Authored by Cam Turner, Principal, United Fund Advisors
With the end of the shutdown in Washington, D.C., many are speculating tax reform will be a priority. Let’s hope so: The New Markets Tax Credit (NMTC), which helps expand businesses and create jobs right here in Oregon, is set to expire December 31st if no action is taken.
During shutdown negotiations, Senate Majority Leader Reid suggested tax reform could be up for discussion as part of a larger budget deal once the government reopens. Congressional tax-writing committees have also resumed efforts to introduce legislation to reform the tax code. However, a new poll by Ernst & Young indicates only 20 percent of tax professionals believe tax reform will be completed by 2014.
Last month, over 1,200 businesses, investors, nonprofit organizations and community leaders across the country—including 24 groups from Oregon—sent a letter to Congress asking that the New Markets Tax Credit be made permanent. In response, Forbes’ Ashlea Ebeling wrote an article asking readers, “If there’s a cure-all for bringing down-and-out communities out of the dumps shouldn’t it be a permanent part of the tax code?” Ebeling described the impact the NMTC has had on “down-and-out communities” through investments leveraged with private funds, providing capital necessary to grow their local economies and create jobs.
One of the NMTC investments highlighted was the Portland Small Business Loan Fund (PSBLF), which United Fund Advisors/Portland Family of Funds formed in 2006 to help small businesses access affordable financing through NMTCs. Portland’s mayor and city council, the Portland Development Commission and PSBLF’s community advisory board supported the formation of a small business lending program to address the strong need for small business working capital and non-real estate related business needs. Micro Enterprise Services of Oregon (MESO) is the project manager of PSBLF’s Small Business Lending program. MESO is dedicated to broadening opportunities for underserved entrepreneurs and supporting businesses with a diversity in trade and color.
Since established, PSBLF has made 28 loans totaling nearly $4.9 million in highly distressed, low-income census tracts in Portland. This includes 22 small business loans totaling $885,550 to businesses ranging from a food cart to a print-screening company.
Sheila Watson, founder of Discovery Gardens Family Childcare, which provides social, emotional, intellectual and physical care to children of working families in underserved neighborhoods, is one of these success stories. Sheila received three PSBLF loans, totaling $27,000 to transition her operation from a home-based facility into three new centers, creating 23 permanent jobs.
Lisa Herlinger-Esco, founder of Ruby Jewel, which creates unique ice cream and cookie treats made with fresh, locally-grown ingredients, is another PSBLF example. Lisa used a $30,000 PSBLF loan for equipment purchases enabling her to increase production and distribution to grocers across the United States. Last year, Ruby Jewel opened its second scoop shop in Portland.
The NMTC program was authorized in the Community Renewal Tax Relief Act of 2000 in a bipartisan effort to stimulate investment and economic growth in low-income communities lacking access to patient capital. Between 2003 and 2011, $27 billion in NMTC investments were made in businesses, creating some 350,000 jobs and leveraging $55 billion in total capital investments.
Our state’s small businesses are engines for economic growth and NMTCs are the financial tool that allows businesses to expand and create jobs in areas that need it the most. It is up to our communities, businesses and people benefiting from these investments to show legislators the NMTC program is working and must be preserved.
— Cam Turner is a principal of United Fund Advisors, a fund manager and financial services company in Northwest Portland that provides tax-advantaged investment capital and advisory services for community development projects.
© 2013 OregonLive.com. All rights reserved.