Bill S.173 188th (2013 - 2014)
An Act promoting efficiency and transparency in economic development
By Mr. Eldridge, a petition (accompanied by bill, Senate, No. 173) of James B. Eldridge, Sheila C. Harrington, Denise Andrews, Patricia D. Jehlen and other members of the General Court for legislation to promote efficiency and transparency in economic development . Economic Development and Emerging Technologies.
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.
“Discretionary tax credit program” means: (i) the historic rehabilitation tax credit in section 38R of sad chapter 63 and section 6J of said chapter 62; (ii) the life sciences investment tax credit in section 38U of said chapter 63 and subsection (m) of said section 6 of said chapter 62; (iii) the low-income housing tax credit in section 31H of said chapter 63 and section 6I of said chapter 62; (iv) the refundable research credit in subsection (J) of section 38M of said chapter 63; (v) the economic development incentive program in subsection (g) of said section 6 of said chapter 62 and section 38N of said chapter 63; (vi) certified housing development credits of subsection (q) of Section 6 of said Chapter 62; (vii) donated land (conservation) credits of subsection (p) of Section 6 of said Chapter 62; (viii) community investment tax credit of section 6M of said chapter 62 and section 38EE of said chapter 63; and (ix) any discretionarily awarded tax credits under chapter 62 and 63 established after January 1, 2013.
“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. Application for Economic Development Subsidies
(a) Notwithstanding any general or special laws to the contrary, an applicant for an economic development subsidy, shall complete an application for the subsidy on a form prepared by the Executive Office of Housing and Economic Development. The information required on the application shall include but not be limited to the following:
(i) An application tracking number for the granting agency and the project;
(ii) The name, street and mailing address, and phone number of the chief officer of the granting body;
(iii) The name, street and mailing address, and phone number of the chief officer of the applicant’s corporate parent;
(iv) The name, street and mailing address, and phone number of the chief officer of the applicant;
(v) The street address of the project site;
(vi) The three-digit North American Industry Classification System number of the project site;
(vii) The total number of individuals employed by the applicant at the project site on the date of the application, broken down by full-time, part-time, and temporary positions;
(viii) The total number of individuals employed in the Commonwealth by the applicant’s corporate parent, and all subsidiaries thereof, as of December 31 of the prior fiscal year, broken down by full-time, part-time and temporary positions;
(ix) The development subsidy or subsidies being applied for with the granting body, and the value of such subsidy or subsidies;
(x) An estimate of the number of new jobs to be created by the applicant, broken down by full-time, part-time and temporary positions, where applicable;
(xi) The average hourly wage to be paid to all current and new employees at the project site, where applicable;
(xii) For project sites located in a Metropolitan Statistical Area, as defined by the federal Office of Management and Budget, the average hourly wage paid to non-managerial employees in the Commonwealth for the industries involved at the project, as established by the United States Bureau of Labor Statistics;
(xiii) For project sites located outside of Metropolitan Statistical Areas, the average weekly wage paid to non-managerial employees in the county for industries involved at the project, as established by the United States Department of Commerce;
(xiv) The type and amount of health care coverage to be provided by the applicant within ninety days of commencement of employment at the project site, including any costs to be borne by the employees;
(xv) A description of the project to be developed or undertaken, where applicable;
(xvi) The value of any additional private investment to be committed to this project;
(xvii) A statement as to whether the development subsidy may reduce employment at any other site controlled by the applicant or its corporate parent, within or without of the Commonwealth, resulting from automation, merger, acquisition, corporate restructuring or other business activity;
(1) If the granting body shall approve the application, it shall send a copy to the Executive Office of Housing and Economic Development within fifteen days of such approval, which shall be a public record.
Section 3. Reports
(a) Annual reports
(i) Notwithstanding any general or special laws to the contrary, each granting body shall file a progress report with the Executive Office of Housing and Economic Development for each project for which a development subsidy has been granted, no later than May 15 each year. The report shall include the following information:-
(1) The application tracking number;
(2) The identity of each taxpayer received an economic development subsidy and from which program the credit was received;
(3) The amount of the tax credit awarded and issued for each taxpayer and each project, if applicable;
(4) A list of all other development subsidies which the applicant has been granted by state or local agencies within the Commonwealth.
(i) Subsidies granted over a period of time, including but not limited to tax increment financing agreements, shall include both the value of the annual subsidy and the estimated cumulative total for each subsequent year.
(5) The benefit to the Commonwealth actually provided, including but not limited to:
(i) The number of jobs created and lost, broken down by full-time, part-time and temporary positions, where applicable;
(ii) The average wage of the jobs created, where applicable;
(iii) The type and amount of health care coverage provided to the employees at the project site, including any costs borne by the employees, where applicable;
(iv) The status of the development project, where applicable;
(v) The amount of private investment committed to this project, where applicable.
(6) The comparison of the total employment in the Commonwealth by the recipient's corporate parent on the date of the application and the date of the report, broken down by full-time, part-time and temporary positions;
(7) A statement, as reported by the taxpayer applicant, as to whether the use of the development subsidy during the previous fiscal year has reduced employment at any other site controlled by the recipient corporation or its corporate parent, within or without of the Commonwealth as a result of automation, merger, acquisition, corporate restructuring or other business activity;
(8) A signed certification by the chief officer of the recipient corporation as to the accuracy of the progress report;
(i) On all subsequent annual progress reports, the granting body shall indicate whether the recipient corporation is still in compliance with its job creation, wage and benefit goals, and whether the corporate parent is still in compliance with its state employment requirement;
(ii) Granting bodies and recipient corporations shall file annual progress reports for the duration of the subsidy, or not less than five years, whichever period is greater.
(b) Two-Year Report
(i) No later than fifteen days after the second anniversary of the date of subsidy, the granting body shall file with the Executive Office of Housing and Economic Development a two-year progress report including the same information as required under section 5(a). The recipient corporation shall certify as to the accuracy of such report.
(ii) The granting body shall state in the two-year report whether the recipient corporation has achieved its job creation, wage and benefit goals, and whether the corporate parent has maintained 90% of its employment in the Commonwealth.
(c) The Executive Office of Housing and Economic Development (EOHED) shall compile and publish all data from the progress reports in both written and electronic form, including to a reporting web site maintained by the Executive Office of Housing and Economic Development. The information in the reports shall be included as part of the Searchable Website administered by the Secretary of Administration and Finance
(d) The granting body and the Executive Office of Housing and Economic Development shall have access at all reasonable times to the project site and the records of the recipient corporation in order to monitor the project and to prepare progress reports. The Executive Office of Housing and Economic Development shall commit the resources necessary to audit compliance and verify the accuracy of progress reports.
(e) A recipient corporation that fails to provide the granting body with the information or access required under paragraphs (1) and (2) of this section shall be subject to a fine of not less than $500 per day to commence within ten working days after the February 1 deadline, and of not less than $1,000 per day to commence twenty days after such deadline.
Section 4. Review
Notwithstanding any general or special laws to the contrary, all discretionary tax credit programs shall expire after a period of 5 years unless reauthorized by an act of the legislature. All other economic development subsidies shall be reviewed every 5 years by the legislature with assistance from the Executive Office of Housing and Economic Development, based on the reports required under Section 3, and may take action to renew, modify, or repeal them accordingly.
Section 5. 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 6. Revocation/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, this shall be deemed a material variance and the granting body shall revoke and recapture the development subsidy from the recipient corporation as follows:
(i) For projects certified before January 1, 2013, if the granting body revokes a subsidy because of a material variance, the value of the economic benefit that shall be recaptured or otherwise recouped by the commonwealth or municipality shall be the amount the corporate parent would have been allowed to receive after the effective date of revocation. Revocation shall take effect on the first day of the tax year in which a material variance occurred as determined by the granting body. If the granting body revokes a subsidy because of a material misrepresentation or fraud, the value of the economic benefit that shall be recaptured or otherwise recouped by the commonwealth or the municipality shall be the total amount of economic benefit approved by the state for the corporate parent.
(ii) For projects certified after January 1, 2013, if the granting body revokes a subsidy, the value of the economic benefit that shall be recaptured or otherwise recouped by the state or municipality shall be the total amount of economic benefit approved by the state or municipality for the corporate parent.
(d) The granting body shall provide notice to the recipient corporation of its intent to revoke and 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 revoke, 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 7. 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 8. 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 9. 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 10. 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 11. 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.
Petitioners: James B. Eldridge, Sheila C. Harrington, Denise Andrews, Patricia D. Jehlen, Sonia Chang-Diaz, Carolyn C. Dykema, Mark C. Montigny, Carl M. Sciortino, Jr., Robert L. Hedlund, Tom Sannicandro, James Arciero, Kay Khan