The recession has made it even harder for the LSU business college to get the new building it’s been trying to build for a decade. The situation has prompted innovative ways of looking for financing. Eli Jones, dean of the LSU’s E.J. Ourso College of Business, says the college is exploring a federal program called the federal New Markets Tax Credit. The idea came from Tom Adamek, an LSU alumnus and president of Stonehenge Capital Company.
Though it’s frequently used for economic development projects in rural or other low-income areas around the country, the $60 million business complex project qualifies—partly because of LSU’s ZIP code and partly because of the impact the college has by teaching students skills to become economically productive, Jones says.
“In our case the first step was to look at where we’re located,” he says. “The bad news is we’re in a low income area. The good news is we’re in a low income area.”
The New Markets program funds projects by selling tax credits to large companies, usually for 70 to 75 cents on the dollar. ExxonMobil, ChevronPhillips and financial services companies are frequent buyers of the tax credits. A portion of the money goes toward funding projects—in this case a new business building. The project is $12.2 million short of the $30 million it needs for another $30 million in state matching funds.
“We’re getting $100,000 here and $200,000,” Jones says. “We appreciate those donations but we need millions. In today’s economy it is very difficult to get millions.”
At 70 to 75 cents on the dollars, LSU could raise $8 million over the program’s seven-year span. Jones is optimistic that some local companies will be willing to buy the credits for 90 cents on the dollar, since it would still give a good rate of return and while helping out the business college, which has a symbiotic relationship with the state’s private sector. That scenario would generate $10.5 million for a new building, Jones says.
It wouldn’t be the first time a university has taken advantage of the program. Tulane used it to build their students activities center, Jones says. Using it at LSU requires approval by the Board of Supervisors. Jones has already presented the plan to the board. Now it’s about hammering out details with the board and university administration over issues such as “how the money flows,” Jones says. “Everyone I believe wants to see it work.”
