Tax Incentives

Local and State Tax Incentives Available to Certified Projects

Tax Increment Financing

Introduction

The City of Fall River Tax Increment Financing (TIF) Program is an incentive program designed to encourage new development and job creation in Fall River.  This program is administered as the local component of the state Economic Development Incentive Program (EDIP), and is a partnership between the state, the municipality, and an expanding company.

The City of Fall River Tax Increment Financing Program is administered by the Fall River Office of Economic Development.

The Fall River Office of Economic Development (FROED) will work with businesses throughout the TIF process both at the state and local level.  FROED is a private, non-profit organization with key objectives of job creation, job retention and the expansion of the city’s tax base.

Any questions regarding the TIF Program, or other economic development incentive programs, please contact:

Fall River Office of Economic Development
One Government Center, 6th Floor
Fall River, MA 02722
(508) 324-2620

 

Overview

Massachusetts Economic Development Incentive Program (EDIP)

The Economic Development Incentive Program (EDIP) is a locally driven program that has become a popular economic development tool for Massachusetts.  EDIP is best described as a three-way partnership between the state, the municipality, and an expanding company.

In this program participating companies receive favorable state and local tax treatment in exchange for job creation and commitments for private investment.

Under the EDIP, the City of Fall River is an Economic Target Area and Gateway Municipality, and utilizes the designation to address blighted, distressed, and underutilized areas and sites.  In a Gateway Municipality such as Fall River, new and expanding businesses are eligible for greater incentives.  Types of projects in the EDIP include: Expansion Projects, Enhanced Expansion Projects, Manufacturing Retention Projects, or Abandoned Building Renovation Projects.

Based upon economic development and land use planning principles, the City of Fall River may designate appropriate locations as Economic Opportunity Areas (EOA) as required by the EDIP.  Local designation of EOAs helps in enabling the City to encourage private development with the assistance of property tax incentives that are offered through the City of Fall River TIP Program.

Massachusetts Economic Assistance Coordinating Coucnil (EACC)

The Economic Assistance Coordinating Council (EACC) is a state board comprised of public and private sector officials.  This 14 member board is created by Chapter 19 of the Act of 1993 whose primary function is to administer the EDIP.  The EACC is comprised of 7 ex-officio members and 7 members appointed by the Governor.  The EACC is co-chaired by the Directors of the Departments of Business & Technology and Housing & Community Development.

The EACC approves all ETA and EOA once they have been designated by the local municipality.  The board also approves Certified Project applications, and is responsible for the certification and decertification of these projects as monitored through the annual reporting process.

The EACC is supported by staff of the Massachusetts Office of Business Development (MOBD).

Certified Project

Under the EDIP, a company that intends to locate or expand operations in an EOA may submit a project proposal for certification to the City of Fall River TIF Board and the EACC.  To be considered for designation as a certified project, the project proposal must provide for job creation and new investment at a Massachusetts site.

Certified projects at an existing site must demonstrate a proposed expansion of permanent full-time employees at such facility that does not constitute a replacement or relocation of permanent full-time employees of the business who work at other facilities located in the Commonwealth.

If the certified project proposal relates to a new facility that is to be located within an EOA after the date of the proposal, the proposal must be either:

  • The business’ first facility within the Commonwealth; or
  • A new facility and not a replacement or relocation of an existing facility already located in the Commonwealth; or
  • An expansion of an existing facility that will increase the number of permanent full-time employees of the controlling business in the Commonwealth.

In exchange for job creation and investment commitments, a company’s certified project becomes eligible to receive the best possible state and local tax benefits, exclusive to Gateway Municipalities such as Fall River, which include:

  • Local property tax exemptions pursuant to executed TIF or STA agreements
  • 100% personal property tax exemption (for executed TIF agreements only)
  • 10% abandoned building tax deduction (if applicable)
  • Up to 7% enhanced investment tax credit (EOAC)
  • Up to 10% investment tax credit (Enhanced Expansion Project: 100 or more jobs)
  • Up to 40% investment tax credit (Manufacturing Retention Projects)

Certified project proposals must also comply with the eligibility guidelines as established by the City of Fall River TIF Board.

Local Real Estate Tax Exemption

Tax Increment Financing (TIF)

A TIF agreement is a negotiated agreement for a certified project between a company and the municipality that exempts new property taxes as a result of new development and job creation as an incentive to make the project possible.  In Fall River this agreement is drafted by the Fall River Office of Economic Development, who provides technical and staff support for the TIF Board, and requires approval of the TIF Board, City Council, and EACC.

TIF agreements must be structured for a minimum of 5 years, however, may not exceed 20 years.

A TIF agreement requires that the full tax is paid on the property as assessed prior to the new investment.  This is the base value.  However there is an exemption from property taxes on all or any portion of the added value as a result of new development.  This exemption from new property taxes on the added value may range from 5%-100% and may adjust for each year of the TIF agreement.  When the TIF agreement is complete the City receives property tax revenue based on the assessed value.  Personal property taxes are also exempt for both the existing and new property.

Special Tax Assessment (STA)

A STA agreement is also a negotiated agreement for a certified project between a company and the municipality.  The process of how this agreement is drafted and approved is the same as a TIF agreement.

STA agreements however apply to the entire assessed value of the property, not just the added value of new investment, therefore current as well as future local tax revenues are exempted for the term of the agreement.  Personal property taxes are not exempted under an STA agreement.

Per statute STA agreements have 5 year minimum and 20 year maximum term and must minimally comply with the following 5 year schedule:

  • Year 1:  no real estate taxes are paid (non-negotiable)
  • Year 2:  municipality is authorized to collect up to a maximum of 25% of the actual assessed value of the entire parcel/property
  • Year 3:  municipality is authorized to collect up to a maximum of 50% of the actual assessed value of the entire parcel/property
  • Year 4:  municipality is authorized to collect up to a maximum of 75% of the actual assessed value of the entire parcel/property
  • Year 5-20:  municipality is authorized to collect 100% of actual assessed value of the entire parcel/property

Economic Opportunity Area Credit

In addition to the local tax incentives that can be provided through an approved TIF or STA agreement, certified projects are also eligible to receive an enhanced state investment tax credit in Gateway Municipalities such as Fall River.  This tax credit is known as the Economic Opportunity Area Credit (EOAC) and is a tax credit of up to 10% that is taken against qualifying personal and tangible property that has a useful life of 4 years or greater and/or is either owned or secured through an operating lease.

The EOAC is available to all industry sectors; however, has a 2% added value for Massachusetts manufacturers.

Process

Letter of Intent

The process of applying for certified project status begins with a letter of intent.  A dated letter is required to be sent to the Mayor form the business (cc: FROED) requesting certified project status and a TIF/STA agreement.

The body of the letter must contain the scope of the project, total investment, and number of jobs to be retained and/or created.  The letter should also include language that if it were not for the incentives available through this program it would not be possible to complete the project as planned.

Once FROED receives a copy of the Mayor’s response to the letter of intent, the FROED staff will contact the business and the MOBD staff, and the certified project application process begins.

Certified Project Application

The certified project applications are available through the MOBD website at www.mass.gov.  A complete preliminary project application must be submitted to the MOBD and the FROED prior to the creation of TIF/STA benefit calculations and TIF/STA agreement.  Following the MOBD approval of the preliminary application, a supplementary application is required.  FROED will provide technical assistance and guidance for any business within Fall River during the application process.

A Certificate of Good Standing is required as a component of the supplementary application.  This certificate is issued by the Massachusetts Department of Revenue and can be applied for online, through the DOR website.  Projects will not be placed on the EACC agenda for approval without this document.

Preliminary Application

The Preliminary Application must be completed and returned to the MOBD by the published deadline.  The application includes general information on the project as well as estimations of the project’s goals.

Supplementary Application

Following review and approval of the Preliminary Application, and upon invitation of the MOBD Regional Director, the Supplemental Application can be completed.  The Supplementary Application includes the submission of supportive data, analysis, and a definitive project timeline.

A Supplemental Application Checklist must be submitted along with the application.

Agreement Review and Approvals

City of Fall River TIF Board

Once the complete certified project application is submitted for review, the TIF/STA benefit calculations, TIF Plan & Zone, and TIF/STA agreement are drafted, and the application, calculations, and agreement are reviewed with the applicant.  Modifications to the certified project application may also be required and are made by the applicant.

Once the applicant has agreed to the terms of the proposed agreement, the TIF Board meeting will be scheduled.  If the TIF Board recommends favorable action on the application, the proposed agreement will be sent to the City Council for review and approval.

Fall River City Council

The City Council has final approval of the recommendations of the TIF Board for all proposed TIF/STA agreements.  Applicants will be notified to attend the City Council meeting that the proposed agreement will be on the agenda, and should be available to answer questions that may arise.  Typical questions usually relate to job creation commitments for Fall River residents and the planned new investment for the project.  FROED staff will also attend City Council meetings with the applicant.

Economic Assistance Coordinating Council (EACC)

Once approval has been granted by the TIF Board and City Council, the final documents will be assembled by FROED/MOBD for EACC review and approval.  These documents include: letter of intent, certified project application (final preliminary and supplementary), Certificate of Good Standing, TIF Plan & Zone, TIF/STA agreement (signed), calculations, and the City Council resolution (signed and stamped).

FROED will notify the MOBD of the City’s action and request that certified project application be placed on the EACC agenda.  Attendance at the EACC meeting is required of the applicant and a City representative.  The applicant will be notified of the meeting time and location.  The EACC meets on a quarterly basis.

Once approval has been granted by the EACC, all documents shall be assembled into the certified project file and the projects shall be included in the certified project database.  A copy of the relevant project documents and approvals will be submitted to the applicant and the Assessor’s Office.

The approved agreement for the certified project will take effect on July 1 of the upcoming fiscal year, unless otherwise specified in the agreement.

Compliance and Monitoring

EDIP Annual Reporting

As a condition of maintaining certified project status, all active projects must annually submit an EDIP Annual Report.  This report is submitted directly to the EACC via a web-based reporting system managed by the MOBD.  Failure to complete annual reports will result in project decertification.

In order to maintain certified project status, all projects with EACC certification dates of 2 years and older must demonstrate that there is a “reasonable chance” that the employment commitments outlined in their previously approved certified project applications will occur.  All Certified Projects must be annually “re-certified” by the EACC to maintain eligibility for all EDIP tax incentives.

City of Fall River TIF Board Annual Reporting

Along with annual reporting to the EACC, active projects must also submit quarterly reports to the City of Fall River’s Assessor’s Office, Mayor’s Office and Fall River Office of Economic Development.

Certified Project Decertification

The certification of a project may be revoked by the EACC upon the petition of the municipality or the independent investigation and determination of the EACC that the business in its project proposal does not have a reasonable chance of meeting its job creation or investment commitments.

In determining whether to revoke a project certification, the EACC may consider whether the amount of the tax benefit that the business is receiving pursuant to the certification is disproportionately high in relation to the number of permanent full-time jobs that have been created by the project, or other benefits provided by the project to the municipality or the state.

If the business fails to provide the EACC with information requested by it pursuant to 402 CMR 2.11 or otherwise fails to comply with designated reporting procedures, such failure shall be grounds for revoking the certification of such project.

Prior to revoking the certification of a project, the EACC shall provide the project proponent with reasonable notice and an opportunity to be heard on the matter.  Any hearing provided pursuant to 402 CMR 2.13(5) shall be conducted in a manner directed by the EACC.

 

*This publication was produced as a guide for businesses in Fall River interested in utilizing the programs mentioned above.  Please note this document may be amended or modified

 

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