Transcripts For CSPAN3 Aspen Institute Discussion Focuses On

Test test test. Test test test. With us from the South Carolina association for Economic Development. Bernie . Thank you and welcome. I bring you greetings from warmer climates where there are Smiling Faces and beautiful places. [ laughter ] South Carolina is a great place to be. We have urban and rural areas that definitely have slight differences. In South Carolina, the Unemployment Rate in our 11 most distressed and rural count iies averages 12 , this is twice that of the more developed and you are urbanized counties. Our three most prosperous counties is home to 40 of the states Bank Deposits. What that translates into is thats where capital largely resides. Whereas the Rural Communities, the 11 most rural and distressed count geez home to 4 of the states Bank Deposits. At the same time, South Carolina rich in land assets or 65 of our state is considered rural as far as landmass. Now, some may say that that is a challenge but we see that as an area of great opportunity and innovation. One area that id like to talk about is Allendale County. If you live in South Carolina, often times when you you want to see and hear about the most distressed conditions in the state you will talk about allen dale county. Population wise its a little over 9,000, 9,433 individuals. All Allendale County is often seen as a place where educational challenges exist. At the same time, Allendale County is rich in cultural and agriculture. Unfortunately, Allendale County is separated from Major Urban Centers because of how the Transportation System aligns. At one time, Allendale County was an area where a local economy would drive because it was a cutthrough between savannah and columbia and some of the more urbanized areas. But with the building of interstates that bypass the county, the county fell into economic hardship. The major areas of opportunities that we see in Allendale County are focused on the local assets and thats where we tried to drill down on our own innovations there. Its abundant in Natural Resources, Cultural Assets and opportunities to really mine the potential that exists there. A recent study from the university of South Carolina produced a one other thing ill say about Allendale County. Its a majority africanamerican population. 73 is africanamerican, 25 euroamerican. So theres some historical qualities that exist there. Recently, the university of South Carolina produced a study, one that we have been hoping to be generated for some time that looked at africanamerican tourism in South Carolina and that study produced recently and released recently showed that africanamerican tourism in South Carolina was a 2. 4 billion industry. Just in africanamerican tourism in the state. So when you look at the cultural asset, the Natural Resources that exist throughout the state but specifically in Rural Counties we see theres an opportunity for cultivating that. So id like to move to one of our organizations in Allendale County and since im here by myself youll have to imagine Allendale County representatives here. He cant fit on the stage but hes actually here. So Allendale County alive is local Community Development corporation. Its a certified Community Development corporation and i x will explain the significance of that shortly. It was created by the community because the community itself recognized they had resources they want to cultivate and they want to maximize the potential that exists in their county. And what has happened, the state also recognized that a lot of our distressed communities had resources but without capital they could not cultivate and receive investment in those resources. So the state created something called a Community Economic Development Tax credit and that tax credit incentivizes investment into local challenged communities. As long as there is a certified Community Development corporation or Community Development Financial Institution in that area and Allendale County alive is one of those Certified Organizations. Verdictfication is done by our state department of commerce and any investment, contribution, equity or debt that is invested in one of these Certified Organizations, that individual bank or Insurance Company who makes that investment gets a 33 tax credit, state tax credit, on their investment. And what that has been able to do is to drive investment, private investment into some of our more distressed communities. What Allendale County alive was able to do was to use that tax credit to be able to secure property and buildings that are now enabling them to operate and to advance heritage tourism, Affordable Housing development as well as cultural tourism. As i mentioned earlier, most of our Bank Deposits and Bank Investments are in the more urbanized areas. Well, through cdifs that exist in the state, those cdifs have also been able to attract private capital and therefore lending them to allowing them to lend capital to some of the more distressed areas. And recently Allendale County alive received a 61,000 loan to advance their work. So in South Carolina, what our state policymakers have recognized is the value of investing in rural and distressed markets. We have had companies, individuals, banks that have invested in these markets using the tax credit as a means to do that and if but for the tax credits those investments would not flow into those markets. To date, the Tax Credit Program has directed over 15 mltd into these rural and distressed communities throughout the state, most of whom are rural and economically challenged communities throughout South Carolina. Now the tax credits have been exhausted and we are engaged with our legislature now to up the ante. So were in discussions with them of increasing the tax credit from 33 to 100 . The current Tax Credit Program has an annual cap of 1 million. Were working with our state legislature to increase that to 5 million annually. Eventually we would like that to be a permanent tool across the state. We received calls from investors, bankers, who are really interested in receiving that tax incentive in order for them to target investment in distressed areas. And so now that the tax credit, of course, is exhausted, were getting more calls than ever because this is a unique tool that is enabling us to channel capital into economically challenged areas throughout our state and Allendale County is one of those that is receiving private capital whereby they would not have received it before. Bernie, thanks a lot. [ applause ] were going to be taking your questions in just a short time but were going to keep the conversation up here a little longer. Im glad you ended, bernie, with the tax incentive program. It certainly makes sense on its face can you envision a time when Allendale County will attract that kind of investment without the tax credit where the advisability of capital going there is selfevident and doesnt need the spur of a tax credit. Often times investors are not going to be drawn to an area where they cannot immediately see a return on their invest investment. So what the tax credit does is brings the attention to the area and gives them the ability to see the Investment Opportunities there. Thats why a Certified Organization is bush administrationed in or serves that particular county so they can package the asset they are in, put that in a package that the investor can see the return on that investment as well as they get a tangible financial return from the state but they could also get a monetary return from the investment. It is going to be below market. Its going to be Patient Capital that goes into the product but theyre going to receive what we call a triple bottom line. Theyre going to receive a turn from the state. Depending on their investment they may receive a return from the project and they will also play a role in moving the economy forward in that local market. If im sitting in columbia with my green eye shade on, do the numbers work . If South Carolina has foregone a certain amount of tax revenue can i make a case for foregoing that revenue in money i dont have to spend for various kinds of subsidies, social welfare payme payments emergency aid to the people of that distressed part of the state . Sure, because already the Tax Credit Program has proven to have a 51 leverage average. Sfiems that leverage is higher in some other markets and a little bit lower in others but on average a 5 to 1 leverage, you are creating jobs in that local market and providing return to the state. So, yeah, the department of revenue with the green eye shades, theyre measuring that as well. And when they see that return on investment, more importantly the legislature sees that return on investment and now they are happy to forgo that potential revenue realizing that they are getting more revenue on the other side. That also includes the local tax base which is going to help with finding local schools and so forth. Sitting here as we are in Dupont Circle in washington, d. C. , were just a short stroll from the agencies that could make your lives in the short term or the near term a little easier, a little harder, a little more promising, the sba is not too far away from here, the u. S. Forest service. Are there really easy fixes that the relationship with both your own State Governments and the federal government are missing. Is there lowhanging fruit that really is kind of easily picked thats being missed right now . Thats certainly true. When you begin looking at the Economic Opportunities across Rural America there are many, many great opportunities that we miss simply because we dont have the initial investment of resources necessary to move to a state where they can sustain themselves. A good example for us in eastern ohio is in the area of infrastructure. We have Many Companies that are looking at globally where it makes the most sense for them to locate an operation and eastern ohio is extremely competitive as a geographic location but we have a shortage of infrastructure to support that. And by infrastructure you mean water, sewer building sites. So in our region, if its flat enough to build on its likely a brownfield, its been built on before and had industry on it before, its on a strip mine, it has an underground coal mine under it, its in a flood plain or a landslide area. So we have billions of assets sitting in a trust fund for reclaiming strip mine land and theres a proposal in congress, the reclaim act, that would move some of the money out but prioritize it for those sites that have the most Economic Development potential. That linkage between Economic Opportunity and that fund can create a situation that basically fixes the problem we have of not having property available when Companies Come calling when you create jobs in our community. David, you reinhabited a closed mill. That sounds like the perfect all around win, revitalizing already existing capital. And theres a lot of it across the west, particularly saw mills in our Forest Industry which has obviously suffered in some of our Rural National forest dependent communities over the last 20 years so those sites are available and the help to get on to them is really important. Our county, for example, stepped up and bought the old mill site in our community and leased it to us with the agreement that we would purchase it back from them over time. We had a five year leaseback option and we will buy the property back from the county by getting some new market tax credit lenlding within 18 months. So the county recognized we neednt been focused on infrastructure, we need to focus on our processes to create those jobs so they stepped up and filled the gap, we were able to buy it back but it was a perfect example of the Public Private partnership to get that infrastructure in the hands of businesses without it becoming cumbersome. Are there interoperability problems . Are there ways that the incentives provided in washington and in your own state doerchlt line up easily or could line up better . Yeah, i think theres one in particular, the Community Development Block Grant Program that were involved with. For entitlement areas, which are usually the urbanized areas, the local government designs those well for urban markets but in nonentitlement areas, those dollars go to the state and the state designs a master plan for that. Often times the state master plan does not align with some of our rural local rural markets. So we really want to see guidelines and directions to the state to be a little bit more sensitive the to what the needs are in the local market. We support water and sewer projects but there are also entrepreneurial opportunities that can be utilized and gleaned from using that program as well as innovative programs and activities around youth entrepreneurship, Work Force Development so that if we can get the cdbg program to be a little bit more directive as far as getting our State Government to do that. Whats the end game . Are we trying to provide a maintenance doseover Economic Development to Rural Counties just do sort of keep them moving forward and keep them alive and keep them funded . Are you trying to create places where people will move to instead of just taking care of the people who are already there . Are you looking to something more ambitious than that . From my own experience, i spent 20 years working in western minnesota in a region which was predicted to be about 175,000 people and today its about 215,000 people and the reason for that is a focused 20year effort to rebuild the local economy from the ground up using local resources. It created more vibrant communities and defied all of the expert predictions about continued rural decline. It is possible, there are examples where its possible. It takes flexible resources driven by a local vision of the path forward to make it happen, but it is very doable. I have a point there, too, please. The really important thing here as far as im concerned as an entrepreneur is to provide the opportunity for people to stay in their communities. Ful so many times people have to move and leave the communities behind and you see an erosion of the tax base, erosion of the infrastructure. All of those disastrous things start to happen. So by creating opportunities on the market side, the way i see things, and bringing work to the people, keeping them in their communities that you not only stabilize their families but you start to stable size those communities as well. So if you can find a way to stop the exit of people from these communities, i think youve gone a long way of rebuilding Rural America. Thats when we got started in 1996, the goal was to create jobs and create enough opportunities that kids came back to the schools. And that is happening. In 20 years after the mill shut down for the first time in 20 years and ive been on the school board for 12 the School Population is growing in Wallowa County and its a source of prietd and excitement within our community. And our community there is so much Natural Resource wealth and as i said before so much ingenui ingenuity and people want a work, they dont want a maintenance dose of funding. They want to work. Theres tremendous opportunit s opportunities were working with farmers and ranchers across t