A federal tax credits program has the potential to have a number of positive impacts on local economic development, by setting the stage for new private sector investment and the creation of new jobs to Camas and Washougal.
Camas-Washougal Economic Development Association Executive Director Paul Dennis recently proposed to Camas and Washougal city councils and the Port of C-W Commission the idea of taking part in the U.S. Treasury’s New Markets Tax Credit Program.
The proposal includes paying experienced consultants $87,500 to help with the formation of a certified “Community Development Entity,” serve as guides through the first application process, and assist with the implementation of the tax credits — if a local project is selected. The port would pay half of the startup costs, while each city would contribute equally to the remaining 50 percent.
According to Dennis, once that initial investment is made by the three entities there wouldn’t be any ongoing line-item expenses in the annual budgets of the cities and port.
This program, established in 2000 as part of the Community Renewal Tax Relief Act, has already proven successful for projects in Oregon and Washington. Some examples include FarWest Steel, ProLogis, Seattle Children’s Hospital and the Mercy Corps World Headquarters project in Portland, which involved overhauling an old, dilapidated building and ultimately contributing to the revitalization of the Old Town district.
Here’s how it works. For every dollar contributed by a qualified investor, there is a 39 cent credit that goes back to the investor — redeemable at the end of seven years.
According to the New Markets Tax Credit Coalition, “between 2003 and 2010, the NMTC generated over $20 billion in private investment in communities with high poverty rates, low incomes and high unemployment rates. This $20 billion leveraged an additional $25 billion in capital from other public and private sources, financing almost 3,000 projects ranging from urban health care centers to rural factories and small business loan funds.” In addition, NMTC investments generated 500,000 jobs.
Dennis said nearly all of Washougal and a significant portion of Camas qualify under the highly competitive federal program.
The New Markets Tax Credit program, fueled by private sector investment, could have a very positive impact on local economic development. It deserves the financial support of the Port and City Councils.