By Leah B. Thibault
Various federal and state financial incentives can further the growth and expansion of businesses committed to making a positive social impact through their daily operations, particularly if that means creating jobs in low-income communities with high unemployment.
Rural counties from New England to the American South to Hawaii are attracting socially responsible businesses by providing economic development packages and financing for new equipment purchases, new factory construction and facilities renovation.
Rural industries can avail themselves of an enthusiastic workforce, access to natural resources and several programs designed to encourage investment in these economically-underserved communities. Financing tools like the New Market Tax Credit Program or the USDA’s Rural Development grants, guarantees, and loans can make the choice to locate in rural areas a smart one -- both fiscally and socially.
Take Ehrmann Commonwealth Dairy. The Commonwealth in its name is a reference to early plans to locate in Massachusetts; but this Vermont-based producer of the Green Mountain Creamery brand of Greek yogurt has made sharing its prosperity with the community a key part of its DNA, bringing a whole new emphasis to the name.
The decision to site the yogurt processing plant in Vermont was driven in large part by the financing incentives offered by the federal New Markets Tax Credit program and state of Vermont economic development programs, encouraging the growth of a new market for area dairy farmers.
Ehrmann Commonwealth Dairy has been a purpose-driven business since its establishment. Leadership committed to return 5 percent of net profits to the small family farmers who produce the milk for the facility. Commonwealth Dairy provides those funds to the Farm and Forest Viability Program of the Vermont Housing and Conservation Board -- which, in turn, distributes them as grants to eligible farms. As of July 2016, Commonwealth Dairy awarded $769,631 in funds and leveraged an additional $3.4 million from other sources. These funds went to 30 different farms, 90 percent of which have herds smaller than 500.
The fund has been used to reinvest throughout the value chain -- for barn construction, milking equipment, and milking parlor renovations, among other uses.
For Karie Atherton of Aires-Hill Farm, it meant adding grooved cement floors in her barn and milking parlor, preventing further loss of cows due to injuries. Not only is animal well-being improved, but the project has also made a big difference in her business.
“It just goes to show you, little things can really improve your cash flow because you’re not losing cows,” Atherton said. “I wish I would have done the project sooner. I knew there would be a difference, but I didn’t realize it would be so dramatic.”
And Atherton isn’t alone. The 15 completed projects have resulted in an average increase in gross income of $18,351 per farm.
Similarly, the Axio Green project brings new meaning to the term community solar in the former mill town of Greenfield, Massachusetts.
Its forward-thinking leadership led to the installation of a privately-run solar farm on a capped landfill on the outskirts of town. The 2-megawatt facility not only supplies nearly half of the electricity for city buildings and saves the city approximately $175,000 in annual electricity costs, but the outcomes have also rippled back to the community through reduced property taxes.
The movement toward a cleaner energy future didn’t stop at the installation of a single solar farm. As part of the financing package with CEI Capital Management, the project sponsors worked with local community development institution, Common Capital, to donate $100,000 to Greenfield Community College to develop a worker training program in the solar energy sector. The project also generated an additional $100,000 from electricity sale profits to the college.
“The Greenfield Solar Farm is a low-profile but highly impactful project,” says Common Capital CEO Christopher Sikes. “It is hidden away at the old town dump. It’s quiet and doesn’t pollute and because the sun did indeed shine, it has produced the electricity for the town. Plus, Greenfield Community College got its worker training in solar energy classes started. Sometimes the most successful projects are invisible in plain sight.”
Right now, the U.S. Congress is beginning to debate tax reform. As part of the discussion, the New Markets Tax Credit program is likely to become one in a mix of many that will be considered for termination or continuation. The program has delivered significant benefits across the country with many examples in both rural and urban areas. It is an investment in job growth and sustainability. It deserves congressional support over the long term.
If you agree, please tell your representative and/or senator to support the program as he or she does the important work of determining how to provide support to both our businesses and our communities.
Image credit: Pixabay
Leah B. Thibault is Director of Executive Administration and Special Projects for CEI Capital Management. The company creates and preserves jobs and improves quality of life in rural, low-income communities by providing access to project capital through New Markets Tax Credits. Over 12 years, CEI Capital Management has placed over $924 million in 90 different projects across the U.S. In addition to fiscal soundness, CEI Capital Management evaluates each project according to its benefit to the local community, economic gain and positive impact on the environment. It is a wholly owned subsidiary of Coastal Enterprises, Inc. (CEI), the Maine-based nonprofit community development financial institution that was among the founders of this important federal economic development program.