Venture capital funds participating in a Georgia rural jobs program say they have created or retained roughly 1,400 jobs, according to the state program’s most recent annual report.
The Georgia Agribusiness and Rural Jobs Act (GARJA), first passed in 2017, was created to help spur investment into Georgia’s rural counties by leveraging state tax dollars. The state agreed to dole out $60 million in tax credits over several years to five venture capital firms who in turn match with $40 million of their own and invest in rural businesses throughout Georgia.
The report completed this month by the Georgia Department of Community Affairs comes after a bill that would have renewed the program with millions more in tax credits failed to pass in the Georgia General Assembly’s legislative session that closed April 4.
Critics of the program such as Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, cast it as a special interest giveaway benefiting the out-of-state venture capital funds who profit off the tax credits.
The investment funds generally get to keep the millions the state invests into the program through tax credits, experts say. The firms also generated more than $2 million in various origination and attorneys fees.
A state audit released in December found the program doesn’t come close to paying for itself and has cost taxpayers some $56 million. It would take the state 72-years to break even.
“No bank in the country would do any of this,” Hufstetler told the AJC last month.
Participants and supporters, though, say the program is a crucial tool for generating rural investment. Many companies who received loans were turned down by traditional lenders before being approved for investment in the rural investment program.
“GARJA has delivered on generating significant job growth in Georgia’s hardest-to-reach rural communities,” said Jon Dangar, director of Stonehenge Capital, which is receiving $12 million in tax credits from the state.
Credit: Georgia Department of Community Affairs
Credit: Georgia Department of Community Affairs
According to the annual report, obtained by The Atlanta Journal-Constitution, GARJA has led to tax credit-backed investments in more than 30 companies located in rural Georgia. Those investments have created 660 jobs and retained 742 jobs, the report said, amounting to a cost of $73,466 per job.
The jobs figures, which are self-reported and not verified by the state, exceed the 1,300 jobs the venture capital firms projected at the beginning of the program. One of the sectors that the program is trying to prop up is the technology industry in rural areas. The report notes those investments remain “particularly challenging” given many are early-stage companies with little to no collateral.
One of the successes touted in the report is Danimer Scientific, a publicly-traded bioplastics company headquartered in Bainbridge. The company, which received a $6.5 million investment through the rural tax credit program, announced last year that it plans to invest $700 million into its Bainbridge, Ga-based facility and create another 400 jobs.
The report noted that Bhughesh Investments, based in Madison, has received $5.3 million in investments through the program since 2019. The company intends to hire up to ten employees to supplement its staff of five, the report said. The company manufactures motor vehicle electrical systems as well as electronic equipment and trailers for film production companies.
“Without the advantage of the GARJA Program, these small businesses would not have been able to secure any financing,” the report read. “The Rural Funds were able to provide affordable, patient capital at reasonable rates.”
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