Chuck Sheketoff posted: The NMTC is essentially a giveaway to wealthy venture capital investors, some based out of state, who specialize in funding real estate developments.

Love how Chuck always trusts his reader's intelligence enough to present whatever he's arguing against in a balanced factual manner... heh!

So... direct from the GAO's latest report: Congress established the New Markets Tax Credit (NMTC) program as part of the Community Renewal Tax Relief Act of 2001 to encourage investors to make investments in impoverished, low-income communities that traditionally lack access to capital. Conventional access to credit and investment capital for developing small businesses, creating and retaining jobs, and revitalizing neighborhoods is often limited in economically distressed communities or in communities with large low-income populations. The NMTC provides investors (individuals, financial institutions, other corporations, etc.) with a tax credit for investing in communities that are economically distressed or consist of low-income populations.

The new Oregon New Markets Tax Credit would match the federal credit dollar for dollar, for a total credit of 78 percent, starting July 1, 2011.

For the record, half of the 10 states with NMTC programs match the federal credit dollar for dollar.

What investor wouldn’t love a project where they would be risking only 22 percent of their capital but benefiting from 100 percent of the income if they succeed in getting an Oregon tax credit subsidy?

Governments don't get their share of the income? Are NMTC investments tax-free? I haven't found anything stating so.

While advocates for low- and moderate-income working families with children would be content with an earned income tax credit equal to 18 percent of the federal credit counterpart...

I guess so. 18% would put Oregon right up there with Maryland, Massachusetts, New Jersey, and New York - states renowned for prudent spending and models of financial stability.

Chuck has given us the cost to Oregon of increasing the NMTC. I guess I'd like to understand what the additional benefits might be, if any - just saying 'Oregon’s been doing quite well compared to other states on a per capita basis' under the current credit isn't all that informative. Incentivizing more investment in low-income communities isn't necessarily a bad thing.

Comrade Shekevoff, It is good to see you working hard against the profit motive and the evil capitalist system. Your rewards will be great in the mother land.

Solidarity, Demetri

Given the apparent fiscal crisis (otherwise, why would the state have raised taxes like they just did), I strongly object to both of these proposals. The first proposal is just a tax reduction on some people just weeks after the state raised taxes. The second is just a subsidization of certain economic activity at the expense of other economic activity that takes place without subsidization. If you believe in "tax fairness" , you should be equally opposed to both of these giveaways. Bob Wiggins

Isn't it amazing how some commenters consistently call government welfare handouts to investors "Profit Motive", but consistently call government welfare handouts to people that need to buy food or pay rent "Welfare"?

Just saying, let's just call welfare for investors "Welfare" too...... and then we can debate who should collect additional welfare in Oregon?

I have an honest observation and some questions:

Before measures 66/67 - and especially during (and on a national level) - I continue to hear about how we need to "tax" the wealthy, and that wealthy need to be "their fair share" and that the wealthy can "afford" to pay more.

As we all know, small businesses are a huge part of our national economy, and especially here in Oregon. A huge majority of jobs are produced in our state by businesses with 20 employees and less.

Wealthy investors and developers often fund a lot of these small business, or invest in them at some level. With the banking industry where it's at, I've personally seen how more small business owners and entrepreneurs are turning to investors for funding since it's more difficult to get a loan from a bank.

At what point does the rhetoric against the wealthy go too far and create two possible problems:

1. Reduce wealthy investors ability to invest at the same level in small business and entrepreneurs.
2. You create an angry backlash from these groups, and end up dealing with another political problem.

Personally, I've spoken with investors who say the more they get taxed, the more they'll pull back their spending on investing in viable companies and projects. Obviously, the money isn't going away, they say, but they'll just be less of it.

I can already hear the proponents of 66/67 saying it's about tax fairness and the wealthy weren't paying their fair share in the first place. My observation isn't about tax fairness, as it is about the public denouncement of those who are wealthy, and the constant push to get more out of them to pay for services.

Perception is reality. And I know many investors in Oregon who currently feel they are becoming the political linchpins for solving the nation's, and Oregon's revenue problems.

"The legislature is working under a tight timeline to complete important business during a month-long special session. * the legislature’s job was made a heck of a lot easier by Measures 66 and 67."

The important business of retribution against the No On 66&67 crowd seems to be the focus of much work.

Sounds like corporate welfare.

There is no better use for this money?

Tax credits must be paid for. Would this be paid for by 100% federal money, or require a tradeoff in the use of Oregon funds?

I think that is the question Chuck is asking. I think it is a valid question.

Screaming "profit motive" does not create jobs.

And what exactly is the revenue forecast saying today---that funding must be cut, or reserves tapped?

Or that things are on the upswing and there is plenty of money for tax credits?

Comrade Shekevoff, It is good to see you working hard against the profit motive and the evil capitalist system. Your rewards will be great in the mother land.////

Funny how times have changed. My Father, My Grandfather both paid taxes at more than twice the current level of income tax. The progressive income tax rates came from a history of abuses from a growing American autocracy of wealth running our nation into depression. The economies of the 50's, 60's, 70's had a strong middle class emerge willing to make sacrifices as well as demands on the nation, and it's government that made America the protector of the free world. We have the attitude that any tax burden of our wealthy or corporations is tantamount to communism, or socialism. Many Americans served in uniform from 1946 to 1981 when the tax burdens for both wealthy, and corporations were twice as much, even up to 90% for almost 20yrs which would make those generations what? Communists? Socialists? Dupes? Stupid? What???? The insanity, the stupidity, the distortions of those whom have been asked to give the least of themselves should scream hysterical every time they should be called upon to pay more is enough to make anyone with a conscience sick to there stomach. The military is laden with our young and brightest desperate to break the sealing between the classes, the working poor, and the affluent by way of an education. Financial bonuses, and subsidized educations if they will put themselves in harms way! I feel ill every time I see a calloused remark about any suggestion of tax burden on those who have been given the greatest relief over the past 30 years, and brought us the financial ruin we suffer today!!

As we all know, small businesses are a huge part of our national economy, and especially here in Oregon. A huge majority of jobs are produced in our state by businesses with 20 employees and less. ///

How much is enough. Small business was in fine shape, as well as the world's greatest industrial manufacturing economy when the top tax bracket was paying 90% and 70%, but not today??? 35%. not to mention capital gains that was just income before, now at 15%. This trend has manifested itself for the past 30years top to bottom in government. Grover Norquist has all but accomplished his stated intent of starving government until it can be drowned in the bath. So, we are living the dream, or we're suffering the nightmare. Which is it?

Revenue forecast apparently down more than expected. So why is anyone talking about tax expenditures?

If the data were there that specific tax expenditures created specific jobs, why didn't NO on 66 & 67 use that data in their campaign?

Chuck writes about a very important principal that is often ignored. Many taxes, such as those on gasoline tax and tobacco, though justified, are counter-progressive. Complementary changes should be made to preserve progressivity, but seldom are, mostly because conservatives and the wealthy will object. I do not know enough about the Oregon New Markets Tax Credit to pass judgment on it, but increasing the Earned Income Tax Credit seems a reasonable way to preserve progressivity.

"The military is laden with our young and brightest desperate to break the sealing between the classes..."

Why would someone want to break the "sealing?" between classes? So they can be demonized and spit on by the democrats? And pay for the other 60% of the population that are 'deemed' poor?

It's much easier to remain poor - that way other people have to pay for your shit. You can always blame stuff on the 'rich', and can sit around all day and drink. This is what makes Portland such a great place to live.

My financial circumstance, or level of intoxication is the question? I'm sorry, that I'm posting on this website advocating progressive policy is somehow evidence I'm drunk, or a drag on society is the only argument you seem able to make. You know my finances because__?

I wonder why you can't just make an argument without making rude generalities, or outright insults against those whom you disagree. Why can't you just make an coherent argument?

John, do you own a business? Have you ever hired anyone?

From people I know who have run businesses and employed people, rhetoric and tax breaks alone are not the only factors in hiring.

An uptick in business, a popular product, word getting around that they have better customer service than the competition, people deciding to buy local rather than from chains would be examples.

If a low cost competitor moves in down the street, do tax expenditures really solve that problem?

Regarding that last paragraph, though, there are people who work very hard even though they don't earn a lot per hour, even though they work part time.

"Sit around all day and drink"? Sounds like the view some people working in retail have of ideologues, talk show hosts, etc.

"Bet they couldn't survive a day in my job!".

So, what is your job, John? Paid blogger?

Money Good, Poverty Bad! Rich Good, Poor Bad!

So, if you're rich you're good! If you're poor you are bad! Lazy, the reason for your poverty is your own fault, and has nothing to do with public policy? Right? Is this how America, or Oregon going to make public policy? I'll bet you our future that there are many more people in my circumstance than those so upset about the 1.3% increase on profits over $250,000.00 a year for a business or paying the .1% of the revenues over $500,000.00 a year! I'll bet you the small business earning over 1,000,000.00 revenue didn't fire anyone over the $500.00 they had to pay for the year! I wonder, do you think your grandfather was really two or three times more capable, or more responsible than you, John?

Posted by: lestatdelc | Feb 8, 2010 10:52:30 AM But putting people back to work should be priority #1 and the most effective counter-cyclical force we can do to turn the numbers around. Every person no longer unemployed, is one less person draining public/social services while fueling the economy. ///////

I wonder where the burden should end up as a shared tax burden from top to bottom. Shouldn't we as a nation. The democracy that would assume to be the 'greatest human experiment' find the right formula for free enterprise, capitalism, and American Democracy's tax fairness? Should we not have come to terms at least in a general terms like how progressive the tax rates should be or at all. I note that the flat tax debate has flunked it's century long test. If we are to look back to when our nation flourished most it was when we were not in a protracted war, and we had a progressive tax rate. I would like to occasionally like to hear examples of diminished tax burden on corporations, and the rich resulted in economic stability. I think we have been trickled on for 30 years and we all can see what has trickle down.

"So, what is your job, John? Paid blogger?"

I don't need a job. I have the Democratic party. Now get back to work.

"Personally, I've spoken with investors who say the more they get taxed, the more they'll pull back their spending on investing in viable companies and projects."

Yeah right.

Because the .33% (that's 1/3 of 1 percent) yield rate on a one year treasury is soooo much more appealing.

Ignore John.

His problem is not only does he watch Glen Beck, but he also believes it's all true.

Chuck Sheketoff posted: The NMTC is essentially a giveaway to wealthy venture capital investors, some based out of state, who specialize in funding real estate developments (think The Nines hotel in Portland).

After Chuck's rather sarcastic dismissal of it as a sort of unworthy boondoggle, I looked into how the NMTC benefitted The Nines Hotel. Here's what I found:

SITE DESCRIPTION The Meier & Frank building, a historic department store in Portland, Oregon listed on the National Register of Historic Places, has been identified by several studies as a lynchpin for downtown redevelopment. Using New Markets Tax Credits (NMTC)-derived financing, Sage Hospitality has purchased the top ten floors of the 15-storybuilding and is renovating them into a 334 room destination hotel called The Nines. Federated Stores is building out a new Macy’s store on the lower five floors.

LOW INCOME COMMUNITY METRICS + Median Family Income: 40 percent of Oregon State MFI + Unemployment rate: more than 5 times the national average + Federally-designated Empowerment Zone, Enterprise Community,and Renewal Community + Small Business Administration designated Hub Zone + Urban Renewal Area + Targeted Distressed Community

PROJECT GOALS + Preserve and revitalize one of Portland’s most renowned historic buildings + Provide high quality hotel rooms near mass transit + Create jobs + Increase retail activity in the downtown retail core + Create a highly environmentally efficient mixed use space that benefits workers, shoppers and visitors.

ECONOMIC IMPACTS SUMMARY The investment of $72.5 million in New Markets Tax Credits leveraged a total project cost of $108.0 million for the hotel portion of the redevelopment. The construction and 10 years of operations of the hotel are predicted to produce a total (direct, indirect and induced) economic impact of $750.1 million during the 24-month construction period and first 10 years of operations. Investment of these funds are associated with the provision of 1580 FTE temporary jobs during the 24-month construction period,and 620 FTE permanent jobs created and then retained during operations of the new destination hotel. An estimated total of $292.6 million in direct, indirect and induced wages will be paid during this period. $116.8 million in Federal, State and Local tax revenues are estimated to be generated over these twelve years, including $21.7million during the 24-month construction period, and $9.5 million annually over ten years when fully operational.

BENEFIT OF TAX CREDITS Sage Hospitality Resources was able to use the largest single-project allocation of NMTC’s to complete financing to create a new hotel in the historic Meier & Frank Building. A $72.5 million allocation of New Markets Tax Credits was used to complete the high cost of seismic retrofitting, preserve the building’s signature terra cotta facade, and reconfigure the upper floors to include a large light atrium and new hotel rooms. Use of the $0.39 tax credit effectively allowed $28.3 million in foregone federal taxes to help generate $71.5 million in new federal taxes over 12 years and, more importantly, bring $750.1 million in total economic impact to Multnomah County during that period through the redevelopment of one of its most iconic historic buildings.

So $72M brings in $750M. Can't have that.

Posted by: alcatross | Feb 8, 2010 12:27:16 PM The construction and 10 years of operations of the hotel are predicted to produce a total (direct, indirect and induced) economic impact of $750.1 million during the 24-month construction period and first 10 years of operations. //

Where do you get this data??? 334 rooms of exclusive hotel rooms in the center of Portland Downtown is a 'Targeted Distressed Community,' really?

You know, I always thought the Outer SE or parts of Hillsboro, and Beaverton where consider distressed?

This is Marketing Speak to flower up the real boondoggle that is the tax credits used to embellish the pockets of real estate developers whom could care less about anything but their investments.

When public policy is privatized this way, very little is benefited by the public.

Where do you get this data???

Try the LINK in his post

Posted by: mp97303 | Feb 8, 2010 12:58:21 PM

It's a PR pitch from the investors, no source of where they arrive at $750 million dollars in local economic impact?

I don't see where they do anything but make the claim whole cloth!

To echo Tim's question - we do you get this data?

The fluff piece you link states: "Use of the $0.39 tax credit effectively allowed $28.3 million in foregone federal taxes to help generate $71.5 million in new federal taxes over 12 years and, more importantly, bring $750.1 million in total economic impact to Multnomah County during that period through the redevelopment of one of its most iconic historic buildings."

The Nines has been open for business for what, 2 or 3 years? But you're claiming they will bring in $750 million in total economic impact. Really?

I'd really be interested to see how that arrived at that number. Sadly I imagine it involves a sphincter and salad tongs.

Then ask the Hiltons how many millions they'd have been able to amass were it not for paying barely subsistance wages to those same maids.

Therein lies the appeal of free market ideology. The supposed infallibility of the system relieves the winners of any moral responsibility toward the losers. The economically worthy make lots of money. The poor get just what they deserve.

Humans are intrinsically moral. We need a good excuse to turn our backs on our fellows. Deification of the Market serves nicely to absolve the guilty.

Tim McCafferty commented: no source of where they arrive at $750 million dollars in local economic impact?

The following is in the same document I linked above:

METHODOLOGY The economic, employment and fiscal impacts shown in this Community Impacts Report were generatedusing IMPLANo Professional, the industry standard econometric software used by over 1,000 companies,organizations and government agencies to estimate the impacts of an economic event. IMPLANo uses input-output accounting and closely follows the accounting conventions used in the Input-Output Study of the U.S. Economy by the Bureau of Economic Analysis (1980) and the rectangular format recommended by the United Nations. Results shown in this report are based on total construction costs and a New Markets Tax Credits allocation amount that are not final. Actual results will vary according to local economic conditions, wages, materials costs, tax rates, and more.

The community impacts contained herein are based on the total project cost. Jobs are measured in hours worked and, using a multiplier, are represented as FTEs (full time equivalents). Construction jobs are temporary and will be spread out over the construction period, depending on the level of construction spending in each year. Operations jobs are permanent. The fiscal impact figures represent the Federal and State/Local tax revenue resulting from the direct, indirect and induced economic activity during the discrete construction period and the first ten years of facility operations. The total impact figure represents the direct, indirect and induced economic impacts of the discrete construction period plus the first ten years of operations. The total impacts figure does not include the fiscal impact, which is considered separately. All output is in 2007 dollars.

Scott in Damascus commented: The Nines has been open for business for what, 2 or 3 years? But you're claiming they will bring in $750 million in total economic impact. Really?

The Nines opened 1/9/09 - so it's been open now a little over 1 year.

'I' am not claiming anything - I merely linked the material for some alternative perspective. Given the current economic downturn, I suspect The Nines is likely behind the first year operational projection. There's no way they could have predicted the downturn in 2007. And just because they're behind the first year projection right now doesn't mean they won't eventually meet or exceed the $750M impact at the end of 9 more years.

I'm very leary of any tax credits to anyone for awhile. Let's raise revenues, pay for services and have government stay away from directing the economy by "partnering" with various groups, at least for awhile.

At least be honest, you know every extra dollar is going for public employee benefits. Giving us this charade of its for the kids/old folks/poor gets tiring after, what say, 25 years or so.

"From people I know"

LT, how many people do you know? Have you ever actually gone out and met a person and I mean talked to them? How about walking down the street - Have you ever done that and actually seen people? You know people who walk and talk? Have you ever volunteered to talk to people? Do you have a job where they actually let you meet people.

I mean I know people who know people and they are the luckiest people.

LOL

IMPLAN ????????????????

IMPLAN is a computer model for economic impact that still has not been accepted as a reliable model. The main problem is the model seems to accommodate whom ever is using it, making it's use little more than whatever the user wants it to be.

If every time IMPLAN is accepted as a reliable model for a project, the decision has already been made and IMPLAN has been used to justify it's own forgone conclusion.

If every time IMPLAN is accepted as a reliable model for a project, the decision has already been made and IMPLAN has been used to justify it's own forgone conclusion.

That's true of all models. And without models we do not think.

<h2>Not to worry, nothing to discuss. Everyone on the lower end, please remove your bloomers. Talking Heads had something to say about that: "same as it ever was, same as it ever was".</h2>