As Washington wrangles over job-creation strategies, it only needs to look at a decade-old effort that has created thousands of jobs here in Maine: the New Markets Tax Credit Program. As one of the leading federally designated providers of these tax credits, we at CEI Capital Management LLC have seen firsthand how they invite private investments in projects that might otherwise never get off the ground, revitalizing Maine’s main streets and rural economies.
Yet the program is at risk.
Congress has not acted on the bipartisan bill that would continue these credits through 2016, spurring entrepreneurship and job creation and revitalizing economically distressed communities in Maine and around the nation. Introduced by U.S. Sen. Olympia Snowe, who year by year has been a strong advocate of this highly successful economic development and job-creation program, and co-sponsor U.S. Sen. John Rockefeller, the bill has support from Maine’s entire congressional delegation, Sen. Susan Collins, Rep. Michael Michaud and Rep. Chellie Pingree.
With a fragile economic recovery under way, now is not the time to cut off this critical source of funding in communities that are just beginning to turn the corner. There’s no doubt the tax credits help preserve at-risk jobs and create new ones.
Witness the “we’re hiring” sign in The County. Presque Isle-based Maine Mutual Group and the new Hampton Inn there used the tax credits to stem an unfortunate trend in Aroostook County. More residents are leaving than coming — so many that the federal government labeled it an “out-migration” county for losing 24.4 percent of its population between 1980 and 2000.
We worked with MMG and other private-sector partners to allocate $7 million of the tax credits, so the insurer could nearly double the size of its Presque Isle home office. This expansion incorporated energy efficiencies and technology upgrades. Importantly, the expansion allowed MMG to better secure its own future, attracting talent to the community with industry-competitive salaries.
That project in turn spurred construction of a new, environmentally friendly Hampton Inn, also using the credits. Built at an abandoned National Guard armory in Presque Isle, the inn now employs about 40 full-time employees.
In Waterville, the credits were instrumental in helping to generate needed funds for a new Educare program, the first in New England. The program serves up to 200 low-income children, from infants to age 5, the most critical brain development stage. Educare employs many University of Maine graduates as teachers.
On the waterfront in Portland, $4.1 million of New Markets Tax Credits funded the Gulf of Maine Research Institute’s marine research facility, providing support to Maine’s fishing industry. The investment supports 145 direct jobs, and indirectly thousands of jobs in the Maine fisheries, all working to protect and sustain that body of water as a global treasure and produce an interactive curriculum for our schoolchildren.
Congress first established the tax credit program in 2000 to stimulate investment and economic growth in low-income and underserved rural and urban communities that are often overlooked by conventional capital markets. Investors receive a seven-year, 39-percent federal tax credit as incentive to finance loans and investments in businesses and economic development projects.
CEI Capital Management has allocated $222 million in New Markets Tax Credits to projects in Maine over the last ten years. These credits have ignited 19 different projects, attracting an additional $557 million from private investors in projects that directly create jobs and support low-income communities. We filter each project through our “Triple Bottom Line” investment criteria, requiring them to benefit local economics, equity and the environment.
The result? Approximately 2,000 direct jobs have been preserved or created in Maine. The entities receiving the tax credits are fueling the state’s innovation economy, from nature-based tourism to renewable energy, small business manufacturing and social services. More than 1.8 million acres of Maine’s timberland are committed to land trust conservation and sustainable forestry practices.
While the tax credits expired Dec. 31, 2011, there is still time to extend them with passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act. With a delicate economic recovery under way, it’s too risky not to. We urge Congress to extend the New Markets Tax Credit as soon as possible.
Charlie Spies is CEO of CEI Capital Management, a wholly owned subsidiary of Coastal Enterprises Inc., the Wiscasset-based nonprofit community development financial institution.