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THOMPSON: TREASURY TO ALLOW BRAC SITES LIKE MARE ISLAND TO MORE EASILY QUALIFY FOR ECONOMIC DEVELOPMENT TAX CREDITS

October 19, 2015

Treasury answers Thompson’s call for increased investments in BRAC sites like Mare Island

WASHINGTON, D.C. – U.S. Rep. Mike Thompson (CA-5) today announced that the Department of Treasury decided, at his urging, to allow Base Realignment and Closure (BRAC) sites to more easily qualify for economic development funds though the New Markets Tax Credits (NMTC) Program. In a letter sent in March, Thompson requested that Treasury expand the universe of NMTC qualifying criteria to include BRAC sites. Treasury recently responded favorably to Thompson's request. This provides private entities with an incentive to invest in BRAC areas.

"These tax credits are job and revenue creators that can help resurrect communities that have been devastated by military base realignments and closures. They have already proven successful, and because of our work with Treasury, even more BRAC communities will be able to qualify," said Thompson. "By expanding these high-value tax credits to BRAC areas like Mare Island, we can put people back to work, create new jobs, and help communities grow their economy."

The NMTC program targets low-income communities suffering from chronic unemployment and high poverty rates by providing investors with a 39 percent federal tax credit to help reduce unemployment and support economic growth.

In the 5th Congressional District, Mare Island Naval Shipyard, which was closed in 1996, could be eligible for the tax credits made available due to Thompson's work with Treasury.

To qualify as an area of "higher distress," a site must meet at least two qualifying criteria. Under Treasury's new rules, being a BRAC site will count towards being considered "higher distressed." If an area is considered to be "higher distressed," investors can qualify for increased economic development tax credits to help boost the area's economy. A full list of qualifying factors can be found here.

Under the NMTC program, private entities are provided with tax credits to incentivize investments in so-called distressed areas. When an entity applies for tax credits through the NMTC program, their application is scored more favorably if at least 75 percent of their investment is being made in a "highly distressed" area. For example, if an entity wants to invest in Mare Island, its NMTC application would now be scored more favorably due to BRAC sites being a qualifying factor.

Over the past several decades, hundreds of military installations around the country have been realigned or closed altogether through the Base Realignment and Closure (BRAC) process, as well as through other base closure laws, leaving communities scrambling to make up for the lost jobs and revenue.

Currently, when a military base is closed, the Department of Defense (DOD) is required to complete any necessary environmental cleanup at the former base and then transition the property to a Local Redevelopment Authority (LRA). Together, DOD's Office of Economic Adjustment and the LRA create a redevelopment plan for the property. The goal of this process is to lead to a timely, beneficial, revenue generating reuse of these former military bases. However, numerous military installation cleanups take much longer and cost much more than expected, significantly delaying their reuse and causing many of these communities to become or remain economically distressed.

Treasury's decision helps address this by allowing BRAC areas to more easily qualify for tax credits through the NMTC program.

The NMTC program has proven effective at growing local economies and creating jobs. According to the U.S. Department of the Treasury, every $1 invested through the NMTC program generates $12 of private investment. Using the NMTC program, Brunswick, Maine has successfully redeveloped a former Naval Air Station into a $15 million, 80,000 square foot medical manufacturing facility. A second NMTC was also used in Brunswick, Maine to make $20 million in renovations to facilities now operated by a private aircraft manufacturer. However, this project could have been three times as large had additional NMTC funds been available. Combined, these two projects will bring more than 200 high-tech, high-wage jobs and other significant economic benefits to this former military community.

Last Congress, Thompson introduced bipartisan legislation to expand the NMTC program by authorizing up to $100 million per year for distressed communities that have had military installations closed or realigned.

Congressman Mike Thompson is proud to represent California's 5th Congressional District, which includes all or part of Contra Costa, Lake, Napa, Solano and Sonoma Counties. He is a senior member of the House Ways and Means Committee. Rep. Thompson is also a member of the fiscally conservative Blue Dog Coalition and chairs the bipartisan, bicameral Congressional Wine Caucus.

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