If plans go accordingly, REACH Inc., operations could get a “fresh” new look and ownership of some of their major facilities by Jan. 1, 2018, with the help of lending partner Craft3 and a New Market Tax Credit. A groundbreaking on the project is scheduled by the end of August.
Craft 3, which lends to individuals and businesses throughout Oregon and Washington, is making a large investment in REACH Inc.’s Maywood Drive manufacturing facility, part of a $7 million project for the nonprofit to buy the facility, improve aesthetics and double staff over the next five years.
The project will utilize the first federal New Market Tax Credit, the first such credit approved in Klamath County.
REACH is using a $6.75 million federal New Markets Tax Credit allocated by the National Community Investment Fund (NCIF), which includes a $3.85 million loan from Craft 3, to purchase the Maywood Drive manufacturing facility and its Washburn Way upcycle store.
REACH applied for the tax credit, meant for distressed rural areas, with the help of IPR consultants in the Portland area.
“The idea is to upgrade those areas and do the best we can to build up the job market,” said Ron Moe, executive director at REACH. “If we can do it here at REACH, certainly lots of other agencies could do it. The benefits far outweigh the effort we put into it.”
The New Market Tax Credit project is not strictly a loan, Moe said.
“There are funds inside the project, that as long as we live up to the compliance on the project, we don’t have to pay it back,” Moe said. “The loan part of this allows us to buy this property and the property on Washburn Way. There’s a little bit more than that in the loan that allows us to complete the project itself.”
REACH Inc., provides employment – both at their facilities and within the community – for individuals with developmental and intellectual disabilities.
Employees at the Maywood Drive manufacturing facility build pallets that are sold to Jeld-Wen. Runners are built and sold to Columbia Forest Products and Collins.
Moe hopes to double staff and participants over the next five years with expanded resources. All participants have been paid minimum wage or higher since Feb. 10.
“We want to pay more people more wages,” Moe said.
The top goal is to revamp the exterior of the building and add needed equipment on the interior.
“Most everything that’s going to happen is cosmetic,” Moe said. “Repair all the blemishes on the outside of the building, all of the equipment that you see in the yard, all the bins will be all painted one color.
“It will be an upgrade,” he added.
“It’ll be fresh, everything will look new.”
The parking lot will be restructured, resurfaced and re-striped, and landscaping will be added to the site.
All lighting will be transferred to LED at the facility, saving REACH about $10,000 per year for three consecutive years.
The project required an investment by REACH, which the nonprofit provided via fire insurance funds. The recycling portion of REACH’s facility was destroyed by fire in July 2015.
“Anything that we repaired or upgraded with the fire insurance money, we got to use that toward our investment in the project,” Moe said.
The R.L. Wendt Family Trust also lent a hand, and provided a “generous” amount of funds toward the project, though Moe wouldn’t specify how much.
“If it weren’t for Dick Wendt, we’d have been out of business years ago,” Moe said of Jeld-Wen’s late co-founder.
“Not only were they the owner of the building,” Moe added, “... they helped us out with some of the investment toward the project as well. They worked with us over many, many months on this as the owner of the property.”
REACH Inc., moved into the Maywood Drive facility – previously a door and window plant – in 1992.
The nonprofit moved an upcycle and recycle sorting space into a former Washington Federal building at the corner Shasta Way and Washburn Way in 2016.
Washington Federal provided the space for free before REACH purchased it as part of the New Markets Tax Credit.
The project to improve the aesthetics and capacity at REACH stem from plans former CEO Sam Porter brought before the board of directors in spring 2015 before his departure from the nonprofit.
The day REACH caught fire, July 7, 2015, Porter was in the Portland area meeting with an investor about the potential project.
“So, we had to put it on hold,” Moe said.
The delay added to REACH’s project potential, however.
“As we put everything together after the fire, the federal government this last fall doubled the amount of tax credits available to companies in the United States,” Moe said.
“Because of that, we reiterated that we would like to do this and it kind of went from there.”
Moe praised Craft3 for the investment made at REACH and the project.
The company has locations in Port Angeles, Seattle, Spokane, and Walla Walla, Wash., as well as Astoria, Bend and Portland.
“We’re impressed with them,” Moe said.
“Their plan to open an office here in Klamath Falls – we believe it’s an asset. They’re the kind of grounded, down-to-earth company that can add some real value to the community.”
The lender is considering the downtown area for its Klamath Falls office.
“Sometimes it’s hard to find a lender as a nonprofit,” Moe said. “To find the mainstream lender that will do these kinds of things for us is really difficult because of the nature of our business. Them coming into this field and really understanding us as a nonprofit has been kind of a breath of fresh air.”