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Massachusetts Community & Banking Council Economic Development Committee June 10, 2010

Massachusetts Community & Banking Council Economic Development Committee June 10, 2010

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Massachusetts Community & Banking Council Economic Development Committee

June 10, 2010

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MassDevelopment

• Quasi-public finance and development authority for Massachusetts

• Serving businesses, nonprofits, and municipalities

• Primary tools• Planning and development services• Loans and guarantees• New Markets tax credits• Tax-exempt bonds

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What We Do

Utilizing tax-exempt bonds; loans and guarantees; and real-estate planning and development services, MassDevelopment offers customized financing and development solutions focusing on housing, job creation, real-estate development, and urban revitalization.

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Real Estate Projects and Programs

• Redevelopment of public buildings and land• Planning• Pre-development• Due diligence• Assistance to cities and towns (including 43D)

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Finance Programs

• Cultural Facilities Fund• Brownfields Redevelopment Fund• Direct Loans and Guarantees

– Emerging Technology Fund– Community Service 501(c)3 Loan Fund– Manufacturing Innovation Programs

• New Markets Tax Credits• Tax-exempt Bonds

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Cultural Facilities Fund

• Since 2007, $37M investment in 224 capital projects for nonprofit institutions that attract visitors to and create jobs in Mass.

• Run in partnership with Mass. Cultural Council

EcoTarium in Worcester

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Brownfields Redevelopment Fund

• Fund recapitalized with $30M in 2006 to revitalize & redevelop neglected areas:– up to $100K interest-

free financing for site assessment

– up to $500K in flexible financing for cleanup loans

Forbes Park in Chelsea

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Emerging Technology Fund

• Fund recapitalized in 2006 & 2007 with $25M

• Loans from Fund encourage creation and expansion of production facilities by emerging technology (“teenage”) companies

• 20 companies financed to date

E Ink in Cambridge

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Community Service 501(c)3 Loan Fund

• 501(c)(3) nonprofit social, youth or family service provider with annual operating budget of less than

$5 million • Funds may be used for owned or leased facilities to

repair, renovate, construct or acquire real property• Loans of $100,000-$500,000• Flexible financing terms and competitive interest rates

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Manufacturing Innovation Programs

• Planning Loans up to $50,000 to pay for consultant services to evaluate and improve demand, fulfillment and strategic leadership

• Implementation Initiation Loan up to $500,000 to implement improvements resulting from strategic planning to include reconfiguring operations, upgrades to plant and equipment, product development

• Real Estate and Equipment Loans

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New Markets Tax Credits• Tax credit subsidizes private investments in low-income

census tracts

• Credits can create equity in real estate projects and can combine with tax-exempt bonds

• Annual competition by U.S. Department of Treasury

• ARRA created additional $3 billion capacity

• Total $5 billion awarded in October 2009

• MassDevelopment is an allocator of NMTC and received $55 million for use in MA in October 2009

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MassDevelopment Tax-Exempt Bonds

Encouraging capital investment by lowering borrowing costs for:

• Small manufacturing facilities• 501(c)3 nonprofits• Waste disposal & recycling• “Recovery Zone” projects• Public Infrastructure• Affordable rental housing

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Recovery Zone Facility Bonds

• New category of “private activity bond” authorized under ARRA

• To promote development in distressed areas

• Projects must be in designated “Recovery Zones”– Areas designated by issuers as having certain distress

factors including poverty, unemployment, home foreclosures or general distress

– Area must have Recovery Zone designation before project is commenced

• Recovery Zone Bonds must be issued by 12/31/2010

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Enhanced Bank Purchasing

• Banks can deduct interest expense associated with tax exempt bonds

• Only for bonds issued in 2009 and 2010• Up to 2% of bank assets • only non-bank corporations had this benefit previously• MA banks may still prefer “separate entity” securities

corporations

• Expanded eligibility for “Bank Qualified” bond status• Not subject to disallowance of interest expense• Issuer limit raised to $30,000,000 • For 501(c)3 nonprofits, limit applies to borrower, not conduit

issuer

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Other Bond Enhancements

• Expanded definition of “manufacturing”– Allows tax-exempt “industrial development bonds”

for facilities and equipment to produce intangible property

– Eliminates requirements on percentages of bond proceeds that must be used for “core” manufacturing

– $20MM maximum capital expenditure and $10MM bond limits still apply

– Examples include facilities for software development, biotech R&D, and recording studios

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For additional information, contact

Bonnie Sullivan

508-898-8692

[email protected]

George Craddock

617-330-2003

[email protected]