September 2006

State-Local Infrastructure Bill Signed by Governor

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New development tool tied to job growth given chance to prove itself

A new state-local infrastructure development incentive tied to job creation rather than the property tax was signed into law by Governor Romney on September 7, 2006. Chapter 293 of the Acts of 2006, (Summary) the Infrastructure Investment Incentive (I3) law will be given five years to prove its worth in providing public support of infrastructure improvement for projects that create net new jobs in the Commonwealth.

Introduced late in the legislative session by the City of Boston, this bill was felt to be a long shot to be enacted this year. However, creating a development tool that would provide incentives for net new jobs in Massachusetts was attractive to state officials in light of the state’s slow job growth recovery. The initial concept of this bill was first introduced by Mayor Menino in his speech at the Research Bureau’s Annual Meeting this past February. Upon review by a committee of Bureau Directors, the Research Bureau testified in support of this bill in July (Testimony) and wrote a brief explanation of the bill in the June/July Bureau Update.

Chapter 293 is a complex law that will apply to a specific type of development in cities and towns that would create net new jobs in Massachusetts. The commitment of net new jobs by a firm before construction begins adds to the complexity. In light of these factors and the Commonwealth’s own financial obligation with this development tool, a series of restrictions were placed on its application. These limits are:

  1. No more than 5 economic development proposals could be approved and no more than two from any one city or town.
  2. The total state support committed could not exceed $200 million.
  3. No development plan that secured municipal approval prior to September 7, 2006 can be considered.
  4. A sunset clause of January 1, 2012 was included.

The City of Boston envisions using this tool for development in the 100 acres by Gillette and Fort Point Channel and the Seaport District. Definitions in the law seem to indicate that several components involving multiple acres can constitute one project. However, new rules and regulations need to be promulgated by the state Secretary of A&F and the Commissioner of DOR by December 31st before this process can be initiated.

Further, the timeline to reach final approval is lengthened. A developer must secure tenants that will create net new jobs before reaching agreement with the municipality. Boston’s local permitting process must be completed and the City Council must approve the plan by a two-thirds vote after holding a public hearing. Final approval by the Secretary of A&F and Boston’s CFO are needed for the project to start. This tool will not apply to all projects and developers will continue to seek assistance in other forms from City Hall.

Boston Municipal Research Bureau 