Five Points Community Capital, LLC, a community development entity, is pleased to announce the closing of a $7.76 million New Markets Tax Credit [NMTC] enhanced loan supporting the relocation and expansion of Houston Meat Distributors, Inc. into their new headquarters which includes a new, state-of-the-art, cold storage facility under construction in Pasadena, Texas. The Project is part of a new 12-acre business park located at 1015 Red Bluff Road, Pasadena, Texas.
Pasadena, the second largest city in the Houston MSA, is located about 20 minutes from downtown Houston. Houston Meat Distributors’ relocation and expansion to this community brings new construction investment and jobs to the area, which lies within an Opportunity Zone, and has also suffered from economically distressed levels of unemployment at over 1.8 times the national rate and low wages resulting in area poverty levels exceeding 40%.
Houston Meat Distributors was founded in 2003 by Paul “Jeff” Martinez and Sonia R. Martinez with a small family loan. It now operates seven days a week, providing wholesale distribution throughout Texas and bordering states of beef, pork, chicken, seafood, lamb and deli products to independent food retailers and the food service industry, including many meat markets.
Houston Meat Distributors was forced to relocate from its longtime office warehouse due to continued high repair costs, inefficient structural design, and an expiring lease.
While the new location offered Houston Meat Distributors an ideal building in size, ceiling height, and location, the costs of specialized improvements and equipment required for cold storage exceeded $10 million. Without traditional or long-term financing available on these necessary tenant improvements and specialized equipment, Houston Meat Distributors sought subsidized NMTC financing led by Five Points to make the Project viable.
Five Points worked with U.S. Bancorp Community Development Corporation as NMTC investor, and the collaboration of 3 participating CDFI lenders, Liberty Bank and Trust Company (New Orleans), PeopleFund and Raza Development Fund to provide source loans for the Project.
As a result of this NMTC allocation and financing, the expansion for Houston Meat Distributors will initially bring 72 jobs to Pasadena, including 21 newly created jobs. The jobs span a wide range of skill sets and offer education internally to support access to promotion and job growth. Based on the information provided by Houston Meat Distributors, approximately 96% of the jobs are accessible to persons with a high school diploma or its equivalent.
“A large part of our mission is focused on supporting accessible, living wage jobs in disadvantaged communities, particularly in our home state of Texas,” said Roy Alston, Executive Director of Five Points. “We are very pleased to have been able to provide both NMTC allocation and to act as a leverage lender for this highly impactful project.”
Houston Meat Distributors co-founder Sonia R. Martinez noted, “this was a group effort to complete this creative financing. We are grateful to the Five Points team and each of the participating CDFI lenders for their willingness to support this Project, and we are eager to move into the Pasadena community and look forward to our growth in area employment and expanding distribution of our quality food products offered.”
Additionally, the participating CDFI lenders noted:
Ronald LeCompte, Senior Commercial Banking Officer, Liberty Bank and Trust Company – “Houston Meat Distributors, Inc. is an excellent example of a borrower that provides significant benefits to the community it serves. The added benefits of the construction jobs and the permanent quality, accessible jobs offered by the Company are clearly important to the area, particularly when considered in context with the poverty and unemployment rates within that market.”
Gustavo Lasala, President & CEO of PeopleFund – “The great economic benefits to the Company, with the value of adding processing in-house and the low cost, flexible financing terms, certainly makes the value of the Project clear. This, combined with the tremendous value to the community that these quality, accessible jobs bring, made this an ideal investment for our CDFI.”
David Clower, Chief Investment Officer of Raza Development Fund – “I can only note that wealth building often starts with access to a quality job. Good wages and benefits are the cornerstone to stable homes, diets, and ultimately long-term economic individual and family growth. These are keys we look at when making the decision to deliver loans and investment.”
The New Markets Tax Credit Program was initiated in the year 2000 designed to help stimulate investment in distressed and disadvantaged communities nationwide by incentivizing private investment through the use of a 39% Federal tax credit. The program is overseen by the CDFI Fund, an arm of the US Treasury, through an annual competitive allocation to Community Development Entities [CDEs]. Five Points seeks to connect capital available from banks, CDFIs and community financial partners to businesses and organizations and that lack access to the capital. To provide capital Five Points 1) aggregates opportunities and provides underwriting and asset management services, 2) provides capacity building technical assistance to borrowers to position them to obtain financing, either directly or indirectly through Five Points. By connecting capital sources, borrowers can gain access to financing that brings jobs, services and affordable housing to benefit low-income communities.
