Commonwealth of Massachusetts Economic Development Incentive Program (EDIP) This program offers eligible projects state and local tax incentives including local property tax exemptions and state investment tax credits. Each eligible project must meet specific criteria including job creation and capital investment. Brief Summary of the Economic Opportunity Legislation   The Economic Development Incentive Program Legislation was designed to provide a mechanism by which cities and towns can stimulate economic development in distressed areas by attracting new businesses to these areas and by encouraging existing businesses to expand. To participate in the Economic Development Incentive Program, cities and towns will have to engage in a comprehensive planning process in order to determine their economic development strategies for these distressed areas. Cities and towns must undertake this type of planning prior to identifying those areas and projects that may be eligible to receive benefits under this program.   This legislation enables cities and towns to designate, subject to state approval, distressed sites or sections within their jurisdiction as "Economic Opportunity Areas." Cities and towns would apply to the Economic Assistance Coordinating Council ("EACC") located within the Massachusetts Office of Business Development, for designation of larger areas within their jurisdiction as "Economic Target Areas" and for designation of smaller areas within the ETAs as "Economic Opportunity Areas." Projects which may be certified to participate in the Economic Development Incentive Program include new facilities and existing facilities which propose an expansion of the number of permanent full-time employees. State government will provide a 5% investment tax credit (an increse from the current 3% ITC) and a 10% deduction for the renovation of abandoned buildings within in an EOA as incentives. Cities and towns will offer certified projects located in an EOA either a special tax assessment on real property or tax increment financing.   How the Economic Opportunity Areas Legislation Works   The Economic Assistance Coordinating Council ("EACC") The EACC shall have 9 members and will be co-chaired by the Secretary of Economic Affairs and the Secretay of Communities and development. The EACC shall administer the Economic Development Incentive Program ("EDIP") and shall promulgate rules and regulations and prescibe procedures. The EACC shall approve or disapprove applications from municipalities for the designation of areas as ETAs and EOAs. The EACC shall certify projects for participation in the EDIP.   Economic Target Area ("ETA") Designation The municipality submits an application to the EACC for designation of an area as an ETA. The area must be 3 or more contiguous census tracts or 1 or more contiguous municipalities. The application must contain the municipality's representation, along with supporting documentation, that the area has an unemployment rate that exceeds the statewide average by at least 1 of the following criteria: at least 51% of the area's household incomes are below 80% of the median income for households in the metropolitan area in which the municipality is located; at least 51% of the area's household income are below 80% of the median income for households in the Commomwealth or for households in an applicable non-metropolitan area category; the area has a poverty rate at least 20% higher than the Commonwealth's average poverty rate; the municipality has experienced a plant closing or permanent layoffs or military base closing resulting in a job loss of 2000 or more within the prior 4 years; the area is located within a community or labor market area which has a "distress factor" greater than 1.33 (calculated by comparing the municipality's unemployment rate and per capita personal income to that of the Commonwealth as a whole); the area is owned by a state agency or authority and exceeds 50 acres, and such land has been used within the past 10 years to manufacture or repair maritime vessels, and the area is zoned for development and industrial use but is not being developed or used by the state agency or authority; the area has a commercial vacancy rate of 20% or more. Upon the EACC's finding that the area meets the requirements for designation as an ETA and subsequent approval, the area shall be designated as an ETA. Economic Opportunity Area ("EOA") Designation   The municipality submits an application to the EACC for designation of an area as an EOA. This application may be submitted separately or in conjunction with the municipality's application for designation of an ETA. The proposed EOA must be wholly within an area designated as an ETA. The application must request designation as an EOA for a specified period of time, ranging from 5 years to 20 years. The area must be within a "blighted open area," "decadent area," or "substandard area," or must have experienced a plant closing or permanent layoff resulting in a job loss of 2000 or more within the past 4 years. The area must meet any additional criteria as may be prescribed by the EACC. The application must contain: (1) a detailed map of the area; (2) a statement of the municipality's economic development goals for the area for the next 5 years; (3) the municipality's plan for increasing the efficiency of the delivery of local services within the area; (4) the municipality's linked-deposit plan (if it has one); (5) a proposal identifying the individual who is authorized to review and approve project proposals on behalf of the municipality and the standards and procedures to be followed. Municipalities with a population of 50,000 or more must also submit a detailed economic development plan containing: (1) a proposal for streamlined licensing procedures for certified projects within the proposed area; (2) a proposal providing for adequate infrastructure support for certified projects within the proposed area; (3) the municipality's plan for ensuring that publicly or privately sponsored training programs will be made available to employees of certified projects or residents of the ETA in which the area is located; (4) the municipality's plan to increase the level of envolvement by private persons and community development organizations in the economic revitalization of the proposed area, including commitments for jobs and job training; and (5) any additional documentation or information as may be prescribed by the EACC.   The municipality's application must contain a binding written offer from the municipality to provide to certified projects within the EOA either tax increment financing ("TTF") or a special tax assessment for each parcel of real property on which is located, or is otherwise a part of, a certified project within the EOA.   Upon the EACC's finding that the area meets the requirements for designation as an EOA and subsequent approval, an area shall be designated as an EOA. The EACC may prescribe criteria by which it shall rank and provide a core for each municipal application and, at the direction of the Secretary of Economic Affairs, may establish a competitive application process. An EOA shall retain its designation for at least 5 years but no more than 20 years. The EACC shall not designate, nor shall there exist at any one time, more than 20 EOAs.   Designation of Certified Projects The "controlling business" (defined as "a business which controls a business or facility thereof") submits its project proposal to the municipality which contains the project EOA. The municipality, upon making a formal written determination that the project meets the requirements for a project proposal, approves the project proposal. After receiving municipal approval, the controlling business submits its project proposal, together with the municipality's written approval, to the EACC for designation as a certified project. The municipality shall request that the project be designated as a certified project for a specified number of years, which shall be not less than 5 years and not more than 20 years or the number of years remaining on the project EOA, whichever is less. The project proposal must contain the following: (1) such information as is prescribed by the EACC and signed by a person authorized to bind the controlling busines; (2) specific yearly targets for the subsequent 5 years relative to the projected increase in the number of permanent full-time employees to be employed by and at the project from among residents of the project ETA (for a project which is already located in the project EOA, this projected increase must be at least 25% over the 5 year period); and (3) the proposal of a project which is a new facility must also include the number of permanent full-time employee employed by the controlling business at other facilities located in the Commonwealth.   The proposed project: (1) must be consistant with, and expected to benefit significantly from, the municipality's plans relative to the project EOA; and (2) in light of other certified projects in the same project EOA, will not overburden the municipality's supporting resources.   The project proposal must include a workable plan by which the controlling business proposes to realize its increased employment objectives by hiring residents of the project ETA. The project proposal should contain documentation of an agreement, if any exists, between the controlling business and area banking institutions whereby the buiness will establish accounts in the banks and the banks will commit a percentage of the funds deposited in said accounts for loans to businesses within the project EOA. The proposed project must have, if certified, a reasonable chance of increasing employment opportunities for residents of the project ETA.   A project proposal shall be granted or denied by the EACC within 90 days of its receipt of the project proposal, and failure to do so will result in approval of such project for a term of 5 years. State Tax Incentives   Businesses may deduct up to 10% of the cost of renovating any abandoned building located within an EOA. Businesses will be eligible for a 5% investment tax credit for property used in a certified project within an EOA. (Note: Businesses must choose between the 5% ITC and the current 3% ITC -- they cannot be eligible for both.)   Municipal Benefits   The municipality must include in its EOA application a binding written offer to provide certified businesses with in the EOA either tax increment financing ("TIF") or a special property tax assessment. Special property tax assessment The binding written offer shall set forth the following assessment schedule for each parcel of real property in and on which is located, and which is otherwise a part of, a certified project in the project EOA:   1. an assessment of 0% of the actual assessed valuationin the first year; 2. an assessment of up to 25% in the second year; 3. an assessment of up to 50% in the third year; 4. an assessment of up to 75% in the fourth year; 5. an assessment of up to 100% in the fifth year. As an alternative to the special property tax assessment, the municipality can commit to provide tax increment financing with in the EOA.   Tax Increment Financing ("TIF")   Tax increment financing is premised upon specific development commitments by specific property owners and is designed to promote particular projects. Subject to the approval by the EACC, a TIF plan, which describes proposed public and private investments in a TIF area. The TIF Agreement provides a property tax exemption for each land owner of between 0 and 100% of the taxes attributable to the increment in new value resulting from the proposed new development. The TIF zone proposed in the TIF plan shall also meet the criteria set forth for the designation of an EOA. The TIF plan shall be adopted pursuant to regulations issued by the Secretary of Communities and Development. Note that TIF is also available outside of EOAs. Any municipality in the Commonwealth may adopt a tax increment financing plan. The TIF plan shall designate a TIF zone or zones, provided that each TIF zone that is outside an EOEA must be wholly within an area designated by the Secretary of Economic Affairs, pursuant to regulation adopted by the EACC, as "presenting exceptional opportunities for increased economic development." TIF plans shall be adopted pursuant to regulations issued by the Secretary of Communities and Development.   (Source: Massachusetts Office of Business Development) I. THE EDIP PROGRAM The Massachusetts Economic Development Incentive Program (EDIP) is designed to stimulate job creation in distressed areas by encourage existing business to expand, attracting new businesses, and increasing economic development overall. Through this program the Massachusetts Economic Assistance Coordinating Council (EACC) has designated the City of Leominster as an Economic Target Area (ETA). The City has created eight (8) Economic Opportunity Areas (EOA) within the ETA. Businesses, which develop or expand within an EOA, by create jobs and investing capital, may be eligible for a series of incentives designed to encourage further investment in the business and community. II. THE ETA AND EOA The City of Leominster is an ETA because it meets the criteria of the Massachusetts EDIP. This program along with other local, state, and federal programs, when combined with private investment, encompasses the stimulus of economic growth in Leominster. Within the ETA (Leominster), each EOA has been defined as a priority area for economic development. The incentives offered are designed to encourage investment within these areas. Each of Leominster’s EOA’s have been designed with the purpose of concentrating development in a confined location, usually in conformity with the zoning regulations. A business or developer may apply for these incentives by submitting a letter of intent to the City of Leominster, or contact Leominster’s Office of Planning and Development (OPD) at (978) 534-7526 to arrange a meeting, outlining the details of the project. Application forms for Certified Project are available in the OPD or online at www.massconnect.state.ma.us III. ELIGABILITY REQUIREMENTS Development projects will be certified if the business is expanding, relocating, or building a new facility and creating permanent jobs within the EOA. The proposals should present: 1. A reasonable chance of increasing employment opportunities; 2. A project consistent with the city’s goals for the EOA; 3. A project that will not overburden or harm the City’s existing infrastructure. IV. ADMINISTRATION OF PROGRAM ETA and EOA applications are reviewed by the Massachusetts EACC, thirteen (13) member, public/private committee established to administer the EDIP program. Certified Project Applications are accepted by the City through a vote of the City Council, and then sent to the EACC for approval. The Massachusetts Office of Business Development (MOBD) offers administrative support on the state level, while the City of Leominster’s Office of Planning and Development offers businesses and Certified Project assistance at the local level. For approval of Certified Projects, the Economic Development Coordinator will consult with the Mayor, the City Assessor, and the City Solicitor (when applicable). Once the Certified Project contract is signed by all interested parties, the City Council votes to approve or disapprove the and approved projects are sent to the EACC for final certification. V. INCENTIVES 1. 5% Investment Tax Credit – The EDIP enables Certified Project recipients to apply 5% to the total capital investment spent during the time of the project to be applied, in the form of a tax credit, to the recipient’s corporate excise tax for new development or expansion. The Tax Credit is applicable over the life of the Certified Project. Currently listed manufacturers in Massachusetts recent a 3% Investment Tax Credit without Certified Project status. 2. 10% Abandoned Building Credit – The EDIP offers a 10% Abandoned Building Tax Credit for renovations made to underutilized buildings within an EOA that have not been at least 75% occupied by a tenant for two (2) or more years. The City is required to verify the percentage of total floor area that is vacant or unused, and the amount of time in which that area has remained unused, prior to any project approval. 3. Tax Increment Financing – The City of Leominster must enter into a contract with the Certified Project applicant, which offers a local tax incentive. Tax Increment Financing is the most common form of tax incentive offered to Certified Project applicants. (See Appendix A for example) The City Assessor’s Office determines the full and fair cash value of the new additions to existing property in accordance with normal assessment standards, and then reduces the taxes for any additional fixed taxable property by the agreed percentage per the Certified Project Contract. VI. PROCESS OF GAINING CERTIFIED PROJECT STATUS A. Certified Projects: Businesses may be eligible for certified project status if the business controls a facility, through ownership or leasehold, which is located or which intends to locate or expand its operations within an EOA. 1. The development of a facility already located within an EOA: a. must provide for an increase in the number of permanent full time employees employed by the business within the Commonwealth; and b. must not replace or relocate permanent full time employees of the business who work at other facilities located in the Commonwealth. 2. For a new facility to be developed within the EOA after the date of proposal, the proposal must be: a. the business's first facility within the Commonwealth; or b. a new facility and not a replacement or relocation of an existing facility already located in the Commonwealths; or c. an expansion of an existing facility which will increase the number of permanent full¬time employees. B. Application Process: Application forms are available at the Office of Planning and Development, 25 West Street, Leominster, MA 01453, (978) 534 7526. The completed application will be submitted to the Office of Planning and Development and then will be reviewed by representatives of the City of Leominster. A meeting with the Economic Development Coordinator is advised before starting the Certified Project application process. All projects should be submitted in application form, and any attachments should be identified and included within the application packet. The pages should be indexed and numbered. Three (3) copies of the completed application form and three (3) copies of all other required application materials should be submitted by the business seeking certified project status to the City of Leominster Economic Development Coordinator. The Mayor of the City of Leominster will consider applications and approve project proposals for and on behalf of the City. Once the City receives a written proposal, the proposal will be evaluated for consistency with the city's plan for the EOA, including but not limited to the following public benefits: 1. amount and type of new full time permanent employees the project will produce for residents of Leominster and the ETA. The total additional wages and state income taxes generated by these new positions; 2. size and type of expansion or new development, and/or alterations to exist¬ing facility; 3. amount of investment related to development and capital equipment; 4. estimated amount of property taxes generated by new development based on current assessed values as maintained by the City Assessors Office; 5. in conjunction with current build out and other previously certified projects in the EOA. The project will not overburden the municipality's infrastructure and utilities servicing the EOA; and 6. the project will make a concerted effort to hire qualified Leominster residents, and utilize local vendors and suppliers. The Mayor will consult with the Office of Planning and Development, the City Assessor and the City Solicitor and will grant or deny certification of the proposal within 30 days of receipt of the application or upon receipt of all recommendations from the above referenced contributors, whichever is longer. If such proposal is incomplete, it may be rejected and returned to the Certified Project applicant, or additional information may be requested to complete the proposal. The 30-day review period will commence upon receipt of all additional information requested. Once the City adopts the proposal by Resolution, the proposal shall be forwarded with the City of Leominster's written approval of the certified project status to the EACC. One original copy of the completed application form and one copy of all other required application material will be submitted by the City to the Massachusetts Office of Business Development (MOBD) for their review. Upon a positive review, MOBD will forward the application to the EACC for final ratification. The EACC shall evaluate, grant, or deny certification of project proposal within 90 days of its receipt of such proposal, provided, however, that if the EACC determines that a project proposal is incomplete, it may either reject such a proposal and return it to the certified project applicant or request additional information to complete the proposal. If the EACC holds the project proposal pending the receipt of additional information, the 30-day review period shall commence upon receipt of the additional information requested. If the EACC fails to act on the project proposal within the 90 day period, as described above, then the project proposal shall be considered to have been approved and the EACC shall take the necessary steps to designate the project as a Certified Project for a period of five years. C. Certified Project Review and Revision The Leominster Office of Planning and Development will serve as liaison between the City of Leominster and the business responsible for the certified project. Annual reports describing the progress of the certified project will be submitted to this Office upon request (usually in July). The City of Leominster, or a representative thereof, will conduct annual employment and investment audits of the business responsible for the certified project. In addition, the Office of Planning and Development will coordinate the interaction of certified projects within the EOA. If there is a change in ownership, the incentives offered for the project apply to the land. Any business with a facility which has been designated by the EACC as a certified project may, upon transfer of ownership of such facility to a successor business, assign to said successor business the rights and benefits which are due to such facility by virtue of its status as a certified project, providing that an instrument of assignment is duly executed and that the EACC approves by resolution said assignment. If the certified project is changed, the sponsoring business should notify the Leominster Office of Planning and Development in writing within 14 days. A certified project will be considered changed if any of the following conditions occur: 1. The number of current and new permanent full time and part time employees that reside in the project ETA, as proposed by the business, is reduced; or 2. The level of investment by the business and its associates is reduced; or 3. The proposed land use for the project has changed; or 4. A proposed project change is inconsistent with the city's plan for the EOA, including goals for investment and employment; or 5. In conjunction with other previously certified projects in the EOA, a project change overburdens the municipality's infrastructure or utilities servicing the EOA. Upon receipt of notification of a change in the certified project, the City will review the change and respond within 30 days. The certification of a project may be revoked by the EACC upon the petition of the City of Leominster or by the Secretary. In addition, a project may be revoked by an independent investigation and determination of the EACC that representations made by the business in its project proposal are materially at variance with the conduct of the business subsequent to the certification and such variance frustrates the public purposes, which such certification was intended to advance. When the actual number of permanent full¬time employees employed by the business at the project site from among residents of the project ETA is less than 50% of the number of such full time employees who were projected to be employed in the project proposal, it shall be deemed a material variance for the purpose of a revocation determination. VII. OTHER INCENTIVES AND RESOURCES 1. Brownfield Programs designed to encourage private sector investment in contaminated and potentially contaminated sites in an ETA and EOA. They include: a. Reuse Pilot Program funds Phase I and II site assessments. b. Targeted Site Assessment Grants c. Brownfield Revolving Loan Funds d. Tax Credits at the Federal and State level. e. Redevelopment Funds for site assessment and cleanup. f. Redevelopment Access to Capital program encourages private sector lending on contaminated sites by backing loans with environmental insurance and loan guarantees to assure cleanup is completed. 2. Financing Programs other than conventional private lending sources include: a. a. Predevelopment Assistance low interest loans for pre construction activities. b. b. MassDevelopment Loan Programs Industrial Development Bonds low interest financing for purchase or construction of manufacturing facilities. c. c. Massachusetts Community Capital Fund provides flexibly structured debt for businesses creating or retaining jobs for low or moderate-income residents. d. North Central Massachusetts Development Corp Micro Loan Program 3. Workforce Development Programs and Incentives a. The Massachusetts Development Loan Fund administered through the Department of Housing and Community Development, and MassDevelopment to establish an equipment training loan fund. This fund totals $2.5 million and is used to train workers on new equipment. Loans range from $1,000 to $45,000; higher amounts require a waiver. This fund is complimented by a new $5 million Equipment Financing Program, available for the purchase of now equipment. Loans range from $50,000 to $300,000. Please contact the Office of Planning and Development for more information. b. Workforce Training Funds being administered by the Commonwealth of Massachusetts Department of Employment and Training to establish a grant program for companies developing training programs and to train current and newly hired employees. The funds consist of $27 million over three years with a maximum grant award of $250,000. Please contact the Office of Planning and Economic Development or the North Central Massachusetts Chamber of Commerce for more information. c. Worklinks to Plastics administered by the Twin Cities Community Development Corporation. This program has been developed to assist plastics companies in training and re training their employees and to find qualified and work ready employees for entry level, skilled, and technical positions. This program has a pool of $1 million dollars for development and implementation of the process. The City of Leominster Economic Development Coordinator represents city manufacturers on the Worklinks Advisory Board. There are numerous other local, state and federal programs and services that can be accessed by businesses looking to expand or relocate within an ECIA.