Aug 24 2011
Farwest Steel expansion near Port of Vancouver is using the New Markets Tax Credit for the first time in Clark County
WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) called for an extension of a tax credit program that is bringing more than 200 jobs to Vancouver – but is due to expire at the end of 2011.
Cantwell toured the site of Farwest Steel’s future fabrication and processing center near the Port of Vancouver on Wednesday morning, as the foundation was being laid for the company’s new 300,000 square foot building. The Farwest facility, which will employ 228 people in Vancouver, marks the first time that the New Markets Tax Credit has been used to help finance a project in Clark County.
“The New Markets Tax Credit is bringing more than 200 jobs in Vancouver and helping our state get back on track,” Cantwell said Tuesday. “We need to continue to invest in the programs that put Americans back to work in communities like Clark County. That’s why I’m calling for an extension of this program so investors are encouraged to keep funding projects that create jobs on Main Street.”
In a letter to Senate Finance Committee Chairman Max Baucus on Wednesday, Cantwell called for the New Market Tax Credit to be extended to fund similar job-creating projects. The program is set to expire on December 31, 2011. Cantwell also announced that she will support a bill to extend the tax credit for five years.
“Since its creation, the New Markets Tax Credit has been helping build American communities and creating jobs,” wrote the Senator. “We must continue this proven program which has done so much to improve the well-being, communities, and prospects for millions of Americans.”
The New Markets Tax Credit was established in 2000. From 2001 to 2007 it was able to allocate $15 billion across the nation. To secure a credit, an investment group forms a Community Development Entity (CDE) and then applies to the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI). The group seeks out qualifying equity investments for the CDE. Once it has the capital in place the CDE turns it into qualified equity investments in low-income communities and small businesses. When the CDE is awarded the New Markets Tax Credit, it can offer credits to the private equity investors in the CDE.
Farwest Steel secured the credits in the first week of July for $48 million. The Farwest project attracted three different CDEs for $38 million of the funding. They were the National Community Fund, National New Markets Fund, and Brownfields Revitalization. An additional $10 million in tax credits was secured through Bank of America’s own CDE.
Cantwell will cosponsor the New Markets Tax Credit Extension Act of 2011 being introduced by Senator Jay Rockefeller (D-WV) and Senator Olympia Snowe (R-ME). The legislation would extend the credit for another five years and provide $5 billion in annual allocation authority. It would additionally provide an Alternative Minimum Tax (AMT) Exemption so investors would get the same consideration under the AMT that they would by investing in many other federal tax credits.
Cantwell, a member of the Senate Small Business and Finance Committee, has long championed measures that get businesses hiring and investing again. She played a leading role in authoring championing the Small Business Jobs Act, a measure helping small businesses create and preserve hundreds of thousands of jobs through tax incentives and expanded private-sector lending. Cantwell was instrumental in winning passage of the Small Business Lending Fund to encourage small business growth through increased access to lending capital. The Fund enables community banks to increase lending to small businesses looking to expand. Cantwell fought to create the Fund in response to the seizure of credit markets caused by the Wall Street meltdown that prevented even thriving businesses from accessing capital.
The complete text of the letter follows.
August 24, 2011
The Honorable Max Baucus
Chairman, Senate Committee on Finance
United States Senate
Washington, DC 20510
Dear Chairman Baucus,
Since its creation, the New Markets Tax Credit has been helping build American communities and creating jobs. We must continue this proven program which has done so much to improve the well-being, communities, and prospects for millions of Americans.
The New Markets Tax Credit was established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. The New Market Tax Credit attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities. Since the program began, Washington State has received $357 million in awards to Community Development Entities.
The New Market Tax Credit is set to expire at the end of 2011. Since my election to the United States Senate I have consistently supported the continuation of the New Markets Tax Credit. Recently, my colleagues Senator Jay Rockefeller (D-WV) and Senator Olympia Snowe (R-ME) have introduced the New Markets Tax Credit Extension Act of 2011 which I intend to cosponsor when the Senate begins its session in September.
The New Markets Tax Credit Extension Act of 2011 would extend the New Markets Tax Credit for 5 years and provide $5 billion in annual allocation authority. In addition, this bill would also provide an Alternative Minimum Tax (AMT) exemption for New Market Tax Credit investments, thereby ensuring New Market Tax Credit investors the same consideration under the AMT as is currently provided to investors in many other federal tax credits.
I believe it is imperative that the New Markets Tax Credit be extended. With our economy stalled and unemployment terribly high, we can’t afford to allow this important job creation program to lapse.
United States Senator