By Leah Thibault
As the year winds to a close, the fate of the 14-year-old federal New Markets Tax Credit program was decided in the final moments of business on Capitol Hill. The potential of this incentive to create and preserve thousands of jobs and improve the quality of life for low-income Americans was renewed for another year.
It’s too bad the renewal was only for a year, short of the permanent extension its supporters pursued. In the course of conducting due diligence on proposed projects and deciding where to deploy these federal credits, New Markets practitioners witness firsthand the revitalization they ignite, especially in rural places.
How excited would you be if a new Hampton Inn were built in your town? In Presque Isle, Maine it’s a big deal. The New Markets-funded Hampton Inn there is the only branded hotel within two hours. It’s no laughing matter, as the effect of this single hotel project will be felt for years to come. Its presence made the key difference in the region winning hosting rights to a World Cup Biathlon competition, attracting millions of dollars to this remote corner of Maine, rippling through the local economy.
It’s similarly a big deal in the numerous medically-underserved rural counties, where the New Markets program provided lynchpin financing for the construction of 68 community health centers. According to research by Stanford University, despite rural communities accounting for about 20 percent of America’s population, less than 10 percent of physicians practice in these communities. Meaning that although rural residents have higher rates of age-adjusted mortality, disability and chronic disease than their urban counterparts, they have less access to doctors and healthcare providers.
And it’s a big deal in towns like Cherokee County, South Carolina; Baileyville, Maine; and Aliceville, Alabama; where New Markets-funded manufacturers have brought new life and innovation to a struggling wood-products industry.
Rural places have unique obstacles to revitalization, including a lack of economic diversity and investors, the limited availability of credit, the seasonal nature of employment, and geographic isolation. Yet there are hundreds more stories that show how this program has been successful. Just take a look at the numbers: An analysis of the U.S. Treasury’s CDFI Fund data between 2003 and 2012 by the New Markets Tax Credit Coalition shows that the program:
- Generated nearly $118 billion in economic activity;
- Created 744,267 jobs in low-income rural and urban communities, including 457,487 construction jobs and 286,781 full-time equivalent jobs in nearly every industry sector of the economy;
- New Markets is especially effective in rural communities, for despite the fact that only 20 percent of New Markets investments go to these areas, more than 30 percent of the full-time jobs the program creates are in rural places.
The USDA just released the 2014 edition of its annual report Rural America at a Glance. Agriculture Secretary Tom Vilsack noted the report “shows that USDA’s investments in rural communities, small businesses, and people are working: rural unemployment has fallen, rural outmigration has declined slightly since last year, and rural poverty has stabilized.”
The New Markets Tax Credit program is one tool that has supported this progress, helping, as the Secretary says, “rural businesses and manufacturers to capitalize on new demand for what is grown and made in rural America.”
Since its inception during the Clinton administration and its commencement in the Bush administration, the program has enjoyed bipartisan support and sponsorship. The new Congress coming into office in 2015 has the opportunity to make permanent a program with the promise of new jobs and opportunity across the country.
Leah Thibault is Director of Operations for CEI Capital Management.