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The 189th General Court of the Commonwealth of Massachusetts

Section 3A: Economic development incentive program; establishment; definitions for Secs. 3A to 3G

[ Text of section effective until August 10, 2016. For text effective August 10, 2016, see below.]

  Section 3A. As used in sections three A to three H, inclusive, the following words shall, unless the context clearly requires otherwise, have the following meanings:

  "Affiliate'', any business which directly or indirectly controls or is controlled by or is under direct or indirect common control with another business, including, but without limitation, any business with whom a business is merged or consolidated, or which purchases all or substantially all of the assets of a business.

  "Business'', a private business corporation, partnership, firm, unincorporated association or other entity engaging or proposing to engage in economic activity within the commonwealth, and any affiliate thereof, which is subject to taxation under chapter sixty-two or chapter sixty-three.

  "Business incubator'', a facility which: (i) provides small units of space, shared support services, or financing and management assistance to new and established businesses; or (ii) is created and operated for the principal purpose of addressing conditions of unemployment and economic distress by encouraging the creation of new businesses and improving their ability to survive and grow.

  "Certified project'', an expansion project, enhanced expansion project, job creation project or manufacturing retention project approved by the economic assistance coordinating council for participation in the economic development incentive program pursuant to section 3F.

  "Control'', the power to direct the management and policies of a business or a facility thereof, directly or indirectly, through the exercise of voting rights, by contract, or otherwise.

  "Controlling business'', a business which controls a business or a facility thereof.

  "Distress factor'', a fraction, the numerator of which is the sum of (1) the city or town's unemployment rate for the most recent three years divided by the commonwealth's unemployment rate for the same period and (2) the commonwealth's per capita personal income divided by the city or town's per capita personal income, and the denominator of which is two.

  "Economic assistance coordinating council'' or "EACC '', the council established pursuant to section three B.

  "Economic benefit'', an award of any tax credit approved under this chapter, any tax increment financing approved under section 3F of this chapter or section 59 of chapter 40 or a special tax assessment approved under said section 3F.

  "Economic development incentive program'' or "EDIP'', a program designed to promote increased business development and expansion to be administered by the EACC.

  "Economic opportunity area'' or "EOA '', an area of the commonwealth, located wholly within an economic target area, which is designated by the EACC pursuant to section three E as an economic opportunity area.

  "Economic target area'' or "ETA'', an area of the commonwealth designated as such by the EACC pursuant to section three D.

  "Enhanced expansion project'', a facility that, in its entirety and as of the project proposal date: (i) is located or shall be located within the commonwealth; (ii) generates substantial sales from outside of the commonwealth; and (iii) generates a net increase of at least 100 full-time employees within 2 years after project certification and which shall be maintained for not less than 5 years; provided, however, that in the case of a facility that as of the project proposal date is already located in the commonwealth, "enhanced expansion project'' shall refer only to a facility at which the controlling business has expanded or proposed to expand the number of permanent full-time employees at such facility and the expansion shall: (1) represent an increase in the number of permanent full-time employees employed by the controlling business within the commonwealth; and (2) not be a replacement or relocation of permanent full-time employees employed by the controlling business at any other facility located within the commonwealth; provided further, that in the case of a facility to be located within the commonwealth after the project proposal date, "enhanced expansion project'' shall refer only to a facility that is: (a) the first facility of the controlling business to be located within the commonwealth; (b) a new facility of such controlling business and not a replacement or relocation of an existing facility of such controlling business located within the commonwealth; or (c) an expansion of an existing facility of the controlling business that results in an increase in the number of permanent full-time employees.

  "Enhanced expansion project proposal'', a proposal submitted by a controlling business to the EACC pursuant to section 3F for designation of a project as an enhanced certified project, provided that: (i) the proposal is submitted in a timely manner, in such form and with such information as is prescribed by the EACC, supported by independently verifiable information and signed under the penalties of perjury by a person authorized to bind the controlling business; (ii) the proposal includes specific targets by year for the subsequent 5 calendar year period relative to the projected increase in the number of permanent full-time employees of the controlling business to be employed by and at the project from among residents of the commonwealth; provided further, that in the case of a project that is a new facility within the meaning of clause (b) of the definition of enhanced expansion project, such proposal shall include, in addition, the number of permanent full-time employees employed by the controlling business at other facilities located in the commonwealth.

  "Expansion project'', a facility that, in its entirety and as of the project proposal date: (i) generates substantial sales from outside of the commonwealth; and (ii) generates a net increase of full-time employees within 2 years after project certification, and which shall be maintained for a period of not less than 5 years; provided, however, that in the case of a facility that as of the project proposal date is already in existence, "expansion project'' shall refer only to a facility at which the controlling business has proposed to expand the number of permanent full-time employees at such facility to occur after the project proposal date and the expansion shall: (1) represent an increase in the number of permanent full-time employees employed by the controlling business within the commonwealth; and (2) not be a replacement or relocation of permanent full-time employees employed by the controlling business at any other facility located within the commonwealth; and provided further, that in the case of a facility to be constructed or relocated after the project proposal date, "expansion project'' shall refer only to a facility which is: (a) the first facility of the controlling business to be located within the commonwealth; (b) a new facility of such business and not a replacement or relocation of an existing facility of such controlling business located within the commonwealth; or (c) an expansion of an existing facility of the controlling business that results in an increase in permanent full-time employees.

  "Expansion project proposal'', a proposal submitted by a controlling business to the EACC pursuant to section 3F for designation of a project as a certified expansion project if: (i) the proposal has been submitted in a timely manner, in such form and with such information as is prescribed by the EACC, supported by independently verifiable information and signed under the penalties of perjury by a person authorized to bind the controlling business; (ii) the proposal includes specific targets by year for the subsequent 5-calendar-year period relative to the projected increase in the number of permanent full-time employees of the controlling business to be employed by and at the project from among residents of the commonwealth; provided, however, that in the case of a project that is already in existence as of the project proposal date, such projected increase shall not be less than 25 per cent over the subsequent 5-year period; and (iii) in the case of a project that is a new facility within the meaning of clause (b) of the definition of expansion project, the proposal includes the number of permanent full-time employees employed by the controlling business at other facilities located in the commonwealth.

  "Facility'', the physical location, in real property, which may include multiple buildings or locations, owned or leased by a business of a commercial, manufacturing or industrial activity, division or component controlled by that business, or any real estate project which involves the construction or renovation of real property to serve such purpose, or any combination of the foregoing, at which are employed, or are projected to be employed, permanent full-time employees of the controlling business.

  "Gateway municipality'', a municipality with a population greater than 35,000 and less than 250,000, a median household income below the commonwealth's average and a rate of educational attainment of a bachelor's degree or above that is below the commonwealth's average.

  "Job creation project'', a project or investment by a controlling business that: (i) is located or shall be located within the commonwealth; (ii) generates substantial sales from outside of the commonwealth; (iii) does not involve a significant investment in the construction or expansion of an existing facility or otherwise result in an increase in the value of the real property where new jobs shall be located; and (iv) generates a net increase of at least 100 permanent full-time employees within 2 years after project certification and which shall be maintained for a period of not less than 5 years; provided, however, that in the case of a facility that as of the project proposal date is already located in the commonwealth, "job creation project'' shall refer only to a facility at which the controlling business has expanded or proposed to expand the number of permanent full-time employees at such facility and the expansion shall: (1) represent an increase in the number of permanent full-time employees employed by the controlling business within the commonwealth; and (2) not be a replacement or relocation of permanent full-time employees employed by the controlling business at any other facility located within the commonwealth; provided further, that in the case of a facility to be located within the commonwealth after the project proposal date, "job creation project'' shall refer only to a facility that is: (a) the first facility of the controlling business to be located within the commonwealth; (b) a new facility of such business and not a replacement or relocation of an existing facility of such controlling business located within the commonwealth; or (c) an expansion of an existing facility of the controlling business that results in an increase in permanent full-time employees.

  "Job creation project proposal'', a proposal submitted by a controlling business to the EACC pursuant to section 3F for designation of a project as an job creation certified project if: (i) the proposal has been submitted in a timely manner, in such form and with such information as is prescribed by the EACC, supported by independently verifiable information and signed under the penalties of perjury by a person authorized to bind the controlling business; (ii) the proposal includes specific targets by year for the subsequent 5 calendar year period relative to the projected increase in the number of permanent full-time employees of the controlling business to be employed by and at the project from among residents of the commonwealth; provided, however, that in the case of a project that is a new facility within the meaning of clause (b) of the definition of job creation project, such proposal includes the number of permanent full-time employees employed by the controlling business at other facilities located in the commonwealth.

  "Manufacturing retention and job growth project'', a manufacturing facility that in its entirety and as of the project proposal date: (i) is located or will be located within a gateway municipality; (ii) retains a minimum of at least 50 permanent full-time positions or creates a minimum of 25 new full-time positions; provided, however, that if the controlling business increases the number of full-time positions at the facility, it shall be within 2 years after certification of the project and the controlling business shall make a commitment that the positions created or retained are to be maintained for at least a 5-year period; and (iii) generates substantial sales from outside of the commonwealth; provided, however, that in the case of a facility that as of the project proposal date is already located in the gateway municipality, "manufacturing retention project'' shall refer only to a facility for which there is a proposed expansion or retention of the number of permanent full-time employees at such facility by the controlling business, to occur after the project proposal date and the expansion shall represent a retention of at least 50 permanent full-time positions or creates a minimum of 25 new full-time positions employed by the controlling business within the project and shall not represent a replacement or relocation of permanent full-time employees employed by the controlling business at any other facility located within the commonwealth; and provided, further, that in the case of a facility to be located after the project proposal date, the "manufacturing retention project'' shall refer only to a facility that is: (1) the first facility of the controlling business to be located within the commonwealth; or (2) a new facility of such business and not a replacement or relocation of an existing facility of such controlling business located within the commonwealth.

  "Manufacturing retention project proposal'', a proposal submitted by a controlling business to the EACC pursuant to section 3F for designation of a project as a certified manufacturing retention project; provided that: (i) the proposal is submitted in a timely manner, in such form and with such information as is prescribed by the EACC, supported by independently verifiable information and signed under the penalties of perjury by a person authorized to bind the controlling business; (ii) includes specific targets by year for the subsequent 5 calendar year period relative to any projected increase in the number of permanent full-time employees of the controlling business to be employed by and at the project from among residents of the gateway municipality and the commonwealth; provided further, that in the case of a project which is a new facility within the meaning of clause (2) of the definition of manufacturing retention project, such proposal shall include the number of permanent full-time employees employed by the controlling business at other facilities located in the commonwealth.

  "MOBD'', the Massachusetts office of business development established in section 1.

  "Municipal application'', an application submitted by a municipality to the EACC pursuant to section three D or three E for designation of one or more areas as an ETA or an EOA; provided, however, that: (i) the application is submitted in a timely manner, in such form and with such information as is prescribed by the EACC, and supported by independently verifiable information; (ii) the area proposed for designation in the application is located, in whole or in part, within each municipality participating in said application; (iii) each municipality within which said proposed area is located participates in the application for designation; (iv) that said application is properly authorized in advance of submission; (v) in the case of an application submitted by more than one municipality, all requirements applicable thereto, including without limitation the requirements associated with proper authorization thereof, shall, apply equally to each municipality participating in said application; and (vi) a single application may request designation of both an ETA and EOA.

  "Municipal project endorsement'', the endorsement by the municipalities in which a proposed project shall be located pursuant to clause (ii) of paragraph (1) of subsection (a) of section 3F.

  "Municipality'', a city or town in the commonwealth or, in a case in which two or more cities or towns agree to act jointly for some purpose hereunder then, collectively, all cities and towns participating in such a collaborative agreement.

  "Permanent full-time employee'', an individual who: (i) is described under the definition of "full-time employee'' set forth in section thirty-one C of chapter sixty-three; (ii) at the inception the employment relationship described in clause (i) does not have a termination date which is either a date certain or determined with reference to the completion of some specified scope of work; and (iii) receives employee benefits at least equal to those provided to other full-time employees of the controlling business. The term "increase in the number of permanent full-time employees of the controlling business employed by and at the project'' shall be determined with reference to this definition and to the definition of "increase in the number of full-time employees employed by the corporation'' set forth in section thirty-one C of chapter sixty-three.

  "Poverty rate'', the poverty rate, as defined by the United States Bureau of the Census, using the most recent census data available, for purposes of identifying poverty areas.

  "Project'', an expansion project, an enhanced expansion project, a job creation project or a manufacturing retention project.

  "Project proposal'', a proposal submitted by a controlling business to the EACC pursuant to section 3F for designation as a certified expansion project, an enhanced expansion project, a job creation project or a manufacturing retention project.

  "Project proposal date'', the date on which a project proposal is received by the EACC; provided, however, that such project proposal had been properly approved in advance of such receipt by the municipality which contains the project EOA.

  "Real estate project'', real property relative to which, at a specified date subsequent to the project proposal date, there shall be initiated construction or renovation activity which, when completed, will result in an increase in the assessed value of said real property of at least one hundred percent over the assessed value of such real property as of the project proposal date; provided, however, that in the case of a real estate facility which is a business incubator facility and which is designated to be a certified project pursuant to section three F, each commercial or industrial facility which executes a binding lease for space in such incubator facility subsequent to the date at which the construction or renovation activity begins shall be eligible for designation in its own right as a certified project pursuant to section three F.

  "Special tax assessment'', a binding agreement between a municipality and a controlling business consistent with the requirements of subsection (g) of section 3F.

  "Tax increment financing agreement'', a binding agreement between a municipality and a controlling business consistent with the requirements of subsection (6) of section 3F of this section and section 59 of chapter 40.

Chapter 23A: Section 3A. Economic development incentive program; establishment; definitions for Secs. 3A to 3G

[ Text of section as recodified by 2016, 219, Sec. 7 effective August 10, 2016. See 2016, 219, Sec. 139. For text effective until August 10, 2016, see above.]

  Section 3A. (a) There shall be an economic development incentive program, or EDIP, which shall be administered by the EACC, under the oversight of the secretary of housing and economic development, to provide incentives that stimulate job creation and investment of private capital and to promote economic growth and expand economic opportunity to all areas of the commonwealth. EDIP tax credits and other incentives shall be administered to stimulate job creation, attract new business activity and promote investment that would not otherwise occur in the commonwealth.

  (b) As used in this section and sections 3B to 3H, inclusive, the following words shall have the following meanings unless the context clearly requires otherwise:

  "Affiliate'', a business which directly or indirectly controls another business, a business which is controlled by another business or a business which is under direct or indirect common control of at least 1 other business including, but not limited to, a business with whom a business is merged or consolidated or which purchases all or substantially all of the assets of a business.

  "Business'', a corporation, partnership, firm, unincorporated association or other entity engaging or proposing to engage in economic activity within the commonwealth and any affiliate thereof which is subject to taxation under chapter 62 or 63.

  "Certified project'', a proposed project that is certified by the EACC pursuant to section 3C.

  "Controlling business'', a business that owns, leases or has the power to direct the operation or management of all or a portion of a facility at which the business employs or intends to employ permanent full-time employees.

  "EDIP contract'', a written agreement between MOBD and the recipient of EDIP tax credits setting forth the amount of credits awarded, the schedule on which the credits may be claimed, any restriction on the carryover of unused credits, the consequences for failing to produce the projected new jobs or new investment and such other terms and conditions as MOBD may in its discretion require.

  "EDIP tax credits'', the tax credits authorized by the EACC pursuant to section 3D and claimed by a taxpayer pursuant to subsection (g) of section 6 of chapter 62 or section 38N of chapter 63.

  "Expansion of an existing facility'', the relocation of business functions and employees from 1 location in the commonwealth to another location in the commonwealth or the expansion of an existing facility located in the commonwealth if such relocation or expansion results in a net increase in the number of permanent full-time employees at the relocated or expanded facility.

  "Facility'', the real property, which may include multiple buildings or locations, owned or leased, on which a business is undertaking or will undertake a commercial, manufacturing or industrial activity.

  "Gateway municipality'', a municipality with a population greater than 35,000 and less than 250,000 with a median household income below the commonwealth's average and a rate of educational attainment of a bachelor's degree or above that is below the commonwealth's average.

  "Material noncompliance'', the failure of a controlling business to substantially achieve the capital investment, job creation, job retention or other economic benefits set forth in the EDIP contract or any other act, omission or misrepresentation by the controlling business that frustrates the public purpose of the economic development incentive program.

  "Municipal project endorsement'', an endorsement, by vote of the city council with the approval of the mayor in a city and by vote of the board of selectmen in a town, of a proposed project by the municipality in which a proposed project will be located which shall include: (i) a finding by the municipality that the proposed project will be consistent with the municipality's economic development objectives; (ii) a finding by the municipality that the proponent of the proposed project has the means to undertake and complete the proposed project; (iii) a finding by the municipality that the proposed project will have a reasonable chance of increasing or retaining employment opportunities as advanced in the proposal; (iv) a determination by the municipality that the proposed project will not overburden the municipality's infrastructure and other supporting resources; and (v) a description of the local tax incentive, if any, offered by the municipality in support of the proposed project, together with a copy of the fully executed tax increment financing agreement or the fully executed agreement setting forth the terms of the special tax assessment, as applicable.

  "Municipality'', a city or town or, in a case in which 2 or more cities or towns agree to act jointly for some purpose pursuant to a collaborative agreement, all cities and towns participating in the collaborative agreement.

  "Permanent full-time employee'', an individual who is paid wages by a controlling business and who: (i) at the inception of the employment relationship, does not have a termination date which is either a date certain or determined with reference to the completion of some specified scope of work; (ii) works at least 35 hours per week; and (iii) receives employee benefits at least equal to those provided to other full-time employees of the controlling business; provided, however, that "permanent full-time employee'' shall not include contractors or part-time employees who may be included in a calculation of the controlling business' full-time equivalent workforce.

  "Proportion of compliance'', a fraction which has as its numerator the number of actual permanent full-time employees at a facility and which has as its denominator the number of permanent full-time employees required to be employed at the facility under the terms of an EDIP contract.

  "Proposed project'', a proposal submitted by a controlling business to the EACC for designation as a certified project.

  "Real estate project'', the construction, rehabilitation or improvement of any building or other structure on a parcel of real property which, when completed, will result in at least a 100 per cent increase in the assessed value of the real property over the assessed value of the real property prior to the project.

  "Refundable credit'', a tax credit awarded pursuant to this chapter that is not limited by the amount of the controlling business' tax liability and which may result in a payment from the department of revenue to the controlling business or a reimbursement of costs incurred for capital investments made as a part of a certified project.

  "Replacement of an existing facility'', the relocation of business functions and personnel from 1 facility located in the commonwealth to another facility located in the commonwealth or the improvement of an existing facility; provided, that such relocation or improvement does not qualify as an expansion of the existing facility.

  "Special tax assessment'', a temporary reduction in real property tax offered by a municipality and approved by the EACC in accordance with subsection (c) of section 3E.

  "Tax increment financing agreement'', an agreement between a municipality and a real property owner consistent with subsection (b) of section 3E and section 59 of chapter 40.

  "TIF'', tax increment financing.