On May 27, in Jackson, Ohio, my staff and I ventured to picturesque Jackson, Ohio, located in the Appalachian foothills, to celebrate the economic development success of another fruitful partnership—Ohio Basic Minerals.

Patrick McDonald, Ohio Basic Minerals CEO, and Jeff Schrader, founder of the original Schrader and Sons Sand and Gravel, spoke to the crowd of local and state dignitaries, Ohio Basic Minerals employees and business partners. Mr. Schrader cut the ribbon to symbolize the grand opening of the newly revitalized and renovated facility, funded by more than $2.45 million from our Finance Fund Capital Corporation (FCAP) and New Markets Tax Credits (NMTC). The event made a splash in the media—read more about Ohio Basic Minerals’ success and exciting new developments

Columbus Dispatch
May 24, 2010
Minerals plant expansion to lead to 30 new jobs

Jackson County Times-Journal
May 25, 2010
Ohio Basic Minerals celebrates expansion

Columbus Business First
May 28, 2010
Finance Fund helps sand, gravel maker expand in southeast Ohio

Jackson County Times-Journal
May 28, 2010
OBM celebrates plant expansion

Finance Fund was able to provide more than $2.45 million from our Finance Fund Capital Corporation (FCAP) and the New Markets Tax Credits (NMTC) resources for expansion and new equipment for the sand and gravel facility. This will not only help OBM compete in new markets and increase revenue, but will enable the company to hire new employees and stimulate Jackson’s economy.

This Thursday we’ll proudly join OBM in celebrating the new facility with a ribbon-cutting ceremony, tours of the facility and special before and after displays. Several local and state dignitaries will be in attendance, in addition to company CEO, president, employees and business partners.

Here’s to Ohio Basic Minerals—another Ohio economic development success story!

According to the New Markets Tax Credit Coalition,  last week, the House and Senate were working on a tax extender agreement that may also include certain small business tax and infrastructure provisions.

Both Chambers have passed H.R. 4213, the Tax Extenders Act of 2009, which both include $5 billion in Credit authority for New Markets in 2010, and other individual and business tax provisions. In addition, the House recently passed the Small Business and Infrastructure Jobs Tax Act of 2010 (H.R. 4849) which included Alternative Minimum Tax (AMT) relief for NMTC investors on Qualified Equity Investments (QEIs) made from March 15, 2010 through January 1, 2012. This bill also included an extension of Recovery Act terms for Build America Bonds through 2013 (estimated to cost $7.5 Billion) and exemptions from AMT for interest earned on tax-exempt and other private activity bonds.

According to the NMTC Coalition, last week the House began working on an extender package for HR 4213, which contains NMTC extension and potential provisions included in the HR 4849, including Build America Bond provisions and AMT relief for New Markets. “One of the reasons for this piecemeal approach is that some of these provisions (although not NMTC) are controversial and unlikely to win approval in the Senate Finance Committee.”

We look forward to the outcomes of these votes in hopes that NMTC extensions are granted to sustain and strengthen this vital program that has provided important development resources to numerous Ohio businesses and neighborhoods. For more information, visit www.NewMarketsTaxCreditCoalition.org.

On Wed., April 21, we proudly hosted several state legislators, community leaders and Finance Fund project partners at the Capital Club in downtown Columbus. It was an excellent opportunity to share how Finance Fund has positively impacted some of the state’s most distressed communities.

We highlighted four partnership “success stories,” including Ohio Basic Minerals in Jackson; Save-a-Lot grocery store in Columbus; Noble Learning Center in Caldwell; and Miami Valley Child Development Centers (MVCDC) in Dayton. Each project touted key Finance Fund goals – job creation, safe childcare access and neighborhood revitalization.

We shared important information about the New Markets Tax Credits (NMTC) program. Last October, we were awarded $50 million in NMTC funding, with $30 million designated specifically for non-metropolitan, rural areas in Ohio. Funding is still available for qualifying projects – we strongly urge those interested to contact us for more information on a possible partnership with us.

We thank our distinguished guests for their presence, and look forward to new partnerships that will lead to more jobs, revitalized communities and safer access to care.

1. Funding authority to catalyze high levels of private investment in distressed communities. The Administration proposes to authorize NMTC at $5 billion in 2010 and 2011.
2. Improving overall competitiveness, attractiveness and effectiveness of the NMTC.
   1. Allowing Alternative Minimum Tax (AMT) taxpayers to claim NMTC.
   2. Review passive activity rules, which is a rule that limits the use of losses and credits for business in which a taxpayer does not materially participate.
   3. Qualification of certain types of investments for the credit, which seeks to clarify what types of loans constitute a qualified investment.
   4. Improvement of NMTC rules to spur additional investment in small business.
      1. Re-examining “substantially all” requirements, which requires an awardee (CDE) to have a specific portion of their funds invested at all times.
      2. Supporting greater investment in institutions that invest in small businesses by supporting new rules to promote more investment in Community Development Financial Institutions (CDFIs).

In addition to the “formal” proclamation of the press release, on the conference call Treasury officials made concerted effort to point out that NMTC has Secretary Geithner’s support and is a high priority for the Administration. Bob Rapoza, representing the NMTC Coalition, expressed the industries appreciation that Treasury is moving aggressively on these issues that will strengthen the program.

It’s good to hear good news once in a while.

PRESS RELEASE and FACT SHEET:

http://treas.gov/press/releases/reports/nmtc%20fact%20sheet.pdf

Tuesday was spent on Capitol Hill visiting with thirteen members of the Ohio Congressional delegation about extension of the New Markets Tax Credit program. NMTC is included in the tax extender package that, on Tuesday, had not yet moved to the floor of the House of Representatives. Our encouragement to members was to increase the amount of tax credit allocation from $3.5 billion to $5 billion as it has been funded in the 2008 and 2009 rounds and to exempt NMTC from the Alternative Minimum Tax as all other community tax credits are thus incenting more investor participation.

Wednesday began with an early breakfast with Congressman Pat Tiberi (R-OH) who is one of the principle sponsors of the NMTC five year extension bill (HR 2628), a NMTC Coalition board meeting, and the beginning of the NMTC Coalition annual conference. The conference opened with a luncheon at which Michael Barr, Assistant Secretary for Financial Institutions at the Treasury Department, spoke about his involvement in NMTC. He was one of the original individuals that developed the NMTC concept in the Clinton administration and has now come back into public service in the Obama administration to find NMTC a developed program with a robust and successful process of moving capital into distressed communities.

(NMTC Coalition, 2009) The Credit contributes to the economy of underserved and distressed communities and is an engine for job creation. Thus far, some $15 billion in NMTC financing has found its way to eligible low income communities. Our research indicates that this financing is usually paired with other sources of capital on a dollar for dollar basis — meaning some $30 billion in capital has been invested in low income communities for financing businesses, community facilities and mixed use projects. Using the Recovery Act standard of 1 job for every $92,000 in financing, that $30 billion converts to 326,086 jobs having been created in low income communities. (EDITOR’S NOTE: Factoring in the 39% tax credit this means the cost of these jobs to the federal government was $6 billion, which if directly appropriated would have been $30 billion)

It was my pleasure to introduce Congressman Tiberi to the attendees as a principal speaker at the Thursday session. The Congressman spoke of his work with Finance Fund in moving NMTC funding into his district and all of Ohio and of the need to extend the program as evidenced by his sponsorship of the five year extender bill. He emphasized the bi-partisan nature of the program and suggested that it may be time to talk about making it permanent. It was also a pleasure to have a board member accompany us on this visit. Reggie Johnson, Huntington National Bank, was asked to present on the Thursday investor panel. This was a great opportunity for exposure and to get board members engaged in the “larger world” of the NMTC industry.

Thanks to the amazing work of Finance Fund staff and board (Jennifer Deuber, Communication Manager; Moniqua Spencer, Chief Program Officer; Reggie Johnson, Board Director)  it was a good week with more relationship building than time and space permit me to report. But the frosting on the cake was that, on Wednesday, the House of Representative took up and passed the tax extender package with an increase of $1.5 billion to the $5 billion level we were asking for. The bill now moves to the Senate which may not deal with it until after the holidays.

Finance Fund’s vision and mission are quite straight forward yet allude to a dramatically different approach, a strategic construct in which systems not symptoms are targeted. This approach births a philosophy that puts emphasis on growing sustainable resources appropriately scaled for the demands of the market. It precipitates a strategy that demands innovation to tackle the challenges of economically distressed communities beyond the inadequate resources offered by public programs or the yield incentives that drive private sector investment.

Our “trademark” has been innovation, looking at things differently and responding “why not” instead of just “why.” From inception our legacy has evidenced this entrepreneurial approach. The Linked Deposit Fund was a groundbreaking innovation inciting bank participation in local projects. The Predevelopment and Economic Development grants have proved to be an innovative model for facilitating leveraged investment into local markets. The New Markets Tax Credit program, Intermediary Relending Program, the creation of Finance Fund Capital Corporation, CDFI certification, and a covey of innovative products are vivid evidence of our movement to fulfill our vision and mission for low-income people.

And now it is time to innovate again. At the September meeting Finance Fund’s Board of Directors approved a resolution authorizing the establishment and funding for the Bank Acquisition Steering Committee (BISC). BISC will implement a process to bring about the acquisition of a bank charter. This means we are moving toward being the majority stockholder of a commercial bank and as such become a bank holding company. This will mean we have to do some changing, some evolving. There will be some challenges, however we have decided we will not back away just because it is hard to do. The benefits to our clients will far out weight the difficulties. An affiliated commercial lender will allow us to bring some stability into the generation of capital, give us access to public sector guarantee programs, provide more flexibility in development of products, and expand growth potential and deployment opportunity not previously possible for Finance Fund. Notice I did not say it will allow us to change our purpose, our vision, or our mission. We will still be providing the same type of products and services to the same market and clients. With a very natural and intuitive repositioning we will be able to offer clients more without much change at all.

Over the next couple of years you can follow the progress of this and other Finance Fund initiatives right here.

This round of New Markets Tax Credit funding enables us to continue to invest in projects that support Ohio’s distressed communities. These projects help stimulate local economies through capital investment, job creation, and community development. You can read more about some of those projects here and here.

Join me in congratulating our team that has spent endless days and nights working on our NMTC application. Kudos to all of them in this successful effort that will benefit all Ohioans.

The vacant and abandoned properties issue is twofold, including both homes and commercial buildings that have been left unoccupied. Both issues are intertwined and understanding their relationship is vital to the redevelopment of these neighborhoods. People need places to work, but they also need places to live with their families. It’s just as simple as that.

The road to redevelopment of these neighborhoods will be long and challenging, not something Ohio will finish overnight. Some of the first steps simply involve taking care of the security and financial risks associated with abandoned properties, such as crime, garbage waste and lack of tax base. Many cities have wrestled with the challenge of maintaining the upkeep of vacant properties, some cities shifting responsibility to mortgage holders entirely.

Ohio’s cities have launched programs to help aid businesses and homeowners. For example, the city of Cleveland started its Vacant Properties Initiative Fund with loans specifically for commercial property ownership. Some cities have requested outside assistance to improve their vacant properties situation, such as Youngstown, Ohio. The National Vacant Properties Campaign provided a report to Youngstown and Mahoning County regarding ways to improve property ownership. Their findings included involving community-based groups, better enforcement of regulations, developing a regional approach to property banking and cultivating community development. The goal of these initiatives is to encourage businesses to remain in communities, keeping jobs available and the economic infrastructure stable.

At Finance Fund, we have been working in these types of situations for more than twenty years. Although many of our programs help reclaim vacant properties, like the Ironton Close to Home III project, we recently developed a program specifically to help nonprofit, community-based organizations gain site control of vacant and abandoned properties. This program, LandLOC, works by providing a flexible line-of-credit to qualifying organizations enabling site control of vacant or abandoned properties. Activities eligible for financing include legal and acquisition costs as well as expenses associated with the safety, security and stabilization of the property. Interested nonprofits should contact me at 614.221.1114 for more information.

The next time you drive past a vacant property in your community, try to look past the eyesore and envision how it could be transformed into new, productive use. This is one important step in how Ohio’s communities will achieve redevelopment and thriving neighborhoods, by envisioning the future together. 

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We have all heard how market conditions and increased competition have affected the health of Ohio’s community banking sector and the quality and availability of banking products and services. But in this economy, it’s imperative to find new ways to do business. Investing in Finance Fund’s New Markets Tax Credit (NMTC) program is one way to add to your bottom line, increase your CRA benefit and create economic development in your community.

Finance Fund works to enable progress and inspire change within Ohio’s low-income communities. Our clients include nonprofit organizations and for-profit businesses. The NMTC program is in line with Finance Fund’s mission to “…build bridges between resources and the low-income community.”  We do that by partnering with banks to provide credit to business borrowers (for-profit & nonprofit) for fixed assets in qualifying low-income census tracks. As our bank partner, your clients have access to capital with lower payments, you have a tool to share or lower risk, and your investment in the community builds assets giving rise to stronger businesses.

It’s simple really. The NMTC program permits taxpayers (that would be you) to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDE: that would be Finance Fund). These investments are then used by Finance Fund to provide credit for in development projects low-income communities.

These investments are used in low income census tract communities for business, real estate and community facility projects that create or retain jobs, stabilize neighborhoods and spurn further economic development, such as the Heritage Square Marketplace and Noble Learning Center.

Finance Fund has been using this program since 2004, and at the close of 2008 has leveraged $212 million on an investment of $44.5 million for 25 projects creating 1,249 full-time jobs and serving 536 children within Ohio’s low income communities.
We invite you to contact us today to find out more about how your community bank can invest with Finance Fund’s New Markets Tax Credit program.