Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S1856 Compare Versions

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2	2	SENATE DOCKET, NO. 1484 FILED ON: 1/19/2023
3	3	SENATE . . . . . . . . . . . . . . No. 1856
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Edward J. Kennedy
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act relative to small scale commercial development for gateway cities.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Edward J. KennedyFirst Middlesex 1 of 11
16	16	SENATE DOCKET, NO. 1484 FILED ON: 1/19/2023
17	17	SENATE . . . . . . . . . . . . . . No. 1856
18	18	By Mr. Kennedy, a petition (accompanied by bill, Senate, No. 1856) of Edward J. Kennedy for
19	19	legislation relative to providing tax incentives for small scale commercial development in
20	20	gateway municipalities. Revenue.
21	21	[SIMILAR MATTER FILED IN PREVIOUS SESSION
22	22	SEE HOUSE, NO. 2916 OF 2021-2022.]
23	23	The Commonwealth of Massachusetts
24	24	_______________
25	25	In the One Hundred and Ninety-Third General Court
26	26	(2023-2024)
27	27	_______________
28	28	An Act relative to small scale commercial development for gateway cities.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 SECTION 1. Chapter 40 of the General Laws is hereby amended by inserting after
32	32	2section 60A the following section:-
33	33	3 Section 60B. For the purposes of this section, the following terms shall have the
34	34	4following meanings:-
35	35	5 “Executive office”, executive office of housing and community development.
36	36	6 “Gateway municipality”, a municipality with a population greater than 35,000 and less
37	37	7than 250,000, a median household income below the commonwealth's average and a rate of
38	38	8educational attainment of a bachelor's degree or above that is below the commonwealth's
39	39	9average. 2 of 11
40	40	10 “Secretary”, secretary of housing and community development.
41	41	11 (b) Notwithstanding any general or special law to the contrary, a city or town, by vote of
42	42	12its town meeting, town council or city council, with the approval of the mayor where required by
43	43	13law, on its own behalf or in conjunction with 1 or more cities or towns and pursuant to
44	44	14regulations issued by the secretary of the executive office of housing and economic development,
45	45	15may adopt and implement a gateway municipality tax increment financing plan, referred to as a
46	46	16GM-TIF plan in this section, intended to encourage commercial rental and build-out
47	47	17opportunities in multi-story commercial buildings in gateway municipalities. Any such GM-TIF
48	48	18plan shall:
49	49	19 (i) designate 1 or more areas of such gateway municipality a gateway municipality tax
50	50	20increment financing area, referred to as a GM-TIF area subject to the approval of the secretary
51	51	21under regulations adopted by the executive office consistent with this section.
52	52	22 (ii) describe in detail the commercial development contemplated for such GM-TIF area as
53	53	23of the date of adoption of the GM-TIF plan that shall be eligible for the GM-TIF;
54	54	24 (iii) authorize tax increment exemptions from property taxes, under clause Fifty-first of
55	55	25section 5 of chapter 59, for a specified term not to exceed 30 years, for any parcel of real
56	56	26property which is located in the GM-TIF area and for which an agreement has been executed
57	57	27with the owner of the parcel under clause (iv); provided, however, that the GM-TIF plan shall
58	58	28specify the level of exemptions expressed as exemption percentages, not to exceed 100 per cent,
59	59	29to be used in calculating the exemptions for the parcel, and for personal property situated on that
60	60	30parcel, as provided under said clause Fifty-first of said section 5 of said chapter 59; provided,
61	61	31further, that the exemption for each parcel of real property shall be calculated using an 3 of 11
62	62	32adjustment factor for each fiscal year of the specified term equal to the product of the inflation
63	63	33factors for each fiscal year since the parcel first became eligible for such exemption pursuant to
64	64	34this clause; provided, further, that the inflation factor for each fiscal year shall be a ratio:
65	65	35 (a) the numerator of which shall be the total assessed value of all parcels of all
66	66	36commercial and industrial real estate that is assessed at full and fair cash value for the current
67	67	37fiscal year minus the new growth adjustment for the current fiscal year attributable to the
68	68	38commercial and industrial real estate as determined by the commissioner of revenue under
69	69	39paragraph (f) of section 21C of said chapter 59; and
70	70	40 (b) the denominator of which shall be the total assessed value for the preceding fiscal
71	71	41year of all the parcels included in the numerator, except that such ratio shall not be less than 1;
72	72	42 (iv) include executed agreements between such city or town and each eligible owner of a
73	73	43parcel of real property which is located in a GM-TIF area. Each such agreement shall include the
74	74	44following: (1) all material representations of the parties which served as a basis for the
75	75	45descriptions contained in the GM-TIF plan in accordance with clause (ii) and which served as a
76	76	46basis for the granting of a GM-TIF exemption; (2) any terms considered appropriate by the city
77	77	47or town relative to compliance with the GM-TIF agreement including, but not limited to, that
78	78	48which shall constitute a default by the property owner and the remedies that shall be instituted
79	79	49between the parties for any such defaults, including an early termination of the agreement; (3)
80	80	50provisions requiring that 75 per cent of the eligible workforce shall receive training that is
81	81	51designed to retain employment in such city or town; (4) a detailed recitation of all other benefits
82	82	52and responsibilities inuring to and assumed by the parties to such agreement; and (5) a provision
83	83	53that such agreement shall be binding upon subsequent owners of such parcel of real property; 4 of 11
84	84	54 (v) delegate to 1 board, agency or officer of the city or town the authority to execute
85	85	55agreements in accordance with clause (iv); and
86	86	56 (vi) be certified as an approved GM-TIF plan by the department pursuant to regulations
87	87	57adopted by said department if the department finds, based on the information submitted in
88	88	58support of the GM-TIF plan by the city or town and such additional investigation as the council
89	89	59shall make, and incorporate in its minutes, that the plan is consistent with the requirements of
90	90	60this section and shall further the public purpose of retaining or encouraging increased industrial
91	91	61and commercial manufacturing activity in the commonwealth. A city or town may at any time
92	92	62revoke its designation of a GM-TIF area and, as a consequence of such revocation, shall
93	93	63immediately cease the execution of any additional agreements pursuant to clause (iv). The board,
94	94	64agency or officer of the city or town authorized pursuant to clause (v) to execute agreements
95	95	65shall forward to the board of assessors a copy of each such agreement, together with a list of the
96	96	66parcels included therein. An executed and approved GM-TIF shall be recorded in the registry of
97	97	67deeds or the registry district of the land court for the county wherein such land lies.
98	98	68 SECTION 2. Section 2 of chapter 40Q of the General Laws, as appearing in the 2010
99	99	69Official Edition, is hereby amended by inserting after the word “council”, in line 14, the
100	100	70following words:- or (3) a designated gateway municipality tax increment financing area
101	101	71pursuant to section 60B of chapter 40.
102	102	72 Paragraph (a) of Part B of section 3 of chapter 62 of the General Laws is hereby amended
103	103	73by adding the following subparagraph:- 5 of 11
104	104	74 (16) An amount equal to 20 per cent of the cost of improving any commercial building in
105	105	75a gateway municipality tax increment financing area as approved by the secretary of housing and
106	106	76economic development.
107	107	77 SECTION 3. Section 6 of chapter 62 of the General Laws is hereby amended by adding
108	108	78the following subsection:-
109	109	79 (s) (1) A credit shall be allowed against the tax liability imposed by this chapter, to the
110	110	80extent authorized by the secretary of housing and economic development, up to an amount equal
111	111	81to 50 per cent of such liability in any taxable year; provided, however, that the 50 per cent
112	112	82limitation shall not apply where the credit is refundable under paragraph (5) for approved
113	113	83projects for commercial rental and build-out opportunities in multi-story commercial buildings in
114	114	84gateway municipalities. A lessee may be eligible for a credit pursuant to this subsection for real
115	115	85property leased pursuant to an operating lease.
116	116	86 The total amount of credits that may be authorized by the secretary in a calendar year
117	117	87pursuant to this section and section 38N of chapter 63 shall not exceed an annual cap equal to
118	118	88$50,000,000 minus the credits granted and carryforwards of credits from prior years pursuant to
119	119	89subsection (q)(5) of section of 6 of this chapter and section 38BB(5) of said chapter 63, and shall
120	120	90include: (1) refundable credits granted during the year pursuant to this section or said section
121	121	9138N of said chapter 63; (2) nonrefundable credits granted during the year pursuant to this section
122	122	92or said section 38N of said chapter 63, to the extent that such nonrefundable credits are estimated
123	123	93by the commissioner to offset tax liabilities during the year; and (3) carryforwards of credits
124	124	94from prior years under this section or said section 38N of said chapter 63, to the extent that such
125	125	95credit carryforwards are estimated by the commissioner to offset tax liabilities during the year. 6 of 11
126	126	96The secretary shall provide the commissioner of revenue with any documentation that the
127	127	97commissioner deems necessary to confirm compliance with the annual cap and the commissioner
128	128	98shall provide a report confirming compliance with the annual cap to the secretary of
129	129	99administration and finance.
130	130	100 (2) Any taxpayer entitled to a credit under this subsection for any taxable year may carry
131	131	101over and apply to the tax for any one or more of the next succeeding ten taxable years, the
132	132	102portion, as reduced from year to year, of those credits which exceed the tax for the taxable year;
133	133	103provided, however, that in no event shall the taxpayer apply the credit to the tax for any taxable
134	134	104year beginning more than five years after the approved project ceases to qualify as such under
135	135	105the provisions of section 60B of chapter 40.
136	136	106 (3) For purposes of this subsection, the commissioner of revenue may aggregate the
137	137	107activities of all entities, whether or not incorporated, under common control as defined in
138	138	108subsection (f) of section forty-one of the Code.
139	139	109 (4) The commissioner of revenue shall promulgate such rules and regulations necessary
140	140	110to implement the provisions of this subsection. Such rules and regulations may provide for the
141	141	111adjustment of prices and elimination of transactions between related taxpayers to ensure that all
142	142	112amounts upon which the credit is based reasonably reflect fair market value. In addition, such
143	143	113rules and regulations shall include provisions to prevent the generation of multiple credits with
144	144	114respect to the same property.
145	145	115 (5) If a credit allowed under paragraph (1) exceeds the tax otherwise due under this
146	146	116chapter, 100 per cent of the balance of such credit may, at the option of the taxpayer and to the
147	147	117extent authorized pursuant to the economic assistance coordinating council, be refundable to the 7 of 11
148	148	118taxpayer for the taxable year in which qualified property giving rise to that credit is placed in
149	149	119service. If such credit balance is refunded to the taxpayer, the credit carryover provisions of
150	150	120paragraph (2) shall not apply.
151	151	121 SECTION 4. Chapter 63 of the General Laws is hereby amended by striking out section
152	152	12238N and inserting in place thereof the following section:-
153	153	123 Section 38N (a) A corporation subject to tax under this chapter that participates in a
154	154	124certified project, as defined in sections 3A and 3F of chapter 23A , or undertakes a development
155	155	125under an approved gateway municipality tax increment finance plan pursuant to section 60B of
156	156	126chapter 40, may take a credit against the excise imposed by this chapter to the extent authorized
157	157	127by the economic assistance coordinating council established by section 3B of said chapter 23A or
158	158	128the secretary of housing and economic development, in an amount not to exceed 50 per cent of
159	159	129such liability in a taxable year; provided, however, that the 50 per cent limitation shall not apply
160	160	130if the credit is refundable under subsection (b): (i) for certified expansion projects and certified
161	161	131enhanced expansion projects, as defined in said sections 3A and 3F of said chapter 23A, an
162	162	132amount up to 10 per cent; (ii) for certified manufacturing retention projects, as defined in said
163	163	133sections 3A and 3F of said chapter 23A, an amount up to 40 per cent of the cost of any property
164	164	134that would qualify for the credit allowed by section 31A if the property were purchased by a
165	165	135manufacturing corporation or a business corporation engaged primarily in research and
166	166	136development and is used exclusively in a certified project, as defined in said sections 3A and 3F
167	167	137of said chapter 23A; or (iii) for approved projects for commercial rental and build-out
168	168	138opportunities in multi-story commercial buildings in gateway municipalities. A lessee may be
169	169	139eligible for a credit under this subsection for real property leased under an operating lease. 8 of 11
170	170	140 The total amount of credits that may be authorized by the economic assistance
171	171	141coordinating council or the secretary of housing and economic development in a calendar year
172	172	142under subsection (g) of section 6 of chapter 62 and this section shall not exceed an annual cap
173	173	143equal to $50,000,000 minus the credits granted and carryforwards of credits from prior years
174	174	144under subsection (5) of section 38BB of this chapter and paragraph (5) of subsection (q) of
175	175	145section 6 of chapter 62 and shall include: (1) refundable credits granted during the year under
176	176	146said subsection (g) of said section 6 of said chapter 62 or this section; (2) nonrefundable credits
177	177	147granted during the year under said subsection (g) of said section 6 of said chapter 62 or this
178	178	148section, to the extent that such nonrefundable credits are estimated by the commissioner to offset
179	179	149tax liabilities during the year; and (3) carryforwards of credits from prior years under said
180	180	150subsection (g) of said section 6 of said chapter 62 or this section, to the extent that such credit
181	181	151carryforwards are estimated by the commissioner to offset tax liabilities during the year. Of these
182	182	152allowable credits, the economic assistance coordinating council may award not more than
183	183	153$5,000,000 in a calendar year to certified enhanced expansion projects, as defined in sections 3A
184	184	154and 3F of chapter 23A, and not more than $5,000,000 for certified manufacturing retention
185	185	155projects, as defined in said sections 3A and 3F of said chapter 23A. Any portion of the annual
186	186	156cap not awarded by the economic assistance coordinating council in a calendar year may be
187	187	157applied to awards by the secretary of housing and economic development in a subsequent year.
188	188	158The economic assistance coordinating council shall provide the commissioner with any
189	189	159documentation that the commissioner deems necessary to confirm compliance with the annual
190	190	160cap and the commissioner shall provide a report confirming compliance with the annual cap to
191	191	161the secretary of administration and finance and the secretary of housing and economic
192	192	162development. 9 of 11
193	193	163 The credit allowed under this section may be taken by an eligible corporation; provided,
194	194	164however, that the credit allowed by section 31A or section 31H shall not be taken by such
195	195	165corporation. For purposes of this paragraph, the corporation need not be a manufacturing
196	196	166corporation or a business corporation engaged primarily in research and development. If such
197	197	167property is disposed of or ceases to be in qualified use within the meaning of section 31A or
198	198	168ceases to be used exclusively in a certified project before the end of the certified project's
199	199	169certification period, or if a certified project's certification is revoked, the recapture provisions of
200	200	170subsection (e) of section 31A shall apply. If such property is disposed of after the certified
201	201	171project's certification period but before the end of such property's useful life, the recapture
202	202	172provisions of subsection (e) of section 31A shall apply. The expiration of a certified project's
203	203	173certification or an approval by the secretary of housing and economic development shall not
204	204	174require the application of the recapture provisions of subsection (e) of section 31A.
205	205	175 As used in this paragraph, “EACC” shall mean the economic assistance coordinating
206	206	176council established in section 3B of chapter 23A. A credit allowed under this section pursuant to
207	207	177the EACC’s approval may be taken only after the taxpayer completes a report signed by an
208	208	178authorized representative of the corporation and files the report with the EACC within 2 years
209	209	179after the initial project certification by the EACC and annually thereafter. The report shall
210	210	180contain pertinent employment data needed to determine whether the taxpayer has reasonably
211	211	181satisfied the employment projections set forth in its original project proposal granted pursuant to
212	212	182section 3F of said chapter 23A. Paragraph (3) of section 3F of said chapter 23A shall apply to tax
213	213	183benefits awarded under this section. Nothing in this section shall limit the authority of the
214	214	184commissioner to make adjustments to a corporation's liability upon audit. 10 of 11
215	215	185 (b) If a credit allowed to a taxpayer under clause (ii) of subsection (a) exceeds the excise
216	216	186otherwise due under this chapter, 100 per cent of the balance of such credit may, at the option of
217	217	187the taxpayer and to the extent authorized by the economic assistance coordinating council, be
218	218	188refundable to the taxpayer for the taxable year in which qualified property giving rise to that
219	219	189credit is placed in service. If such credit balance is refunded to the taxpayer, the credit carryover
220	220	190provisions of subsection (d) shall not apply. The amount of credit eligible to be refunded shall be
221	221	191determined without regard to the limitations in subsections (a) and (c).
222	222	192 (c) In the case of a corporation that is subject to a minimum excise under any provision of
223	223	193this chapter, the amount of the credit allowed by this section shall not reduce the excise to an
224	224	194amount less than such minimum excise.
225	225	195 (d) Any corporation entitled to a credit under this section for any taxable year may carry
226	226	196over and apply to its excise for any one or more of the next succeeding ten taxable years, the
227	227	197portion, as reduced from year to year, of those credits which were not allowed by paragraph (a)
228	228	198or paragraph (c) or which exceed the excise for the taxable year; provided, however, that in no
229	229	199event shall the corporation apply the credit to its excise for any taxable year beginning more than
230	230	200five years after the certified project or economic opportunity area ceases to qualify as such under
231	231	201the provisions of chapter twenty-three A.
232	232	202 (e) In the case of corporations filing a combined return of income under section thirty-
233	233	203two B, a credit generated by an individual member corporation under the provisions of this
234	234	204section shall first be applied against the separately determined excise attributable to that member,
235	235	205subject to the limitations of paragraph (a) or paragraph (c). A member corporation with an excess
236	236	206credit may apply its excess credit against the excise of another group member, to the extent that 11 of 11
237	237	207such other member corporation can use additional credits under the limitation of said paragraph
238	238	208(a) or paragraph (c). Unused, unexpired credits generated by member corporations shall be
239	239	209carried over from year to year by the individual corporation that generated the credit. Nothing in
240	240	210this section shall alter the provisions of paragraph (h) of section thirty-one A.
241	241	211 (f) For purposes of this section, the commissioner of revenue may aggregate the activities
242	242	212of all corporations that are members of a controlled group of corporations and, in addition, may
243	243	213aggregate the activities of all entities, whether or not incorporated, under common control as
244	244	214defined in subsection (f) of section forty-one of the Code.
245	245	215 (g) The commissioner of revenue shall promulgate such rules and regulations as are
246	246	216necessary to implement the provisions of this section. Such rules and regulations may provide
247	247	217the adjustment of intercompany prices and elimination of intercompany transactions to ensure
248	248	218that all amounts upon which the credit is based reasonably reflect fair market value. In addition,
249	249	219such rules and regulations shall include provisions to prevent the generation of multiple credits
250	250	220with respect to the same property.
251	251	221 SECTION 5. Chapter 63 of the General Laws is hereby amended by striking out section
252	252	22238O and inserting in place thereof the following section:-
253	253	223 Section 38O. A corporation whose excise under this chapter is based on net income may,
254	254	224in determining such net income, deduct an amount equal to 20 per cent of the cost of renovating
255	255	225any abandoned or underutilized building located within either an economic opportunity area as
256	256	226determined by the economic assistance coordinating council established by section 3B of chapter
257	257	22723A or within a gateway municipality tax increment financing area as approved by the secretary
258	258	228of the executive office of housing and community development.