kmay at igc.org
04-07-1999, 06:30 PM
Arthur H. Rodgers wrote:
>
> I was wondering if people had heard anything about Clinton's APIC (America's
> Private Investment Corporation) proposal and what they thought about it.
> It is modeled after the govt's OPIC (Oversees Private Investment Co.) Is
> there a good source of info on it? I apoligize if the topic has already
> been discussed.
> Thanks
I have been doing extensive work on this topic, with the Rainbow/PUSH
Coalition, the Appalachian Regional Commission, and others. There are 6
separate components to what the White House calls "The New Market
Initiatives", of which APIC is one. (My PERSONAL opinion is that the
APIC design could be a lot better. It doesn't really do what OPIC
does.) Each has overlapping but separate legislative, budgetary,
regulatory, and political issues. People also have different
perspectives on the political status of the package, and I would
certainly welcome a discussion on this list to air these various views,
and to start coordinating strategy.
My understanding is that only one of the six initiatives is actually a
done deal (the SBIC LMI program). As a whole package, we should get
behind the New Market Initiatives, and call Congresspeople about passing
them. I've been trying to inspire some serious political organizing
around these issues, and am very glad someone raised the topic. This is
one of the most comprehensive, if somewhat flawed, attempts to address
capital access issues that I can remember, and there is a good, high
level team working on it, which does seem to be fairly responsive to
real community development practitioners--certainly to Reverend Jackson,
who helped spur the discussions initially. If people on this list have
had differing experiences with the Administration's effort, I would be
very interested to hear.
The list and political status (as far as I have heard) is as follows:
1--The SBIC new LMI program: this is a new category of SBA guaranteed
leverage through the SBIC (Small Business Invesmtent Company) program,
called LMI, Low-Mod Income investments. It lowers the minimum
capitalization requirements for the SBA's "participating securities"
when investments are made in targeted geographies or populations. This
is a very good thing for the SBIC program. Only shortcoming is that it
doesn't provide any technical assistance dollars for the extra work that
LMI investments often require.
2--APIC: The "American Private Investment Company" is supposed to be
modeled on the OPIC (Overseas Private Investment Company)program, but
it's really nothing more than a giant SBIC. Doesn't really have the
same level of resources in terms of incentives, or creative risk
reduction programs analogous to OPIC (like their political risk
insurance, for example). APIC is going to be a pilot project, with only
a limited number of licenses granted, and specifically designed for
mega-development projects adn particular groupings of investors. The
APIC name has become a substitute in some discussions for the rest of
the New Market Initiatives, which is too bad, because it's little more
than a marketing spin, and I only hope that it doesn't become the excuse
not to pass the rest of the vehicles. It does still require
legislation.
3--NMVCC: This is a very good new vehicle designed to provide equity
capital to VERY small businesses (matching SBA leverage through
participating securities), but the most distinguishing factor is the SBA
matching GRANT for technical assistance. This could be a very important
tool for community development--the SBA has been advised by some of the
leading community development venture capital practioners in the country
in the design of this program (are you out there Kerwin and Meg? Do you
agree?) This program DOES need legislation and strong lobbying,
particularly for the T.A. component.
4--New SBLC licenses: The "Small Business Lending Company" is a
non-bank, non-depository lender which has access to SBA 7a loan
guarantees. Currently there are only 14 license holders, which were
doled out in a very short period during the early Reagan years. "The
Money Store" is the best known example. Needless to say, they have not
been effective mechanisms for community development, and are not subject
to CRA, so there has been momentum building to open up these licenses to
CDFI type and minority organizations. The proposal on the table is to
grant 10 new licenses to qualified lenders that can demonstrate strong
experience and capability to do community development-like lending.
While this program does not require legislation, it DOES require new
regulations, and the lobby against these revisions is incredibly strong,
entrenched, and deep-pocketed. PLEASE, register your opinions with
Congress, Treasury, and the SBA.
5--Business LINC: A fine, revamped public-private partnership to
encourage business mentoring. This is a combination of new and old
programs which link large firms with small and minority suppliers to
bring them up to quality standards, improve minority contract
opportunities, and generally get the private sector involved in these
issues. Its not significantly different from existing programs, and I
don't think requires much political pressure to put through.
6--The New Markets Tax Incentive: THE LINCHPIN TO THE WHOLE NEW MARKET
PROGRAM. PLEASE CALL YOUR SENATORS AND REPRESENTATIVES!! Taking a cue
from the Canadian experience and their revenue-positive investment tax
credits for the "Labor-Sponsored Investment Funds," this proposal is
designed to help capitalize qualified, community development investment
vehicles by offering personal, and institutional tax credits to
investors. I think the figure was 6% for each of four years. I heard
Rubin say it equaled 25% in present value terms. It's not really
enough, but it's a start, and an important concept to lobby on. This
one definately needs help.
I've also seen documents that discuss increased CDFI funding as part of
this effort. Let's hope so.
Some of the Appalachian groups I've been working with are helping to
build some political will around passing this package, and I know that
CDVCA should be putting out an educational piece for lobbying on the New
Market Venture Capital vehicle, but I don't have it yet. My sense is
that the time for URGENCY on organizing around this issue is upon us.
Even if the programs are not perfect, and even if we don't pass all of
them, this is an opportunity to get the issues out into the national
dialogue. The SBA has been doing good outreach workshops, but they are
really only talking about the new LMI investments for the SBICs, because
the other ones aren't done. I'm anxious to hear everyone's feedback on
this, and whether there is momentum to get going.
Karen May
VP for Economic Development
Wilhelm and Conlon Public Strategies
Chicago, IL
This post transferred from the cdb-l mailing list
>
> I was wondering if people had heard anything about Clinton's APIC (America's
> Private Investment Corporation) proposal and what they thought about it.
> It is modeled after the govt's OPIC (Oversees Private Investment Co.) Is
> there a good source of info on it? I apoligize if the topic has already
> been discussed.
> Thanks
I have been doing extensive work on this topic, with the Rainbow/PUSH
Coalition, the Appalachian Regional Commission, and others. There are 6
separate components to what the White House calls "The New Market
Initiatives", of which APIC is one. (My PERSONAL opinion is that the
APIC design could be a lot better. It doesn't really do what OPIC
does.) Each has overlapping but separate legislative, budgetary,
regulatory, and political issues. People also have different
perspectives on the political status of the package, and I would
certainly welcome a discussion on this list to air these various views,
and to start coordinating strategy.
My understanding is that only one of the six initiatives is actually a
done deal (the SBIC LMI program). As a whole package, we should get
behind the New Market Initiatives, and call Congresspeople about passing
them. I've been trying to inspire some serious political organizing
around these issues, and am very glad someone raised the topic. This is
one of the most comprehensive, if somewhat flawed, attempts to address
capital access issues that I can remember, and there is a good, high
level team working on it, which does seem to be fairly responsive to
real community development practitioners--certainly to Reverend Jackson,
who helped spur the discussions initially. If people on this list have
had differing experiences with the Administration's effort, I would be
very interested to hear.
The list and political status (as far as I have heard) is as follows:
1--The SBIC new LMI program: this is a new category of SBA guaranteed
leverage through the SBIC (Small Business Invesmtent Company) program,
called LMI, Low-Mod Income investments. It lowers the minimum
capitalization requirements for the SBA's "participating securities"
when investments are made in targeted geographies or populations. This
is a very good thing for the SBIC program. Only shortcoming is that it
doesn't provide any technical assistance dollars for the extra work that
LMI investments often require.
2--APIC: The "American Private Investment Company" is supposed to be
modeled on the OPIC (Overseas Private Investment Company)program, but
it's really nothing more than a giant SBIC. Doesn't really have the
same level of resources in terms of incentives, or creative risk
reduction programs analogous to OPIC (like their political risk
insurance, for example). APIC is going to be a pilot project, with only
a limited number of licenses granted, and specifically designed for
mega-development projects adn particular groupings of investors. The
APIC name has become a substitute in some discussions for the rest of
the New Market Initiatives, which is too bad, because it's little more
than a marketing spin, and I only hope that it doesn't become the excuse
not to pass the rest of the vehicles. It does still require
legislation.
3--NMVCC: This is a very good new vehicle designed to provide equity
capital to VERY small businesses (matching SBA leverage through
participating securities), but the most distinguishing factor is the SBA
matching GRANT for technical assistance. This could be a very important
tool for community development--the SBA has been advised by some of the
leading community development venture capital practioners in the country
in the design of this program (are you out there Kerwin and Meg? Do you
agree?) This program DOES need legislation and strong lobbying,
particularly for the T.A. component.
4--New SBLC licenses: The "Small Business Lending Company" is a
non-bank, non-depository lender which has access to SBA 7a loan
guarantees. Currently there are only 14 license holders, which were
doled out in a very short period during the early Reagan years. "The
Money Store" is the best known example. Needless to say, they have not
been effective mechanisms for community development, and are not subject
to CRA, so there has been momentum building to open up these licenses to
CDFI type and minority organizations. The proposal on the table is to
grant 10 new licenses to qualified lenders that can demonstrate strong
experience and capability to do community development-like lending.
While this program does not require legislation, it DOES require new
regulations, and the lobby against these revisions is incredibly strong,
entrenched, and deep-pocketed. PLEASE, register your opinions with
Congress, Treasury, and the SBA.
5--Business LINC: A fine, revamped public-private partnership to
encourage business mentoring. This is a combination of new and old
programs which link large firms with small and minority suppliers to
bring them up to quality standards, improve minority contract
opportunities, and generally get the private sector involved in these
issues. Its not significantly different from existing programs, and I
don't think requires much political pressure to put through.
6--The New Markets Tax Incentive: THE LINCHPIN TO THE WHOLE NEW MARKET
PROGRAM. PLEASE CALL YOUR SENATORS AND REPRESENTATIVES!! Taking a cue
from the Canadian experience and their revenue-positive investment tax
credits for the "Labor-Sponsored Investment Funds," this proposal is
designed to help capitalize qualified, community development investment
vehicles by offering personal, and institutional tax credits to
investors. I think the figure was 6% for each of four years. I heard
Rubin say it equaled 25% in present value terms. It's not really
enough, but it's a start, and an important concept to lobby on. This
one definately needs help.
I've also seen documents that discuss increased CDFI funding as part of
this effort. Let's hope so.
Some of the Appalachian groups I've been working with are helping to
build some political will around passing this package, and I know that
CDVCA should be putting out an educational piece for lobbying on the New
Market Venture Capital vehicle, but I don't have it yet. My sense is
that the time for URGENCY on organizing around this issue is upon us.
Even if the programs are not perfect, and even if we don't pass all of
them, this is an opportunity to get the issues out into the national
dialogue. The SBA has been doing good outreach workshops, but they are
really only talking about the new LMI investments for the SBICs, because
the other ones aren't done. I'm anxious to hear everyone's feedback on
this, and whether there is momentum to get going.
Karen May
VP for Economic Development
Wilhelm and Conlon Public Strategies
Chicago, IL
This post transferred from the cdb-l mailing list