NMTC Bolsters Economic Growth in Missouri

The New Markets Tax Credit (NMTC) Program’s most obvious impact on affordable housing is through financing construction projects with at least 20 percent of revenue from commercial activity. But the credits’ spillover effects also impact the housing market overall, for instance by financing construction projects, or by bolstering a community’s economic activity. A recent case in Missouri provides an example of both.

Last year, Quaker Windows and Doors closed into a $25 million NMTC allocation, which was needed for its third phase of expansion and growth of its manufacturing facilities in Eldon, MO, enabling additional economic revitalization. NMTC allocations were made by CEI Capital Management and Heartland Renaissance Fund, an offshoot of Arkansas Capital, which functions as a Community Development Entity (CDE) connecting projects with NMTCs. Dudley Ventures/Valley Bank provided the NMTC equity investment. Additional funding came from the Missouri Works program, which provides tax credits for projects that create jobs in the state.

The NMTC Program is intended to encourage economic expansion and job creation in low-income communities. CDEs receive tax credit allocation authority through a competitive process. According to Novogradac, “The program is designed to allow the CDE to use its local knowledge and expertise to decide what business to invest in or lend to with the funds it raises with the NMTC.” The program has led to the creation of over 1.2 million jobs, supporting industries as diverse as food service and energy production. Manufacturing projects financed through NMTC allocations have also happened in South Carolina, Massachusetts, Mississippi and many others across the country.

“As with many other lucrative economic development incentives, the hope is that 70 to 100 jobs will be created per $10 million of allocation invested into a project,” according to Laurel Tinsley with Cherry Bekaert Advisory. And it is communities like Eldon that the program is intended to help. Materials provided by CEI state that the poverty rate around the manufacturing facility sits at 46.6 percent, and the unemployment rate is ten percent. Quaker prides itself on participating in the town’s revitalization. The company’s 2020 opening of the Eldon facility was hailed by local leaders as a critical investment in the community’s growth.

Thanks to the credits, Quaker will expand the facility by 344,000 square feet (a 2022 expansion added 250,000). Traci Vaine, CEO of CEI Capital Management, suggests that expansion would be key to providing economic opportunity in Eldon, a sentiment shared by local officials, including the mayor and Missouri elected officials.

“Manufacturing businesses provide one of the few pathways to quality jobs, particularly for those with lower levels of formal education,” says Vaine, whose firm is one of the two NMTC allocatees that brought funding for the project.

Nearly all the jobs Quaker is creating will be open to people with below a college education. By focusing on their skills and job performance, Quaker’s staff are given equal opportunities to improve their socioeconomic situation. The company also educates employees about financial literacy and has a profit-sharing program for its employees.

Vaine says the expansion will add 220 new jobs and will allow Quaker to have a cost and reliability advantage by increasing the firm’s domestic manufacturing capacity. The expansion includes modern painting technology, which will help the company meet increasing demand for its window and door products.

Mandy Asbury, Eldon’s city administrator, is optimistic that the project “will not only create more jobs, boosting local employment but will also continue to generate revenue for our local business and further expand our housing market.” Housing demand has already picked up somewhat; in 2020, permitting grew 50 percent. Expanded window manufacturing capacity could benefit the housing sector more broadly, as window delays were an industry-wide challenge in 2022, and Quaker’s investments will help it maintain competitive lead times. 

The Eldon project demonstrates how NMTCs can have multifaceted impacts. This funding will allow for an expansion in employment in an economically distressed area and allow the company to modernize its manufacturing capabilities. It will also create much-needed quality and accessible jobs in a community with high poverty and unemployment rates.