Economic Development

‘Power of 32’ Loan Fund Seeks Development Projects

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YOUNGSTOWN, Ohio – The Power of 32 Site Development Fund has funded four projects in the four states where it operates – but none yet in any of the five counties in Ohio that are part of it.

“The issue we’re trying to solve is a lack of prepared, pad-ready inventory,” said Dennis Yablonsky, chairman of the Power of 32 fund and former CEO of the Allegheny Conference. “Without a development-ready site, other issues such as workforce are moot,” he said.

The $49 million fund, launched in 2014, provides money to close funding gaps in the capital stack for site preparation activities, generally after private equity and public funds, Yablonsky said. Money can be used to acquire real estate, environmental remediation, infrastructure installation and utility work.

Power of 32 encompasses 32 counties in four states, including five in Ohio — Mahoning, Columbiana, Jefferson, Belmont and Monroe.

“We have not yet had an application from Ohio. We are puzzled by that,” Yablonsky said.

Addressing that void was the reason the economic development fund held a meeting Thursday morning in the Covelli Centre. Sponsored by the Western Reserve Port Authority and The Business Journal, the event originally was scheduled for the port authority’s economic development office in Penguin Place. It was moved because the response was greater than anticipated. More than 60 individuals who represented economic development organizations, government and other private-sector entities attended.

The objective was to outline the fund’s purpose, convince local leaders of the initiative’s importance and “convince those of you that have a need to interact with us and apply for a unique funding opportunity to help develop sites,” Yablonsky said.

The focus is on commercial and industrial activities, although residential and retail can be components of mixed-use projects.

“That is not the type of project that we’re looking for,” Yablonsky said. “We’re particularly interested in brownfields and other kinds of sites where there will be a positive community impact as well as the economic development impact.”

So far, Power of 32 has provided support for four sites in two states, Pennsylvania and West Virginia, and has about $20 million available, said Josh Lavrinc, CEO of Callay Capital and site fund manager.

It is a “patient loan fund,” with subsidized interest rates, he said. “We are looking at a five-year term where we like to see sites that we invest in, build out their site, and return to productivity within five years so that we can get that money back,” he said, and lend it again.

Because of restrictions on some of the partners in the fund, it can lend up to $3 million per project outside Pennsylvania, he said.

One of the fund’s four projects is the Turnpike Industrial Park in Beaver County, which received a $6.9 million loan. The industrial park in Potter Township (Beaver County) has access to interstates 376, 79 and 80, and is within 15 miles of the Shell cracker ethane cracker under construction in the county.

The project would not have been completed without the Power of 32 support, said Pat Nardelli, president of Castlebrook Development Group. “It’s just a great, great fund,” he remarked.

WRPA officials already are in discussions with the fund about local opportunities, said Anthony Trevena, its economic development director and head of its Northeast Ohio Development and Finance Authority.

“We’ve got a lot of potential projects here in the Mahoning Valley,” he said. “Knowing that there’s additional resources, especially with those focused on brownfield cleanup and remediation, we’re very excited.”

Many projects have a gap in financing and the ability to identify another resource to close such gaps is “something that we can take advantage of,” said T. Sharon Woodberry, director of community planning and economic development for the city of Youngstown.

“What makes it helpful is you don’t necessarily have to have a project that’s ready to go,” she added. “It’s something that could be of tremendous benefit for projects in which we have a developer and no end user.”

Private sector interests also appeared eager to explore the opportunities the fund could provide.

Routh-Hurlbert Real Estate Co., Howland, has two large sites, including a brownfield that needs preparation and better access, according to real estate agent Dan Crouse. “People are wondering what to do with them and this gives an avenue to prepare them,” he said.

The Shenango Valley Economic Development Corp., which has a master lease for the former Westinghouse complex in Sharon, Pa., is working with the commonwealth of Pennsylvania and Penn-Northwest Development Corp. to redevelop that property, Clancy Atkinson, president of the development corporation, said. Power of 32 could provide critical funding to redevelop the property.

Pictured: Dennis Yablonsky, chairman of the Power of 32 fund.

Published by The Business Journal, Youngstown, Ohio.