State offers more incentive to do business in 'Gateway Cities'

By Brian Boyd

Old manufacturing cities like New Bedford and Fall River could have an easier time luring businesses and developers thanks to a newly enacted package of tax credits and grants.

Gov. Deval Patrick on Thursday signed into law an economic development bill that includes some of the provisions sought by the Gateway Cities Coalition, a group of 11 cities. Coalition members lobbied Beacon Hill for tax credits to promote market-rate housing, job creation and historic rehabilitation in their cities.

“This is targeted toward urban areas that certainly need additional incentives to attract developers,” said Mayor Scott W. Lang, who is co-chairman of the coalition. “The state can only be as strong as its cities.”

Some of the provisions build upon existing programs, and not all of them are exclusive to the Gateway Cities. But supporters say the changes will give cities a better shot at new businesses and housing.

Along with the incentives, there is a change in scope, increasing the number of Gateway Cities to 24. Locally, this revision adds Taunton to the list, said state Rep. Antonio F.D. Cabral, D-New Bedford, co-chairman of the Gateway Cities’ legislative caucus.

“This is the first time that I think anyone can recall that tax incentives were designed, adopted and implemented specifically for these urban communities, the so-called Gateway Cities, to help spur the type of economic development they need to once again be the economic engines for their region,” he said.

The coalition started two years ago and consists of cities outside Boston. A 2007 MassINC-Brookings Institution report identified the 11 original communities as traditional manufacturing cities missing out on the knowledge-driven economy, and it suggested ways to revive them.

The group succeeded in getting a new state tax credit program in the economic legislation that is designed to encourage market-rate housing in designated areas of the cities. The program received an initial appropriation of $5 million.
Previously, tax credits went to affordable housing, but city leaders had expressed a need for more market-rate housing in their communities, Cabral said.

“This is an issue we heard from every city,” he said.

The package also includes what supporters describe as an expanded and improved state tax credit program meant to create and save manufacturing jobs in the targeted cities.

The jobs incentive would provide tax relief for up to 40 percent of a business’s investment if it locates in one of the targeted cities and creates 25 or more manufacturing jobs. Employers who already operate in one of the cities could also earn up to 40 percent in tax credits for expansion or remodeling if they retain 50 or more manufacturing jobs.

In the past, the state offered a 5 percent credit for job creation, but the potential savings was not enough to affect a business’s decision to locate in a particular area, and it was spread out among 140 “economic opportunity areas,” said Benjamin Forman, a research director at MassINC.

“We’re not spending any more money,” Forman said. “We’re just making fewer but larger awards.”

So there is no guarantee a project in a given city would get the credits, but when it does, the support would have a meaningful impact, he said.

The new law also allocates $50 million to keep the Growth Districts Initiative going. The program provides grant money for development-related infrastructure improvements in the state’s 20 designated “growth districts,” 14 of which are located in Gateway Cities, according to city and state officials.

The law extends tax credits for brownfield remediation and historic rehabilitation to 2014 and 2017 respectively. It did not, however, remove the cap on the historic tax credits, something that Gateway Cities Coalition had sought.

Cabral said it would be difficult to lift a cap on spending in the current economic environment.

Still, half of the tax credits for rehabilitation of historic buildings have gone to Gateway Cities, even though there is no quota guaranteeing a share for the cities. Meanwhile, roughly 80 percent of the Growth District money has gone to those cities, according to his office.

bboyd@s-t.com
August 09, 2010

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