Ecotrust subsidiary funnels $60M in federal tax credits

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Ecotrust CDE LLC, a for-profit community development subsidiary of the Portland-based nonprofit Ecotrust, announced Wednesday that it allocated more than $60 million in New Markets Tax Credits in 2010 to Northwest businesses that are creating "green" jobs in rural areas.

Ecotrust calculates that more than 300 jobs were created as a result of the investments enabled by tax credits.

The New Market Tax Credit program was renewed by Congress as part of the tax cut deal struck by President Barack Obama and signed into law last week. The program, which has proved a valuable tool for renewable energy projects, will be extended at $3.5 billion per year for two years.

The program is administered by the Community Development Financial Institution Fund, a division of the U.S. Treasury.

Here's how it works: The tax credit aims to stimulate development in underserved communities by allowing taxpayers to receive a credit against federal income taxes for making equity investments in community development entities such as Ecotrust CDE. In turn, Ecotrust CDE makse investments in qualifying businesses.

In 2010, those investments included:

• NewWood Corp., which is reopening a manufacturing plant in Elma, Wash., for making a plastic-wood composite material. The plant will employ about 150 people

• Ochoco Lumber Company, which used the proceeds to refinance debt, expand sawmill operations, and construct a new pellet mill at the Malheur Lumber Company site in John Day.

• ZeaChem Inc., which is building a $40 million pilot facility in Boardman, to convert wood waste into ethyl acetate to produce products such as ethanol.

• Garibaldi Forest Management, which used the proceeds to acquire Northwest forestland and initiate forest restoration activities including invasive species removal and habitat enhancement.

Ecotrust CDE was formed in 2005 expressly for the purpose of applying to be certified to accept New Market Tax Credits. The tax credits are allocated to for-profit organizations that are certified by the U.S. government to pursue a specific community development strategy.

Ecotrust CDE, which focuses on creating jobs with forest-related projects, was allocated $50 million in New Market Tax Credits in 2005 and $30 million in 2009. Ecotrust CDE has applied for an additional allocation and Bettina von Hagen, who runs the organization for Ecotrust, said staff may be added if an additional allocation is granted.

Von Hagen said she was relieved that the tax credit program was renewed last week.

"It was a concern, given the challenging financial times that we've been experiencing, that (the tax credit program) wouldn't be renewed," von Hagen said. "It's been hugely instrumental over the last two years given the limited debt and equity environment."

"The new markets tax credit program is an excellent tool for fostering economic growth in areas of the state that need it most," said Oregon Senator Jeff Merkley, D-Ore., in a press release. "By using this tool to provide Oregon companies with capital, Ecotrust has helped put hundreds of people to work in our forests and on construction sites."

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