The Michigan Institute of Aviation and Technology (M.A.I.T), an established vocational school in aircraft engine maintenance and turbine power applications, needed to expand its training facilities to accommodate growth in the area of wind turbine power generation. They chose to close two existing facilities and relocate to the 124,000 square foot former La-Z-Boy furniture distribution facility in Canton Township.
Their expansion plans posed several challenges. They would need to move out of two existing buildings, complete nearly $4 million in improvements and secure financing that would leave adequate working capital for expansion into other regions of the country.
The most significant obstacle encountered was with financing and the extremely high equity requirements in today’s commercial lending markets that often approach 50%. As project completion cost grew to nearly $9 million the purchaser became concerned with its available working capital for expansion into other markets and considered dropping the project. Chuck Hawes, President and C.E.O of M.I.A.T., remarked, “this deal was dead and buried, but our team kept finding solutions to our problems.”
As CCIM’s we are trained to identify obstacles and implement solutions that the market offers. With the expert assistance of our Asset Manager and SBA expert, Darcie Moss, CCIM, we were able to secure Conventional and SBA financing for 90% of the total project costs. $3,588,000.00 of the Purchasers equity came from securing a 504 Energy Conservation Bond. This is nearly twice the amount that the SBA typically provides for this type of project.
Under the provisions of the bond you must demonstrate a minimum 10% energy savings by producing an Energy Conservation Report. The report contrasted the two current M.I.A.T. facilities energy consumption to the new facility. In this case we were able to demonstrate at 13% reduction in natural gas usage and a 22% savings in electric usage. SBA participation was directly indexed to the energy savings in excess of 10%.
M.I.A.T. has begun improvements plans to open its new facility in June of 2010.
In these difficult times you cannot under estimate the benefit of a C.C.I.M. education.
For more information, please contact info@thomasduke.com.
