Low-income communities in 14 states (including the Quad Cities) will benefit from $60 million in New Market Tax Credits recently awarded to a subsidiary of Rock Island-based Economic Growth Corp. (Growth).
Central States Development Partners, Inc. has received this award from the U.S. Department of Treasury Community Development Financial Institution Fund — the sixth such NMTC allocation, having previously received $160 million in federal NMTC.
In 2021, they got $30 million; this year is their largest award ever — and $60 million was the largest given out across the nation.
“Three administrations, six years in a row, $220 million of federal credits,” marveled Brian Hollenback, who’s president and CEO of both Growth and Central States. “When you look at this amount, it definitely puts the Quad Cities on the map.”
“We really target our most vulnerable communities and with these resources, empower them to provide solid, livable wage jobs,” he said.
Central States is a nationwide Community Development Entity (for-profit) that was formed by its parent non-profit, focused on revitalizing low-income communities. Since its formation in 2009, Central States has sought to bring critical jobs, services, and goods to low-income communities that have affordable housing needs, high rates of rent burden, low wages, and significant needs for affordable services in low-income communities.
“When Central States was created in 2009, we knew it would have a remarkable impact to extend our mission further to reach more underserved communities and people,” Hollenback said recently. “We are proud of the impact we have made to date and are incredibly honored by the CDFI Fund’s support of our work in underserved urban and rural communities throughout the nation.”
Central States will use this $60-million award to support projects that will bring manufacturing, mixed-use, healthcare, and youth services that increases the tax base and creates new opportunities for better amenities, community services, while improving access to quality jobs for low-income people.
One hundred percent of the allocation award will be deployed into critical project funding within deeply distressed areas throughout the nation. Central States has a strong track record, using its prior NMTC awards to support over 1,495 jobs and the provision of services to over 6,450 people in addition to funding affordable housing and other outcomes over the last five years.
Investments made through the NTMC program are used to finance businesses and real estate projects, breathing new life into neglected, underserved communities.
Since 2012, Central States facilitated and/or deployed nearly $100 million in federal and state New Market Tax Credits in Illinois for a total of 3,009 jobs created/retained. It’s received $9.1 million in Iowa.
The new award “clearly demonstrates that we have our act together,” Hollenback said recently. “We do exactly what we say we’re gonna do. We perform beyond what we commit to do. And we couldn’t do it and be so successful if we didn’t have a tremendous team within the Growth team, and communities in which we work. It takes strong leadership.”
The NMTC program helps create investment where it is needed most; over 70% of NMTC awards have been made in highly distressed areas. These are communities with low median incomes and high rates of unemployment, and the NMTC investments can have a dramatic positive impact, according to Central States. For every $1 invested by the federal government, the NMTC program generates over $8 of private investment.
The new tax credits allow CS to continue to do “amazing things,” Hollenback said. “What it does from reputation, we were funded six years in a row. What it allows is the ability to negotiate a little bit harder and it is all connected.”
This success allows the organization to parlay that into more funding and investment, he noted.
“It allows us access to resources, in a very competitive market, that our projects will stand out,” Hollenback said.
One of those best examples is Chad Pregracke, founder and leader of Living Lands & Waters, who is heading a new effort, Green Current Technologies in East Moline (at the former McLaughlin Body), on 12th Avenue near The Bend.
Central States worked closely with the developer of Green Current, a startup manufacturing company working to alleviate impacts of the global plastic pollution epidemic by developing and manufacturing plastics products, primarily pallets, out of 100% recycled plastic, each containing a portion of Ocean Waste Plastic sourced by river cleanup events within the Mississippi River watershed.
The effort will create 46 permanent jobs and 157 construction jobs by repurposing a former manufacturing facility that includes a 71,000-square-foot factory, and a 32,000-square-foot warehouse. Central States was able to source $10 million of federal NMTC and $10 million of Illinois state NMTC to close the financing gap for the project within a highly distressed census tract.
“Most people don’t realize we did the East Moline Expo Center and in that scenario, we were the Hail Mary,” Hollenback said. “The deal wasn’t going to close and we stepped up in the 11th hour,” he said $3 million for the Bend XPO. The 70,000-plus-square-foot event center formally opened in July 2021.
“We are committed to making communities better and we’re here to do that,” Hollenback said. “There’s no room for egos in this stuff. This stuff makes my brain hurt; I’ve been doing it 10 years and every day, I become more humble because I realize how little I do know and I need to be respectful of those that know more.”
“It is amazing, the people that we get to meet who are so committed to making their communities better, it’s empowering and encouraging,” he said.
Three weeks ago, he visited a federally funded health care facility that integrates mental health, traditional health, dental care and a pharmacy all on one site, for those who don’t have access to health care.
“It’s all about people,” Hollenback said. “We know how important integrated health care is. You can address that all at one site.”
“I am very honored, humbled and encouraged, because in a time period where we see so much negativity, and people are struggling and have such challenges, to know we can be a part of the solution,” he said. “We’re not the whole solution, but we can be part of the solution.”
The NMTC program also assisted McLaughlin Body Company, which consolidated its manufacturing operations in the former IH Farmall plant in Rock Island. That $10.3 million long term investment strategically aligns with the $54 million in new investment in the Columbia Park area since 2014.
Access to the NMTC program provides benefits to the community by enhancing McLaughlin Body Company’s ability to retain and create 50 new jobs, adding to its existing 175-employee workforce, through financial incentives for facility and operational improvements.
Every transaction has a community benefit agreement, that holds the parties accountable, Hollenback said.
The tax credits also helped CS to fund 11 area nonprofit organizations, including Quad City Arts, Rock Island-Milan Education Foundation, Transitions Mental Health, Boys and Girls Club, Community Caring Conference, Common Chord, Broadway Historic District, UnityPoint Health Robert Young Center, WQPT, and QC Ballet Folklorico.
‘It’s such a stamp of approval after six years,” Hollenback said, crediting his wide-ranging team, including finance, audit and legal staff. “The financial accountability is so important,” he said.
The Wilson Lofts in Clinton also used historic and New Market Tax Credits. That $15.3-million project, at 210-217 5th Avenue South, Clinton, will create 33 rental apartments and ground-floor commercial.