NEW YORK--(BUSINESS WIRE)--Citi, New Markets Community Capital, and MBS Urban Initiatives provided New Market Tax Credit (NMTC) financing for rPlanet Earth, a new company that is bringing more efficient polyethylene terephthalate (PET) recycling to the United States. This new facility will be rPlanet Earth’s first plant and serve as the company’s headquarters.
Financing for the project was structured through the NMTC Program, a federal initiative designed to spur investment in businesses and real estate projects located in low-income communities. Citi provided $7.5 million in NMTC allocation and $6.6 million of NMTC equity. New Markets Community Capital provided $8 million of NMTC allocation, and MBS Urban Initiatives provided $5 million of NMTC allocation. Private investors provided the remainder of the capital.
The new facility will be vertically integrated from raw material feedstock (baled post consumer PET) to finished products (food grade recycled PET – “rPET” packaging). By employing highly efficient and technologically advanced equipment, rPlanet will be able to eliminate costly intermediate stage production steps, supplier mark-ups and transportation costs, which in turn will allow it to offer high quality, competitively priced rPET bottle grade packaging for local, regional and national customers. The facility is expected to create over 100 high quality jobs.
“Citi is honored to partner with rPlanet Earth to help finance this new state-of-the-art manufacturing facility,” said Richard Gerwitz, Co-Head of Citi Community Capital. “The creation of accessible high-paying jobs will be an economic boost to the residents of the local communities, and the increased availability of bottle grade recycled PET material will provide a positive environmental impact to the entire Southern California region.”
Gerwitz went on to say “As a result of these positive environmental and social impacts, this transaction will contribute to Citi’s Environmental Finance Goal to lend, invest and facilitate $100 billion over the next 10 years to activities that reduce the impacts of climate change and create environmental solutions that benefit people and communities.”
“We are very pleased that Citi, New Markets Community Capital, and MBS Urban Initiatives have partnered with us to provide a portion of the capital, in the form of low cost debt financing, that is required to build-out and equip our first plant in Vernon, CA,” Said Robert Daviduk, Co-CEO of rPlanet Earth. “We look forward to commencing operations in 2017 and having a positive impact on the local economy, its residents and the environment.”
“We are looking forward to creating jobs in an economically distressed area of Los Angeles. Our facility will be the first in the U.S. that offers a broad range of rPET packaging to the consumer products, food, beverage and retail industries,” said Joseph Ross, Co-CEO of rPlanet Earth. “We intend to do good by our stakeholders, employees and customers in an environmentally sustainable manner.”
“New Markets Community Capital/TELACU is honored to have been able to team with Citi and MBS Urban Initiatives in providing New Markets Tax Credits to close the financing gap that allows rPlanet Earth to move forward with the tenant improvements of a new leading edge technology manufacturing facility in one of the more highly distressed communities in Los Angeles and that will also result in the creation of a substantial number of good paying jobs,” said Jose Villalobos, Senior Vice President of New Markets Community Capital. “The rPlanet Earth project will serve as a catalyst for decades to come as the community moves to rebuild and to once again thrive.”
“MBS Urban Initiatives is proud to use our NMTC allocation to make sure jobs from the rPlanet Earth LA facility will be within reach for people within the surrounding communities,” said Laurel Tinsley, Executive Director of MBSUI. “Our NMTC investment into rPlanet is just a continuation of the work McCormack Baron Salazar has done for over 30 years in Los Angeles and nationally to revitalize and transform low-income communities into neighborhoods of choice with access to safe and affordable housing and quality living wage jobs. The MBS team will expand its existing community outreach efforts as a result of the rPlanet Earth NMTC investment. Working with our community partners, MBS will manage a job readiness and outreach program that will help recruit and train eligible candidates for employment opportunities with rPlanet Earth when the facility opens in 2017. These efforts will be coordinated and implemented through the Pueblo del Sol Community Service Center, which provides job readiness, health and youth programs for local residents and the surrounding community of the Boyle Heights/East Los Angeles area.”
About Citi Community Capital
Citi Community Capital (CCC) is a premier financial partner with nationally recognized expertise in financing all types of affordable housing and community reinvestment projects. CCC's origination, structuring, asset and risk management staff across the country provides creative financing solutions designed to meet their clients' needs. CCC helps community development financial institutions, real estate developers, national intermediaries and nonprofit organizations achieve their goals through a broad, integrated platform of debt and equity offerings. Additional information may be found at www.citicommunitycapital.com.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Additional information may be found at http://www.citigroup.com | Twitter: @Citi | YouTube: http://www.youtube.com/citi | Blog: http://blog.citigroup.com/| Facebook: http://www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi.
About rPlanet Earth
rPlanet Earth is a “green tech”/ “clean-tech” company focused on the manufacture of high value added food, beverage, cosmetics, pharmaceutical and other types of containers with the primary raw material feedstock being post-consumer Polyethylene Terephthalate (PET which is also known as Plastic #1 – primarily clear water and soda bottles). Our first facility will be located in Vernon, California and when completely built out will recycle over 160 million pounds per year of water and soda bottles to be used in the domestic manufacture of new recycled PET (‘rPET”) based containers. The process we employ is known as “bottle to bottle” recycling which is the highest value added and most environmentally sustainable use of postconsumer PET. Our company will increase the supply of rPET in a market that is best characterized as having a chronic shortage of supply of bottle grade recycled PET despite very high levels of demand.
Our company will have a tremendous impact on the availability of recycled bottle grade PET in the U.S. that can be used in direct food contact applications. Bottle grade rPET has to meet the strictest standards set by the FDA for direct food contact applications and our facility will be one of the few in the U.S. that is capable of producing this extremely high quality material. The process is referred to as “bottle to bottle” recycling because bottles that have been discarded can be recycled into a clean, decontaminated PET flake that can be used to make new bottles. Bottle to bottle recycling is truly a closed loop process that reduces the need for the production of virgin PET from fossil fuels (crude oil & natural gas). As a result our highly efficient plants will help to alleviate the negative environmental impact caused by the production of virgin PET. It is estimated that recycling PET uses 84% less energy, produces 71% less greenhouse gases and uses 90% less water versus the manufacture of virgin PET. 100% of the food grade packaging materials that we produce will be manufactured in the U.S.
About New Markets Community Capital
In 2002, TELACU formed New Markets Community Capital, LLC for the specific purpose of applying for and securing allocations of New Markets Tax Credit (NMTC) from the U.S. Department of Treasury/CDFI Fund. TELACU has been successful in its efforts and has secured six NMTC allocation awards totaling $205 million. NMCC utilizes the NMTC Program to build partnerships and make investments that serve as vital catalysts in generating a substantial increase in jobs, services, advancement, and self-sufficiency for the residents of highly distressed low-income communities. NMCC has used the $205 million to make loans, and equity investments, at below market terms to eligible operating and real estate projects throughout California. NMCC has funded sixteen projects that will create/retain in excess of 1,500 permanent jobs.
Formed in 1968, TELACU is a nonprofit community development corporation with a mission of addressing the needs of low income communities through its economic initiatives by providing access to capital, capital investment and job creation. The TELACU Model is based upon the belief that there is no more viable business venture than one that is economically sound, enhances the community, and positively impacts people’s lives.
Additional information may be found at http://www.telacu.com.
About MBS Urban Initiatives
MBS Urban Initiatives CDE, an affiliate of McCormack Baron Salazar, Inc. (MBS), has received six NMTC awards totaling $275 million. MBSUI is investing its allocation in low-income communities in cities around the country, with a focus on developments that accelerate renewal by bringing jobs and economic activity back to these neighborhoods. MBS has developed over $3.52 billion in residential and commercial real estate, all of it in the most challenging low income urban communities around the country, and the investments of MBS CDE complement this work.
Our NMTCs help fund commercial, retail, mixed-use and for-sale developments which enhance new housing development in distressed communities across the country, thus bringing to these neighborhoods critical jobs, services, and opportunities for advancement that will ensure and expedite their revitalization. Since receiving our first award in 2006, we have closed 36 NMTC transactions (in roles as CDE, QALICB, Developer and Consultant), including 7 NMTC transactions closed with third party allocation. These transactions helped to close financing gaps and enable more than $850 million in high-impact developments in deeply distressed neighborhoods to become a reality.
Additional information may be found at http://www.mccormackbaron.com/ | Twitter: @McCormackBaron | YouTube: https://www.youtube.com/McCormackBaron1 | Facebook: https://www.facebook.com/McCormackBaronSalazar/ | LinkedIn: https://www.linkedin.com/company/mccormack-baron-family-of-companies.