Catalytic Capital: The value of New Markets Tax Credits

Picture of Jeremy Barnicle

Jeremy Barnicle

Executive Director

Ochoco Lumber Company, Grant County Oregon

Over the past several months, Ecotrust CDE has been working to remedy the problem the state of Oregon believes exists with the 2014 Rough & Ready New Markets Tax Credit transaction. Recent coverage by The Oregonian focuses on the nature of that dispute but neglects the bigger story of the New Markets Tax Credit Program and its potential to deliver capital to Oregon communities when little else can.

Ecotrust was founded in 1991 on the idea that the environmental movement didn’t stand a chance if it continued to act as if our lands and waters were somehow distinct from the people who depend on them. In the nearly 30 years that have followed, we have pursued new models for recognizing and developing the full range of social, economic, and environmental values in all of our initiatives and investments. And we have seen the power of leveraging the full range of catalytic capital — public, private, and philanthropic — to drive durable change.

One example of this kind of catalytic capital is the New Markets Tax Credit (NMTC) Program. The NMTC Program is an initiative of the U.S. Department of Treasury designed to help economically distressed communities attract private capital by providing investors with a federal tax credit. In 2005, Ecotrust CDE, or Community Development Entity, engaged in a competitive process and received an NMTC allocation, enabling us to facilitate capital investment from private investors to qualified businesses located in distressed, low-income communities around the region. Ecotrust CDE has received six federal NMTC allocations since 2005. In addition, Ecotrust CDE received an allocation from the short-lived Oregon NMTC Program, which had just one authorization.

Of the 120 CDEs across the country, Ecotrust CDE is one of only 14 that focuses primarily on rural areas in our investments. Our projects have supported tribal communities, forestland restoration, and fiber and food processing with a goal of delivering triple-bottom-line benefits — social, economic, and environmental — in every investment we make.

Our projects have supported tribal communities, forestland restoration, and fiber and food processing with a goal of delivering triple-bottom-line benefits — social, economic, and environmental — in every investment we make.


The federal NMTC program is particularly beneficial here in Oregon, where the timber economy has declined in many parts of the state in terms of employment and economic contribution. Consolidation of mills, a concentration of log processing and distribution along the I-5 corridor, and changes in federal and private harvest practices have all contributed to shuttering family-owned and operated mills in many rural communities where they were once the biggest employer. Rural wood processing facilities are critical, not only for the jobs and community benefit they generate, but also for the vital role they play in a time of increased fire frequency and intensity. Without processing facilities nearby, thinning overcrowded and fire-prone forests is cost-prohibitive. Processing facilities are expensive (and financially risky, as witnessed by how often they are shuttered with or without public funding) and will not be built in rural landscapes without private-public partnerships.

Alongside our partners, we have realized some important wins in timber communities through NMTC investments. The permanent closure of Rough & Ready in 2016 was a deeply disappointing ending to the efforts of so many to revitalize the mill and the community that depended on it for their livelihoods. The Rough & Ready mill provided 80 good jobs in a county with 30 percent poverty and 15 percent unemployment rates. The financial risk to restarting the mill precluded conventional financing. Despite the eventual outcome, we stand by the decision to support efforts to reconfigure the mill and bring back jobs to Josephine County — it was exactly the kind of investment the NMTC Program is designed to make.

Ecotrust CDE has a strong record of successful NMTC transactions, and we are proud of their performance against their stated objectives. We do rigorous due diligence on all of Ecotrust CDE’s investments and often choose not to pursue transactions if they don’t meet our underwriting standards. Our NMTC legal counsel reviews and provides opinions on every transaction, confirming that the transaction fully complies with program requirements. This legal opinion is then reviewed by two other NMTC law firms. There remains risk in NMTC investments, but we will continue to pursue them and drive to achieve the objectives we set. Without catalytic capital, we won’t be able to create the solutions we need.

As an organization, Ecotrust is tackling big, important problems — in the case of Rough & Ready, an economy that is leaving too many people behind — and we are committed to radical, practical approaches to solving those problems. We are proud to be doing this work at Ecotrust, and we will never apologize for taking responsible risks.


Asset 3


Mobilizing New Markets Tax Credits for projects that strengthen climate resilience, intergenerational wealth-building, and lands and waters stewardship

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