Update of Massachusetts Senate Bill, No. 2345 (now, No. 2331), which Proposes the Study of the Feasibility of a State-Owned Bank

Update of Massachusetts State Senate Bill No. 2345
Summary • 23 June 2010

Senate, Tuesday, March 24, 2010
The committee on Senate committee on Ways and Means to whom was referred the bill promoting economic development throughout the Commonwealth (Senate, No. 2331), report recommending that the same ought to pass, with an amendment, recommending a new draft entitled An Act relative to economic development reorganization (Senate, No. 2345).

From Senate, No. 2345:
SECTION 131. (a) There shall be a commission to study the feasibility of establishing a bank owned by the commonwealth or by a public authority constituted by the commonwealth.

The text of the Senate Bill No. 2345 can be found here, and a .pdf version can be found here.

Summary of Senate Bill No. 2345 below.

Economic Development Reorganization

The goal of S2345 is to create a business-friendly environment that will stimulate job growth and improve the ease with which MA businesses can operate in the markets they serve. The bill:

  • Implements strategically-focused economic development policies that will promote job retention and job creation throughout the entire Commonwealth and within the targeted sectors in which Massachusetts can be competitive.
  • Enables all segments of the workforce to grow in a coordinated and concentrated manner.
  • Eliminates redundancy and waste in the economic development activities funded by the government and holds the entities conducting those activities responsible for delivering results.
  • Facilitates assistance for new and existing businesses,
  • Strives to ensure that state government is not an obstacle to job creation.

We cannot be content with the status quo when other states consistently win competitions for business in which the Commonwealth also competes.

A. Regional “One-Stop Shops”

  • We require MOBD to contract for regional “one-stop shopping” and business prospect management services with regionally-based organizations
    • Private regional economic development organizations exist throughout most of the Commonwealth and provide many services to businesses.
    • These existing organizations were created locally in geographic regions where communities self identified as being economically interdependent.
    • Eligible organizations:  non-profits, service area of at least 10 municipalities, describe interrelation of economic assets, history of collaboration with businesses, governments, higher ed, other organizations in the identified region, private financial support
    • Not eligible organizations: government entities such as RPAs, REBs, Tourism councils, municipal owned entities.
  • MOBD’s job will be to oversee the efforts of these organizations, provide leads to the regional organizations and provide information about state programs and services.
    • MOBD will provide initial assistance to any business contacting the state and connect the business with the regions.

B. Planning the State’s Results

  • Require a written economic development plan to be filed by the Governor by December 31 of the Governor’s first year after being elected at a quadrennial election, with input from an economic development planning council, including members of the regional organizations and including measurable and verifiable performance goals
  • Form a commission to study the formation of a state-owned bank

C. Improved Oversight and Reorganization

  • Make the Secretary of the Executive Office of Housing and Economic Development (EOHED) chair of most quasi-public boards of directors that do economic development work.
  • Require most private or quasi-public economic development agencies to publish written comprehensive annual reports each fiscal year, with financial statements audited by the Auditor of the Commonwealth and publish a strategic plan for each year approved by the Secretary of HED.
  • Create the office of performance management in EOHED to establish performance measurement standards and techniques for all Executive Branch and quasi-public agencies involved, and any private organizations that receive taxpayer dollars or Commonwealth bond proceeds.  Performance results will be used in negotiating contracts.
  • The Secretary of HED will publish an annual report on all public lending activities to businesses with an assessment of the economic impact of those activities.
    • Include a special report evaluating public lending activities to small businesses
  • Require in statute that back office functions of several authorities, including the MA Life Sciences Center, be contracted out, as some authorities already do.
  • Eliminate the “Department of Business Development” – instead, MOBD reports directly to the Secretary.
  • Re-constitute the Health and Educational Facitilities Authority as a division of the Massachusetts Development Finance Agency, with increased transparency and constraints to ensure that the fees charged to non-profits do not increase during the transition.

D. Controlling Business Costs

  • Commission a study by EOHED of energy cost drivers in MA
  • Change the administrative procedure act (MGL 30A) to expand the “statement of considerations” currently required for the impact on small businesses and require that the statement be published concurrent with draft legislations.
  • A review of existing regulations within four years of enactment for their impact on businesses, and a subsequent review at least every twelve years thereafter.
  • Extend for two years (until August 2010) state and local permits held by any developer who has been unable to proceed with their project because of tight credit markets, except for comprehensive permits under 40B
  • Allow municipalities to negotiate the percentage of personal property exemption awarded to businesses in a tax increment financing zone
  • District Improvement Financing improvements – redefining the inflation factor and making its use optional, and extending the duration of the district.
  • Extend manufacturing or R&D property tax credits to disregarded LLCs by local option
  • Raise the jurisdiction limit of small claims court from the current $2,000 limit to $7,000.  Create a sliding scale of filing fees to discourage corporations which purchase consumer debt from dramatically increasing their use of small claims procedure.
  • New program of expedited state permitting in the Commonwealth’s designated growth districts

E. Small Business Lending

  • Massachusetts Growth Capital Corporation.  Combine the Community Development Finance Corporation and the Economic Stabilization Trust into the Massachusetts Growth Capital Corporation in order to provide direct lending and financing assistance to small businesses.  Preserve CDFC’s preferences for providing assistance to CDCs and minority and women contractors.  Remove current restrictions that loan applications must be submitted through a community development corporation
    • Create a certification process for CDC’s in the statute governing Community Economic Development Assistance Corporation.
    • The GCC will be empowered to operate a program of loan guarantees and debt restructuring and to continue the mission of the EST to provide turnaround financing and employee ownership transition assistance.
    • GCC will create a robust program of financial and managerial consulting assistance for companies it serves which will include collaboration with the SBA and the Small Business Development Center Network.
  • Authorize the PRIT to institute a program of working capital support for growth companies.  The trust will invest between 25 and 50 Million in a finance company or bank that makes working capital loans to fast growing small businesses.  This investment of the pension funds must still adhere to the funds requirements for sound, prudent investments.
  • Require that technical assistance be provided in conjunction with any loan (or loan guarantee) to a business by a public entity.
  • Emerging Technology Fund. Expand the mandate of the ETF to make  working capital loans

F. International Trade, Tourism and Commonwealth Marketing

  • Create a “Massachusetts Marketing Partnership” overseeing the following activities:
    • Marketing of the Commonwealth
    • Travel and tourism (including sports and film)
    • Trade
  • The Partnership includes EOHED. MOBD, MCCA, MassPort, Mass Econ and 6 gubernatorial appointments
  • Eliminate MOTT, MOITI and MITCI’s role in managing MOITI
  • Continue to fund these operations as currently provided.

G. Tax Initiatives

  • Sales tax holiday for the weekend of August 14 and 15, 2010
  • Clarify the application of combined reporting rules to foreign-owned companies doing business in Massachusetts
  • Extend the brownfields tax credits
  • Extend the current net operating loss carryforward from five to twenty years
  • Create a new housing development incentive program within the ceiling of the current economic development incentive program
  • Create a new 3% tax rate on capital gains on investments in Massachusetts –based companies, for investment held more than three years

H. Additional Provisions

  • Allows  item pricing in big box, membership stores
  • Allows for wine to be sold at agricultural events

One Response

  1. Great ideas that I would like the state of Arizona to try.

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