Posted: 5:15 p.m.
Tuesday, March 15, 2016
Middletown loan fund for
business redevelopment gets first investor
By http://www.journal-news.com/staff/chelsey-levingston/" rel="nofollow - Staff Writer
Middletown
Middletown Moving
Forward has gained its first investor to create a new loan fund for financing
redevelopment efforts in the downtown and airport areas of the city, said
Director Calista Smith.
Similar
funds in Hamilton and Cincinnati have successfully recruited
job-generating businesses and attracted new investment to empty properties.
Duke
Energy is committing about $500,000 to the nonprofit Middletown Moving Forward
to start the revolving loan fund, said Tim Abbott, government and community
relations manager for the utility provider.
“It
is in investment into the organization and the Middletown community,” Abbott said. “We feel
the timing is right and we’re at a critical crossroads to make sure downtown
revitalization is successful.”
http://www.journal-news.com/news/news/middletown-community-group-raising-funds-to-invest/njXXM/" rel="nofollow - a
fundraising effort was launched with the goal of reaching about $5 million
total worth of commitments to aid business development efforts in the city.
“Landing
our first investor helps bolster our strategy and will help us gain momentum in
establishing our fund,” Smith said.
The
group is modeling its efforts after other nonprofit economic development
agencies such as Hamilton’s CORE Fund, which has
raised more than $7.5 million since its launch at the end of 2012; and Cincinnati’s 3CDC which
has invested heavily in the city’s Over the Rhine district. All of Hamilton’s spending so
far has been on property acquisition, repairs and other costs to restore
blighted commercial and residential buildings for sale to private developers.
Even though the CORE Fund was started to provide gap loans, it changed strategy
to respond to a greater need to help ready vacant buildings for new
development, http://www.journal-news.com/news/news/core-fund-property-acquisitions-grow/nmWfL/" rel="nofollow - For
example, http://www.journal-news.com/news/news/how-hamilton-landed-largest-job-announcement-in-a-/nkHPb/" rel="nofollow - it owns on High Street, which promises
to create nearly 700 jobs.
Plans
for Middletown Moving Forward’s money are to loan it into vetted business
projects in the city and for other objectives that fit the nonprofit’s
strategy, according to the group and Duke Energy. As developers and other loan
recipients pay back the borrowings, the money can be re-invested into other
qualified projects.
Typically,
gap financing provides lower-interest capital with lengthier payback terms than
traditional business loans to applicants that qualify. It’s not meant to be the
sole source of financing.
“We
are still focused on the gap financing. We also want to try to be more
aggressive in attracting a wide variety of quality developers to Middletown,” Smith said.
It
will likely be another 18 months to two years before Middletown Moving Forward
begins considering and awarding any loan applications, Smith, the group’s
director said.
Before
it gets to that point, hopes are to raise more funds from more investors, Smith
said. However, that doesn’t mean that all $5 million will need raised before
loans are made, she said. That amount at which lending can start has not been
set. It will also depend on the level of development activity in the city for
which additional financing is needed, she said.
“We
want to make sure we have a team of investors… so that we can spread the risk,”
she said. “The goal is still $5 million but we may able to start some effort at
a lower amount.”
Duke
Energy sets aside a certain amount of money for economic development activities
in its coverage area, Abbott said, who also pointed out this is not the same as
a grant. The investment should generate a return for Middletown, he said. Historically, Duke at
one time operated a regional headquarters downtown that is now a branch campus
of Cincinnati State Middletown.
Middletown
Moving Forward eventually expects to create a committee of investors to
evaluate loan criteria, which Abbott plans to join, he added.
Nothing
is being contemplated by city government at this time to invest in Middletown
Moving Forward, said Middletown City Manager Doug Adkins.
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