Baker signs law aimed at fostering economic development

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STATE HOUSE — With the stroke of a pen Wednesday morning, Gov. Charlie Baker authorized $500 million in new state infrastructure spending, $45 million for contaminated site cleanups and $4.5 million for a cybersecurity and data center.

The roughly $1 billion economic development law completes the work on major bills highlighted by the governor as priorities for this legislative session. Five of six items identified by Baker as must-finish policy pieces became law in recent weeks, although Senate President Stan Rosenberg said last week that in the rush to write those bills lawmakers lost an opportunity make “good bills” even better.

Baker administration economic development officials were not able to assign an estimate of the number of jobs that would be created with the bill’s implementation, but said the legislation strengthens the foundation for private sector employers to grow in Massachusetts.

The new law features tax credits to promote investments in new companies, creates a commission to examine online gaming in Massachusetts, and encourages workforce development by extending to families a new tax deduction tied to college savings plans. The bill also authorizes $107.5 million for a new berth and cranes at South Boston’s Conley Terminal, which handles shipping containers for the Port of Boston.

The governor vetoed a provision of the bill allowing for community benefit districts, where a group of property owners can get together and agree to assessments for improvements – similar to a business district.

Baker told reporters there are “too many unanswered questions about how it would work,” and said it would apply to entities traditionally exempt from the full cost of property taxes. His veto letter says the provision does not require that a majority of the affected property owners support creation of the district.

According to a bill summary, cities and property owners could create community benefits districts to fund services in downtown areas, with signatures from property owners representing at least 50 percent of the assessed value in the district. All property owners in the district would contribute based on a fee structure.

In his veto letter, Baker said non-profits, houses of worship and government entities would be required to pay into benefit districts and the proposal didn’t protect residential property owners entitled to tax abatements, such as blind, elderly and veteran residents.

Baker also vetoed a section that would allow the Metrowest Regional Transit Authority to provide commercial driver’s license instruction. In his veto letter, Baker said that would give a quasi-public entity an “unfair competitive advantage over existing small businesses.”

After a midnight scramble July 31 to enact legislation regulating ride-hailing apps, fostering renewable energy growth and stimulating the Bay State economy, lawmakers left unfinished a bill that would have limited non-competition agreements in employment contracts.

Lawmakers made the jobs bill vulnerable to Baker’s veto by sending it to the governor as formal sessions came to a close until January. Veto overrides require a recorded vote, which can only take place during formal sessions.

While some laws are tailored to deal with one particular issue, jobs bills are usually a hodge-podge of priorities for state assistance to the economy, chock full of programs that lawmakers can tout in their bids for re-election.

The $500 million MassWorks financing will be available for economic development projects in need of public funding of infrastructure. Another $45 million would fund equipment and capital improvements at career and technical education training programs. The state’s brownfields redevelopment fund, which is occasionally tapped dry by cleanup projects, will receive a $45 million influx of authorized capital spending.

At a bill-signing ceremony at the bottom of the Grand Staircase, Gardner Mayor Mark Hawke talked about how a $200,000 MassWorks investment paved the way for an expansion of New England Peptide’s facility. Hawke said a sewer main lay in the way of the expansion, and MassWorks funding altered the street and realigned the main. The expansion created 12,500 square feet of new workspace, according to the company, which in 2015 said it plans to hire three to five people per year for the next five years.

“Is there anyone here who isn’t looking for a grant?” Housing and Economic Development Secretary Jay Ash half-joked at the start of the bill-signing ceremony.

In addition to authorizing borrowing and spending roughly $1 billion in capital dollars, the new law establishes a new tax incentive for a prepaid tuition or college savings program established by the state. Single filers will be able to deduct $1,000 while married people filing jointly can deduct up to $2,000.

“Aside from the countless benefits that college savings incentives have for students looking to attend college and graduate with manageable loans, these incentives also benefit our entire economy,” Association of Independent Colleges and Universities in Massachusetts Richard Doherty said in a statement. “Everyone wins when students can attend college and invest more of their post-college earnings back into the economy. Passing an economic development bill that includes college savings incentives is one of the best ways the legislature could have helped Massachusetts families now and in the future.”

The bill also establishes an “angel investor tax credit” to encourage early investment in new companies. Investors would be able to receive an income tax credit of 20 percent of their investment in qualifying Massachusetts businesses that have no more than 20 fulltime employees and $500,000 in revenues. For fledgling businesses located in the state’s 26 “gateway cities” – cities where educational attainment and median income are below the state’s average – the credit totals 30 percent of the investment.

The new law also rewrites the statutes governing economic development incentives, consolidating four distinct categories of tax incentives and eliminating a minimum threshold of job creation for eligible projects. To qualify, projects would need to enable the hiring of new permanent fulltime jobs in Massachusetts or retain at least 50 jobs within or nearby “gateway cities.”

The program will be subject to a $30 million annual cap and it authorizes the state to “claw back” tax credits if the company fails to comply, according to a bill summary. The Baker administration had sought authority to award up to $50 million in tax incentives under what it called an “extraordinary economic development opportunities” program.

“We had asked for more leverage,” Ash told the News Service. He said, “We got like 95 percent of what we asked for.”

Asked how many jobs the new law would create, Ash’s director of policy and communications, Paul McMorrow responded, “Government’s job is not to create jobs, but to advance conditions that allow private employers to invest and create jobs.” He said the law will “create a platform for dynamic economic growth in communities across Massachusetts.”

The bill also permits the sale of alcohol by liquor stores on Memorial Day, after noon, and allows certain grocery stores to include on-premises alcohol consumption areas.

Baker specifically noted the bill will allow the Nashoba Valley Winery to continue its operations, holding a farmer’s brewing license and a license to serve its products at a restaurant on the property. State liquor regulators in March told the business it could not both pour and produce alcoholic beverages on its property.

Lawmakers who negotiated the compromise version of bills passed by the House and Senate did not include a Senate provision that would have given municipalities control over the number of liquor licenses for local bars and restaurants. When municipalities run up against the statutory cap, they must appeal to the Legislature for special laws authorizing them access to additional liquor licenses.

Boston is home to the online fantasy sports company DraftKings, which received some consideration in the new law. The legislation allows fantasy contest operators to offer their contests in Massachusetts, as regulated by the attorney general, until July 31, 2018, according to a bill summary, and it creates a commission to study the matter.

“A company like DraftKings, which is a big and successful player in the consumer online business can continue to be headquartered here,” Baker told reporters. In a written statement DraftKings CEO Jason Robins said, “This new law gives us the foundation we need so that we can continue to grow right here in Boston.”

— Written by Andy Metzger

Copyright State House News Service