SP0111, LD 278, item 1, An Act To Provide Greater Access to Capital for Certain Businesses Through Advance Payment of Employment Tax Increment Financing Benefits

An Act To Provide Greater Access to Capital for Certain Businesses Through Advance Payment of Employment Tax Increment Financing Benefits

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 5 MRSA §13120-A, first ¶, as amended by PL 2011, c. 563, §10, is further amended to read:

The Maine Rural Development Authority, as established by section 12004-F, subsection 18 and referred to in this subchapter as the "authority," is a body both corporate and politic and a public instrumentality of the State established for the purpose of providing loans to communities for the development of commercial facilities on a speculative basis and for serving as lender or investor in the acquisition, development, redevelopment and sale of commercial facilities in areas where economic needs are not supported by private investment. The authority may also provide loans to businesses that are eligible for an advance payment of employment tax increment financing benefits under Title 36, section 6754 or that currently do not own real estate and that are not supported by private investment.

Sec. 2. 36 MRSA §6753, sub-§8-A is enacted to read:

8-A. Extraordinary circumstances. "Extraordinary circumstances" means that a qualified business plans to add at least 50 net new qualified employees in the State or make an investment of $50,000,000 or more in the State.

Sec. 3. 36 MRSA §6753, sub-§10-A is enacted to read:

10-A. Net present value calculation. "Net present value calculation" means the present value of the projected revenue from the 5-year or 10-year benefit to the applicant under this chapter as determined by the State Tax Assessor.

Sec. 4. 36 MRSA §6754, sub-§1, as amended by PL 2011, c. 240, §44, is further amended to read:

1. Generally. Subject to the provisions of subsection subsections 2 and 4, a qualified business is entitled to reimbursement of Maine income tax withheld during the calendar year for which reimbursement is requested and attributed to qualified employees after July 1, 1996 in the following amounts.

A. For qualified employees employed by a qualified business in labor market areas in this State in which the labor market unemployment rate is at or below the State’s unemployment rate at the time of application, the reimbursement is equal to 30% of Maine income tax withheld during each of the first 5 calendar years for which reimbursement is requested and attributed to those qualified employees. The percentage of reimbursement for the 6th to 10th years of the employment tax increment financing development program is established based upon the labor market unemployment rate at the beginning of the 6th year.

B. For qualified employees employed by a qualified business in labor market areas in this State in which the labor market unemployment rate is greater than the State’s unemployment rate at the time of application, the reimbursement is equal to 50% of Maine income tax withheld during each of the first 5 calendar years for which reimbursement is requested and attributed to those qualified employees. The percentage of reimbursement for the 6th to 10th years of the employment tax increment financing development program is established based upon the labor market unemployment rate at the beginning of the 6th year.

C. For qualified employees employed by a qualified business in labor market areas in this State in which the labor market unemployment rate is greater than 150% of the State’s unemployment rate at the time of application, the reimbursement is equal to 75% of Maine income tax withheld during each of the first 5 calendar years for which reimbursement is requested and attributed to those qualified employees. The percentage of reimbursement for the 6th to 10th years of the employment tax increment financing development program is established based upon the labor market unemployment rate at the beginning of the 6th year.

D. For qualified Pine Tree Development Zone employees, as defined in Title 30-A, section 5250-I, subsection 18, employed directly in the qualified business activity of a qualified Pine Tree Development Zone business, as defined in Title 30-A, section 5250-I, subsection 17, for whom a certificate of qualification has been issued in accordance with Title 30-A, section 5250-O, the reimbursement under this subsection is equal to 80% of Maine income tax withheld each year for which reimbursement is requested and attributed to those qualified employees for a period of no more than 10 years for a tier 1 location as defined in Title 30-A, section 5250-I, subsection 21-A and no more than 5 years for a tier 2 location as defined in Title 30-A, section 5250-I, subsection 21-B. Reimbursement under this paragraph may not be paid for years beginning after December 31, 2028.

Sec. 5. 36 MRSA §6754, sub-§4 is enacted to read:

4. Advance payment permitted. The commissioner, under extraordinary circumstances, may provide an advance payment in anticipation of reimbursement under subsection 1 to a qualified business using a net present value calculation, determined by the commissioner and the State Tax Assessor, based on an estimate of future employment tax increment financing benefits. The payment must be made in the form of a loan from the Maine Rural Development Authority pursuant to applicable requirements in Title 5, chapter 383, subchapter 9. The commissioner and the State Tax Assessor shall establish procedures for determining any variations between advance payments and final benefits due and for repayment of loans from the Maine Rural Development Authority under this subsection.

summary

This bill allows the Commissioner of Economic and Community Development, under extraordinary circumstances, to provide advance payments of employment tax increment financing benefits to a qualified business based on a net present value calculation of the projected employment tax increment financing benefit to the business. The advance payment must be made in the form of a loan through the Maine Rural Development Authority, pursuant to applicable conditions and requirements.

SP0111 LD 278	Session - 126th Maine Legislature		LR 491 Item 1
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