MassDevelopment.com: Press Room: Financial Consortium Announces First In New England Loan Program For Small Business, Nonprofits

Financial Consortium Announces First In New England Loan Program For Small Business, Nonprofits
MassDevelopment, Sovereign Bank and Citizens Bank Unite, Utilize New Markets Tax Credits to Create Jobs, Community Investment
February 15, 2007

Contacts:
Adam Bickelman, MassDevelopment, 617-330-2086
Ellen Molle, Sovereign Bank, 617-757-5573
Michael Jones, Citizens Bank, 617-994-7586

MassDevelopment President/CEO Robert L. Culver today joined Citizens Bank of Massachusetts Chairman, President and CEO Robert E. Smyth, Sovereign Bank Massachusetts CEO Patrick J. Sullivan and United Housing Management (UHM) CFO Otis Gates at The Historic Charles Street A.M.E. Church in Roxbury to announce the creation of a $30 million New Markets Loan Fund (NMLF) to support economic development and job creation in low-income neighborhoods. The new program will target area businesses and nonprofit organizations in more than 400 eligible census tracts in 75 communities statewide. Consortium officials estimate the NMLF will help create 500 jobs over the next two years.

UHM, a Boston-based property management company with more than 1,100 affordable rental units in its portfolio, will use a $1.9 million NMLF loan to renovate a two-story office building at 530 Warren Street in Roxbury’s Grove Hall neighborhood and an adjacent garage for use as the organization’s headquarters and maintenance facility.

"It’s not often we see competing financial institutions come together in a common cause," said Robert L. Culver, MassDevelopment president/CEO. "The visionaries at Citizens and Sovereign deserve a lot of credit for joining forces to spur investment in the Commonwealth’s underserved neighborhoods. The structure of this fund is unique in New England, and perhaps the nation. I thank our banking partners for their commitment to promoting economic growth throughout Massachusetts."

MassDevelopment is leveraging the fund with New Markets Tax Credits allocated to the agency by the U.S. Department of the Treasury in 2004. MassDevelopment’s ability to leverage the tax credit equity from its investors allows the agency to provide loans that offer lower interest rates and longer terms than loans secured through conventional financing. Borrowers must locate in federally designated low-income census tracts to qualify and must use loan proceeds to acquire or renovate real estate, or to purchase equipment. The $1.9 million NMLF commercial mortgage loan issued to United Housing Management will finance the renovation of a two-story office building and a single-story garage property, located at 530 Warren Street. This facility will serve as the new corporate and maintenance headquarters for United Housing Management, LLC, allowing the company to retain its 42 employees.

"Citizens Bank is committed to supporting job growth and economic development in Massachusetts," said Robert E. Smyth, chairman, president and CEO of Citizens Bank of Massachusetts. "Through the Citizens Job Bank, a low-interest loan fund tied to job creation, we have invested more than $40 million in 41 local companies that have committed to creating a total of 1,025 new jobs for our local work force. We are pleased to support MassDevelopment and its New Markets Loan Fund, which will help create an additional 500 new jobs in Massachusetts."

Shortly after receiving the 2004 New Markets Tax Credit allocation, MassDevelopment distributed an "offering package" to a dozen Bay State banks seeking partners to capitalize the fund. Citizens and Sovereign banks submitted the winning proposals, and the new consortium set out to structure a fund that would offer cost-effective financing while enabling each lender to service the debt under a conventional repayment schedule. MassDevelopment will administer the fund, and has pledged $4.5MM to support the program. Sovereign Bank will provide $13MM in debt and equity, and Citizens Bank will provide $12MM in debt.

"We are thrilled to partner with MassDevelopment and Citizens Bank on this important program," said Patrick Sullivan, Massachusetts CEO for Sovereign Bank. "We believe in spurring economic development across the state – in every neighborhood and we know that these investments are at the heart of creating more jobs and more opportunities for all of the citizens of the Commonwealth. Sovereign is proud to be a part of stimulating economic development for a small business that deserves it and for a neighborhood that deserves it too."

MassDevelopment, the state’s finance and development authority, works with businesses, financial institutions and local officials to stimulate economic growth across the Commonwealth. Between FY 2004 and FY 2006, MassDevelopment financed or managed 589 projects statewide representing an investment of more than $4 billion in the Massachusetts economy. These projects are supporting the creation of 5,505 housing units and more than 23,000 jobs: 12,381 permanent and 10,679 construction-related.

Citizens Bank of Massachusetts is a $37 billion bank with 264 branches and 625 ATMs stretching from greater Boston to Cape Cod and the Berkshires. It is headquartered at 28 State Street in Boston. It is a subsidiary of Citizens Financial Group, Inc., a $164 billion commercial bank holding company headquartered in Providence, R.I. Citizens has more than 1,600 branches, approximately 3,200 ATMs and 26,000 employees in a 13-state retail branch network and has non-branch retail and commercial offices in about 40 states. Citizens is the eighth-largest commercial banking company in the United States ranked by deposits and ninth in assets as of March 31, 2006. Citizens is owned by RBS (The Royal Bank of Scotland Group plc). Citizens’ Web site is citizensbank.com.

Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), the parent company of Sovereign Bank, is a $90 billion financial institution with nearly 800 community banking offices, over 2,000 ATMs and approximately 12,000 team members with principal markets in the Northeast United States. Sovereign offers a broad array of financial services and products including retail banking, business and corporate banking, cash management, capital markets, wealth management and insurance. Sovereign is the 18th largest banking institution in the United States.

United Housing Management (UHM) is a professional management services company focused on creating and preserving affordable housing for working families in Boston. UHM strives to build communities with a focus on individual responsibility and fostering a sense of pride in one’s home and neighborhood. UHM’s employs 42 full-time workers, and manages more than 1,100 quality low-income apartment units in Boston’s urban core.