The Agency of Commerce and Community Development is focussed on economic development, tourism, housing development and housing assistance. It operates through three departments: Economic Development, Housing and Community Development and Tourism and Marketing.
Total audited expenditures in fiscal year 2016 were $53.5 million. This Agency is much bigger than this level of annual expenditures might otherwise imply. Large and independently financed organizations including the Vermont Economic Development Authority, the Vermont Housing Finance Agency, the Vemont Housing and Conservation Board and the Vermont State Housing Authority are all under the Commerce and Community Development umbrella.
This article is focussed on Economic Development, which is all about support for business development and job creation.
It provides assistance with respect to loans, state permitting, foreign trade opportunities, government contracting and job training.
Through the Vermont Economic Development Authority (VEDA), an autonomous small business banking unit, low interest loans are made available to Vermont businesses and farms.
The Vermont Training Program, with about $1.2 million of annual grants available, provides assistance in funding job training programs for businesses focussed on new and/or innovative products.
Another program is the Vermont Employment Growth Incentive Program. It provides cash incentives for new employment or investment subject to i) the judgement that such new employment or investment wouldn’t happen absent such incentives, and ii) the amount of the incentives being only a portion of the new revenues that state will receive as a result of such new business activity. There are 45 active participants in this program.
Here is one success story.
In the 1990’s, Vermont put in place a regulatory framework that was highly advantageous to captive insurance companies (the in-house insurance arms of major corporations).
Today, Vermont is the on-shore tax haven for this industry and there are 560 captive insurance companies registered and operating in Vermont as well as the legal services industry to support them. 48 of the Fortune 100 and 18 of the Dow 30 companies are operating their captive insurance operations in Vermont.
In addition to the high quality employment and larger tax base, Vermont collects a nice tax on insurance premiums. Vermont is a small state and this type of niche strategy can have quite a positive impact.
Vermont Economic Development Authority
VEDA made $129 million of loan commitments in 2016 to Vermont small businesses and farms. At the end of fiscal year 2016, it had $275 million of total assets, mostly consisting of outstanding loans.
VEDA funds itself by way of a $150 million “Moral Obligation Pledge” from the State of Vermont, which it then leverages into about $275 million of debt, mostly issued as Commercial Paper.
While the State is not legally obligated to repay this debt, the Informed Vermonter thinks it would be very difficult for it to walk away if things went pear-shaped at VEDA.
The EB-5 Visa Program
The Economic Development Department also manages Vermont’s EB-5 Visa program. This federal program grants visas and a pathway to permanent US residence to qualifying foreign investors.
Vermont has raised over $500 million through this program for a variety of investment projects, particularly in the ski industry.
One such scheme at Jay Peak turned out to be fraudulent and resulted in a $150 million settlement with Raymond James, the brokerage firm. As you might imagine, this resulted in a fair amount of adverse publicity, departmental scrutiny and ongoing legal actions.
Tourism & Marketing
This department provides support for marketing Vermont’s tourism industry across the full spectrum of media. It has an annual budget of only about $4 million. Among other things, it funds Vermont Life Magazine and the Vermont Symphony.