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Massachusetts Incentives and Workforce Development Guide

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Bond Financing

Tax-Exempt Bonds: Because they are exempt from federal taxes and in certain cases state taxes, tax-exempt bonds are usually the lowest interest rate option for real estate projects and new equipment purchases.  Tax-exempt bonds can be sold in the capital markets or directly to your bank or another financial institution.

Projects financed must be eligible for tax-exempt financing under the federal tax code and include:

  • 501(c)3 nonprofit real estate and equipment
  • Affordable rental housing
  • Assisted living and long term care facilities
  • Public infrastructure projects
  • Manufacturing facilities and equipment
  • Municipal and governmental projects
  • Solid waste recovery and recycling projects

Taxable Bonds: MassDevelopment can issue taxable bonds for industrial and commercial real estate.  Taxable bonds are often used as a “tail” in a tax-exempt financing if the borrower organization’s needs exceed its eligibility to issue tax-exempt bonds for a particular project.

Infrastructure Financing: MassDevelopment offers financing options to support infrastructure projects within Massachusetts. Eligible public infrastructure projects may include: roadways and intersections; water and waste water facilities; transportation facilities such as train stations and bus depots; seawalls, docks, bridges, and tunnels; streetscape including sidewalks, electric lines, and street lights; parks, playgrounds, and recreational facilities; parking garages; brownfield mitigation; and other costs.

Local Infrastructure Development Program (M.G.L. Chapter 23L)

  • Property owner can finance public infrastructure improvements with tax-exempt bonds.
  • Bonds issued by MassDevelopment and debt service is paid through a special assessment on the property. Credit on bonds is based on the property owner and/or credit enhancement.

District Improvement Financing (DIF), called TIF in other states (M.G.L. Chapter 40Q)

  • Public infrastructure improvements can be financed from local incremental property taxes.
  • Bonds issued by municipality or MassDevelopment and may require credit support from the municipality or the developer. Credit based upon incremental property taxes within district.

Infrastructure Investment Incentive (I-Cubed) (Legislation last revised in M.G.L. Ch. 238 of the Acts of 2012)

  • Program promotes public infrastructure improvements to support certified economic development projects. Credit based upon State’s General Obligation.

All three programs can be used together or in combination to meet a project’s financing needs.

Loans & Guarantees

Predevelopment Loans: Predevelopment loans can be used to finance early stage project costs, such as architectural and engineering work or traffic and feasibility studies, which are necessary to advance a project to the construction stage.  Our predevelopment loan program offers:

  • Loans up to $100,000
  • Deferred interest payments

The borrower is required to provide a 50% match for MassDevelopment loan funds.

Real Estate Loans: Real estate loans can be used to fund facility acquisition, renovation, construction, and permanent financing. Our real estate loan program offers:

  • Loans or bank loan participations up to $5,000,000
  • Construction loans, usually made in partnership with another lender

Permanent financing loans

  • Multi-tenant, mixed use, commercial, industrial
  • Manufacturers, small business, non-profits
  • Rental housing apartment buildings

For owner-occupied real estate, loan advance rates up to 90% of the property value

Equipment Loans: If your company is expanding operations and needs to purchase equipment, MassDevelopment can help. Our equipment loan program offers:

  • Loans or bank loan participations up to $2,000,000
  • Fixed rate financing
  • Loan terms up to seven years
  • Loan advance rates up to 85% of the cost of new equipment
  • Exporters may receive 100% financing for new equipment

Specialty Programs

Brownfields Redevelopment Fund: The Brownfields Redevelopment Fund was created in 1998 to encourage the reuse of brownfields in Economically Distressed Areas (EDAs) throughout Massachusetts. Brownfields are vacant, abandoned, or underutilized industrial or commercial properties where expansion, redevelopment, or improvement is complicated by real or perceived environmental contamination and liability. MassDevelopment administers the Brownfields Redevelopment Fund programs.

  • The Brownfields Site Assessment Program – The Site Assessment Program provides unsecured, interest free financing up to $100,000 for environmental assessment of brownfields.
  • The Brownfields Remediation Loan Program – The Remediation Loan Program provides flexible loans up to $500,000 for environmental clean-up of brownfields.

When your site is ready for redevelopment, MassDevelopment can provide a real estate loan or tax-exempt bond to finance your project.  Our staff can also provide information on accessing other state, federal, and private-sector assistance and identifying Licensed Site Professionals.

Emerging Technology Fund: The Massachusetts Emerging Technology Fund (ETF) targets technology companies that are starting up or expanding manufacturing in Massachusetts by providing financing for working capital, manufacturing facilities, and equipment. The ETF offers:

  • Loans or loan participations up to $2,500,000
  • Loan guarantees up to $1,500,000

To qualify for ETF financing:

  • Borrower must be a technology company starting or expanding manufacturing operations in Massachusetts
  • Financing must be for the purchase, expansion or improvement of real estate, working capital, and/or the purchase of equipment
  • There must be at least two other parties at risk
  • Financial investment must benefit the Massachusetts economy

Companies that receive ETF financing must have strong management teams, demonstrated technical feasibility, market demand for their products, and a proven fundraising record.

Bridge Loans to Federal Grants: The ETF also offers loans to bridge the receipt of federal grants by advanced manufacturing companies.

  • Loans of up to $500,000
  • Payable in full upon receipt of federal grant
  • Deferred and accrued interest due at maturity

Transformation Development Initiative: The Commonwealth Gateway Cities Transformative Development Initiative (“TDI”) seeks to enhance local public-private engagement and community identity; stimulate an improved quality of life for local residents; and spur increased investment and economic activity. Along with the specific new tools in the Transformative Development Fund, MassDevelopment will utilize additional existing finance products, and coordinate with its public-sector partners, to leverage activity by private landowners, enterprises, and investors. The Transformative Development Fund was created within MassDevelopment pursuant to C. 287, Acts of 2014 in August 2014.

TDI is an integrated systems approach to investment and urban redevelopment on a scale that can amplify and accelerate revitalization. Building on MassDevelopment’s legacy of investments withinGateway Cities and expertise in effecting long-term revitalization, TDI focuses on linking and leveraging these investments (and partner investments) to catalyze follow-on investments and activities.

The initiative is rooted in three principles that MassDevelopment considers critical to successful redevelopment:

  • Local collaborative partnerships: Development success comes from strong partnerships and people, as the connective tissue that establishes a vision, links resources to ideas, and moves projects forward over sustained periods.
  • Strategic district focus: The program will be a place-based redevelopment initiative focused on locally-identified, strategically-located districts, TDI Districts. As MassDevelopment has seen from its experiences, isolated investment deals do not automatically spur additional growth, but investments that are co-located within districts, supported by additional activity by neighboring land owners, local entrepreneurs, and business development assistance, lead more quickly to additional private development.
  • Community engagement: TDI seeks to support capacity and provide funding tools that will reinforce and support local community engagement. By building on local assets and activities to support communities, MassDevelopment can stimulate internal and external investments that allow communities to engage with and enjoy the benefits of those investments.

The program is organized around three distinct programs authorized by the Legislation: a “Technical Assistance Program,” TDI Assistance, through which MassDevelopment will award grants to Gateway Cities to pay for third-party professional services managed by the MassDevelopment and community building placemaking projects, TDI Places; a “Fellows Program,” TDI Fellows, through which professional staff will be embedded in Gateway Cities to assist them in capacity-building; and an “Equity Investment Program,” TDI Investment, through which MassDevelopment will make equity investments in real estate, within TDI Districts. Additionally, the program of TDI Cowork supports the emergence and expansion of collaborative workspaces to support innovative activities and catalyze new business development.

Additional Massachusetts incentive information is available at www.massdevelopment.com.

Updated 12/9/14

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