Some of NH's most economically distressed communities have received a boost in recent years from a federal tax credit program-New Market Tax Credits-that leverages private investment to spur employment and economic activities. CEI Capital Management LLC of Portland, Maine has leveraged $331.7 million in private capital with more than $100 million in New Market Tax Credits to support economic development in low-income rural NH communities.
From Errol and Plymouth to Berlin and Claremont, the company has managed the investments of eight NH projects. (See list on page 37.) that have created or preserved more than 493 jobs and helped protect or retain 31,563 acres of timberland. Of the 270 companies nationally that have received tax credit allocations, CEI Capital Management has received the most funds for rural projects and is tied with a New York firm for the largest recipient overall. CEI targets one-third of funds to Maine, one-third to the rest of the Northeast and a third nationally.
It looks a lot like equity, but it doesn't take ownership so it's very advantageous for the project developers, says CEO Charlie Spies. The for-profit company is a subsidiary of Coastal Enterprises Inc., a Maine-based nonprofit focused on creating economically and environmentally viable communities. The program helps drive capital to lower-income communities. We look at how we can work in communities, mostly often rural ones, to help support job creation and in some cases help diversify economies.
In vetting projects, it uses a triple bottom line test: economic viability, social equity (job creation) and environmental sustainability. Since the program was signed in law in 2000, CEI has been allocated $778 million and invested $675 million of it in projects. Most projects cost a least $10 million. CEI actively manages projects during a total seven-year loan period to insure loan payments are made on time, and that investors and developers are satisfied. The NH Business Finance Authority in Concord also received $65 million under this program in 2008, according to the U.S. Treasury Department.
CEI Capital Management works as an intermediary, vetting projects and seeking investors, who receive a federal tax credit on 39 percent of the original investment (5 percent in each of the first three years and 6 percent for the last four years). Projects typically end up costing 20 to 25 percent less than they would under a traditional funding scenario due to better interest rates and investor terms. The tax credits are overseen in partnership with community banks, including Mascoma Savings Bank based in Vermont, Franklin Savings Bank based Franklin and First Colebrook Bank based in Colebrook.
For more information, visit www.ceimaine.org/CCML or www.cdfifund.gov/what_we_do/programs.asp.
New Markets Tax Credits (NMTC) Transactions in NH Allocated by CEI Capital Management
GMO Renewable Resources, NH & Maine
Tax credit: $700,000 (NH), $27.1 million (Maine)
Worked with two other partners to facilitate $70 million of long-term debt on a $246 million purchase of 1.1 million acres of sustainable working forest in Maine and NH (24,594 acres in NH). A significant working partner in this effort was The Nature Conservancy.
Berlin Station, LLC, Berlin
Tax credit: $20.7 million
Redevelops salvaged boiler facilities from the former Fraser Pulp Mill into an advanced environmentally friendly, state-
of-the-art, 70 megawatt electricity generating power plant, creating an estimated 40 new jobs. Worked with the NH Business Finance Authority and several other partners to make this $270 million capital project happen.
Claremont Mills, Claremont
Tax credit: $18.5M
Renovation to create mixed commercial space within a long-abandoned historic mill using both historic tax credits and NMTCs. This project created more than 150 new jobs.
Capital Hotel, Concord
Tax credit: $10 million
Financed the construction of a 92-room, 68,000-square-foot Residence Inn by Marriott. Deal includes an Employment and Training Agreement designed to help immigrant and refugee workers learn job skills. The deal creates 35 new jobs.
Speare Memorial Hospital, Plymouth
Tax credit: $9.4 million
Financed the construction of a 31,654-square-foot medical office building in a federally designated medically underserved area. The building will allow Speare Memorial Hospital to locate its physicians and surgeons at one site with adequate support services in an efficient, modern facility. It is projected to create 50 to 75 clerical and physician support jobs within the next five to eight years.
Plymouth Community Health Center, Plymouth
Tax credit: $3.4 million
Financed the construction of a nonprofit community health center in Plymouth affiliated with the Speare Memorial Hospital, creating 17 high quality jobs. The area is defined as medically underserved by the U.S. Department of Agriculture and as a health professional shortage area as by the NH Health Resources and Services Administration.
Oscar Brown Block Redevelopment, Claremont
Tax credit: $2.8 million
A mixed-use renovation of an 1800's era building in downtown Claremont. The project combined eight sources of bordinated debt and grant funding along with NMTC and Historic Tax Credit equity funds to develop commercial and residential space.
13 Mile Woods, Errol
Tax credit: $2.39 million
The Town of Errol purchased 5,269 acres of forestland in northern NH after two decades of planning. This community forest is managed to preserve traditional forestry uses, recreation, wildlife habitat and associated jobs. The Northern Forest Center was a working partner in this project.
Total Tax Credits: $67.3 million
Total NH Project Costs: $326.3 million
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