Hoiseth: Top priority at this stage is filling financing gap with additional financing.
More players are coming to the table and the pieces continue to fall in place that point toward Adam and and his dad, Tim Wagner, co-owners of Vertical Malt, which grows and malts a variety of barley for regional craft breweries, breaking ground on a facility on Crookston’s south end in 2020.
The Wagners, who farm near Fisher, launched Vertical Malt a few years ago in a single bay in the rear of Valley Technology Park. Then they moved into another bay, and then they moved across the hall into another bay. For more than a year, the wheels have been turning toward Vertical Malt leaving VTP and building its own facility, and as Adam Wagner has updated stakeholders over the past several months the broad brushstrokes have become more detailed and definite.
Wagner this week said the design for the malt plant, to be located on around seven acres south of Ingersoll Avenue, is coming together, a feasibility study is progressing, and state and federal grant opportunities are being explored, including the Agricultural Utilization Research Institute (AURI).
A local, primary lender has been lined up, CHEDA Executive Director Craig Hoiseth tells the Times, and now it’s about filling the funding gap with additional financing. The CHEDA Board earlier this year agreed to help the Wagners cover the cost of bringing longtime malting barley expert Rob Liedl into the fold, and Hoiseth said it’s anticipated that the Wagners will come back to CHEDA soon in search of additional gap financing. Hoiseth added that the primary lender has recommended that the loan to build the plant be backed by the Small Business Administration (SBA).
“Filling the remaining gap is the priority now, and, yes, we did talk about providing an IRP (Intermediary Relending Program) loan for up to $250,000,” Hoiseth explains. “Additionally, we own the land, and are discussing ways in which we might provide some land and infrastructure costs that benefit the start-up of operations.”
He said he anticipates the financial pieces being in place by year’s end, with the hope of breaking ground next summer.
Wagner says it’ll be a $3 to $4 million project. A big decision to be made, he added, is whether to build the plant a bit larger than needed initially to make future expansion easier, or stick with a smaller footprint at first, which would make expansion a more arduous undertaking.
“I would like to build it two expand early on, so we wouldn’t need to build an additional structure to add two malt-houses in the future, but it all depends on financing,” Wagner explained. “I would hate to put up a wall and then have to tear it down in two years.”
Current plans have the facility being 18,000 to 25,000 square feet in size and taking 10 to 14 months to build. Annual revenue would total, conservatively, around $1.3 million, Wagner said. Eight to 10 jobs would be created, with annual payroll of approximately $300,000.
Wagner said he is considering outside investment in the plant, and is pondering research partnerships with UMN Crookston and NDSU.