November 26, 2016

Financing a vision: Building in sustainability

Provided Photo

This the interior of the King Street Center, a Burlington-based community center serving over 500 low-income children and families with a variety of programs.

Planning for a new facility is doubly daunting for a nonprofit community organization. In addition to the fundraising and financing necessary for the construction, the nonprofit must create a plan to sustain operating costs for the new facility, knowing it cannot rely on increasing revenue or fees from low-income clients.

That was the challenge for King Street Center, a nonprofit community center in the heart of downtown Burlington.

The building vision

King Street Center serves more than 500 low-income children and families with pre-school and after-school programs, tutoring, mentoring, technology education, athletics and the arts. The center’s goal is to provide the core life-building skills necessary for a healthy and productive future.

The center’s board and staff understood they needed to redevelop their building to better meet the needs of their community. The vision was to combine renovations with expansion that nearly doubled the center’s size, while echoing the long history of its urban lakeside neighborhood. The result transformed the old center with two floors of classroom space, a renovated gymnasium, a more pedestrian-friendly entrance, and a rooftop playground.

The challenge

Although King Street Center successfully met its capital campaign goals to double the size of the building and create efficient, bright, and modern space, $1.2 million in enhancements and fit-up costs remained to truly maximize the building and expansion’s potential. Covering the projected energy costs for operating in the increased space was an additional concern. To fill the gap, King Street Center faced a difficult decision: cut the project potential short, secure costly long-term financing, or dip into its working capital reserves.

An outside view of the King Street Center is shown in Burlington.

Provided Photo

An outside view of the King Street Center is shown in Burlington.

Closing the financing gap

The center found the optimum answer in a fourth option. Vermont Rural Ventures brought in $1.8 million of additional capital to the project, using its New Markets Tax Credit allocation, and eliminating the need for King Street Center to choose between over-leveraging or short-changing their ambitious goals.

King Street Center used the New Markets Tax Credit investment to enhance its new building with solar photovoltaic panels, increase natural lighting opportunities, add improvements to its gymnasium and outdoor areas — and expand its early education services through the addition of a new early pre-school program for children 1½ to 3 years of age.

Managing energy costs for double the space remained a major concern. In downtown Burlington, peak electrical demand occurs during the day when businesses are operating — and when the most children are at King Street Center.

In addition to installing energy-efficiency measures, solar panels, and a high-performance heating ventilation and air-conditioning system, King Street Center chose to install rooftop battery storage. During peak-demand hours for the local municipal utility, systems draw power from battery storage, significantly reducing utility costs. The battery storage units recharge overnight, when electricity rates are lowest.

“The investment from Vermont Rural Ventures enabled King Street Center to fulfill its vision of a vibrant space for children and families, while minimizing building operating costs so we could continue to change lives every day,” said Vicky Smith, executive director.

Meaningful impact

The new facility also allows the King Street Center to expand and offer a fully licensed year-round Early Head Start program, new jobs, and a professional-quality kitchen; improve adult language instruction, performing arts, computer access, art studio and gymnasium space; purchase essential equipment; and expand administrative office space.

Financed in part by Vermont Rural Ventures using a portion of its New Markets Tax Credit allocation, the King Street Center building expansion has fulfilled the vision of serving as a bright and vibrant community center that can provide more services to more children and families with operating costs that are sustainable for the long term.

Beth Boutin is senior investment officer of Vermont Rural Ventures, a community development entity that uses New Markets Tax Credit allocations for community investments throughout Vermont. Vermont Rural Ventures is a subsidiary of nonprofit Housing Vermont.

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