A partnership between Heritage Bank of Nevada and the U.S. Department of Agriculture is giving a fast-growing manufacturing company in Storey County some much-needed financial flexibility.
Executives of the bank and the USDA Rural Development said Tuesday the bank made a $5.6 million loan to refinance the mortgage on a major building at Tahoe Reno Industrial Center, the home of two related companies — Dynamic Isolation Systems and Scougal Rubber Corp.
Between them, the two companies employ about 170 with a payroll of close to $7 million a year in Storey County.
The refinancing removed a major uncertainty for Foley Tahoe-Reno LLC, the company that owns the building. Seattle businessman Tom Foley, a top executive of Dynamic Isolation Systems and Scougal Rubber, also controls Foley Tahoe-Reno.
The problem, company executives said, was this:
When Foley Tahoe-Reno financed the 100,000-square-foot industrial building on Denmark Drive in 2010, the loan called for a balloon payment at the end of its term.
But appraised values of industrial properties in the region have fallen, and the company faced two equally difficult choices — coming up with cash to cover the difference between the loan value and the appraised value or selling the building.
With rapid growth at Dynamic Isolation Systems — it’s added about 40 employees since last spring — the companies would be pinched if they needed to write a big check for their real estate.
The loan that Heritage Bank of Nevada made to refinance the building includes a guarantee through a business-and-industry program of USDA Rural Development.
Tom Traficanti, the chief credit officer of Heritage Bank, said lenders at the Reno-based institution put substantial time into understanding the value of the building as they considered refinancing the mortgage.
It was specifically built to meet the needs of the manufacturing companies that it call it home. Concrete floors, for instance, are much thicker than those in neighboring warehouses, mostly to support the heavy equipment that Scougal and Dynamic Isolation Systems use.
Sarah Adler, state director for USDA rural development in Nevada, said the loan guarantee made by her agency fits with its priority to encourage growth of manufacturing in rural areas.
USDA officials in Washington, D.C., used the Storey County loan as a platform to call for quick Congressional approval of a farm bill.
Dynamic Isolation System makes big rubber-and-steel bearings — some of them as big as 5 feet in diameter — that provide protection against earthquakes for bridges and buldings.
Its bearings have been installed in 375 projects worldwide, including the north approaches to the Golden Gate bridge and Interstate 80 bridges near Carlin.
It’s grown from 17 employees last spring to 62 employees today as it continues to land contracts in 15 countries around the world, said President Konrad Eriksen.
Scougal Rubber, meanwhile, makes large rubber-and-steel pads that are used in bridge construction. The pads allow steel girders to support traffic loads and deal with the stresses of temperature change.