MMA letter to Senate urging passage of economic development bill

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Dear Senator,
On behalf of the cities and towns across the Commonwealth, the Massachusetts Municipal Association wishes to offer our support for several local policy initiatives included in S. 2423, the economic development bill released by the Senate Committee on Ways and Means. The economy of Massachusetts is only as strong as the economies of its cities and towns, and we appreciate your work and ongoing partnership to craft legislation that helps to realize the economic potential of all communities across the Commonwealth.
Investing More in the Successful MassWorks Program
MassWorks provides a beneficial source of funding for an impressive array of projects across the Commonwealth. Since its creation in 2010, MassWorks has invested approximately $310 million in a variety of infrastructure projects. These have included a $2.6 million investment in the West End Mill Development in Chicopee, $4.7 million toward the Hamilton Canal District in Lowell,
a $3.3 million investment in the Six Corners Intersection in Springfield, and $2 million toward the Rear Main Street Corridor in Gardner, which is helping to advance Gardner’s Downtown Urban Renewal Plan.
These are just a few examples of the many ways in which MassWorks is contributing to economic development in cities and towns. We thank you and your colleagues in the Legislature for building and supporting the MassWorks Program. We support the proposal in S. 2423 to provide MassWorks with an additional $330 million over the next three years. This funding would provide direct investment in economic development and growth in communities across the state, and would serve as a magnet to attract additional funding from other public and private sources. We respectfully ask you to support this MassWorks expansion.
Brownfields Redevelopment Fund Recapitalization
Brownfields redevelopment funding continues to drive the environmental cleanup of contaminated land, transforming dangerous, harmful and compromised sites to safe, positive and productive use as part of key redevelopment projects. The fund has been essentially depleted since December 2015, with no new projects being funded. S. 2423 would add $45 million to the Brownfields Redevelopment Fund, allowing for the remediation of more sites in more municipalities. In addition to recapitalization, S. 2423 would change the manner in which the program is funded to provide stability and predictability. Funding would be provided for three years, which is intended to allow communities to embark on projects with the confidence that funding will be available on a more long-term basis. We ask you to build on the longstanding success of this program, and support this additional capital commitment and funding.
Room Occupancy Excise Reform
Cities and towns strongly support the reform of the room occupancy excise included in Section 67. S. 2423 would extend the room occupancy excise to include “transient” accommodations that are leisure or short-term rentals in apartments, homes, condominiums and other properties. These rentals are not included in the increasingly out-of-date definitions in the room occupancy statute that is currently referred to as the “hotel-motel” tax.
The expansion of the excise to include transient accommodations will close loopholes in the law that have narrowed the scope of the excise over the years as the economy and business practices have changed. The reforms in S. 2423 would help level the playing field for the leisure rental market and provide new revenues for the state and cities and towns.
Increasingly, private property is being leased as leisure and short-term rentals, a practice that has become more common with the expansion of the sharing economy and the advent of online booking companies such as Airbnb. These short-term rentals compete with local hotels and B&B companies, but are largely able to avoid the room occupancy excise due to the obsolete definitions in the law.
The MMA applauds Senate leaders for moving forward with this important reform of the room occupancy excise law. On behalf of cities and towns across the state, we ask the full Senate to support Section 67. Closing this loophole will restore fairness to our tax system, ensure that all types of short-term rentals are treated equally, and provide additional revenues to 175 cities and towns to support municipal services and local economies.
Community Benefit Districts
This section would grant municipalities the local option to create Community Benefit Districts (CBDs). With this CBD proposal, local property owners would have the option to assess themselves a small fee to implement a management plan for the district. This would not replace or privatize public services, but would instead provide the opportunity for new services not ordinarily provided by the municipality. The property owners, municipality, and the community at-large would oversee implementation through a nonprofit management organization, and would have the option to dissolve the entity.
Economic Development Incentive Program Changes
Economic Development Incentive Program (EDIP) projects receive tax incentives for job creation, manufacturing job retention, and private investment commitments, promoting business development and employment in cities and towns. Under current law, projects must be located in designated Economic Target Areas (ETAs) or Economic Opportunity Areas (EOAs) in order to qualify for the incentives. However, these designations are outdated and limit state support for projects that would otherwise qualify. S. 2423 would remove the requirement that EDIP projects be located in ETA or EOA areas, thus expanding the reach of the program statewide.
Gateway Cities Transformational Development Fund
In 2014, the Legislature added Section 46 to Chapter 23G of the General Laws, which created a Transformational Development Fund at MassDevelopment in order to support large-scale transformative development projects in Gateway Cities. This fund was intended to support equity investments and technical assistance, and assist in the creation of collaborative workspaces to jumpstart revitalization and redevelopment efforts in Gateway Cities. Though this program has had proven successes, it suffered a $14.5 million loss due to 9C cuts in November 2014. S. 2423 would recapitalize the fund with $30 million in additional funding. We urge you to support this increased funding level.
Expanded Housing Development Incentive Program
Incentive programs provide important tools to leverage the creation of a vibrant array of housing in many Gateway Cities. S. 2423 would expand the Housing Development Incentive Program (HDIP), offering developers in Gateway Cities tax credits of up to 10 percent for market-rate and mixed-income housing units. In addition, the credits would double from $5 million to $10 million for the next four years, a meaningful increase that would certainly lead to the development of more housing.
With more than 200 amendments before you today, there are many proposals that would impact cities and towns. In this letter, we are highlighting the most visible amendments that would affect municipal interests.
The MMA opposes Amendment #34, which would add “structural steel” to the required sub-bids in Section 44F of Chapter 149 of the General Laws. This would make public construction projects more difficult to manage and increase costs to local taxpayers. A similar amendment was defeated by senators yesterday during debate on the Municipal Modernization Act.
The MMA opposes Amendments #56 and #183, which include language on starter home districts that would override local environmental and health regulations.
The MMA respectfully asks that you support Amendment #30, filed by Senator Tarr, which would grant municipalities the ability to enter into public-private partnerships on water infrastructure projects. Currently, the Legislature must pass a special act in order for a municipality to do so.
The MMA also supports Amendment #68, filed by Senator Lewis, which directs the Executive Office of Housing and Economic Development to establish a local economic development assistance program.
Thank you again for your focus and leadership on economic development policy. We urge you to support S. 2423, and ask you to support the municipal position on the amendments highlighted above. If you have any questions, please do not hesitate to have your office contact me or MMA Legislative Director John Robertson at (617) 426-7272 at any time.
Geoffrey C. Beckwith
MMA Executive Director & CEO