ULGM Black Business Hub Coming Closer to a Reality: A Major Anchor Tenant
Dr. Ruben Anthony Jr., CEO of the Urban League of Greater Madison, in front of the south east corner of the Villager Mall where the Black Business Hub will be built.
By Jonathan Gramling
The Urban League’s Black Business Hub planned for the southeast section of The Villager Mall property is picking up momentum as more and more partners are attracted to the project. The Black Business Hub will be a four-story building that will house business services organizations and companies as well as start-up small businesses that can benefit from shared services such as conference rooms as well as a synergy that would develop between the businesses — in some cases providing goods and services to each other — and the businesses and the resource providers.
After securing use of the land from the city of Madison, the Urban League has been busy putting together financial partners to raise the $23.5 million needed to make the dream into a reality. It appears that the funds will come from four primary sources. The first is governmental grants like the $2 million committed from Dane County and a possible $5 million from other governmental sources.
The second is private investment, large and small, that is attracted to the project through the U.S. Treasury’s New Market Tax Credit Program. According to Treasury, “The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). The credit totals 39 percent of the original investment amount and is claimed over a period of seven years.”
“We have to raise another $3 million to close on the New Market Tax Credit deal,” said Dr. Ruben Anthony Jr., CEO of the Urban League. “The project is about $23.5 million. We’re going to go into debt for some of it.”
The third source is private donations to the Urban League to increase its equity position in the project.
“We received a million dollars from Pleasant Rowland to help us with the build out,” Anthony said. “And we are very honored to have received that and that the Pleasant Rowland Foundation has the confidence in the project and the desire to help with Black businesses in the city. It’s going to make a huge difference in moving us closer to closing our finances on this deal.”
And the final source would be a loan from one or more private bankers.
“To close, we’re looking to possibly take on about $8 million in debt,” Anthony said.
What will impact the terms of the loan, outside the financial viability of the project, is the number of tenants who commit to the project, thereby creating a long-term revenue stream in monthly rents that create a greater certainty that the Urban League will be able to meet and its loan obligations and possibly lead to more favorable loan terms and interest rates.
In the past, Anthony projected that the Black Business Hub would need two anchor tenants to contribute to the long-term financial viability of the project.
On November 30, the Urban League announced that the Wisconsin Economic Development Corporation will move its Madison offices — and approximately 110 employees — to the Hub when it is completed in 2023.
“WEDC is one of the major anchor tenants that we had anticipated coming into the site,” Anthony said. “Having anchor tenants coming into the site definitely helps stabilize the enterprise over the long haul. It allows us to secure the loans to pay a mortgage. We know that we have solid revenue coming for an established period of time. That really puts us in a good position to pay a mortgage.”
It’s a two-for in the Urban League’s overall plan. Not only will WEDC be counted on for sizable monthly rents, but it will also be an important service provider to the small businesses.
“This really gives us the ability to have lots of support services right there in the building,” Anthony said. “There will be more support services in our facility than any other facility that I am aware of in the state. We’re going to have a financial institution there. We’ll have the Black Chamber and a bunch of other folks there to have resources at the ready for these businesses. WEDC had agreed to be a part of the Hub even before they said they would move into the building. They gave us $400,000 to add to our accelerator program. We’ve raised about $1.2 million for our accelerator program to give grants and loans to minority-owned businesses. They participated in that right off the bat. Now this really shows even their deeper desire to be a part of this. I think having them in the building is going to be like adding jet fuel to the processes that we already have to start and develop minority-owned businesses. I’m really excited about them coming in all the way.”
Anthony is enthusiastic about the message this sends on the state’s commitment to help minority-owned business start and grow in the state.
“Just think about it,” Anthony enthused. “A state agency that provides resources or funds to businesses being right there at the ready and accessible to all of these small Black-owned businesses. It’s a huge statement about how this state is committed to helping grow economic development focusing on the big companies like Foxconn and also dedicating themselves to growing companies here locally. If we learned anything in this COVID era is that we realized that we have to start growing and developing supply chain businesses here in the state. It’s just a great vote of confidence to know that WEDC and this state is going beyond talking and they are going to make the commitment to be there to help us with these small minority-owned businesses.”
The Black Business Hub concept is starting to garner the support and momentum needed to make the Hub a reality. Anthony plans to have the first shovels in the ground for the project by the end of 2021 and for the Hub be ready for occupancy in 2023.
“It’s exciting and it’s exhausting and it’s exhilarating,” Anthony said about the long hours that he and the Urban League have put into the project. Things are coming together. I’m really feeling like its coming together. There is a lot of support from the foundations and individual investors. People really believe in the project. I’ve said several times that if the Urban League can’t bet on Black businesses, who can? Although we’re stretching ourselves here, we believe this is necessary and the timing is right for us to really help make a difference. When you look at the statistics in Dane County, and only four-tenths of a percent of Black businesses have one or more employees, less than 40, it’s time that we do something. I think the time is now.”
Soon, minority-owned businesses may dot the economic landscape of Dane County helping to fuel overall economic growth in Wisconsin. The time is indeed now.