MA Economic Development Bill Aims to Increase Access to Capital, Streamline Agencies

Gov. Deval Patrick signed into law last week an economic development bill that includes the creation of the Massachusetts Growth Capital Corporation to provide access to capital and mentoring for small businesses capitalized with $35 million, and a $5 million recapitalization of the Massachusetts Technology Development Corporation to provide funds for early stage technology startups. The bill also reorganizes and consolidates economic development agencies focused on regionally based efforts to grow and attract businesses to the state, according to a press release. A broader version of the bill proposed earlier this year by the governor included a $50 million tax credit to small businesses for new job creation. The measure, however, was not approved in the enacted version (see the Feb. 17, 2010 issue of the Digest). Specifically, the bill:

• Establishes the Massachusetts Growth Capital Corporation to offer working capital, loan guarantees, grants and financial guidance, capitalized with $35 million;
• Recapitalizes the Massachusetts Technology Development Corporation with $5 million to help close the capital gap for startup and expansion of early stage technology companies;
• Allows for the Massachusetts Office of Business Development to contract with regional economic development organizations to establish a plan for business development that supports regionally-based efforts to grow and retain existing businesses and attract new businesses to the state; and,
• Creates the Massachusetts Marketing Partnership, a new umbrella agency comprised of the state's marketing and trade offices aimed at marketing the state domestically and internationally.

To encourage investment in Massachusetts-based startups, the bill also reduces the tax rate on capital gains from 5.3 percent to 3 percent, as long as the investments are held for at least three years, reports The Boston Globe.

Other provisions include a $50 million recapitalization of the Growth District Initiative allowing for infrastructure investments in areas identified for significant growth, creation of a market rate Housing Development Incentive program, and a sales tax holiday weekend.

Earlier this year, Gov. Patrick and Senate President Therese Murray introduced proposals aimed at consolidating state agencies to maximize efficiency and eliminate overlapping and counterproductive efforts. The final bill includes a number of mergers and consolidations, including the merger of the Community Development Finance Corporation and the Economic Stabilization Trust Fund into the new Massachusetts Growth Capital Corporation. Additionally, the Health and Educational Facilities Authority will be folded into the Massachusetts Development Finance Agency, according to the Globe article.

S. 2345 is available at: http://www.mass.gov/legis/. Read the governor's press release.