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

2 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

3 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.

4 Real Estate Projects and Programs Redevelopment of public buildings and land Planning Pre-development Due diligence Assistance to cities and towns (including 43D)

5 5 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

6 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

7 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

8 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

9 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

10 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

11 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

12 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

13 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

14 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

15 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

16 For additional information, contact Bonnie Sullivan George Craddock