Lynn Tokarczyk

What do the world’s leading developer and manufacturer of high-performance fiber lasers, a privately owned ice cream distributor and a pioneering developer of a new class of medicines have in common?

They’ve all secured government tax incentives for real estate expansion and job growth in Massachusetts. Available under the Massachusetts Economic Development Incentive Program (EDIP), these valuable state and local tax packages help growing businesses make corporate real estate decisions and save thousands – even millions – of dollars. Government incentive packages also benefit cities and towns by expanding their real estate tax bases, retaining and creating jobs and kindling economic development in the local community and surrounding region.

Sweeping changes to the EDIP were established by the state legislature in 2009 and 2016. Additional revisions to the program’s eligibility requirements were approved in 2010, 2014 and 2018. Designed to foster job creation and business growth, the new reforms grant greater flexibility to the Massachusetts Economic Assistance Coordinating Council (EACC), which casts the final vote for these incentives.

Businesses planning to conduct a site search or real estate expansion in Massachusetts will need to consider whether they meet certain state criteria. Eligibility is based on state statutory standards and other factors the EACC may consider. Once the available incentives have been identified, the company must receive approval from various municipal boards and committees, the city council or town meeting and, eventually, the state EACC.

Here are some factors to consider when determining eligibility for these incentives:

Is the company located in an Economic Target Area (ETA)? In order to apply for and receive potential state and local incentives, the company must be located in an ETA or a TIF-Eligible Area approved by the state.

Is the company planning a real estate investment? Tax incentives may be available to companies planning a variety of growth opportunities, such as an on-site facility expansion, the purchase of new machinery and equipment, the lease or purchase of a new facility, the retention or hiring of additional employees or searching for that ideal parcel of land.

Does the company plan to create new jobs with its expansion? Businesses planning to expand may be designated as “certified projects.” This designation allows companies to access a variety of incentives, such as:

• State EDIP credit for qualifying depreciable assets capped at $20 million annually based on job creation and other state criteria;
• State 10 percent Abandoned Building Tax Deduction for costs associated with renovating an abandoned building at least 75 percent vacant for two years;
• Municipal Tax Increment Financing (TIF), a negotiated local property tax exemption of up to 20 years based on the increased value of the project property due to new construction or other significant improvements;
• Municipal Personal Property Tax Exemption, a negotiated local personal property tax exemption of up to 20 years with all TIFs; or
• Municipal Special Tax Assessment, a negotiated local property tax exemption of up to 20 years on the total base value of the project property.

If a company plans to retain jobs but not create new ones, or is a manufacturer or life science company, it may be eligible to apply for a TIF-only project within a particular municipality and may not be eligible for the EDIP Tax Credit. Timing of the project is also essential; if a company has already made a commitment to a property, it is unlikely tax incentives would be available for the proposed project.

Due to the complexity of the incentives process, it is critical that participating companies have strong communication and negotiating skills. The ability to present the project to government officials and resident voters at numerous municipal meetings and community sessions is essential to achieving a positive outcome.

Many of the state’s most respected businesses have realized long-term financial benefits from government tax incentives. Both publicly held and privately owned businesses have received valuable incentive packages for growth.

Taking the time to learn about, apply for and secure government incentives for your company’s expansion is an important step towards keeping your business on the fast track to success.

Lynn Tokarczyk is president of Business Development Strategies Inc., a government incentives consulting firm based in Medway. She may be reached at (508) 966-4300.