1. Massachusetts Office of Business Development (MOBD) October 13, 2015 Jon Golnik Regional Director-Central MA 617-595-6256 jon.golnik@state.ma.us

2. About MOBD MOBD Resources MOBD Partners The Economic Development Incentive Program MOBD Results Application Process Massachusetts Office of Business Development Agenda

3. The Massachusetts Office of Business Development (MOBD )is part of the Executive Office of Housing and Economic Development (EOHED) Presided over by Secretary Jay Ash Assistant Secretary Nam Pham is responsible for the MOBD What does MOBD do? Act as an umbrella organization to facilitate access to resources Administer the Economic Development Incentive Program (EDIP) With the Goals of: Promoting job growth and job retention Stimulating private investment And Helping businesses thrive in Massachusetts Today, the EDIP is the largest new job generating program in the Commonwealth Massachusetts Office of Business Development About MOBD

4. Massachusetts Office of Business Development About MOBD

5. Financing Workforce Training Tax Incentives International Trade Industry Expertise Permitting Business Consultation Massachusetts Office of Business Development MOBD Resources

6. Commonwealth Corporation Community Economic Development Assistance Organization Commonwealth Marketing Office Massachusetts Business Development Corporation Massachusetts Clean Energy Center Massachusetts Convention Center Authority Massachusetts Cultural Council MassDevelopment Massachusetts Export Center Massachusetts Growth Capital Corporation Massachusetts Office of Business Development MOBD Partners Massachusetts Life Sciences Center Massachusetts Office of Business Development Massachusetts Office of International Trade and Investment Massachusetts Port Authority Massachusetts Office of Travel & Tourism Massachusetts Small Business Development Center Massachusetts Technology Collaborative Massachusetts Technology Transfer Center MassVentures

7. The Economic Development Incentive Program was established in Chapter 19 of the Acts of 1993, An Act Relative to Incentives for Economic Development: – “a program designed to promote increased business development and expansion in Economic Target Areas of the Commonwealth, to be administered by the Economic Assistance Coordinating Council (EACC).” July 1, 1994, first projects were approved. EDIP received a major overhaul that became effective January 1, 2010. EDIP was again reformed in the 2014 Economic Development Bill, effective July 1, 2014. Massachusetts Office of Business Development About the EDIP

8. Within the EDIP there are four types of projects that can receive state Investment Tax Credits (ITCs): 1.Expansion Project (EP) 2.Enhanced Expansion Project (EEP) 3.Manufacturing Retention & Job Growth Project (MRP) 4.Job Creation Project (JCP) All of these projects must be approved by the EACC at their quarterly meetings: March, June, September and December Massachusetts Office of Business Development EDIP Basics 8

9. About the EDIP: Economic Assistance Coordinating Council (EACC) The EACC is the administering and governing body of the EDIP. The council is comprised of up to 14 voting members: 7 regional designees appointed by the governor; and Public officials from the Massachusetts Office of Business Development, Department of Housing and Community Development, Labor and Workforce Development and Commonwealth Corporation Primary responsibilities of the EACC include:  Establishment of regulations, policy and procedures to effectuate the administration of the EDIP  Designation of Economic Target Areas (ETAs)  Designation of Economic Opportunity Areas (EOAs)  Certification per Council Vote for Expansion Projects (EP), Enhanced Expansion Projects (EEP), Manufacturing Retention & Job Growth Projects (MRP) and Local Tax Increment Financing Only Projects (TIF-Only)  Execution of Tax Incentive Contractual Agreements  Administration of Annual Reporting Procedures  Project Decertification for failure to comply with the terms of the Tax Incentive Contract Massachusetts Office of Business Development

10. “Significant out-of-state sales” – More than 25% – Determined that these projects “drive” economic development For those projects that do not cross the ‘out of state sales’ threshold – Local Incentive Only projects are allowed: TIF-Only STA-Only Both still need EACC approval Massachusetts Office of Business Development EDIP Eligibility 10

11. Massachusetts Office of Business Development Location: Anywhere in Commonwealth of Massachusetts Job Creation: New job creation and retention for at least 5 years Municipal Involvement: Requires municipal approval and a local tax exemption (either “TIF” or “STA”) Out of State Sales: Must generate greater than 25% of sales outside MA to be considered for EDIP state tax credit Location: Anywhere in Commonwealth of Massachusetts Job Creation: At least 100 new jobs to be created in 2 years and retained for at least 5 years Municipal Involvement: Not required Budget Considerations: $5 million annual award cap Out of State Sales: Must generate greater than 25% of sales outside MA to be considered for EDIP state tax credit Location: Gateway Municipalities Job Creation: At least 25 new manufacturing jobs to be created or at least 50 existing manufacturing jobs to be retained – for at least 5 years Municipal Involvement: Requires municipal approval Budget Considerations: $10 million annual award cap Out of State Sales: Must generate greater than 25% of sales outside MA Job Creation: Anywhere in Commonwealth of Massachusetts Job Creation: At least 100 new full-time jobs to be created within 2 years. ITC equal to $1000 per job created or $5000 per job if created in a Gateway City (ITC cap of $1,000,000) Municipal Involvement: Not required Out of State Sales: Must generate greater than 25% of sales outside MA to be considered for EDIP state tax credit *If structure has been vacant for at least 24 months, may be eligible for 10% Abandoned Building Renovation Deduction Program Eligibility: By Project Type

12. Tax Increment Financing (TIF) is a negotiated Agreement between business and host municipality. The percentage exemption applies to the incremental increase of assessed value of the parcel and the agreement can contain exemptions on personal property tax. Per M.G.L. 40 § 59 – TIFs have a 5 year minimum, 20 year maximum or anything in between – Business pays full tax rate on the “base value” – Exemption from property taxation on all or part of the increased value accrued as a result of development (the “increment”) – Percentage of exemption (for incremental real and personal property tax value) may range from 5% to 100% Program Eligibility: Local Mechanics - Tax Increment Financing (TIF) Massachusetts Office of Business Development

13. Program Eligibility: Local Mechanics – Tax Increment Financing (TIF)

14. Program Eligibility: Local Mechanics Special Tax Assessment (STA) STAs are a negotiated Agreement between business and host municipality. STAs apply to entire assessed value of a parcel, not just the increment. Therefore, current as well as future local tax revenues are exempted. Unlike TIF Agreements, no Personal Property Taxes are not exempted under an STA Agreement. Per Statute - MGL 23A§3E(3) - STAs have 5-year minimum and 20-year maximum terms and must minimally comply with the following 5-year schedule : Year One: Business does not pay real estate taxes (non-negotiable); 100% property tax exemption for company Year Two: Municipality is authorized to collect up to a MAXIMUM of 25% of the actual assessed value of the entire parcel; at least a 75% property tax exemption for the company Year Three: Municipality is authorized to collect a MAXIMUM of 50% of the actual assessed value of the entire parcel; at least a 50% property tax exemption for the company Year Four: Municipality is authorized to collect a MAXIMUM of 75% of the actual assessed value of the entire parcel; at least a 25% property tax exemption for the company Subsequent Years: Municipality may collect up to parcel’s fully assessed value

15. What does all this mean for Mills? How does all this apply specifically to Mills? Abandoned Building Deduction (ABD): Businesses renovating eligible buildings in Economic Opportunity Areas (EOA) may deduct 10% of the cost of renovation from gross income. This deduction may be in addition to any other deduction for which the cost of renovation may qualify. To be eligible for this deduction, renovation costs must relate to buildings designated as abandoned by the Economic Assistance Coordinating (EACC). The Business must have a TIF with the town as well. Only commercial and industrial projects are eligiblefor TIFs or STAs. If there will be housing, that square footage cannot be in the TIF or STA. Mill buildings many times receive STAs because (especially if abandoned) the taxes being paid to the municipality are negligible and it is in the municipalities’ best interest to get the property improved and being used. There have been cases where building owner applies for TIF. Once tenant comes in they pass through the TIF tax savings to the tenant for their % of square footage; usually occurs with triple net leases. Tenant can apply to EACC for EDIPC if they have 25% out-of-state sales. This can be a marketing tool for the landlord. Developers of mills cannot get EDIPC (Incentive Tax Credits) because they are not creating the jobs. Businesses can negotiate the personal property tax exemption or break with the municipality.

16. Since January 2010 17,716 Jobs Created $6.2 Billion Private Investment 47,883 Jobs Retained Massachusetts Office of Business Development MOBD Results

17. Requirements for Companies Applying to the EACC for the EDIP Investment Tax Credit: 1. A Letter of Intent to apply for the Economic Development Incentive Program: A letter of intent must be submitted to the municipality of interest and the municipality's MOBD Regional Director. The letter of intent should be sent as the earliest possible date. 2. Preliminary Application (Round 1): Companies interested in applying for the state EDIP Investment Tax Credit (ITC) must submit a preliminary application by the posted deadline for consideration at the corresponding EACC meeting. The Massachusetts Office of Business Development (MOBD) will review the application and ensure that the applicant meets the eligibility requirements of the EDIP. 3. Supplemental Application (Round 2): Qualified applicants may be sent a Supplemental Application for consideration by the EACC. Applications must be submitted by the posted deadline for consideration at the corresponding EACC meeting. Requirements for Companies Applying to the EACC for Local Incentives Only: 1. Letter of Intent to apply for the Economic Development Incentive Program. 2. Local Incentive Only Application: Companies that are working with their municipality to execute a Tax Increment Financing (TIF) Agreement, but will not be applying for the state EDIP Investment Tax Credit, must submit a Local Incentive Only Application to the EACC by the posted deadline for consideration at the corresponding meeting date. Application Process: Certified Project & Local Incentive Only *Application documents are available on our website at: http://www.mass.gov/hed/business/incentives/edip/edip- application.html * Scheduled meetings and application deadlines are published on our website at: http://www.mass.gov/hed/business/incentives/edip/edip- application.html http://www.mass.gov/hed/business/incentives/edip/edip- application.html http://www.mass.gov/hed/business/incentives/edip/edip- application.html Massachusetts Office of Business Development