Construction on a planned expansion of the Monadnock Food Co-op that was set to begin this winter will likely be delayed to late spring.
That’s because the organization is seeking a new funding source for the project that won’t be available until early 2019, said Drew Bedard, the Keene co-op’s finance manager.
Co-op leaders now hope to fund a portion of the expansion through the New Markets Tax Credit program, a federal incentive geared toward promoting economic development in areas designated as low-income. People or private firms invest in projects through an intermediary called a “community development entity” and then get that investment back through federal tax credits.
In this case, the co-op is working with Mascoma Community Development, an arm of Lebanon-based Mascoma Bank, according to John G. “Jack” Dugan, president of Monadnock Economic Development Corp., which has been helping the co-op look into the program.
The U.S. Department of the Treasury’s website notes that community development entities are selected through a competitive application process. Funds are typically awarded in February, Bedard said, which pushes back the start of construction.
“With a co-op expansion here in Keene, we are looking to offer healthy food, expanding our workforce and just bringing a lot of value to the downtown area,” Bedard said. “So we fit in within that criteria that will actually fit within these community development programs quite well.”
Leaders at the co-op began discussing the prospect of using the tax credit program after they discovered estimated construction costs would likely be higher than expected, he said.
An earlier estimate for the cost of constructing the expansion — a 6,000-square-foot, single-story addition to the east side of the building on Cyprus Street and more than 30 new parking spots — was about $2.27 million. But after speaking with contractors and reviewing appraisals, the co-op determined costs would be closer to $2.98 million, Bedard said.
That put the project over the eligibility threshold for the tax credit program — which would provide enough funding for the co-op to buy the expanded building, according to Bedard. The co-op leases the building from Monadnock Economic Development Corp., which originally built the facility, Dugan said.
Under the initial plan for the expansion, the development corporation would have financed the construction with an option for the co-op to buy the facility down the road.
“The intent always was that they would actually eventually own the building. That’s how we do all our projects,” Dugan said. “And this is kind of an exciting opportunity for them to own it and expand it sooner than later.”
The co-op has grown rapidly since it opened in April 2013. Sales topped $11 million in 2017, a spokeswoman said earlier this year, and store officials have said the co-op is outgrowing its space.
The area the co-op is in only recently became eligible for the tax credit program, Dugan said, estimating that around 30 percent of the project will be paid for through the proceeds.
“So it really makes it kind of a really attractive financial option for them,” he said.
Monadnock Economic Development Corp. also secured a $500,000 state block grant earlier this year intended to go toward the project. Bedard said the co-op hopes to still use those funds, though discussions about how the money will be used are ongoing.
The co-op is a member-owned market that offers healthy, sustainable foods, with an emphasis on local produce and products. It costs a one-time payment of $200 to become a member, of which there are more than 3,000.
Co-op leaders plan to leverage that membership with a member-owner loan campaign to raise additional funds to outfit the new space with necessary equipment, Bedard said.
The campaign will likely be launched sometime this winter, and that money paired with funds from the tax credit program should fully cover the construction and equipment costs, as well as the purchase of the building and land — about $7.5 million in all, he said.
Though the Monadnock Food Co-op will no longer be leasing its space from Monadnock Economic Development Corp., Bedard said the organizations hope to continue their relationship as the co-op continues to grow.
“It’s been a very good partnership throughout this process. Even when we decided to move forward with this ability to purchase the building and the land from MEDC, they have been more than gracious with helping us out throughout this program,” Bedard said.