Lawmakers are considering legislation that would use seed money from Nevada’s Insurance Premium Tax to leverage both private and federal funding to create or expand Nevada businesses in poor communities.
Senate Minority Leader Michael Roberson, R-Las Vegas, presented Senate Bill 357 at a Saturday hearing of the Senate Commerce and Labor Committee.
The measure would create the Nevada New Markets Jobs Act as a tax credit program for small businesses willing to invest in low-income communities. Ryan Brennan of Advantage Capital Partners said the bill would commit up to $30 million from the Insurance Premium Tax as loan money to eligible businesses. He said it opens the door for companies like his to compete for a slice of the $3 billion a year in IRS tax credits the federal government has committed to a similar national program.
Brennan said his company’s job is to match those companies with insurance companies willing to buy those tax credits. That, in turn, he said convinces banks to make loans covering the rest of the cash those businesses need for expansion.
He said in many cases, the banks are interested in making loans to these kinds of companies, but want another investor before doing so. This program provides that in the form of insurance companies interested in purchasing those tax credits.
The program would be available only in low-income communities, Roberson told the committee. That means Nevada communities — many of which are in rural areas — where the poverty rate is 20 percent or the median income is less than 80 percent of the state average. The rules require those companies receiving the loans and credits to operate in those communities for a full seven years.
Brennan said the entire process runs through the private sector. He said the government doesn’t choose what to invest in, that companies like Advantage put each deal together. As for their share, he said they don’t get their fee until the end of the seven years and, if any company reneges on the arrangement by, for example, leaving the low-income community, “all the credits are recaptured.”
He said other states already doing this have discovered that new revenue from expanded businesses and hiring has exceeded the cost of the credits so there is no net loss to the state.
He predicted the Nevada program would attract or expand up to 60 businesses.
The committee took no action on the plan.