Farwest Steel Corp. has obtained $48 million in federally subsidized financing to build and equip its planned Vancouver steel fabrication plant.
The complicated structure of the funding — secured through the 11-year-old federal New Markets Tax Credit program — enables Farwest to build and occupy its site at the Port of Vancouver at a lower cost and more quickly than with traditional financing.
The company will kick off construction of the facility this week.
The Farwest project is expected to bring 228 new and relocated jobs to Vancouver. It’s the first project in Clark County to be financed by the New Markets Tax Credit program, a federal tax incentive set up by Congress in 2000 to spur investments in businesses and real estate projects in low-income communities.
It’s also one of the largest allocations from the federal program in the Portland-Vancouver region.
The complex deal involves multiple parties. Farwest, the port, the city of Vancouver, JP Morgan Chase, Bank of America and other separate funding entities all played roles in making it happen.
The deal achieves several goals. For Farwest, it makes building and equipping the new plant cheaper and quicker in a time when tight credit and a feeble economic recovery have made it difficult to obtain capital by conventional means.
For investors in the Farwest project, including JP Morgan and Bank of America, the federal program allows them to receive tax credits against their federal income tax returns.
For Clark County, it brings jobs and money to a community with one of the highest unemployment rates in Washington.
In fact, the port site qualified for the federal tax credit program because it met certain criteria, according to a news release issued by the city of Vancouver on Tuesday. Those criteria include a poverty rate above 30 percent and household median income below 60 percent of the area median.
Curtis Schuck, director of economic development and facilities for the Port of Vancouver, said there’s another benefit from the deal: It gives local governments and economic development agencies the experience to potentially do similar deals in the future using the federal tax credit program.
“The partnership worked, the tool is there and worked, and hopefully that will pave the way for it to be used again,” Schuck said. “It’s got to be a good deal, it has to be a solid company,” for so many parties to agree to such a complex arrangement, he said. “I think that all of the appropriate pieces were in place.”
In the news release issued by the city, Patrick Eagen, president and CEO of Farwest, said: “These federal business tax credit allocations were significant in allowing this project to proceed.”
The steel fabrication plant Farwest wants to build is the latest step in the company’s larger plans to consolidate operations at the Port of Vancouver and to grow. The port’s Board of Commissioners unanimously approved a deal in August 2010 that sold 20 acres to Farwest for $5 million.
The board’s decision opened a path for the company to pursue building the plant, which will house multiple operations, including industrial, warehouse and distribution facilities, office space, a covered truck wash and fueling area, a covered loading area and employee locker rooms.
Farwest’s new facility, to be built in two phases, would open for business sometime in 2012.
Aaron Corvin: 360-735-4518 or firstname.lastname@example.org