UMA MEMBER COMPANIES IN THE NEWS:
ATK RECEIVES MORE THAN $50 MILLION, SECOND OPTION COULD EXCEED $170 MILLION BY 2013September 24, 2010 – UB Daily
Alliant Techsystems (ATK) has received an order valued at more than $50 million from the U.S. Army Contracting Command, Rock Island Contracting Center (RICC), Rock Island, Ill.
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September 24, 2010 – Quick Manufacturing News
Did you know that 26% of grinder accidents in an 8-year period resulted in fatalities? Click to continue
UTAH RENEWABLE ENERGY BUSINESS SUMMIT SET FOR NOVEMBER 15
September 24, 2010 - USTARFor manufacturers and service providers, renewable energy and energy efficiency represent a number of new, fast-growing markets. Wind, solar, geothermal and energy efficiency industries have supply chain needs that can be met by established and emerging businesses alike. But how does an established business make the shift to enter these markets? How does an emerging business position itself to gain a foothold?
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UTAH OILSANDS BECKON EARTH ENERGY RESOURCES: CALGARY FIRM PLANS STATE'S FIRST OIL MINE
September 24, 2010 – Calgary HeraldThe state of Utah granted final approval this week for what would be the first oilsands mining project in the United States.(Calgary Herald)
UNDERSTANDING THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS IN FINANCING ECONOMIC DEVELOPMENT
September 24, 2010 - EDCUtahOnce the sole domain of public infrastructure projects like the construction of roads, libraries, courthouses and schools, public financing programs are becoming increasingly important to economic development in Utah.
Today the term "public financing" programs may include anything from a bond to a tax credit that is used to stimulate economic development, says EDCUtah Business Development Manager Teri Klug. For this story, EDCUtah set out to highlight a few of the public financing programs that utilize public monies in unique ways to stimulate economic development without necessarily creating public debt.
New Market Tax Credit
The New Market Tax Credit is one such program. It has both private finance applications and public or governmental tax incentives. For example, on the private side, the credit can spur investment in private sector capital in distressed communities by providing a tax credit for taxpayers who make qualified equity investments in designated Community Development Entities (CDEs). The Utah Microenterprise Loan Fund (UMLF) is an example of a Utah organization that is a qualified CDE. In certain circumstances, a city or related entity might issue bonds and then loan the proceeds from the bonds to private entities, to encourage economic development. Furthermore, Klug says if a construction project is located in a qualified low income census tract, the developer may be eligible to receive up to 39 percent in tax credits against the construction loan through the New Market Tax Credit Program.
Recovery Zone Facility Bonds
Other public finance programs require government involvement, but do not require the government entity to issue any debt. Recovery Zone Facility Bonds (RZFBs)--part of the American Recovery and Reinvestment Act--are one example. Randy Larsen, a public finance attorney and partner at Ballard Spahr LLP says the RZFBs were created as a financing incentive solely for private business and are funded through an "allocation" of tax-exempt bonding capacity to cities and counties. For example, Davis County issued $9.5 million in RZFBs on behalf of Janicki Industries, the anchor tenant in Layton's new East Gate Business Park. Wells Fargo purchased the bonds from the county and provided a tax-exempt interest rate (roughly saving 35 percent in interest costs) "with the full understanding that it will be repaid solely by Janicki, and not the county," he adds.
In this instance, Davis County acted like a conduit issuer, according to Larsen. The county obtained a tax-exempt interest rate, which it was able to pass on to Janicki, saving the company roughly one-third of the interest costs associated with the loan. In turn, Janicki is building a $19.5 million, state-of-the-art manufacturing plant that will create 50 jobs in support of the F-35 Joint Strike Fighter fleet. As the bond purchaser, Wells Fargo was willing to accept a lower interest rate on the bonds because it does not have to pay taxes on the interest it receives.
Of course there are always limitations and hoops to go through with such programs, but Larsen says the Davis County-Janicki example typifies what can be done with Recovery Zone Facility Bonds. He notes that federal legislation has been proposed to extend and re-allocate additional RZFBs to states.
Utah Fund of Funds
The Utah Fund of Funds is another example of a public-private partnership that is being used to stimulate investment in Utah's private enterprises. The Fund is a $300 million State of Utah economic development program aimed at providing access of alternative or non-traditional capital to Utah entrepreneurs. While the Fund of Funds was created with public money, it does not invest money into any company or individual. Rather, it invests in venture capital and private equity funds that commit to establishing a working relationship with Utah's start-up and business community, and commit to making investments in qualifying Utah companies.
As of July the Utah Fund of Funds has made investments in 28 private equity firms from throughout the U.S. These firms--many of whom had little or no involvement with Utah before their engagement with the Fund of Funds--have invested hundreds of millions of dollars in Utah, and have been instrumental in the creation of thousands of high-quality, high-paying jobs.
Local Incentive Commitments
Klug points out that the Industrial Assistance Fund (IAF), a post-performance grant offered by the Governor's Office of Economic Development for the creation of high-paying jobs in the state, requires that the requesting enterprise obtain a local incentive commitment from the community where the enterprise will be located. Such local incentives often come in the form of tax increment financing through the creation of project areas by the city or county's Community Development and Renewal Agency (CDAs). Larsen says CDAs are "really the strongest link between public financing and private enterprises." By virtue of its powers, he says a CDA can create a project area and then collect certain property tax increment revenues to be used for the benefit of economic development in that area.
Tax Increment
"Tax increment is the main source of revenue for CDAs," Larsen explains. For example, he says, take a building or piece of land that has significant deterioration or is unimproved and has a low property value. If an investor puts a significant amount of money into that property its value should naturally go up. That incremental increase from its base property value (before the investment) to the new property value is considered "tax increment" and can be used for incentives or financing to private enterprise for economic development purposes. Thus, a developer can look for the possibility of obtaining a portion of the incremental increase in return for making the investment in the building or property. The process does not remove existing tax revenues from the entities that have claim to the property taxes, such as school districts, counties, and other special districts; rather, those entities must "opt-in" before the tax increment incentive or financing can take place.
Nonetheless, "tax increments can be a significant public finance resource for private enterprises," Larsen continues. "In certain circumstances, a bond could be issued by the CDA against the anticipated tax increment. Furthermore, in many circumstances the interest rate can be tax exempt. At that point the CDA would be issuing bonds repayable from the tax increment and use bond proceeds to incentivize or aid the project."
Industrial Revenue Bonds
Klug says industrial revenue bonds (IRBs) are another example of public financing for private enterprise. With IRBs, a municipality or county issues the bonds, but is prohbited from having any obligation to pay the bond back. The investor buying the bond makes the loan based solely upon the credit of the borrowing company. Generally, the private business must find its own bond purchaser, which can simply be converting the commercial lending terms they can obtain into a tax-exempt interest rate through IRBs.
"Municipalities and counties can issue industrial development bonds on behalf of private companies, including 501c3 organizations, to allow such entities to access a tax-exempt interest rate. For 501c3 organizations, there is no limit to the amount of the bonds. Private companies can obtain tax-exempt financing through IRBs by obtaining an allocation of "volume cap" from the Utah Private Activity Board. This volume cap can be through the RZFBs or other volume cap allocations by the federal government to the state, such as for manufacturing facilities and multi-family housing projects "Interest rates are negotiated between the bond purchaser and the borrowing company" says Larsen. Ninety-five percent of bond proceeds must be used for qualifying capital facilities. They cannot be used to refinance debt, inventory or operating capital."
Klug says IRBs are financing tools that have been used for a long time, but they have a number of limitations. For example, she says the manufacturing facility bonds must be limited to no more than $10 million and they are generally only available to smaller borrowers who don't have more than $25 million in capital. Larsen notes that IRBs offer tax exempt interest rates, which can save a business roughly a third of the interest costs.
USDA Programs
The U.S. Department of Agriculture also administers a number of loan and grant programs, which are largely directed at rural or under-served areas. USDA programs include Business & Industry Guaranteed Loans, Rural Business Enterprise Grants, Rural Business Opportunity Grants, an Intermediary Relending Program, Rural Cooperative Development Grants, Rural Economic Development Loans & Grants, Value Added Producer Grants, and Renewable Energy/Energy Efficiency Grants.
Professional Help
In order to understand the vast array of public financing opportunities that are available to private businesses, Larsen says it is often useful to seek professional help from public finance attorneys, bankers or commercial lenders with experience in public finance. Some financial institutions have public finance departments dedicated to helping businesses with public financing options. Furthermore, the Utah Division of Housing and Community Development's Private Activity Bond Authority Program also provides a vast amount of information about public financing programs available to communities and businesses. Klug notes that economic developers within EDCUtah and the Governor's Office of Economic Development can also provide assistance to businesses that are investigating opportunities to relocate or expand their operations in Utah, and need help navigating the various incentives and financing programs available.
TAX ALERT: TELL CONGRESS TO REPEAL THE HIDDEN 1099 BURDEN ON BUSINESS
September 24, 2010 – Utah Taxpayers Association “Taxing Times”
Section 9006 of President Obama’s new healthcare bill requires all businesses to issue 1099 forms to all vendors from whom they annually purchase $600 or more in goods or services. Businesses will be required to file hundreds of 1099 forms to their vendors and process hundreds of 1099 forms from their clients and customers. Read the full tax alert by clicking here.
September 24, 2010 – Quick Manufacturing News
"So, why aren’t American workers going into manufacturing?..." Click to continue
September 24, 2010 - AP
The House voted 237-187 Thursday to pass "a long-delayed bill to help struggling small businesses with easier credit and other incentives to expand and hire new workers." Just one Republican, Rep. Walter Jones, supported the bill, but 13 Democrats opposed it.
The AP says the "$40 billion-plus bill is the last vestige of the heralded jobs agenda that Obama and Democrats promoted early this year. They ended up delivering only a fraction of what they promised after emboldened Senate Republicans blocked most of the agenda with filibusters."
The measure is heading to President Obama’s desk for his signature after having passed the Senate last week.
PUMP PRICES EXPECTED TO REMAIN STEADY
September 24, 2010 – Today in Manufacturing.net
Retail gasoline prices have fallen steadily this week and are expected to continue down, barring a hurricane or a significant shift in the economy ... continue
OBAMA NEEDS TO GO FURTHER ON TRADE
September 24, 2010 – Global Utah WeeklyPresident Obama recently introduced the new members of his national export council, headed by the CEOs of Boeing and Xerox, and charged them with helping achieve his ambitious objective of doubling U.S. exports within five years. He rightly observed that, with 95 percent of the world's consumers outside our borders, we can't have a decent or lasting economic recovery without trade.
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DURABLE GOODS REPORT SIGNALS REBOUND IN SPENDING
September 24, 2010 – Today in Manufacturing.net
The 4.1 percent increase to capital goods in August signaled a rebound in business spending after orders fell 5.3 percent in July ... continue
CONGRESSMEN URGE SALAZAR TO DEFEND FEDERAL COAL LEASING PROGRAM
September 24, 2010 - Barry Cassell and Kathleen Hart (UAE Weekly Energy Brief)Thirty-six members of the Senate and House of Representatives wrote a letter to Interior Secretary Ken Salazar on Sept. 22, urging him to strongly defend the federal coal leasing program against environmental group charges of global warming impacts.
"We are writing to underscore the importance of the federal coal leasing program to the economy and energy security of this nation and to emphasize the need for the Department to undertake a strong defense of the federal coal leasing program," Wyoming Republican Sens. John Barrasso and Mike Enzi, as well as 34 other members of Congress, said in the letter. They noted that environmental group WildEarth Guardians filed a lawsuit in July against the U.S. Department of the Interior and a petition with the department to stop the federal coal leasing program until a new system can be devised.
WildEarth Guardians, supported by the Sierra Club, filed its lawsuit July 1 in the U.S. District Court for the District of Columbia, claiming BLM's coal leasing program in the Powder River Basin in Wyoming and Montana is illegal. WildEarth Guardians said a legal leasing program would mandate that the agency take into account the CO2 emitted when PRB coal is burned in power plants.
The members of Congress defended BLM's leasing practices and urged Salazar to dismiss WildEarth Guardians' claims. "Prior to leasing federal coal, the BLM engages in an extensive, multi-year process to assess and address every potential impact of the proposed mining operation," the Congressional leaders wrote. "This process allows full analysis of both specific environmental impacts associated with leasing in that location, as well as broad analysis of wider environmental implications like climate impacts. WildEarth Guardians' allegations to the contrary are unfounded and should not be entertained by DOI."
Enzi, in a Sept. 22 news release, dismissed the lawsuit as "unfounded" environmental litigation aimed at stopping coal production on federal land. He added: "WildEarth Guardians' petition could potentially result in the delay or stop the 12 proposed coal leases in the Powder River Basin. These leases contain up to 5.8 billion tons of coal, and would jeopardize nearly 6,000 high-paying jobs and $2 billion in revenues to state and federal coffers."
Coal companies up for BLM lease auctions in the PRB over next three years include Peabody Energy Corp., Alpha Natural Resources Inc., Arch Coal Inc. and Cloud Peak Energy Inc. The letter noted that the PRB supplies more than 450 million tons of coal per year, which is about 40% of the nation's coal.
On Sept. 20, over the objections of WildEarth Guardians, Judge John Bates allowed intervention in the coal leasing case by the state of Wyoming, the Wyoming Mining Association and the National Mining Association. "The court is cognizant that allowing all three entities to intervene could potentially result in unduly lengthy and inefficient briefing later in the case," Judge Bates noted. "Hence, the court hereby notifies the intervenor-defendants that it expects them to submit joint briefs where practicable and, where separate briefs are submitted, to avoid duplicative briefing. The court will set page limits once this case reaches briefing on the merits."
On Sept. 15, WildEarth Guardians filed an amended complaint that varies little from the original complaint. On Sept. 22, the state of Wyoming filed its reply to the amended complaint. Among the state's arguments are that the District of Columbia is not a "convenient venue" for this action, and it should be transferred to the U.S. District Court in Wyoming; plaintiffs are attempting to revive a challenge to the merits of BLM's 1990 decertification decision for the PRB, which is barred by the applicable statute of limitations and the doctrine of laches; and that plaintiff Sierra Club was not a party to WildEarth's failed petition to Interior for rulemaking, which is the main issue of the case, and therefore does not have standing to participate in this litigation.
Barrasso and Enzi said a similar lawsuit filed by WildEarth Guardians on federal oil and gas leasing in Montana produced a settlement agreement that resulted in Interior's cancellation of 61 oil and gas leases as well as suspension of all future oil and gas leasing in Montana, North Dakota and South Dakota while the agency studies potential climate change impacts.
CHINA WORKS TO REVERSE 'BRAIN DRAIN'
September 24, 2010 – Today in Manufacturing.net
Thousands of Chinese go abroad every year to study science and engineering, and many never return home because China lacks jobs to match their advanced skills ... continue
BUFFETT SAYS RECESSION CONTINUES
September 24, 2010 – Today in Manufacturing.net
Warren Buffett says the economy remains in a recession because most people and businesses still aren't doing as well as they were before the financial crisis ... continue
BIPARTISAN-BACKED 15% RENEWABLE ELECTRICITY STANDARD BILL INTRODUCED IN SENATE
September 24, 2010 - By Kathleen Hart (UAE Energy Brief)Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M., and Sens. Sam Brownback, R-Kan., Susan Collins, R-Maine, and Byron Dorgan, D-N.D., introduced a bill in the Senate Sept. 21 that would establish a nationwide 15% renewable electricity standard.
The bipartisan bill will require sellers of electricity to retail customers to obtain certain percentages of their electric supply from renewable energy resources, beginning with 3% in 2012-2013, and increasing to 6% in 2014-2016; 9% in 2017-2018; 12% in 2019-2020; and 15% beginning in 2021 and running through 2039. Utilities selling less than 4 million MWh per year would be exempt.
Qualifying renewables under the Renewable Electricity Promotion Act of 2010 are wind, solar, ocean, geothermal, biomass, landfill gas, incremental hydropower, hydrokinetic, new
hydropower at existing dams with no generation and qualified waste-to-energy.
The bill specifies that any state may opt for its utilities to meet up to 26.67% of its requirement by improving energy efficiency in their systems. The items that qualify as energy efficiency savings include customer facility savings, electricity savings, recycled energy, and combined heat and power.
The federal renewables standard will not affect state programs. To meet the federal standard, each seller may produce the specified amount of electricity or efficiency savings itself; purchase renewable energy or efficiency savings; or purchase renewable credits or energy efficiency credits from entities that have excess. The other alternative is to make compliance payments into a fund, 75% of which is to be returned to states whose utilities have paid into the fund for development of renewable resources or to offset increases in customers' bills.
The senators said the stand-alone renewable standard bill is substantially the same as legislation previously proposed in 2009 by Bingaman, the American Clean Energy Leadership Act, S. 1462.
At the end of August, Senate Majority Leader Harry Reid, D-Nev., voiced confidence that the Senate could pass an energy bill with a renewable electricity standard after the November midterm elections. However, it is not clear whether the sponsors of the stand-alone renewables standard will be able to find the 60 votes required to pass the bill following the elections.
American Wind Energy Association CEO Denise Bode praised the bipartisan effort by the two Democratic and two Republican senators. "Wind does work for America. It's a free and renewable resource. It provides long-term, stable energy prices for American families," Bode said in a Sept. 21 teleconference.
While acknowledging that the 15% requirement in the bill is considered modest by some renewable energy advocates, Bode said it is important to send a long-term signal to electric utilities and manufacturers of wind components. "The RES is the single most important thing we can do to grow jobs here in the United States and to keep the existing 85,000 American wind energy workers on the job," she said.
"While the renewable electricity standard proposed today is not perfect, the United States absolutely cannot afford to wait any longer to create a national clean energy policy," Marchant Wentworth, deputy legislative director for the Union of Concerned Scientists, said in a statement. "If passed by the Senate, the bill Senators Bingaman, Brownback, Collins and Dorgan introduced today would represent a significant step toward creating more renewable energy sources. It would keep us in the clean energy race and begin to address the need to reduce carbon emissions from the power sector."
NextEra Energy Inc. Chairman and CEO Lew Hay said that Senate action could spur billions of dollars in U.S. investments. "We face a simple but critical policy choice. Do we want to accelerate the renewable energy industry in the United States and benefit from the advances in technology and direct economic benefits of additional good jobs or not? Sens. Bingaman and Brownback understand that while wind and solar power produce no emissions, they do produce jobs. My message to the Senate is simple: With a national RES in place, we'll invest billions of additional dollars in renewables and create tens of thousands of jobs. Without an RES, that won't happen," Hay said in a Sept. 21 statement.
AEROSPACE MAKES JOBS AND EXPORTS SOAR
September 24, 2010 – Global Utah WeeklyFor the naysayers who argue that American manufacturing is dead (it's not!), let me suggest that they take a look at what's happening in the aerospace industry. Despite the recent economic downturn, aerospace achieved $215 billion in sales last year, all while providing more than 644,000 good-paying jobs.
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