit the community."

He says there has been an uptick in jobs in the area so far, primarily due to construction of the physical plant as well as specialized employment. The overall goal is to ensure direct and indirect permanent jobs once the plant is operational.  In the case of the Westvelt plant, the direct jobs are obvious; employees will need to be hired to run the operation. Shafer comments that the indirect jobs could include truck drivers who will need to bring lumber in from the hills to the plant; lumberjacks who will cut down the trees and, once the product is manufactured, transport to barges on the waterway, meaning contracts for barge companies. "What we look to as well as the catalytic impact; whether there's a revitalized business district, perhaps new stores opening or a restaurant opening," Shafer says.

Such investments do work, even if they don't make the news as large, flashy developments or job-creation plans promising thousands of new jobs. In one case, one of WNC's first NMTC investments was with a small shopping center in a rural part of Riverside County, CA. WNC helped a developer build a small shopping center, and Shafer says that within a few years, the retail growth almost doubled in that area. "Also within a five-block area of that center, a small housing development of 60 homes went up, and was sold," he adds.

Though the Aliceville situation is somewhat different, involving manufacturing, Shafer says the idea is the same. "It's all about bringing jobs to these areas," he comments.  Whether organizations such as WNC will continue to be involved in the NMTC programs is uncertain; the program under which WNC operated expired on Dec. 31, 2011 and Shafer says little will be done until after the general election. "What we're hoping for after the election is that it will be extended and signed into law," he adds.