Amendment #667 to H3400

Tax Expenditure Clawbacks

[Sponsors] Mr. Sciortino of Medford moves that the bill be amended after section 36 by inserting the following:

SECTION XX. The General laws are hereby amended by inserting after Chapter 30b:-

Chapter 30C. Economic Development, Transparency and Fiscal Accountability

Section 1.  As used in Chapter 30C, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

“Corporate parent" means any person, association, corporation, joint venture, partnership, or other entity, that owns or controls 50 percent or more of a recipient corporation.

"Date of subsidy” means the date that a granting body provides the initial monetary value of a development subsidy to a recipient corporation provided, however, that where the subsidy is for the installation of new equipment, such date shall be the date the corporation puts the equipment into service and provided, further, that where the subsidy is for improvements to property, such date shall be the date the improvements are finished, or the date the corporation occupies the property, whichever is earlier.

"Development subsidy” means any expenditure of public funds with a value of at least $25,000.00 for the purpose of stimulating economic development within the Commonwealth, including but not limited to bonds, grants, loans, loan guarantees, enterprise zones, empowerment zones, tax increment financing, grants, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits.

“Full-time job” means a job in which an individual is employed by a recipient corporation for at least 35 hours per week.

"Granting body" means any agency, board, office, public benefit corporation or authority of the Commonwealth or a local government unit that provides a development subsidy.

“Local government unit” means an agency, board, commission, office, public benefit corporation, or public authority of a political subdivision of the Commonwealth.

“New Employee” means a full-time employee who represents a net increase in the number of individuals employed by the recipient corporation in the Commonwealth.  “New employee” does not include an employee who performs a job that was previously performed by another employee of the recipient corporation if that job existed for at least 6 months before hiring the employee.

“Part-time job” means a job in which an individual is employed by a recipient corporation for less than 35 hours per week.

“Permanent Job” means a job that is not scheduled to terminate at the completion of a discrete project.

"Project site" means the site of a project for which any development subsidy is provided.

"Property-taxing entity" means any entity that levies taxes upon real or personal property.

“Recipient corporation” means any person, association, corporation, joint venture, partnership or other entity that receives a development subsidy.

“Searchable Website” means the website defined in Section 14C (a) of Chapter 7 of the Massachusetts General Laws and administered by the Secretary of Administration and Finance that allows the public at no cost to search for, obtain and aggregate state spending and revenue information.

"Small business" means a corporation whose corporate parent, and all subsidiaries thereof, that employed fewer than twenty full-time employees or had total gross receipts of less than one million dollars during the calendar year.

“State” means an agency, board, commission, office, public benefit corporation or public benefit authority of the Commonwealth.

"Subsidy value” means the face value of any and all development subsidies provided to a recipient corporation.

“Temporary job” means a job in which an individual is hired for a season or for a limited period of time.

Section. 2  Subsidy Limit and Job Quality Standards

(a)  A granting body shall not grant award a development subsidy if the cost per permanent, full-time job is greater than $35,000.00.  Such cost shall be determined by dividing the amount of the subsidy by the number of permanent, full-time jobs required under the application approved by the granting body.

(b) A granting body shall not grant a subsidy to an applicant unless the wages paid to employees at the project site are equal to or exceed 85% of the average wage as established under paragraphs (xii) and (xiii) of section 4, provided, however, that for small businesses, the average wage must equal or exceed 75% of the wages established hereunder.  The computation of wages under this section shall only apply to a recipient corporation that provides the health care coverage as approved in its application by the granting body.

Section 3. Recapture

(a) A recipient corporation shall fulfill its job creation, wage, health care and other benefit requirements for the project site within two years of the date of subsidy. Such recipient shall maintain its wage and benefit goals as long as the subsidy is in effect, or five years, whichever is longer.

(b) The corporate parent of a recipient corporation must maintain at least 90% of its employment in the Commonwealth as long as the development subsidy is in effect, or not less than five years, whichever is longer.

(c) If the requirements under paragraphs (a) or (b) are not fulfilled, the granting body shall recapture the development subsidy from the recipient corporation as follows:

(i) Upon a failure by the recipient corporation to create the required number of jobs or to pay the required wages or benefits, the amount recaptured shall be based on the pro rata amount by which the unfulfilled jobs, wages or benefits bear to the total amount of the development subsidy.

(ii) Upon a failure of the corporate parent to maintain 90% of its employment in the Commonwealth, the rate of recapture shall equal twice the percentage by which such employment is less than 90%.

(d) The granting body shall provide notice to the recipient corporation of its intent to recapture the development subsidy and state the reasons and amount to be recaptured.  The recipient corporation shall remit to the governing body such amount within 60 calendar days of the date of such notice.

(e)  If a recipient corporation fails to create at least 90% of the required number of jobs or to pay the required wages or benefits for three consecutive calendar years, the granting body shall declare the subsidy null and void, and shall so notify the Executive Office of Housing and Economic Development and the recipient corporation. The recipient corporation shall pay back to the granting body all remaining value of the development subsidy it has not previously repaid within 180 calendar days of the date of the notice of such default.

(i) Recipient corporations that have defaulted on their agreement and had their full subsidy recaptured shall be barred from applying for any other economic development subsidy in the Commonwealth for a period not less than 5 years.

Section 4. Private Enforcement Action

If a granting body fails to enforce any provision of this Act, any individual who paid personal income taxes to the Commonwealth in the calendar year prior to the year in dispute, or any organization representing such taxpayers, shall be entitled to bring a civil action in state court to compel enforcement under this statute.  The court shall award reasonable attorney’s fees and costs to such prevailing taxpayer or organization.

Section 5.   Transparency & Public Record Disclosure

(a)All records required to be prepared or maintained under this Act, including but not limited to applications, progress reports, audits, recapture notices and any other records or proceedings relating thereto, shall be subject to disclosure under the Commonwealth’s Open Records Law and be made available as part of the Searchable Website administered by the Secretary of Administration and Finance.

(b)Granting bodies administering discretionary economic development incentive programs, including but not limited to the Economic Assistance Coordinating Council and the Massachusetts Life Sciences Center, shall be required to:

(i)Post meeting dates 30 days in advance on the website of the Executive Office of Housing and Economic Development.

(ii) Make meeting agendas and supporting materials, including but not limited to the full text of the applications to be considered, publicly available on the website of the Executive Office of Housing and Economic Development at least 2 weeks prior to the meeting.

(iii) Make meeting members, votes, and minutes publicly available on the website of the Executive Office of Housing and Economic Development within 24 hours of the meeting.

Section 7.  Pre-emption

Nothing in this chapter shall be read to require or authorize any recipient corporation to reduce wages or benefits established under any collective bargaining agreement or state or federal prevailing wage law.

Section 7.  Separability

If any provision of this Act is determined to be unenforceable in a court of law, such determination shall not affect the validity or enforceability of any other provision of this Act.

Section 8. Waivers

The Executive Office of Economic Development may waive the subsidy limit and job quality standards described in section 6 upon a finding that there exists significant public policy goals apart from job creation. Thirty days prior to waiving requirements, the Executive Office of Economic Development shall publish its intent to do so on its reporting website with an explanation of the specific public policy goals, why the waiver is necessary to meet the public policy goals and define objective standards by which the public policy goals will be measured.  The one and two year progress reports described in section 5 will use these standards to determine whether these public policy goals were met.