Impact in Action

Catalytic Capital to Build Rural Communities

Deal Highlights

Deal Type/Amount
$2.5MM permanent loan, replacing an interest-only construction loan of an equivalent amount
Investee Central Lincoln County YMCA
Investor(s) Coastal Enterprises, Inc. (CEI)
Close Date August 2018
Geography Damariscotta, Maine (Rural Region)
Terms 5% fixed-rate interest with 38-year payback
Purpose CEI made a $2.5MM interest-only construction loan in 2017 to support the YMCA’s facility expansion project. Thanks to the USDA Community Relending Program, CEI can replace the YMCA’s construction loan with $2.5MM in permanent financing-- with terms that would not be possible otherwise.
Impact Goals The new, energy-efficient facility is expected to deliver higher-quality service to residents of this rural community, with public pre-K programs, senior support services, nutrition education, transportation to support access to the facility, and scholarships for low income community members.
Supporters USDA Community Facilities Relending Program and Uplift America
Expert Daniel Wallace, CEI, [email protected]



Back in 1973, the residents of the small coastal town of Damariscotta, Maine built a local recreational center. The structure was basic, more like an airplane hangar than a wellness center. But at the time, it was enough to create a community hub that grew in popularity with every passing year. By the end of the 1980s, the center was purchased by the local YMCA and today operates as the Central Lincoln County (CLC) YMCA, serving 20,000 residents from ten rural Maine communities.
The economy in this region faces challenges similar to many non-industrial rural places in the U.S.; over half of students in the area participate in the federally subsidized school lunch program, according to the Annie E. Casey Foundation's Kids Count Data Center. Soon though, scores of children will be cooking up their own meals with fresh, local ingredients in a new teaching kitchen, just one of dozens of features included in the YMCA’s vision to transform its legacy home into a 68,000 sq. ft., state-of-the-art facility for the community.
This new facility is thanks to the Y’s successful $5 million capital campaign and a crucial $2.5 million loan  from Coastal Enterprises, Inc. (CEI), a 40-year old a Community Development Corporation (CDC) and Community Development Financial Institution (CDFI) that serves Maine and other rural regions. Meant to bridge a gap between the Y’s capital raise and the final construction costs, the CEI loan was made possible by a unique government re-lending program in partnership with foundations, banks, and other supporters.

Catalytic Capital For Rural Communities

The Central Lincoln County YMCA is one the first organizations in the country to be approved for an impact investment through the USDA Community Facilities Relending Program, a multi-pronged program designed to work with CDFIs like CEI to facilitate much-needed infrastructure projects in rural communities that suffer from underinvestment.
The USDA program, created in 2016, is allocating up to $500 million in long-term, low-cost financing to CDFIs around the country who know the unique needs of their communities. In turn, these local CDFIs re-lend the USDA dollars to organizations planning facilities projects, for the construction of schools, health care centers, child care facilities and other projects in underserved communities.
To help these local lenders ramp up their capacity, a cohort of foundations, banks, and community development organizations created the Uplift America Fund, an independent grantmaking pool created explicitly to help lenders build capacity to execute this USDA program.
The Uplift America Fund combines USDA funds, bank financing, and private grants to community lenders, enabling them to provide low-interest loans and technical assistance to community centers in economically distressed areas around the country. With Mary Reynolds Babcock Foundation taking the lead, foundations – including FordHeron, JP Morgan Chase, Northwest Area, and Winthrop Rockefeller –seeded Uplift America with $22 million.
CEI received a $20 million loan from the USDA Community Facilities Relending Program, which was guaranteed by Bank of America. CEI also received a $1 million, five-year capacity building grant from Uplift America. With that package CEI could provide one of the first loans approved from this USDA program.

The Deal Structure

The Y had been fundraising for years toward its $7.5 million goal. But it still needed another $2.5 million to cover construction costs, and staff were concerned about going another winter without getting started. The Board of Directors was prepared to take the risk of borrowing to fill the gap in capital need, but they could not find a bank that would lend against future fundraising— nor with terms the Y was confident it could meet. Then, they approached CEI, which had just received the USDA allocation.
There are two loans in this transaction. First, CEI made a $2.5 million, interest-only construction loan to the YMCA. However, that’s not a loan CEI would make without the confidence that subsequent, permanent financing was in place.
That’s where the USDA came in; the USDA program provided the funds for the permanent loan to replace the construction loan originally made by CEI. The loan terms are ideal for the Y: a long-term fixed-rate loan at 5 percent payable over 38 years, which makes the monthly payments accessible for an organization with a steady but modest cash flow. The Y continues to fundraise, however, as it hopes to add a pool in the next 3-5 years.

Getting to Impact: Deepening the Ability to Serve the Community

The impact of this investment has personal resonance for CEI loan officer Daniel Wallace, who grew up, played youth soccer, and won a youth tennis tournament at the Y when he was a middle schooler.
Thanks to the loan, the fully renovated Y will help serve the community more deeply as its needs change over time. It will be home to the community’s first private pre-k and eventually aims to offer space for public pre-k to local public schools that do not have room for early learning programs. Two nonprofits will relocate to the renovated facility, sharing space and resources with their clients, Y members, and visitors: the nonprofit FARM will spearhead a teaching kitchen, and Spectrum Generations will expand its senior living program and support skills. Other ADA accessible upgrades are also helping the Y to be inclusive to all.
This momentum has also produced additional bounty. Notes the Y’s CEO Meagan Hamblett, “Because we were able to put a shovel in the ground with funds that CEI made happen, the community has rallied with additional contributions.” For instance, the baseball field on the property has been spruced up by construction partners. And one local donor committed additional funds to insulate three walls of the original building, which wasn’t part of the original renovations.
This oasis of wellness and community, especially during long Maine winters, has found new life, thanks to a public-private partnership intended to do just that.
Note: MIE presented a webinar related to the launch of the Uplift America Fund when it first was launched.

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