'Going To Have To Make Some Tough Choices Around Here': Wyden Raises Concerns Over New Tax Credits

2 months ago

During a Senate Finance Committee hearing, Sen. Ron Wyden (D-OR) questioned witnesses about community development tax credits and opportunities.

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Transcript

00:00Thank you very much, Mr. Hawkins. Let's go now to questions. Let me start with you, Ms. Lofton.

00:09Without tax-exempt bonds, many local governments wouldn't be able to borrow money

00:14at any reasonable interest rate. And bonds have just been key to maintaining infrastructure and

00:21making other essential investments for residents. And I think when you look at successes like Build

00:29America Bonds, it got money off the sidelines. There's no question that's what happened in 2009

00:36when we really kind of stunned and awed people with $180 billion worth of investment in Build

00:43America Bonds. So my first question to you is, let's put it in a kind of broader sort of context.

00:50How can tax-exempt bonds best leverage federal grants, funding from the American Rescue Plan,

00:55or other resources in order to better invest, make smarter investments in communities?

01:02Thank you for that question. One of the things that I believe our city prides itself on is how

01:07well we leverage our limited local resources with the federal assistance that we receive. So

01:15taking bonds, tax tools like this, and coupling that with our local resources has helped us

01:22bring projects to our locality that we would not have been able to do otherwise.

01:27These tax tools, the tax-exempt municipal bonds, we've been able to leverage with ARPA funding,

01:34for example, in a way that there have been significant developments that we have had

01:40sitting in our planning books for 10, 12 years. We weren't able to accomplish them because the

01:45dollar amounts were so high. But with ARPA funding, with all of the tax incentive tools that we've got,

01:52and the ability for us to issue tax-exempt bonds together, we've been able to significantly make

01:59huge investments in our downtown corridor, but also in some of our distressed neighborhoods.

02:04Large projects as simple as a recreation facility that serves our low-income populations,

02:11those wouldn't be able to be built without these resources because our resources were too limited.

02:17But in partnership with state and federal funding, we've been able to get those types of buildings

02:22and build streets and roads that lead to them so that our citizens can even access those amenities.

02:27So I do believe that leverage is an important power in the ability to use these bonds and these

02:32tools effectively. Well, heaven forbid, Ms. Loftin, you're probably being too logical for much of the

02:39federal government, but I think the point of leverage is so key because, you know, not all

02:46dollars are created equal in one sense. If you can leverage this in terms of investments,

02:52particularly in low-income communities, it is a huge bonanza in terms of actually delivering

02:59for people. Let me go to you, Ms. Nelmark, with respect to, again, this tough choices kind of area.

03:07Now, evidence that we've seen indicates that the New Markets Tax Credit targets communities that

03:15have significant underinvestment. Do you agree with that? Absolutely. That is the majority of

03:23New Markets goes to far more distressed areas than is required by the law.

03:28So based on your experience, compare New Markets Tax Credits to Opportunity Zones because what

03:37I keep seeing and, you know, part of the problem was we couldn't get much information

03:42on the Opportunity Zones or wasn't, you know, much transparency in that is that these Opportunity,

03:50you know, Zones seem to be really good for building, you know, marinas and all kinds of

03:56things that the 1% seems to use but not really getting into communities that are in desperate

04:05need. Compare, if you would, the New Markets Tax Credit to Opportunity Zones in terms of the

04:11value of the dollar because we're going to have to make some tough choices around here in terms

04:16of where we're going to go. Compare those two, if you wouldn't mind. From my experience, the New

04:21Markets Tax Credits have been used far more than the Opportunity Zones in our area and we explored

04:29some possible transactions with a local company who had invested in Opportunity Zones. They went

04:36a different route in terms of a long-term redevelopment project. My knowledge of Opportunity

04:42Zones is limited as we have not participated directly in those. So you were in effect almost

04:50invited to make the choice and you said for the best possible dollar, particularly for investing

04:58in low-income communities, New Market Tax Credits was the best buy. It's more accurate to say that

05:07New Markets has been an extremely effective tool and we play a major role in those. With

05:13Opportunity Zones, we have not, CDEs aren't actually needed in Opportunity Zones and so

05:20we don't steer those in any way. Fair enough. Senator Crapo. Thank you.

'Going To Have To Make Some Tough Choices Around Here': Wyden Raises Concerns Over New Tax Credits

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