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NPS Report – 2.4M Jobs Generated by Federal Historic Tax Credits

Last week was the 35th anniversary of the Federal Historic Preservation Tax Incentives (FHPTI) Program. To mark the occasion, the National Park Service (NPS) released a report on the program’s achievements and its usefulness.

Former Sears Power House in Chicago, IL

Former Sears Power House in Chicago, IL (photo – homansquare.org)

FHPTI, which is administered by the NPS, encourages private investments in projects that undertake rehabilitation and reuse of historic buildings.

Property owners get a 20 percent tax credit, provided for rehabilitation of historic properties so that they can be used for a business or income-producing purpose while still retaining the original historic structure.

Highlights from the report, summarizing the program’s effectiveness from its first project in 1977 through to FY 2012:-

- Helped attract $66 billion ($106 billion after adjusting for inflation) in private capital for rehabilitating historic buildings;

-Supported 2.4 million jobs that are higher paying and more skilled than new construction;

- Supported rehabilitation of historic properties through more than 38,000 certified projects;

- Projects supported by FHPTI have rehabilitated or created 460,000 housing units, of which 124,000 are low and moderate income units.

In FY 2012 alone, the program offered tax incentives to projects that plowed $3.5 billion into local economies, supporting around 57,000 jobs.

One of the projects highlighted in the report is the original Sears, Roebuck and Company world headquarters in Chicago, Illinois, which dates back to 1905. The 55-acre site had a number of buildings, which have gradually been developed into more than 300 housing units and a community center.

A $31 million rehabilitation project supported by FHPTI was undertaken at this site to convert the powerhouse into the Charles H. Shaw Technology and Learning Center. The classroom facilities are being used by the Henry Ford Power House Charter High School, whose enrollment grew to more than 400 high school students.

The project retained not just the historic structure, but also some of the building’s energy production technology, and added to it with new sustainable energy technology including geothermal cooling and heating. Thanks to all these efforts, the project has been awarded LEED Platinum certification.

NPS Director Jonathan B. Jarvis said that FHPTI was the nation’s most effective program promoting community revitalization and historic preservation.

Jarvis also mentions in the report foreword that while the accomplishments of the program are considerable, this is also a good time to look forward towards the more than 1.4 million buildings that are listed in the National Register of Historic Places or are a part of historic districts.

Around 20 percent of these buildings qualify as income-producing sites, and each year many of them are lost because of demolitions or fire.

Secretary of the Interior Sally Jewell sounded a similar note when she said that FHPTI has proven to be an extraordinary success since its inception. She said the tax incentives helped preserve the past, benefit the economy in the present, and ensure remembrance of the national heritage in the future.

Read the full NPS report on the FHPTI Program – Download (pdf)

CAP Report – 300 Million Engines of Growth

The Washington, D.C.-based Center for American Progress has released a report which presents an expansive policy agenda for strengthening people, creating jobs and growing the economy.

CAP report - 300M engines of growth

CAP report – 300M engines of growth (photo – americanprogress.org)

The 252-page report, titled “300 Million Engines of Growth,” covers a lot of ground from education to job creation, workplace standards, infrastructure rebuilding, research and development investments in science and technology, etc.

The most interesting part is the section (pg 138) on energy policy, which neatly summarizes the problem and suggests highly specific policy ideas to tackle a well-defined goal.

The report states that the United States is starting to feel the high costs of climate change, coupled with the volatility of energy prices and imported oil. The U.S. imported $313 billion worth of oil last year, and only six percent of the electricity used nationwide came from renewable sources.

Use of renewable energy has doubled from 2008-2012, and CAP suggests it can be doubled again by 2020. The policy ideas they offer would reduce oil imports by half and increase the share of electricity from renewable energy sources to 12 percent by 2020, putting the U.S. on course for a 35 percent target by 2035.

The following policy ideas are suggested for achieving these goals:-

Carbon Tax – Implement a $25/ton carbon tax on large polluters, starting with power plants, in order to motivate them to invest in limiting pollution.

The report says it would reduce power plant emissions by 20 percent in 10 years. It would also raise $500 billion in revenue over the next decade. CAP proposes to invest $200 billion of the tax revenue into R&D for advanced clean energy technologies.

Financing for Renewable Energy Projects – CAP suggests the government should directly spend $9 billion for R&D through the DOE, to be invested in both the public and private sectors. They ask for tax incentives, including a longer extension of the wind energy PTC which is set to expire at the end of the year. They also call for a “Green Bank” and more public market financing tools so that clean energy projects can raise funds.

Infrastructure for Renewable Energy – The report mentions that, as per a McKinsey & Co. estimate, the U.S. wastes $130 billion in energy annually. Smart grids, better storage, energy efficiency retrofits and and other measures can eliminate this waste to a large extent.

Specifically, CAP suggests three programs to reduce this waste, including a $6 billion Home Star plan that offers rebates to home-owners for energy efficiency retrofits; a similar $6 billion Building Star plan for businesses and residential buildings; and a $4.9 billion Rural Star loan program to fund rural electric co-operatives so that can lend money to customers for retrofits.

Put together, these programs would create 250,000 jobs and reduce carbon emissions equivalent to taking 4.6 million cars off the road.

Read the full “300 Million Engines of Growth” report from CAP – Download (pdf)

Study – Strategic Placement of Air Polluters

A paper presented last month at the 2013 State Politics and Policy Conference in Iowa City, Iowa suggests that site selection decisions for polluting industries are disproportionately in favor of downwind border areas in order to minimize responsibility for environmental impact and pollution exposure for in-state residents.

Air pollution transport

Air pollution transport (photo – nps.gov)

The paper, titled “Strategic Placement of Air Polluters: An Application of Point Pattern Models,” was co-authored by James E. Monogan III, David M. Konisky and Neal D. Woods.

Monogan is an assistant professor at the University of Georgia, while Konisky is an assistant professor at Georgetown University in Washington, D.C. Woods is an associate professor at the University of South Carolina.

In order to test their hypothesis, the authors pinpointed the locations of stationary pollution sources in each state using a spatial point pattern analysis.

The results showed that air polluting industries were more likely to be located at downwind borders than any other group of industrial facilities, and the effect is even more pronounced for facilities that release highly toxic emissions into the air.

The paper further suggests that states may be actively promoting this phenomenon called “state line syndrome” by providing incentives for projects that provide economic development benefits while exporting the environmental and health costs of the facility across state lines to neighbors.

The EPA is currently holding meetings with states to address air pollution transport under the Clean Air Act’s “good neighbor” provision.

Monogan et al also claim NIMBY (not in my backyard) driven dynamics as impacting site location for polluting industries.

Projects that pollute the environment tend to face significant opposition from concerned local residents, which in turn can derail the project or at the very least cause delays, legal costs, reduced political support and increase in regulatory proceedings.

However, if the harmful impact is largely going to be felt by non-residents, then the company can expect significantly lower opposition.

So while state incentives encouraging state line syndrome provide the carrot, NIMBY is the stick that forces polluting industries towards downwind borders. The paper mentions that this NIMBY effect was brought to their notice by an economic development official in North Carolina.

This is a revised version of a paper that was presented earlier this year in Chicago at the 2013 Annual Meeting of the Midwest Political Science Association.

Read the full “Strategic Placement of Air Polluters” paper – Download (pdf)

NMTC Progress Report – 47,821 Direct Jobs Created in 2012

The 2013 NMTC Progress Report released today by the Washington, D.C.-based New Markets Tax Credit Coalition says the federal NMTC program was responsible for the creation of 47,821 direct jobs in economically distress communities in 2012.

New Markets Tax Credit

New Markets Tax Credit (photo – nmtccoalition.org)

Every year, the NMTC coalition asks all the Community Development Entities (CDEs) that receive NMTC allocations to participate in a survey wherein respondents are asked detailed information about their NMTC activity in the past year.

The latest report represents the ninth annual publication of the survey results, and provides all the survey data collected from 72 CDEs about their 2012 NMTC activity. Highlights from the report:-

- $2.2 billion in Qualified Equity Investments and $2.3 billion in Qualified Low Income Community Investments;

- 273 businesses received NMTC financing, with the total project financing pegged at $5.6 billion;

- 100 percent of NMTC investments went into qualified low income communities, of which 76 percent were in severely distressed communities and 65 percent were communities with unemployment rates that were at or higher than 1.5 percent the national average;

- Projects closing in 2012 created 47,821 jobs, including 20,251 full-time jobs and 27,570 construction jobs.

The NMTC program is credited for $3.9 billion in projects that are in the pipeline for 2013. The report also provides historical data based on past surveys, which sheds light on the program’s track record.

From 2003 to 2011, NMTC financed businesses garnered investments worth $55 billion, out of which $27 billion is NMTC capital – as in investments made by entities that received the tax credits. The rest of the capital came from other sources.

These NMTC financed businesses created 358,832 jobs during the same period from 2003-11, including 247,555 construction jobs and 111,277 full-time jobs.

In this same period, the NMTC program cost the federal government $7 billion in lost tax revenue, which puts the cost per job created by the NMTC at $19,500.

José Villalobos, senior vice president of TELACU Los Angeles, California, and president of the NMTC Coalition, said that the latest progress report shows that NMTC made significant contributions to the economic recovery last year.

Steve Leeper, president and CEO of Cincinnati Center City Development Corporation, said that NMTC had helped 3CDC invest and attract $466 million for the distressed city center in Cincinnati, Ohio.

Leeper added that as a result, crime in the area had dropped by 50 percent. About 4,000 construction jobs had been created, and 30 new businesses had moved in.

Read the full 2013 NMTC Progress Report – Download (pdf)   

ACC Report – Economic Benefits of Chemical Industry Investments

The Washington, D.C.-based American Chemistry Council (ACC) has released a report analyzing the economic impact of 97 announced chemical industry projects, with a specific focus on investments tied to affordable natural gas from shale.

American Chemistry Council

American Chemistry Council (photo – americanchemistry.com)

The report, titled “Shale Gas, Competitiveness, and New U.S. Chemical Industry Investment – An Analysis of Announced Projects,” examines 97 projects that together account for $71.7 billion in potential investments announced through the end of March 2013.

By 2020, these projects will have created a total of 530,000 new and permanent jobs. This includes 46,000 direct jobs in the chemical industry, along with another 264,000 jobs with suppliers and 226,000 induced jobs.

All this will generate $20 billion in local, state and federal tax revenues, along with 1.2 million temporary jobs in between now and 2020, when these projects are in the construction phase.

ACC President and CEO CAL Dooley said that the U.S. had become a magnet for chemical sector investments, which he said was a testament to the positive environment created by shale gas and the bright outlook for natural gas for decades to come.

Dooley added that the most exciting part about it was that half of the announced projects were led by non-U.S. firms, which means the country is about to capture a large part of the rest of the world’s market share.

The report also notes that much of the investment is geared towards production plants that would supply export markets, which would help in improving the US trade deficit.

Other highlights from the report include:

- The $71.7 billion investment will increase chemical industry output by $66.8 billion;

- The associated hike in supplier activity will add $100 billion in indirect economic output; and

- The 310,000 direct and indirect jobs created will together earn payrolls totaling $23.8 billion.

The report concludes that barring “ill-conceived policies” to restrict access to shale gas resources, there will be a significant chemical industry manufacturing expansion in the U.S.

The report authors add that there is concern about the quality and quantity of workers required for the skilled manufacturing and construction jobs that will be created. They say the government and industry need to work together to ensure that a trained workforce is prepared to build and work in the soon to come chemical industry manufacturing renaissance.

Read the full ACC report on chemical industry investments – Download (pdf) 

Energy Dept Launches H2USA Public-Private Partnership

The U.S. Department of Energy announced the launch of a new public-private partnership called H2USA aimed at advancing the infrastructure required for fuel cell electric vehicles (FCEVs).

Hydrogen refueling station

Hydrogen refueling station (photo – ornl.gov)

The H2USA partnership includes automakers, government agencies, utilities that supply gas, and private industry members involved in the hydrogen and fuel cell sectors.

In addition to the Association of Global Automakers, current members named as part of the partnership include Hyundai Motor America, Mercedes-Benz USA, Nissan North America R&D, and Toyota Motor North America.

Other members who are part of the partnership include the California Fuel Cell Partnership, Massachusetts Hydrogen Coalition, American Gas Association, Electric Drive Transportation Association, Proton OnSite, and the Fuel Cell and Hydrogen Energy Association (FCHEA).

Morry Markowitz, president and executive director of FCHEA said that the fact that so many entities have come together for this partnership is a positive sign.

The Energy Dept says that shale gas developments are helping reduce the cost of hydrogen production and use of fuel cells. H2USA will bring together experts to find solutions for infrastructure challenges including leveraging cheap natural gas.

Assistant Secretary for Energy Efficiency and Renewable Energy David Danielson said that the H2USA partnership will help in advancing affordable fuel cell vehicles that save money and give driver’s more choices.

A couple of months back, the Energy Dept’s Fuel Cell Technologies Office issued an RFI (request for information) in which it sought feedback from stakeholders on which fuel cells and hydrogen technologies were ready for technology validation.

Among the areas of interest mentioned in the RFI are ideas that could be applicable for an incubator program. The purpose of the RFI was to collect information in advance of a DOE Funding Opportunity Announcement (FOA) for technologies that could be supported to stimulate commercialization of fuel cell and hydrogen technologies.

The H2USA partnership may be helpful in this regard, since one of their tasks will be to evaluate alternative fueling infrastructure that can provide economies of scale and cost reductions.

R&D programs undertaken by the Energy Department’s national laboratories have helped private industry reduce fuel cell costs by 35 percent since 2008. The costs relative to 2002 are now 80 percent lower, and so is the amount of platinum required in fuel cells.

US Launches $200M Competition for Three Innovative Manufacturing Institutes

The United States government announced the launch of competitions to select locations for three manufacturing innovation institutes that will be created with $200 million in federal funding.

Clean Energy Manufacturing Innovation Institute

Clean Energy Manufacturing Innovation Institute (photo – energy.gov)

The federal government’s plan to create these three institutes comes after the National Additive Manufacturing Innovation Institute (NAMII) was opened in Youngstown, Ohio as a pilot project.

The FY2014 federal budget includes a billion dollars to create a network of 15 such institutes called the National Network for Manufacturing Innovation (NNMI).

The three institutes for which proposals are being solicited are being funded with $200 million from the budgets of five agencies, including the Departments of Energy, Defense and Commerce, and from the National Science Foundation (NSF) and NASA.

The three new institutes are:-

Digital Manufacturing and Design Innovation (DMDI);

Lightweight and Modern Metals Manufacturing (LM3I); and

Next Generation Power Electronics Manufacturing (CEMI – Clean Energy Manufacturing Innovation).

The first two will be lead by DoD, while the power electronics institute will be lead by the Energy Department.

DoD will put up $50 million each for DMDI and LM3I, with the other aforementioned agencies chipping in for a total of $70 million in funding for each institute.

This funding requires a minimum of 1:1 matching funds committed by the consortiums applying to be selected to host an institute, so each institute will kick off with an initial public-private funding commitment of at least $140 million in total.

These institutes have the power to radically transform the manufacturing sector and raise the global competitiveness of small and medium-sized businesses in the U.S.

For example, implementing the DMD environment would create savings to the tune of $30 billion over 15 years for the commercial aviation sector alone. This “digital thread” concept can similarly be implemented across all manufacturing industries, and is expected to decrease costs for the entire sector by 10 percent.

Similarly, LM3I will be helping to develop a supplier-base that can provide lightweight metals at scale. The demand for these metals is being driven partially because the automotive industry needs these metals to produce vehicles conforming to the required fuel efficiency standards of 35.5 mpg by 2016, and CAFE standards of 54.5 mpg by 2025. Raising the standard to 35.5 mpg is expected to save a total of 1.8 billion barrels of oil over the lifetime of all the vehicles covered.

The DOE’s CEMI will be pursuing the economic and technological transformational promise of wide bandgap (WBG) semiconductor materials, which are smaller and faster, and provide higher energy efficiency in power electronics and clean energy technologies. WBG is expected to get an $84 billion share of the global lighting market by 2020, and that’s just one application area.

Read more about the aims of DoD’s DMDI and LM3I institutes, and an overview of WBG from the DOE.

Report – Business Climate Rankings Have No Policy Value

A new report published by Good Jobs First claims that business climate rankings published by several organizations are based on flawed data, have no predictive value, and must not be used while formulating public policies.

Grading Places report

Grading Places report (photo – goodjobsfirst.org)

The report, titled “Grading Places: What Do the Business Climate Rankings Really Tell Us?,” is a revised second edition of a book on the same subject written by Dr. Peter Fisher, research director of the Iowa Policy Project.

The book was first published in 2005 by the Washington D.C.-based Economic Policy Institute (EPI).

Fisher examined several rankings for the study, including the Boston, Massachusetts-based Beacon Hill Institute’s State Competitiveness Report, the Small Business and Entrepreneurship Council’s U.S. Business Policy Index, and the Tax Foundation’s Location Matters, among others.

For the record, all three of the aforementioned ranking organizations and their ranking methodologies were included for analysis in the original EPI book in 2005.

Fisher says in the report that Beacon Hill’s ranking combines 45 variables related to fiscal policy, human resources, technology and business incubation. he claims that many of the variables among these 45 are “dubious choices.”

This is all pretty much similar to what was in the book, updated to reflect changes in the ranking methodology. But in this latest report, Fisher additionally claims that whatever value there may be in this data is further undermined because 21 percent of the numbers are fabricated.

He says the examination of the methodologies of several top business climate rankings uncovered major errors, with effects being presented as causes and scores that do not take into account the differences in state taxation systems.

Given all these alleged flaws, Fisher says it’s no surprise that many such rankings produce contradictory results and are unable to predict which states’ economies are poised to thrive.

Greg LeRoy, executive director of Good Jobs First, said they are not trying to correct the rankings or present an alternate ranking system.  He says the report’s main point is that the needs of businesses and their individual facilities vary so much, along with the conditions in each metro area, that it makes the whole concept of state business climates nonsensical.

Read the full Good Jobs First report on Grading Places – Download (pdf)

CDFI Fund Announces $3.5B in New Market Tax Credit Awards

The Community Development Financial Institutions Fund (CDFI Fund), which comes under the U.S. Department of the Treasury, released a report of its New Markets Tax Credit (NMTC) allocation awards made in 2012.

NMTC flowchart

NMTC flowchart (photo – nrel.gov)

As per the report, the Treasury is providing 85 organizations from 28 states and D.C. a total of $3.5 billion under the tenth round of the NMTC program.

NMTCs were created in Dec 2000 to incentivize investment projects in low-income and distressed communities

Corporate and individual investors are provided federal income tax credits worth 39 percent of equity investments made in community development entities (CDEs), to be claimed over a seven year period.

Each dollar invested into NMTC by the federal government generates another eight dollars in private investment.

In 2012, 282 CDEs applied to the CDFI Fund, requesting $21.9 billion in NMTCS. Out of this pool of applicants, 85 CDEs were selected in a competitive process and awarded $3.5 billion (16 percent of total requested).

The awards range in size from a minimum of $15 million to a maximum of $80 million, with the average allocation amount being $41.2 million.

Thirteen of the 85 CDEs were government controlled entities and their subsidiaries, which together received $420 million. Another 26 were Community Development Financial Institutions (CDFIs). Eight were real estate developers who received a total of $260 million.

Deborah La Franchi, co-founder and president of the Los Angeles, California-based National New Markets Fund which was awarded a $75 million NMTC allocation, said that the projects they target tend to have a huge impact, but are very difficult to finance unless there are NMTCs involved.

Donna J. Gambrell, director of the CDFI Fund, said that more than 70 percent of NMTC investments to-date have ended up in communities classified under the highest distress category, above and beyond the requirements set forth by the NMTC program for qualified investments.

Gambrell said the results demonstrate how essential NMTC is for spurring economic development for underserved communities.

Out of the total of $3.5 billion, around $744 million has been allocated to CDEs that will be investing in rural area projects. Another $1.859 billion will be invested in major urban areas, and the remaining $824 million in minor urban areas.

In the ten rounds awarded so far by the CDFI Fund, a total of $36.5 billion in NMTCs have been allocated to 749 recipients. This includes a billion dollars meant for redevelopment and recovery efforts in Louisiana and other Gulf Coast states after Hurricane Katrina, and another $3 billion under the Recovery Act.

Read the full report on the 2012 NMTC allocations – Download (pdf)

U.S. Launches Investing in Manufacturing Communities Partnership

During a visit to the Able Engineering plant in Mesa, Arizona, Deputy Secretary of Commerce Rebecca Blank unveiled a new manufacturing initiative – the Investing in Manufacturing Communities (IMCP).

Deputy Secretary Blank at Able Eng. plant in Mesa, AZ

Deputy Secretary Blank at Able Eng. plant in Mesa, AZ (photo – commerce.gov)

IMCP is a manufacturing assistance program for communities to make long-term investment for building up infrastructure that will attract manufacturing jobs.

The program will be a multi-agency partnership to leverage the entire federal government’s economic development resources.

U.S. Deputy Secretary of Commerce Rebecca Blank said in a statement that IMCP is designed to “improve the way we use federal resources for economic development initiatives, in order to bring more investment to American communities and make them an attractive place to do business.”

Federal agencies will be working in partnership with the industry and universities, and will select five or six communities where IMCP will be tested as a pilot program.

Each pilot will get $25 million in funding from the U.S. Economic Development Administration (EDA) in 2014, and more funding as required from other federal agencies. The FY 2014 federal budget request includes a total of $113 million for the Investing in Manufacturing Communities Fund.

The pilots will be awarded in a competitive process which will require participating communities to come up with economic development plans that aim to create an environment that attracts investments. The Dept. of Commerce provided guidelines of what they are looking for in such plans:-

- Business incubators and university research centers targeting specific tech sectors;

- Training programs that prepare workers for targeted industry sectors;

- Public spending on energy efficiency and infrastructure upgrades; and

- Viable plans for export growth.

In advance of the 2014 grants for the pilot programs, Commerce will be providing 25 communities smaller grants of around $200,000 later this year for communities that follow the same model described above. Solicitations for these grants will be issued next month, and the awards will be issued in September.

Inter-agency cooperation for IMCP begins right away, with six to eight “listening sessions” to be scheduled in 2013 to raise awareness of the aforementioned grant opportunities and get input from communities about the 2014 pilot competition.

The Dept. of Commerce will be leading the coordination effort to focus and combine the impact of all federal agency programs dealing with energy efficiency, research and commercialization centers, workforce training, etc.

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