Photo: Jo Bradley and Cassie Polhemus. Photo by Katie Kittell.
by Timothy McQuiston, Vermont Business Magazine On April 1, Cassie Polhemus took over as CEO of the Vermont Economic Development Authority. Created by the Legislature 45 years ago, VEDA is a vital financial institution that the person on the street may not be familiar with. But the average person certainly knows its work as a contributing lender to some very significant projects across the state.
Nor would the average person be familiar with Polhemus, who has worked her way up through the executive ranks of VEDA. But that person just might know her now predecessor, the ebullient Rosalea Bradley. Bradley, who is known by everybody as “Jo,” has led VEDA for over 20 years. She runs a sound financial institution with a keen mind, winning smile, vault-like memory and high heels.
She holds herself, VEDA, and the borrowing firms accountable. Bradley also famously gets their annual meeting started on time, and more importantly, ended on time.
Now she has handed over her tough love and institutional expertise to Polhemus.
Despite the risk and reward of running an operation that issues about $100 million in loans every year, VEDA has been, and there’s no getting around this, a fun place to work.
Cassie Polhemus is certainly a lower-key person in a Williams College-kind-of-way than Bradley or her former right-hand man COO Steve Greenfield. But in an interview with the two women in March, and many interactions over the years, she is no less professionally adept and just as upbeat about Vermont as Jo Bradley. And she’ll have to be.
While Polhemus and Bradley have roots in Vermont, with Bradley graduating from Johnson State College, they have the shared experience of growing up as military brats. Something they describe with pride and humor.
“I would say I mostly grew up in the Washington, DC-Virginia area,” Polhemus said, “but I lived, you know, in California, South America and knew that I always was a New Englander at heart. And so I went to college in New England and decided after that that I wanted to stay in New England. So I lived in Connecticut after college and for a while it was great until we had our first child. We were living outside of New York City and decided that we really wanted to kind of have a better quality of life and moved to what we considered vacation land, which was Vermont.”
“We moved here about 23 years ago and it's been great.”
Photo: Jo Bradley and Cassie Polhemus. VBM Photo.
She started at Howard Bank, took a break for about seven years when another kid came along, went back part-time, “and then met Jo and Jo hired me and it’s been Nirvana now for five and a half years.”
She worked as a commercial loan officer initially, then moved over to director of operations before taking over from Steve Greenfield as COO when he retired at the end of 2016.
VEDA has changed much since its inception in 1974. The Legislature wanted a base-line industrial lender much like other quasi-public entities like the Vermont Housing Finance Agency is for housing and the Vermont Student Assistance Corporation is for college students.
The loans tend to be issued in conjunction with traditional and even unconventional financing. VEDA was part of the financing to get the Brooks House in Brattleboro redeveloped after its devastating fire in April 2011.
The Brooks House is a prominent architectural and commercial centerpiece of the downtown. Its charred hulk cast a literal and metaphorical shadow across Brattleboro.
VEDA and others stepped in to finance the $23 million redevelopment, through an investment group called Mesabi, which was brought together by the Stevens & Associates. They also employed New Market Tax Credits.
If it all sounds complicated, it was. VEDA offers both aid and confidence to other investors because of its stability.
In a similar way, VEDA is part of the redevelopment of the Putnam Block in downtown Bennington. Also at a crucial downtown crossroads, this project cleared its final funding hurdle in early January with $3.1 million in financing commitments.
“That’s another very complicated project that was a little uncertain if it was going to come together or not,” Bradley said.
The state bankrolled VEDA initially and sent it on its way. VEDA uses traditional financing instruments like commercial paper (short-term, unsecured debt) and its own earnings to leverage capital.
In the early 1970s, the state saw the need to bolster the core of its industrial economy.
Early loans went to Cabot Cooperative Creamery, Hubbardton Forge and in 1993 to Green Mountain Coffee. Their more recent history includes loans to Cabot Hosiery Mills (Darn Tough Socks), Blake Hill Preserves and Caledonia Spirits (Barr Hill Gin).
Jo Bradley is especially fond of a manufacturer in Northfield which keeps growth at an exceptional rate.
Photo: Darn Tough Socks annual sock sale. VBM Photo.
“The one I love is Darn Tough Socks,” she said. “That’s a great company that one of our lenders has worked with for years.”
“We’ve stayed with them and they’ve stayed with us,” even through economic downturns.
“It wasn’t always easy for them. But they’ve done it,” she said.
Among the many, many success stories are Mamava in Burlington, Peerless clothing in St Albans and Greensea in Richmond.
“The great thing about this is you ride around the state and you can say, we were part of this, and the fact that I’m retiring and have been a part of that is really amazing.”
And, Polhemus adds laughing, “We’ve been part of just about every brewery.”
Beer has become like maple and cheese to the state’s iconic brand.
VEDA even invested in Jasper Hill Farm, when the idea of aging cheese in a cave in Greensboro, Vermont, seemed crazy, until they brought in some samples.
“Oh my god this is so good!” Bradley said. “It was so delicious.”
“That’s what it’s like. What’s your product? Is your product any good?”
Photo: Jasper Hill cheese. Courtesy Photo.
Jasper Hill won two more Best of Class ribbons at the US Championship Cheese contest in Green Bay in March.
Even in money lending, the human element is crucial.
But in the rough and tumble world of finance, not everyone wins.
A couple recent business failures include the startup eCorp English in Middlebury in 2012. Another is the dairy operation of Nordic farm in Shelburne. They both cost VEDA, and others, a pile of money.
eCorp, a Web-based language training service, folded in September 2012 after less than two years in operation. VEDA initially loaned eCorp $425,000, which it then restructured once the loan became troubled. Other lenders did the same, but ultimately it wasn’t enough to rescue it.
“A woman came in and convinced not only us but the entire economic development contingent in the state,” Bradley said. “So everyone was very excited.”
“There's always an element of wishful thinking, right? And some of it works out, sometimes it doesn't, but it's not like we didn't look at all the numbers and do what we thought was a really good job underwriting and doing our due diligence.”
As for Nordic Farm and its famous white barn with its red roof just off Route 7, the dairy operation was an expensive, state-of-the-art robotic milking operation. Bradley said the families leasing it simply weren’t able to make a go of it, “for whatever reason.”
Polhemus said there were issues with deferred maintenance and “basically the farm was abandoned.”
The eCorp failure cost VEDA $368,000 and Nordic Farms resulted in a $203,000 loss.
“They’re significant but not very significant,” Bradley said. “It doesn’t keep me up at night, and I’m sure it won’t Cassie."
“It’ll be interesting to see how the Vermont economy evolves around food,” Cassie Polhemus said.
VEDA is part of the broadband initiative now making its way through the legislature. It’s only about $11 million Bradley said, but it willing be “very risky” for these small firms.
But, Bradley points out, “We’re obviously a lender that’s will to take a risk.”
“We have a strong equity position, so we can stand to take some losses,” she said.
Polhemus added, “We reserve like a bank,” even though their loss rate, given their mission is higher than a commercial bank, about 1 percent for their big loans and about 2 percent for their small business portfolio. A bank might be only about a 35 basis points (0.35 percent).
So, with Cassie Polhemus taking over, where to from here?
“Well the mission of VEDA stays the same,” she said. “And it’s a strong mission of providing a broad range of financing tools for eligible businesses and to support the economic vitality of Vermont.”
So what might change is, what is the Vermont economy doing? How can we adjust and be nimble and responsive to meet that changing need? That doesn’t change overnight. So, for instance, how is the Ag economy changing, and how can we be responsive to that?”
“A good example of that might be hemp. That’s clearly on the horizon. So, let’s take a look at it. There’s clearly a demand for it. We need to understand, what are the risks? What do regulators think about it? How do we prepare ourselves?”
Polhemus noted that tech companies are inherently risky. And if the state is promoting tech companies, for instance, “How does VEDA walk that balance beam?” between its economic development mission and the financial risk.
And VEDA has to be financially capable of doing all that, “and make sure our lenders are happy with us and our decisions.”
Over time, VEDA’s role has expanded and evolved. Small agricultural loans account for the bulk of total loans. Last year, farming-focused Addison County received the largest number of total VEDA loans.
Energy projects, in particular solar installations, have also become a recent recipient of VEDA financing, as the state has bulked up on renewable and distributed energy. Vermont, with by far the smallest population, has New England’s third largest solar industry.
As a declarative of its evolving mission, VEDA changed its name in 1993 from the Vermont Industrial Development Authority.
While agriculture loans account for the most loans and nearly $24 million, or about 40 percent of the loan portfolio, despite their relatively smaller scale, they’re not exactly chicken feed either.
Several of the farm loans are in the million dollar range or greater, including to Roger and Patrician Scholten of Weybridge (three loans worth $1.5 million); Sheldon Farm Inc (five loans for $2.3 million); Blissful Dairy, LLC in Bridport (approval was $900,000, actual was $150,000); Correia Family (three loans, $1.15 million); and Trish and Benjamin Shepard (one loan, $935,000).
The Commercial Loans are fewer in number but higher per borrower. They totaled $18.4 million with several individual loans of over million. The largest was to the Green Mountain Economic Development Authority in Randolph for $3.8 million. The GMEDC is one of the state’s Regional Development Authorities. Helping finance the RDCs is one of VEDA’s chief missions.
Other million dollar commercial loans went to: Mansfield Hall, LLC, Burlington ($1 million); New Pitcher Inn, Warren ($1.2 million--not closed); St Albans Bay Marina, LLC ($1.2 million); Stowe Vail, LLC, Stowe ($1.04 million); Burlington Harbor Marina, LLC ($1.5 million); Black Bay Ventures X, LLC, Colchester ($1.5 million--not closed); and Sunrise Development, LLC, Morrisville ($1.3 million--not closed).
The Revenue Bond program accounts for $36.6 million in inducement approvals for a handful of institutions, such as Rhino Foods Inc of Burlington ($9 million--not closed); Logic Supply of South Burlington ($8 million--not closed); ReSource of Burlington ($7 million--not closed); and Health Care & Rehabilitation Services of Southeastern Vermont, Inc of Springfield ($8.9 million--not closed).
Energy Loans totaled $8.8 million and focused on solar PV installations, including Milton McMullen Road Solar, LLC in Milton ($1.2 million); New Haven GLC Solar, LLC in Waterbury ($1.2 million); and Northfield Bull Run Road Solar, LLC in Northfield ($703,222).
The Small Business Loans are indeed smaller. The largest was to Hillside Precision of Bristol for $250,000. Most of the rest were in the $75,000 to $150,000 and totaled $10.1 million.
The Entrepreneurial Loans were the fewest and overall smallest. They totaled $713,000 and the largest of the six was to Greensea Systems Inc in Richmond for $250,000.
Jo Bradley became Chief Executive Officer of the Vermont Economic Development Authority in February 1997. Her previous professional experience includes the positions of Deputy Secretary at the Vermont Agency of Commerce and Community Development, Commercial Loan Officer at the Vermont Economic Development Authority, and Vice President at Solomon Brothers, Inc. in Boston. Jo graduated with Honors from Johnson State College, earning a BA, and from the Boston University School of Management with an MBA in Finance. She also completed the Program for Senior Executives in state and local government at the John F Kennedy School of Government at Harvard University. Jo served as the State Government representative on the 2007 National Advisory Committee of the Export-Import Bank of the United States (Ex-Im Bank), and she serves on numerous state and local boards.
Cassie Polhemus joined VEDA in 2013 as a Commercial Lender and became VEDA’s Director of Operations in 2014. In January 2017, Cassie became VEDA's COO. Cassie has over twenty years of experience in commercial lending and risk management with financial institutions. Prior to joining VEDA, she was Senior Vice President and Risk Manager for Northeast Member Business Services, a credit union service organization providing small business lending services to credit unions in New England and California. From 1987 to 1999, she held various commercial lending and credit management positions at banks in Connecticut and Vermont. Cassie earned a BA in Economics from Williams College.
On its Website, VEDA offers a brief history of itself:
Since its creation by the Vermont General Assembly in 1974, VEDA has provided $2.5 billion in financing assistance to thousands of eligible Vermont commercial and agricultural businesses, helping them grow and create jobs. For more than four decades, VEDA’s financing innovations and investments have helped to stimulate Vermont’s economy.
The Authority's original statutory focus was the support of industrial development in Vermont. Since inception, VEDA's enabling statute has been updated repeatedly to keep pace with Vermont's growing economy. Over the years, VEDA has created and adapted innovative financing programs and tools to support the diversification of Vermont’s economic sectors, and maximized available funding for its programs.
In 1989, VEDA started making agricultural loans to assist farmers in restructuring their balance sheets, which had been negatively impacted by a cyclical downturn in the dairy industry. In 1999, the Vermont Agricultural Credit Corporation (VACC) was formed, and now, agricultural lending through VACC has grown to comprise 40% of VEDA’s direct loan portfolio. VACC’s portfolio, initially more than 90% dairy, is becoming much more diversified as the Vermont agricultural economy expands to include new types of farm operations.
In recent years, VEDA has approved millions of dollars in financing for commercial and agricultural energy generation and efficiency projects, supporting investments in hydropower, solar photovoltaic, wind, digester and biomass projects. In 2013, the Vermont Legislature approved new financing at VEDA for sustainable energy projects.
Small business loans can be made up to $500,000 and may provide financing for both fixed assets and working capital.
VEDA’s role in financing manufacturing has a long history, dating back to when VEDA was organized in 1974.
Travel & tourism is an extremely important sector, as it imports capital into Vermont. As its importance to Vermont’s economy grew, VEDA’s lending criteria were expanded in the early 1990’s to include the travel and tourism sector.
VEDA recognizes that Vermont- based businesses in seed, start-up and growth stages are a vital source of innovation, employment, and economic growth in Vermont. The Authority’s Entrepreneurial loan program provides financing to meet the working capital and capital-asset financing needs of Vermont-based businesses that may not have access to conventional means of financing.
This article originally ran in the April 2019 issue of Vermont Business Magazine.