Tax Advantage Group (TAG) recently managed the successful closing of an $8.7 million New Markets Tax Credit (NMTC) allocation for Associated Hardwoods SC, Inc., with funding secured from CEI Capital Management, LLC. Wells Fargo Community Investment Holdings provided the NMTC investment and leveraged debt for the rural sawmill.
Associated Hardwoods is a family-owned lumber company specializing in wholesale lumber, specialized lumber, trucking, planed & ripped-to-width, plywood processing, and more. The company will utilize the NMTC funding to build and operate a sawmill in Gaffney, S.C., with an economic impact of $14.7 million estimated during the first four years of the project. Construction, which begins immediately, is expected to create 93 direct and 23 indirect jobs. Once construction is complete, Associated Hardwoods expects to initially employ 15 full-time workers, expanding to 24 full-time employees in the first three years of operations.
“This is a wonderful example of the benefits New Markets Tax Credits can have on a local economy,” said tag President Tammy Propst. “Tax Advantage Group is proud to have an opportunity to help make a difference in Gaffney’s local economy and make a positive impact on the people that live and work there.”
The project is part of a community development plan in a rural census tract that is designated “Distressed” by the Appalachian Regional Commission.
“The New Markets Tax Credits that tag was able to secure for us made this project possible,” said Associated Hardwoods President Rick Jordan. “Associated Hardwoods is extremely pleased to establish operations in Cherokee County and looks forward to creating many long-lasting partnerships throughout Gaffney and the entire region.”
Due to a number of significant actions designed to protect forests and the environment, Associated Hardwoods will help ensure the Gaffney project has environmentally sustainable outcomes. Actions include:
- Investing in new state-of-the-art grinding equipment that converts wood waste into fuel for the boiler.
- Reclaimable wood fibers are used in other consumer products sold to the public.
- Improved recycling methods to decrease landfill waste by 74%.
- Utilizing a new negative draft boiler that increases efficiency while reducing carbon footprint.
- Associated Hardwoods is FSC, PEFC, and SFI certified, which allows them to provide LEED certified materials to building projects.
- Associated Hardwoods is Certified Sustainable by Appalachian Hardwood Manufacturers through the U.S. Forest Service.
The New Markets Tax Credit Program is a $40 billion federal program intended to encourage private capital investment in eligible, impoverished, low-income communities. The NMTC Program provides investors with a 39 percent federal tax credit claimed over a seven-year period. The tax credit proceeds create equity, which can be permanently placed in eligible low-income community projects.