How Tribal Leaders Are Creating Jobs
The New Markets Tax Credit (NMTC) has provided a vital spark to infrastructure and economic development projects across Indian country. Momentum has been building over the past several years but because of recent federal agency actions, and now tax-related Congressional bickering, it is in danger of petering out.
Out on the prairie, the skyline of Winnebago, Nebraska continues to grow. That is because the Winnebago Tribe is constructing a new multi-million-dollar educational center. This is a major achievement for a community in great need. Any other rural community might have issued bonds based on local property tax revenues to construct a critical community asset like this. But of course tribal governments cannot levy real property taxes. As such, NMTC-backed financing helped make this project a reality.
Up on the Great Lakes, the Lac du Flambeau Band of Lake Superior Chippewa recently completed work on a cutting-edge dental center that will provide quality, affordable care and train Band members for jobs in the dental care field. A few generations ago, the only dentist Band members might see would be a military doctor, once a year. Now the Band has a landmark dental center that serves members and even draws non-Tribal members onto the reservation for dental care. Any other rural community might have pledged fee lands as collateral for a loan needed to finance a new dental center. But of course tribal governments cannot pledge trust realty as collateral. Because of restrictions on lending on trust land, this project would not have been completed without NMTC support.
On the windswept coast of the Bering Sea, Native communities in the Kuskokwim River Delta are working together to process hand-caught salmon for the global market. The Alaska Native community of Platinum was able to attract its regional community development quota group—Coastal Villages Region Fund—to construct a new Salmon processing plant. For a community as small as Platinum, landing this plant, and the jobs that come with it, is like a mid-sized city scoring a new GM facility or GE factory—a massive political and economic win to be sure. Any other rural community might have used tax increment financing or some other state tax incentive to attract a big employer to a small town. But of course states do not provide these tools to Indian communities. NMTCs once again did the trick.
So, in an era when virtually any important local economic development project receives some local tax subsidy, how is it that American Indian, Alaska Native and Native Hawaiian leaders are succeeding in creating new jobs and diversified revenue streams, without access to these tools? The same way Indians have always battled in the face of difficult economic conditions: through collaboration and ingenuity. Tribal leaders have shared information, pooled best practices, and leveraged available financial resources to bring hundreds of millions in private investment to Indian country – not merely through Indian gaming, but also through the federal NMTC program. Still, the potential for NMTC-backed financing has barely begun to be tapped by tribal communities.
The NMTC is a federal incentive that attracts equity from financial institutions to intermediaries called community development entities (CDE). These CDEs use this equity to make flexible, low-cost loans and equity investments that support vital public services and job-creating projects. This is not just a program for Indian country; CDEs have deployed billions in communities of high unemployment and poverty since 2000. In communities that have received investments by CDEs, the NMTC is moving the needle. NMTC-funded businesses and organizations are hiring and providing a much-needed boost to local economies. Tribal leaders have been working for years to educate members about the NMTC and to attract CDE attention to Native projects. (See Tex Hall, “Position Your Tribal Community as a New Market.”) Yet today, before Indian country has even reached the NMTC tipping point, it is in danger of stalling out.
In the most recent NMTC allocation round, the federal Community Development Financial Institutions Fund (CDFI Fund) did not allocate NMTCs to any CDEs with a specific focus on Indian country. Previously, at least one Native-focused CDE has received an allocation each go-round. That has helped build a track record of success—demonstrating to the CDFI Fund, CDEs and NMTC investors that Indian country is now a mature market for New Markets. But Indian country cannot afford a setback of being passed over for NMTC allocation; not when a pipeline of so many worthy tribal projects has been built.
Here is a sampling of projects that could well go unfunded because of the lack of Indian country NMTCs this year—a wastewater treatment plant that supports future residential growth; a homeownership initiative that will put working families in their first homes along with an affordable loan and financial counseling; and a renewable energy project that will create green power and green jobs. Those CDEs that did get NMTC allocations have missions to serve certain markets—namely those that have lost auto industry jobs, those hit hard by natural disasters, and those with potential in 21st century growth industries. And these are all worthy goals. Yet Indian country is simply not on the CDEs’ radar screens. The only way to ensure Native communities will receive CDE attention and investment for the CDFI Fund to again allocate to CDEs who focus on Indian country, in 2014. Hopefully, greater awareness of NMTC successes in Indian Country, will cause that to happen.
Meanwhile, we must also ask members of Congress, especially those Representatives and Senators with high Native constituencies, to support reauthorization of the vital NMTC program, specifically Senate Bill 1133 and any House companion bill that might soon emerge. “We” means tribes and Alaska Native and Native Hawaiian communities, as all of American Indian country has the potential to benefit from the program. But simply advocating for re-authorization is not enough, especially given the Beltway’s current partisan gridlock. Tell your Senators and Representatives that there is great need and high demand in Indian country for NMTCs, which cannot be ignored amidst the latest government shutdown squabble.
Tell Congress Indian families in need of jobs to survive, Indian businesses in need of new capital to grow, and non-profits in need of help for America’s most impoverished minority group, simply cannot afford to take another year off.
Lance Morgan is president of Ho-Chunk, Inc., and Gabriel S. Galanda is a partner with Galanda Broadman, PLLC. Both are members of a CDE advisory board. Lance is a Winnebago tribal member, and Gabe is an enrolled member of the Round Valley Indian Tribes.
You need to be logged in in order to post comments
Please use the log in option at the bottom of this page