Who is "Snowy Mountain Development" and what are they up to?

 

January 4, 2023



By Sara Hudson

Executive Director

SNOWY MOUNTAIN DEVELOPMENT

Recently, I have received several emails and phone calls about Snowy Mountain Development. I don’t have much of a marketing budget so I can certainly understand the confusion. Hopefully, this will help.

Snowy Mountain Development (SMD) is made up of two organizations: Snowy Mountain Development Corporation (SMDC) and Snowy Mountain Development Authority (SMDA). SMDC and SMDA are very different kinds of organizations. SMDC is a tax exempt 501(c)(3) nonprofit organization established by Articles of Incorporation; SMDA is a tax-exempt quasi-governmental port authority established by Joint Resolution of six county commissions (Fergus, Petroleum, Musselshell, Golden Valley, Wheatland, Judith Basin).

SMDC is governed by an 18-member board; SMDA by a 7-member board (County Commissioners Butcher, McKenna, Pancratz, Blomquist, Sell and McDonald and one at-large seat, Robinson). They are independent legal entities that function as sister organizations with a shared mission to build community and economic capital in Central Montana. The two boards meet jointly; both are accountable and transparent to those they serve through annual audits, cooperative agreements, and open meetings.

SMDC member contributions are based on per capita population; SMDA’s are based on new taxable value. SMDC’s contributions make up less than 1% of the organization’s assets; SMDA’s make up all of it (because it is new).

Montana law affords SMDA broad authority that SMDC’s 501(c)(3) status does not. SMDA can buy and sell land, issue bonds, create limited liability companies, participate in tax credit structures and syndication, and moves closer to the speed of the market than SMDC.

An additional advantage is increased access to funding. Nonprofits are not eligible to apply for several programs; however, port authorities—considered political subdivisions—are eligible for many. This niche is where the SMDA Board is positioning the organization. Operating as sister organizations presents the opportunity for SMDC and SMDA to layer funding and incentives to cash flow development.

At its December Joint Board meeting, for example, the SMDA Board agreed to assist Petroleum County’s effort to restore its courthouse. The County wants to use historic tax credits to cash flow the project. Unfortunately, the County can’t participate in the deal structure. But SMDA can. The Board agreed to create a limited liability company (Snowy Mountain Development LLC) to participate in the tax syndication. Once the credits wind down over five years, SMD LLC is dissolved.

This is an exceptional example of flexing the muscle of a port authority. It will set precedent for SMDA to support its local governments in sophisticated deal structures like these (federal and state Historic Tax Credits, New Markets Tax Credits, and federal and state Housing Tax Credits). In addition, SMDA may leverage US HUD stabilization funds to buy blighted properties, fix them up, and put them back on the market to attract the moderate-income workforce our businesses are seeking. SMDA may also layer federal and state Housing Tax Credits with the stabilization funds to round out a more robust capital stack. This is important because it significantly reduces cost burdens on local governments and local taxpayers.

How do we get it done? As the Executive Director of SMDC, I manage five professional staff and two contractors (loan servicing and accounting). As the Executive Director of SMDA, I leverage SMDC’s staff through professional contracts. This arrangement provides revenue for SMDC and keeps SMDA lean while we build its budget and organizational assets.

Our goal is to build a $1 million budget within SMDA’s first 24 months. In February, SMDA will apply to US EPA for $3 million to provide nationwide technical assistance on brownfields grants and loans; in June, SMDA will apply to US HUD for $8 million to support housing redevelopment; later in the year, SMDA will apply to US EDA for $5 million to support a workforce development. In 2024, SMDA will establish a small loan portfolio to support our local governments and lending institutions as the Fed increases interest rates. These increases will create more demand for gap financing—especially for new business startups.

Operating a 501(c)(3) alongside a port authority is an effective model in the economic development industry. However, SMDA is unique in Montana because it is the very first multi-county port authority. The 15 other port authorities are comprised of single counties only. It is our hope that, over time, SMD will serve as a best practice for other rural organizations that have limited resources to compete for limited funds.

SMD is committed to excellence in service. We appreciate the calls and emails asking for clarification. Please continue to reach out to us at 535-2591 for any additional questions you may have.

 

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