New York’s development professionals bring expertise, experience, best practices, and the resources of the state and their communities to every project they assist. These case studies are a sampling of those projects.
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Galvstar
Galvstar will build a continuous coating line to galvanize steel for the construction and building materials industry. The line will produce 200,000 tons per year of a corrosive resistant product called Galfan, which is only available outside North America prior to Galvstar’s start up. The company has signed a lease to occupy 120,000 square feet of space at the former American Axle facility on East Delavan in the City of Buffalo. The first phase of the project will create 55 new jobs within the first year and invest $24.9 million into the facility. The company is committed to hiring residents of the East Delavan and Grider Community and to hiring the laid off workers of the shut-down Arcelor Mittal facility. Galvstar chose the Buffalo Niagara region after considering locating their new facility in Hamilton, ON or Detroit, MI. The decision to locate in Western New York was based on Buffalo Niagara’s proximity to the major U.S. and Canadian markets with convenient access to raw material supply and to a pre-existing customer base of Galfan that until now has had to be imported from overseas. Galvstar anticipates the start up of their operation in the 2nd quarter of 2011.
Project Need (problem)
Galvstar’s decision to look at the Buffalo Niagara region was based on the area’s proximity to their major markets. With easy distance to the east coast and Canada, Galvstar chose the region for its accessibility to its niche market from Boston to Washington and suppliers of raw material from Canada and Detroit. As a start-up, Galvstar could not obtain the amount of capital needed through commercial loans for their costs. The availability of small-issue bonds through Recovery Zone Facility Bonds and Industrial Revenue Bonds helped cover the start up costs associated with Galvstar’s operation.
Project Solution
BNE assisted Galvstar by providing site selection and the facilitating of site visits. Once Galvstar indentified their new location, BNE coordinated the incentive aspects of the project by facilitating discussions between Galvstar, Empire State Development Corporation and The New York Power Authority in order to secure Empire Zone and Hydropower benefits. BNE also assisted with the mezzanine financing of the project. In May 2010, the company was able to obtain tax free bond financing through an allocation of Recovery Zone Facility Bonds through Erie County and the City of Buffalo, as well as small issue Industrial Revenue Bond financing through the Erie County Industrial Agency. The sale of those bonds was completed in October and the company is capitalized at $20 million. With financing in place, the company will start the build-out of the space and the installation of the galvanizing machinery into their new facility. BNE continues to work with Galvstar to establish their operations through introductions to National Fuel Gas and NYS Department of Labor as the company lays the groundwork for starting operations.
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