VEDA’s wide net of assistance helps an eclectic array of endeavors
by Virginia Lindauer Simmon
“I think Vermont has so much to offer in terms of who we are and our way of life.”
The Vermont Economic Development Authority’s small-business loan program has seen dramatic growth over the last few years. In 2008, says Jo Bradley, the authority’s chief executive officer, “we only had a million and a half in that program.”
The fiscal year ending June 30, 2012, saw almost $25 million in loans in the small-business program — a record — although $18 million of that was for emergency loans to help businesses and farms recover and rebuild in the wake of Tropical Storm Irene. “That would have made our small-business program approximately $6 million, and that’s about what it is this year,” Bradley says.
The small-business program offers financing through a range of low-cost lending options up to $350,000. The lending solutions are customized to each borrower’s individual needs, and projects can be larger, Bradley says, “because we often partner with banks to do a part of a project. That’s in both our small-business portfolio and our larger commercial program, which can make loans up to a million and a half.”
The commercial program also had a record year in 2012, she says, lending $14.2 million, and the year just ended saw about $19.8 million.
Both programs fall under VEDA’s commercial financing options, which include 15 subcategories. The authority also has an agricultural financing program, the Vermont Agricultural Credit Corp.
The total number of jobs impacted for each of the last two years, Bradley says, was about 2,700. “Impacted,” she says, means “we count the new and existing jobs. Most economic development organizations have gone to the ‘jobs impacted’ statistics. The average wage for those jobs is $24 with benefits last year and about $30 for 2013.”
Each recipient gives VEDA a projection of job impact upon receipt of a loan. The projection is entered into VEDA’s database, Bradley says, “and VEDA follows up quarterly.”
VEDA raises its funds in the capital markets and issues short-term bonds or commercial paper. “We do get some money from state and federal sources from time to time,” says Bradley. “This is used to subsidize our loan rates and offer low economic development capital.”
VEDA lends money for all sorts of enterprises. Recipients this year, for example, included projects as varied as issuing revenue bonds to help a secondary school build an addition to one of its buildings; financing a renovation to create an arts destination; expanding manufacturing facilities; helping the affiliate of a Canadian firm with an expansion project in Vermont; and refinancing a tax-exempt revenue bond for a nonprofit museum to help lower its interest payments.
We asked three recipients of VEDA loans about their projects. They all see VEDA in heroic terms.
Carbon Zero LLC and AOE Inc.
North Bennington, $683,278. With his wife, Maria, Bill Scully is redeveloping a dam site they bought several years ago. The idea, he says, stemmed from “a little internal dialogue I had on Christmas Day 2008 when I was driving back from Connecticut and listening to NPR, on which was a discussion of oil prices. They were due to hit $4.53 a gallon or something like that.
“I was driving on, I think, Route 8, along a river and had an epiphany: Why, when we live in a mill town that I think has five dams, why aren’t we all driving electric cars?
Scully learned that Vermont hadn’t had any new hydro projects in some time — “approaching 30 years,” he says. “I came to discover 1,200 dams in the registry not being used, and 300 to 400 of them were ready to be redeveloped. Why we hadn’t done it was in large part to do with the fishing lobby.”
Scully set about trying to grasp exactly why that was an issue, he says, “and reached out to those folks, and they’ve become great advocates and helpers with this project.” He says he was reaching out to do something a little different than other developers had done, trying to build a group of stakeholders, including people who had opposed hydro, to find what their interest was.
The Scullys found a dam at the old Vermont Tissue Mill in North Benningto: “six acres of land and six acres of water,” he says. The owners were leaving the state, so the timing was good, he says. They learned it was also a brownfields site, and VEDA helped with that cleanup as well as obtaining financing.
“It’s not something a business person enters into because of money, but a shift in policy. I wanted to get this done for more personal than business reasons. And VEDA steps in at those times. I have to say that Tom Porter at VEDA has been an absolute hero for this project.
“There are benefits beyond creating green energy,” Scully says. We’re in a very remote section of the Vermont power grid, and boosting the grid in remote sections helps improve the efficiency of the grid. And the fish guys are happy — fish passage will be good, and it will have water year-round from now on. We have and will continue to increase portage for kayakers and canoes, and a lot of swimmers and fishermen go there.”
Needless to say, this probably won’t be Scully’s last dam project.
King Arthur Flour
Hartford, $2.9 million revenue bond financing. King Arthur is constructing a 23,900-square-foot building in Hartford’s Billings Farm Commercial Park to house the company’s food manufacturing operation, which has been in leased space. The leased space will continue to house the company’s warehouse and fulfillment center for catalog and Web-based sales.
“Thirty positions in our warehouse will move over into this new building within the next year or two and we will have the addition of about five, depending on the growth,” says Ralph Carlton, King Arthur’s chief financial officer.
The land has been cleared and construction began in September, he says. “We’re looking to occupy the facility sometime in the first quarter of 2014. It’s a relatively rapid process — a basic manufacturing structure. It will be a nice facility, but then again, these things are relatively easy to build. The hard part is outfitting the interior.”
The finished plant will produce a variety of King Arthur Flour’s products such as its baking mixes, says Carlton.
The company worked with Green Mountain Development Corp. and VEDA pulled together the financing. “VEDA is a very important resource to the state and they do a great job at what they need to do.”
Gray Rock Quarry LLC
Milton, $332,400. Bill Daily approached VEDA for help buying machinery and equipment he has been leasing and to provide working capital to help his company grow. Gray Rock is a stone-crushing plant whose products are used in the production of concrete and asphalt, draining, and landscaping.
“The product we have is a high-quality dolestone that can be used in all aspects of construction, to include hot mix [an asphalt product] and ready mix concrete,” says Daily, who’s no stranger to the quarry business.
“I’ve been doing this my entire career. This quarry is in its third year now. The other business I owned was named William E. Daily Inc. in Shaftsbury. We opened this reserve to be used in local construction markets, and because of its high quality, it allows us access to these local markets.” Gray Rock is sold within about a 40-mile radius, he says.
Working with VEDA was “great,” he says. “They were able to help us get financing in a difficult financing world. It wouldn’t have happened without them. We wouldn’t have been able to secure these jobs without VEDA’s participation. We have nine jobs right now, an increase from six, I think, last year. And we lowered our capital payments. We anticipate in the next three years to increase employment by about 15 people, but again, it’s going to be a function of accessing the capital required to support the growth. Sandy Croft did a super job for us. She worked very hard to make this happen.
Jo Bradley is optimistic. There’s definitely a ripple effect from this activity, Bradley says, and enthusiasm has returned to the organization. “For a while, in 2008, ’09, even 2010, things were tough for business. I would say it’s definitely coming back, although maybe a bit slower than in the past. I’ve been here for 17 years, so have seen some cycles, and it’s been slower than in the past. But I do think there’s an upbeat sense. Businesses are looking to capital purchases and hiring some people.
“I also think Vermont has so much to offer in terms of who we are and our way of life. While the aging of Vermont is not to be totally ignored, many people are working into their 70s. I am more optimistic. I think we really are going to attract more people. I went away and came back in my 30s, and I think we’ll see more of that.” •