March 12, 2018
$20 Million of New Markets Tax Credit Supports Pulping Plant Construction; Creates 87 New Jobs
Starbuck, WA and Brunswick, ME – Columbia Pulp I, LLC, a next generation pulp mill turning waste straw into pulp for papermaking, and processed byproducts for other industrial and agricultural uses, has received $20 million in critical New Markets Tax Credit financing from CEI Capital Management LLC to help the start-up build a new processing plant.
The new company will build a 290,000 square foot facility where it will convert low-cost waste agricultural wheat and alfalfa straw supplied by farmers in the area into pulp for papermaking at regional and national paper mills. As a byproduct, the processing plant will also produce a lignin-carbohydrate co-product to be sold as for use in soil and dust abatement and industrial applications. The New Markets Tax Credits are directed toward the construction of that lignin-carbohydrate co-products processing division.
“We’re developing a next-generation pulp mill with the potential to be a transformative regional and national supplier of sustainable, tree-free pulp and unique co-products for years to come,” said Michele McCarthy, CFO from Columbia Pulp. “But it would not have been possible without the New Markets program filling a gap in our financing.”
Because of the economic conditions in Columbia County, Washington, the company qualified for the federal New Markets program, which was designed by Congress to stimulate private investment and economic growth in low income communities that lack access to capital needed to grow businesses, create jobs, and sustain healthy local economies.
Columbia County, where the pulp mill is located, suffered an economic setback in 2005, when Seneca Foods’ asparagus canning facility, once the largest asparagus canning facility in the world, shut down after 71 years of operation and moved offshore. The plant had been Columbia County’s largest employer and taxpayer, providing 50 year-round jobs, 1,000 seasonable jobs during the summer, and supporting 2,000 seasonal jobs at local asparagus farms.
Replacement for such a large employer is difficult for any community and can be particularly challenging in rural areas. Fortunately, following approximately a decade of research and development of a sustainable pulping process, Columbia Pulp I, LLC will create approximately 87 new, well-paying, direct permanent jobs at an industrial site in Starbuck, Washington. According to MIT’s Living Wage calculator all the new permanent jobs will pay above a living wage for a single adult in Columbia County. In addition, during construction, there will be about 120 construction workers working on the site at peak.
The project will also benefit the local farming community, producing about $16 million in new annual income for the region’s farmers and their associated contractors from the sale of wheat straw. It will also significantly reduce the harmful emissions and burdensome cost of burning the straw in the fields after harvest.
The expected local economic benefits incented a variety of public-private financing for the $184 million project. Columbia Pulp I, LLC received $133.6 senior bond financing from the Washington Economic Development Finance Authority. To fill the remaining capital gap, CEI Capital Management utilized the New Markets Tax Credit program to allocate $20 Million in NMTC capacity to finance the $39.4 million lignin-carbohydrate portion of the project. Wells Fargo Community Investment Holdings, LLC provided the equity, while CP Leverage Lender, LLC provided the debt financing for the transaction, which closed in two tranches on September 2017 and February 2018.