Cherrytree Group LLC Blog

... By Warren Kirshenbaum

Baltimore Area Institutions to Receive Over $155 Million in New Markets Tax Credit Awards

BALTIMORE, MD - In an effort to highlight the Obama Administration’s key investments in broad-based economic growth and commitment to the revitalization of communities stricken by the economic crisis, Community Development Financial Institutions Fund Director Donna Gambrell today visited a job training and human services organization in Baltimore benefiting from private sector investments made possible through the New Markets Tax Credit (NMTC). Speaking alongside Representative Elijah Cummings, Director Gambrell announced the selection of 99 organizations nationwide to receive NMTC allocation awards under the 2010 program round. These 99 awards will leverage billions of dollars of investment into businesses and real estate projects to create jobs and promote growth in communities with high rates of poverty and unemployment.

“The New Markets Tax Credit continues to be a tool for job-creation and economic revitalization in areas that struggle to attract investment because of poverty, unemployment and a lack of opportunity” said Director Gambrell. “I am honored to announce the 2010 New Markets Tax Credit Award allocations with Representative Cummings here in Baltimore, where our partners have demonstrated why this tool has been so effective in making literally thousands of projects possible across the country and give Americans a chance to make a living, to start a business and to build a better future in areas that need it most.”

The NMTC, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in investment vehicles known as Community Development Entities (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. CDEs must apply to the Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) to compete for this allocation authority. The 99 organizations receiving awards were selected from a pool of 250 applicants that requested over $23.5 billion. They are headquartered in 27 different states and the District of Columbia; but have identified principal service areas that will cover nearly every state in the country, as well the District of Columbia.

“By helping our partners in community development secure critical funding for job-creating projects, the New Markets Tax Credit is helping to bring opportunity and drive investment in our local businesses and communities,” said Representative Cummings. “In these tough economic times Baltimore welcomes the support of the CDFI Fund, and we will continue working to ensure that we're reaching the hardest hit.”

Director Gambrell’s and Representative Cummings’ announcement was made today at Humanim Inc., a nonprofit organization that provides workforce development and rehabilitation services to individuals with disabilities and other barriers to employment. An award winning human services organization, Humanim provides a ground-breaking model for delivering expanded employment services that gives those individuals in greatest need the opportunity to build a career and attain financial independence. Over $14 million in NMTC financing provided by City First Bank of DC and the National Trust Community Investment Corporation allowed Humanim to convert a large brewery that sat abandoned for 35 years in one of the poorest neighborhoods in Baltimore into its headquarters. Humanim reaches individuals of all ages with comprehensive vocational services.

Having benefitted from funding under the NMTC, Humanim highlights the effectiveness of the NMTC in leveraging private investment to complete economic and community development projects that help revitalize communities with high rates of poverty and unemployment. In total, five institutions in Maryland will receive funds in this NMTC award round to invest in development projects.

To date, over $20 billion of private-sector capital has been invested through the NMTC into urban and rural communities throughout the country, helping to create or retain hundreds of thousands of jobs and to provide low-income community residents with access to quality education, health care, job training, housing and critical retail services in their communities.

2010 NMTC Program Awards

2010 NMTC Program Award List
2010 NMTC Program Highlights
2010 NMTC Program Allocatee Profiles
2010 NMTC Program Award Booklet

A complete list of the 99 organizations selected and additional information on the NMTC Program can be found on the CDFI Fund’s web site at: http://www.cdfifund.gov.

... by Warren Kirshenbaum

I was meeting with a commercial tenant representative today over coffee, and during our discussion about what trends he was noticing in business, he said that he had been accumulating leads more rapidly over the past few months. His view was that people were starting to consume more, or at least entertain thoughts of consumption and expansion efforts in business. They’re not feeling more confident because the economy is on an upward trajectory, they’re just tired of being depressed. I think he’s absolutely correct. When you get hammered by a lot of bad news, eventually you don’t care anymore. It gets to a point that you become sensitized toward bad news, and you just start moving forward with plans, and loosening the purse strings for no other reason than you become tired of the ways things are.

This is the new normal.

Thinking about this, I realized that, although my set of circumstances differ, and my perspective is shaped by the view from my seat, my conclusion is the same.

Things changed in the Fall of ’07, and have not been the same since. 2009 was an improvement, challenging but good. Business in 2010 is different to the way it was in 2009 — things are changing rapidly. There’s more activity, but not greater volume; clients are focused on cost cutting, do not have the ability to risk their remaining resources, are being smarter about their spending, and are less likely to ride with a project for as long as they had done in earlier years. These factors are pressuring the market for services to change from the a la carte delivery of specific services to a more all-encompassing pre fixe. Clients are demanding the delivery of those services in a way that adds value to their projects. This is leading to more price stability for buyers of services, more specialization and niche building by sellers of services, and a movement away from the traditional ways in which services were priced and delivered.

Once again, a new normal.

Naturally, the question of whether we “are at the bottom” and “when is the economy going to return to normal” will be asked. Well it isn’t going to — there’s a new normal.

Our economy has lost millions of jobs during this recession, and even if we could replace them, it would take many years to do so. Current business conditions, however, discourage small businesses from adding new workers. Specifically, health care costs, taxes, data privacy concerns, payroll costs and employee benefits are a major discouragement to hiring new employees. At the same time, new technology has made it easier to outsource job functions than to hire more employees. A company that needed 8 employees 10 years ago, can now achieve the same output with only 3 employees. It’s possible now to bank online and make deposits from the office; bookkeeping and accounting are easily outsourced as online software programs download banking, billing, revenue and expense data and process the data into registers and reports; billing and accounting information can be accessed from the internet by an outsourced independent contractor; printing, copying, marketing, advertising, internet strategy, as well as informational technology are all outsourced, and administrative and secretarial services are shared between companies that have co-located in larger office space, with any excess services needed being handled by virtual assistants.

My point being that the old jobs lost are not going to come back, big companies will shrink, and small companies will try to remain small. Jobs are being created, and will continue to be created but they are being created by new businesses, not existing businesses. The new jobs are in different fields, and workers will need new skills.

Once again, this will be the new normal. The new normal is to adapt or die. Adaptation will need to be done quickly, and will require one to be nimble. Large entities are by their nature not nimble and cannot adapt quickly enough to create significant opportunities in the new normal. It’s up to us little guys to do that. I’m up to the challenge, are you?