- Created on Tuesday, 12 February 2013 17:15
- Written by Imperial Valley News
Sacramento, California - Today, Assemblymember V. Manuel Pérez (D-Coachella) introduced two bills aimed at spurring private investment, infrastructure development, and small business job creation in underserved communities and in the border region.
AB 305 creates a state equivalent to the federal New Markets Tax Credit (NMTC) program, which supports economic development in disadvantaged and underserved communities. Administered through community development entities (CDEs), the NMTC is a tax credit offered to individual and corporate investors in exchange for making an investment in the CDE. The CDE then uses the private equity for economic revitalization investments such as small business development, real estate projects, and community facilities.
“A state New Markets Tax Credit provides a much-needed incentive to encourage the private sector to focus resources in economically distressed rural and urban communities,” said Pérez. “And in doing so, we help spur local entrepreneurship, job creation, and community revitalization, which benefits the entire state.”
The federal New Markets Tax Credit program was enacted in 2000 by the U.S. Congress. The program expired at the end of 2011, but it was renewed last month for 2012 and 2013, with $3.5 billion in credit authority allocated for each year. Since the inception of the federal NMTC, at least nine other states have enacted matching programs to help leverage more federal dollars in NMTC investments.
AB 311 expands the role of the California Infrastructure and Economic Development Bank (I-Bank) to include facilitating infrastructure and economic development financing activities within the California and Mexico border region. Mexico is California’s top trade partner, with cross-border trade valued at more than $190 billion in 2011. Promoting infrastructure development in the economic corridor comprising the Coachella, Imperial and Mexicali Valleys can facilitate the region’s economic recovery and growth. Provisions in the bill specifically prohibit state moneys from being used to finance projects in Mexico.
“Cross-border trade with Mexico is a critical element of the California economy,” noted Pérez. “Yet, our deficit in border infrastructure impedes the growth of this relationship. Given the growing importance of the region’s economic corridor, high quality infrastructure will be very important, and the I-Bank is uniquely qualified to undertake the financing structures needed to attract the private capital for those improvements.”
Both bills have been referred to the Assembly Rules Committee, where they await assignment to the appropriate policy committee.