SB 817: A Win For Main Street Oregon
By Alan Hickenbottom of Portland, Oregon. Alan is the General Manager of Tanner Creek Energy.
Let's set the record straight on SB 817. This is not a win for Wall Street as some have characterized, this is a win for Main Street Oregon and Oregon's environment.
SB 817, also known as the Low-Income Community Investment Initiative, will encourage job creation and economic growth in underserved, local economies throughout Oregon. Through the creation of a modest, strategic and highly regulated state investment, SB 817 will make capital available for small, qualified businesses in looking to create jobs in some of Oregon's hardest hit communities. Small businesses and smaller projects too small to qualify for the Federal New Market Tax Credits Programs would get the funds that they need to develop their business and create jobs under SB 817.
Each business and its needs are unique and the credit created under SB 817 can be used for a variety of purposes. From operating loans, to business expansion, to commercial rehabilitation to energy efficiency upgrades, SB 817 will help businesses in struggling communities launch, grow, survive, prosper and hire.
Oregon was recently declared the 2nd greenest economy in the America. This is because, in every corner of this state, there is the understanding that good environmental stewardship and sound business practice is one in the same. Business owners know that cutting down on energy use and waste is not only good for the environment but good for the bottom line.
At Tanner Creek Energy, our mission is to help our clients cost-effectively implement tools and technologies to reduce their energy consumption, enhance profitability and improve operational efficiency. We know that energy efficiency translates into savings for small businesses and, if they had the opportunity and the capitol, many existing small businesses would like to move forward with energy efficiency upgrades. SB 817 will help make those opportunities possible.
We also know that new construction in Oregon can and should be energy efficient. SB 817 will stimulate new construction in blighted areas where energy efficiency has been previously absent.
While the credit created under the Low-Income Community Investment Initiative is flexible and can be used for a wide variety of purposes, it is also highly regulated to ensure that jobs are actually created and that Oregon tax payer dollars are protected. Here is how:
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As job creation is the key component to this Initiative, projects must demonstrate a job creation component before qualifying for participation in this program.
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Investors must make a long-term commitment to invest in the community and business development. To claim the credit in any one year, the investor has to commit project funds for seven years.
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The credit can't be used for businesses or projects that aren't able to support themselves over the long term, because the proposal still must satisfy commercial lenders and private investors.
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Projects are to provide measurable, verifiable community benefits such as job creation, services to the community, and environmental benefits. Projects with limited or private benefit, like the construction of rental housing, will not qualify.
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Projects must benefit low-income communities. SB 817 requires annual reporting on job creation, wages and other critical benefits, allowing the program to be modified for maximum effectiveness.
SB 817 is a good, necessary step towards our Oregon economic recovery and a valuable tool in promoting sound energy efficiency practices. Oregon has been a leader in the green economy and SB 817 will help our state continue in that proud tradition.
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July 18, 2011
Posted in guest column. |
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5:12 p.m.
Jul 18, '11
Alan says "projects must demonstrate a job creation component before qualifying for participation in this program." but nowhere in SB 817 (PDF) is that mentioned.
Alan says "Investors must make a long-term commitment to invest in the community and business development. To claim the credit in any one year, the investor has to commit project funds for seven years" yet nowhere in SB 817 (PDF) is that mentioned. In fact, SB 817 (PDF) provides that they can claim carry forwarded credits indefinitely.
Alan claims the bill is for "smaller projects too small to qualify for the Federal New Market Tax Credits Programs," but every project approved under the state program would be approvable under the federal program AND there's no prohibition against double-dipping (federal tax credit and state tax credit). In fact, that's just what the proponents want to be able to do.
Alan claims "SB 817 requires annual reporting on job creation, wages and other critical benefits, allowing the program to be modified for maximum effectiveness," but there's no provision for annual modification, and scaling it back might require a 3/5 vote. And as noted by at least one opponent, the bill's reporting is not part of the so-called transparency bill that the legislature earlier adopted.
Alan claims "Projects are to provide measurable, verifiable community benefits such as job creation, services to the community, and environmental benefits," but SB 817 (PDF) does NOT contain such a provision.
No representatives of low-income communities came forward in support of this measure because it is such a sham.
We may very well be the 2nd greenest economy in the country -- and we did it without SB 817. Oregon already gets more than its fair share of new markets tax credit-financed investments. We don't need to spend state dollars on top of the federal dollars on the investors.
12:44 a.m.
Jul 19, '11
Seems to me that these are verifiable fact claims that are at odds in Chuck's and Alan's descriptions of the policy.
Alan, can you provide evidence - either in the language of the bill, requirements elsewhere in statute, or agency regulations (in place or proposed) - that would support your claims?
I think it's all well and good to argue about the merits of a policy. I do want to make sure that we're all arguing the same facts, though.
12:16 p.m.
Jul 19, '11
Alas, the guest column above is full of the generalizations about life and times in Oregon that we have come to expect when the facts of the matter don't support the argument.
When I challenged my rep, Jules Bailey, about his support for SB 817, which provides for huge fees out of our tax revenues for the banksters, he told me to "read the bill." And so I have carefully read SB 817-A, the verson passed. It's a difficult bill to read, but anyone can verify Chuck's points above by reading the bill on line. As to the title given to it, no doubt by some corporate lobbyist, the "Low-Income Community Investment Initiative,"--that's so deceptive as to be comic to anyone who has read it. There's still more documentation about this on the Tax Fairness Oregon website. The Governor should veto this huge and unneeded tax giveaway.
1:35 p.m.
Jul 19, '11
I think that the history of this tax credit at both the federal and state levels is one of consistent abuse. Any time a business lobbyist provides tax credit legislation to legislators it is likely to be self-serving. Somehow the safeguards that witness's and legislators describe in testimony just don't make it into the final legislation. Funny about that.
10:37 a.m.
Jul 20, '11
This is a comment from Alan Hickenbottom, the author of this post. (He's just getting started on Facebook, so wasn't able to post directly himself.)
Thanks to everyone for their thoughtful responses. Sometimes I feel like I need protective headgear when I read the post-article comments in the Big O. A confessed bias: I am a beneficiary and supporter of the Oregon Business Tax Credit program. Regardless of the well-publicized anomalies in the program, I firmly believe the projects we have been involved in, or are personally aware of, have delivered all and more than the program was created for. That’s not to say, in light of our current brutal budget environment, we didn’t need to make some adjustments. In the 2011 session I think the governor and legislature got it just about right.
I have first hand experience with the New Market Tax Credit program, to which SB817 is closely tied, and can say from experience that there is a very strong, almost hard-wired bias towards job creation in the screening and award process. For example, even though I come from the solar industry, it became clear early in my NMTC education that a large-scale solar project would never make the grade – there just aren’t enough jobs in that sort of project. Let me be clear, SB817 is not the end all, be all of rural job creation. However, to the extent that SB817 will help close the risk-gap for an investor looking at a project in a distressed census tract I believe it will prove to be a wise investment in Oregon’s future.