rural development partners
By Jean Caspers-Simmet
MASON CITY, Iowa — Rural Development Partners, a subsidiary of Ag Ventures Alliance, is assisting with rural development projects in the Midwest as well as places as far away as Washington and Maine.
Steve Baker, with Rural Development Associates, discussed how the entity is using New Market Tax Credits to boost rural economies at the recent Ag Ventures Alliance annual meeting in Mason City.
Ag Ventures Alliance is a value-added agriculture development group. Baker said that a few years ago Ag Ventures members were thinking of ways to develop new sources of capital for value-added businesses.
"It seemed like we were always missing that last 20 percent," Baker said. "We wondered if there wasn’t something we were missing."
Someone suggested they look at the U.S. Treasury’s New Markets Tax Credits Program, created in 2000 to stimulate investment in economically distressed areas. Tax credits were only being used in urban areas, but nothing in the law said they couldn’t be used in rural areas.
Rural Development Associates and Ag Ventures Alliance created Rural Development Partners, a community development entity designed for the New Markets Tax Credit program.
In 2004 Rural Development Partners received an allocation under the tax credit program for $45.7 million of investment in agribusiness projects. These tax credits were used to simulate investment in a milk processing plant in the Midwest that had been destroyed by a fire and forestry projects in Maine and Washington.
RDP applied for and received another allocation of $60 million in 2006. Some of these credits are being used for a wheat-based ethanol plant on a Montana Indian Reservation and a grain receiving station at Cresbard, S.D. Baker said RDP is looking for other projects where tax credits can be used, especially in the Midwest. Investors and lenders can enhance their return by using the program, and businesses in low-income communities can attract equity and debt capital they would not otherwise obtain, Baker said. As the project has evolved, Rural Development Partners has provided a leadership example for other rural community development entities. Baker is also working with investors who may put a small amount of seed money into an Ag Ventures revolving loan fund for smaller loans to emerging rural businesses.
Baker urged Ag Ventures members to tell their elected officials that the program is doing good things for rural areas. He also said to let him know about projects that might qualify for the tax credit program.
"Rural areas have received just $300 to $400 million of $15 billion in tax credits issued through the program, Baker said. "We’re the little guy, and we’re fighting for our due."