Two years ago, a medical products company from Europe called Molnlycke Healthcare chose to locate its U.S. manufacturing headquarters in Brunswick, Maine, on the site of the former Brunswick Naval Air Station. Molnlycke is one of world’s leading makers of advanced wound-care products. It’s based Sweden but has a global presence, employing about 7,000 people with about $1.5 billion in annual sales. The company broke ground on the Brunswick facility last month, and plans to begin production this fall. Before that can happen, though, there’s some hiring to be done.

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But why Brunswick, a former mill town of 15,000 inhabitants, more than two hours north of Boston? One reason is that it already has a presence in mid-coast Maine: The foam used in Molnlycke’s wound-care pads is made in Wiscasset, at a plant it purchased two years ago.

 

But another factor – and one which was instrumental in luring it to Brunswick Landing, as the redeveloped former naval air station is now called – is a financing package known as the New Market Tax Credit.

 

“Molnlycke is an excellent example of how New Markets works,” says Charlie Spies, chief executive of CEI Capital Management, a division of Coastal Enterprises Inc., a Maine-based non-profit that works nationally to spur economic development in deprived areas.

 

Because of the departure of the Navy two years ago, and the effect this had on the local economy, Brunswick Landing qualifies for New Market Tax Credits, a federal program administered by CEI Capital Management.

 

“The tax credits are used by corporations to reduce the overall cost of their investment in the project,” Spies says. “And by doing that, ultimately the lease rates here and the cost of the building were lower than they would have been otherwise, and that allowed this to be a competitive site.”

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Last week, the Treasury’s Community Development Financial Institutions Fund announced a new $3.5 billion allocation of New Markets Tax Credits to revitalize low-income and distressed communities. Awarded to 85 different community development entities headquartered across 28 states and the District of Columbia, the tax credits allow these organizations to attract private investment capital to underserved communities across America. In the past, every dollar in tax credits has generated an average of eight private investment dollars for projects like manufacturing plants, retail developments, affordable housing and health centers. Perhaps that’s why last week’s announcement was greeted with excitement across the country.

Read their full post.

On Wednesday, June 5th, 2013 at 8:45 AM, the New Markets Tax Credit Coalition will sponsor a breakfast briefing on Capitol Hill in 121 Cannon House Office Building.

The briefing will coincide with the release of the 2013 NMTC Progress Report. All are invited. Please extend an invitation to Members of Congress and their staff.

Today the CDFI Fund announced the Tenth Round of NMTC Allocation Awards totaling $3.5 billion in allocation.

• Read their release and browse the award recipients.

VIDEO: Donna Gambrell announces awards:

• Debt, Equity, and Capital
• Real Estate
• Manufacturing
• Financial Services

NMTCC to Working Groups – 4-12-2013.

• April 11: Small business, corporate investment and innovation;
• April 18: Families, education and opportunity;
• April 25: Infrastructure, energy, and natural resources;
• May 9: Types of income, investment, and tax structures;
• May 16: Economic security, health, retirement, and insurance;
• May 23: International competitiveness;
• June 6: Economic and community development;
• June 13: Tax exempt organizations and charitable giving; and
• June 20: Non-income tax issues

We also investigated NMTC impacts for all fifty states and the District of Columbia.

• Browse state economic impact reports

The groups will be led by one Republican Member serving as Chair and one Democratic Member serving as Vice Chair.  Each of the 11 groups will review current law in its designated issue area and then identify, research and compile feedback related to the topic of the working group.  The working groups will be responsible for compiling feedback on its designated topic from: (1) stakeholders, (2) academics and think tanks, (3) practitioners, (4) the general public and (5) colleagues in the House of Representatives.  Once the work of those groups has been completed, the Joint Committee on Taxation will prepare a report for the full Committee, due by April 15, 2013, that describes current law in each issue area and summarizes the other information gathered by the Committee Members.

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The New Markets Tax Credit (NMTC) program was revived with Congress’ Jan. 2 passage of the American Taxpayer Relief Act of 2012 (H.R. 8). The eleventh hour decision extends the NMTC through 2013 at $3.5 billion per year. A report released in December by the New Markets Tax Credit Coalition confirmed what program supporters have been saying since before the NMTC was allowed to expire in 2011: the NMTC is a sound investment not just for communities, but for taxpayers as well. Statistics show that the program has created thousands of jobs in economically distressed areas and has generated a healthy return on investment.

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“The New Markets Tax Credit has shown that – at a modest cost to the federal government – it generates meaningful economic growth and job creation in economically distressed urban and rural communities throughout the country,” explained Jose Villalobos, New Markets Tax Credit Coalition Board of Directors Chairman and TELACU Senior Vice President. “I commend Congress for ensuring that private sector investment in these communities will continue.”

Passed by both chambers of Congress on Tuesday in response to the fiscal cliff, The American Taxpayer Relief Act of 2012 (H.R. 8) includes a provision extending the previously-expired NMTC through 2013. This will allow the Department of Treasury to make two more rounds of NMTC allocation awards, providing $7 billion in NMTC allocation authority at a ten-year cost of $1.8 billion in foregone federal revenue. If history is any guide, this $1.8 billion in federal investment will leverage more than $14 billion in total investment in in rural and urban areas struggling with high rates of unemployment and poverty, creating over 100,000 jobs.

The New Markets Tax Credit was enacted in 2000 in an effort to stimulate private investment and economic growth in low income communities that lack access to the patient capital needed to support and grow businesses and create jobs. It does so by offering a modest incentive on investments made in economically distressed communities with poverty rates of at least 20% or median incomes at or below 80% of the area median.

Between 2003 and 2010, NMTC investments were responsible for creating over 500,000 jobs in economically distressed communities across America and generating over $5.3 billion in federal tax revenue and over $3 billion in state and local taxes, according to a report on the aggregate economic impact of the NMTC released by the Coalition last month. The federal tax revenue generated by NMTC investments more than covers the cost of the program, as measured in terms of revenue lost by the federal government, providing a significant return on investment to the federal government.

Since the NMTC was enacted, it has generated billions of dollars in private investments in projects and communities that likely would never have received such injections of patient capital otherwise. According to a survey conducted by the U.S. Government Accountability Office (GAO), 88 percent of NMTC investors would not have made their investments if not for the incentive of the Credit.

The New Markets Tax Credit originally expired on Dec. 31st, 2011.

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About New Markets Tax Credit Program

The New Markets Tax Credit was enacted in 2000 in an effort to stimulate private investment and economic growth in low income urban neighborhoods and rural communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies. The NMTC is a 39% federal tax credit, taken over seven years, on investments made in economically distressed communities. Today due to NMTC, more than $45 billion is hard at work in underserved communities in all 50 states, the District of Columbia, and Puerto Rico.

About New Markets Tax Credit Coalition

The NMTC Coalition is a national membership organization of Community Development Entities and investors organized to conduct research on and advocacy for the New Markets Tax Credit. The Coalition hosts two annual conferences and regularly publishes the NMTC Bulletin. To learn more, please visit www.nmtccoalition.org.