Sec. NNN-1. 30-A MRSA §5223, sub-§3, as enacted by PL 2001, c. 669, §1, is amended by amending the last blocked paragraph to read:
The conditions in paragraphs A to D do not apply to approved downtown tax increment financing districts or tax increment financing districts included within Pine Tree Development Zones designated and approved under subchapter 3.
Sec. NNN-2. 30-A MRSA c. 206, sub-c. 3 is enacted to read:
SUBCHAPTER 3
PINE TREE DEVELOPMENT ZONES
§5245. Findings and declaration of necessity
1. Legislative finding. The Legislature finds that there is a need to encourage development in economically distressed areas of the State in order to:
A. Provide new employment opportunities;
B. Improve existing employment opportunities;
C. Improve and broaden the tax base; and
D. Improve the general economy of the State.
2. Authorization. For the reasons set out in subsection 1, a unit of local government, or 2 or more cooperating units of local government, may develop a program for improving a district within its collective boundaries:
A. To provide impetus for targeted business development;
B. To increase employment; and
C. To provide the facilities outlined in the development program adopted by the participating units of local government.
3. Declaration of public purpose. The Legislature declares that the actions required to assist the implementation of these development programs are a public purpose and that the execution and financing of these programs are a public purpose.
As used in this subchapter, unless the context otherwise indicates, the following terms have the following meanings.
1. Affiliated business. "Affiliated business" means a member of a group of 2 or more businesses in which more than 50% of the voting stock of each member corporation or more than 50% of the ownership interest in a business other than a corporation is directly or indirectly owned by a common owner or owners, either corporate or noncorporate, or by one or more of the member businesses.
2. Applicant. "Applicant" means any unit of local government and any group of cooperating units of local government in the State that apply for designation as a Pine Tree Development Zone under section 5247.
3. Average employment during base period. "Average employment during base period" for a business means the total number of qualified employees of that business on each of 6 consecutive measurement days in each of the 3 calendar years in the base period as chosen by the business divided by 18.
4. Base level of employment. "Base level of employment" means the greater of either the total employment in the State of a business and its affiliated businesses as of the December 31st immediately preceding its certification as a qualified Pine Tree Development Zone business or its average employment during the base period.
5. Base period. "Base period" means the 3 calendar years prior to the year in which a business is certified as a qualified Pine Tree Development Zone business.
6. Commissioner. "Commissioner" means the Commissioner of Economic and Community Development.
7. Department. "Department" means the Department of Economic and Community Development.
8. Financial services. "Financial services" means services provided by an insurance company subject to taxation under Title 36, chapter 357; a financial institution subject to taxation under Title 36, chapter 819; or a mutual fund service provider as defined in Title 36, section 5212, subsection 1, paragraph E.
9. Labor market average weekly wage. "Labor market average weekly wage" means the average weekly wage as published by the Department of Labor for the labor market or markets in which potential qualified Pine Tree Development Zone employees are located for the 12 most recently reported months preceding the date of application for zone designation.
10. Labor market unemployment rate. "Labor market unemployment rate" means the average unemployment rate as published by the Department of Labor for the labor market or markets in which potential qualified Pine Tree Development Zone employees are located for the 12 most recently reported months preceding the date of application for zone designation.
11. Manufacturing. "Manufacturing" means the production of tangible personal property intended to be sold or leased ultimately for final use or consumption or the production of tangible personal property pursuant to a contract with the Federal Government or any agency thereof.
12. Person. "Person" has the same meaning as defined in Title 36, section 111, subsection 3.
13. Pine Tree Development Zone. "Pine Tree Development Zone" or "zone" means a specified area within the boundaries of a unit of local government, or within the boundaries of cooperating units of local government in a multijurisdictional application, that has been designated by the commissioner as a Pine Tree Development Zone in accordance with section 5247.
14. Pine Tree Development Zone benefits. "Pine Tree Development Zone benefits" means:
A. The exclusion from the limitations established under section 5223, subsection 3 of tax increment financing districts included within a Pine Tree Development Zone;
B. Expanded employment tax increment financing benefits under Title 36, chapter 917;
C. The sales tax exemptions under Title 36, section 1760, subsections 86 and 87; and
D. The Pine Tree Development Zone tax credits provided by Title 36, sections 2529 and 5219-W.
15. Production. "Production" has the same meaning as defined in Title 36, section 1752, subsection 9-B.
16. Qualified business activity. "Qualified business activity" means a business activity that is conducted within a Pine Tree Development Zone and is directly related to financial services, manufacturing or a targeted technology business for which the business receives a certificate from the commissioner pursuant to section 5250-B.
17. Qualified Pine Tree Development Zone business. "Qualified Pine Tree Development Zone business" or "qualified business" means any for-profit business in this State engaged in financial services, manufacturing or a targeted technology business that adds qualified Pine Tree Development Zone employees above its base level of employment in this State and that meets the following criteria:
A. It demonstrates that the establishment or expansion of operations within the Pine Tree Development Zone would not occur within the State absent the availability of the Pine Tree Development Zone benefits. The department shall investigate whether the business has met the requirements of this paragraph and provide an advisory opinion to the Executive Director of the Bureau of Revenue Services in the Department of Administrative and Financial Services, who shall make the final determination; and
B. It has received a certificate as a qualified business pursuant to section 5250-B.
18. Qualified Pine Tree Development Zone employees. "Qualified Pine Tree Development Zone employees" means new, full-time employees hired in this State by a qualified Pine Tree Development Zone business for work directly in one or more qualified business activities for whom a retirement program subject to the Employee Retirement Income Security Act of 1974, 29 United States Code, Sections 101 to 1461 (2003) and group health insurance are provided and whose wages derived from employment within the Pine Tree Development Zone are greater than the average annual per capita wages in the local labor market area in the county in which the qualified employee is employed. Qualified Pine Tree Development Zone employees must be residents of this State.
19. State average weekly wage. "State average weekly wage" means the average weekly wage as published by the Department of Labor for the State as a whole for the 12 most recently reported months preceding the date of application for zone designation.
20. State unemployment rate. "State unemployment rate" means the average unemployment rate published by the Department of Labor for the State as a whole for the 12 most recently reported months preceding the date of application for zone designation.
21. Targeted technology business. "Targeted technology business" means a business primarily involved in a targeted technology as defined in Title 5, section 15301.
22. Unit of local government. "Unit of local government" means a municipality, county, plantation, unorganized territory or Indian tribe.
§5247. Pine Tree Development Zones
1. Creation. One or more units of local government, or an organization representing one or more units of local government, may apply to the commissioner for the designation of a Pine Tree Development Zone within the boundaries of the unit or units of local government in accordance with the requirements of this subchapter. County governments may apply on behalf of unorganized territories. Groups of units of local government may apply for multijurisdictional or joint projects. Multijurisdictional applications require designation of one unit of local government as the lead applicant and consent for that designation by each participating unit of local government. Counties may also apply on behalf of a consortium of units of local government. The designation of a Pine Tree Development Zone may not conflict with the provisions of a municipal or other unit of local government charter. Zones that meet the requirements of subsection 2 are authorized for designation as follows:
A. Aroostook County, including up to 100 acres of land reserved for the Aroostook Band of Micmacs and the Houlton Band of Maliseet Indians;
B. The Androscoggin Valley region, including the Lewiston Enterprise Community Zone as designated by the federal Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, Appropriations Act, Public Law 105-277 (1999);
C. The Penobscot Valley region, including up to 500 acres of land reserved for the Penobscot Nation; and
D. Washington County and the Downeast region, including up to 500 acres of land reserved for the Passamaquoddy Tribe.
No more than one zone may be established in each of the areas specified in paragraphs A to D, except that the commissioner may designate up to 4 additional zones through the process established in section 5249.
2. Requirements for designation. The commissioner shall adopt rules establishing the minimum requirements for the designation of Pine Tree Development Zones. Additionally, each participating unit of local government must agree to maintain at least one prepermitted construction or development site available within the zone on a continual basis throughout the term of the zone.
3. Limitations. The designation of Pine Tree Development Zones is subject to the following limitations:
A. The total area of a zone, including all noncontiguous parcels, may not exceed 5,000 acres;
B. A zone located in Aroostook County as described in subsection 1, paragraph A may include property that is also included within the Aroostook County Empowerment Zone as designated by the federal Community Renewal Tax Relief Act of 2000, Public Law 106-554;
C. Pine Tree Development Zone benefits may not be used to encourage or facilitate the transfer of existing positions or property of a qualified business or affiliated businesses into a zone from a location elsewhere in the State;
D. Pine Tree Development Zone benefits may not be provided based upon any employees or positions transferred by the business or affiliated businesses into a Pine Tree Development Zone from a location elsewhere in the State;
E. A Pine Tree Development Zone may not consist of more than 20 noncontiguous parcels of property;
F. All property included within the boundaries of a Pine Tree Development Zone must be suitable for one or more qualified Pine Tree Development Zone business activities;
G. All property included within a Pine Tree Development Zone must meet one of the following:
(1) The property is located within a market area for which the labor market unemployment rate is greater than the state unemployment rate at the time of the application; or
(2) The property is included within a county in which the average weekly wage is below the state average weekly wage at the time of the application.
In the case of a multijurisdictional or joint application, the requirements of this paragraph are met if the combined unemployment rate of the cooperating units of local government meets the requirements of subparagraph (1) or the average weekly wage of the cooperating units of local government, on a per-employed-worker basis, meets the requirements of subparagraph (2); and
H. The restrictions contained in paragraph G may be waived for property that is contained within a labor market area that has sustained a greater than 5% loss of population or employed workers during the 3-year period immediately preceding the time of application if the loss was caused by business closings.
4. Application. An application for designation of a Pine Tree Development Zone must include, but is not necessarily limited to, the following:
A. A narrative description of the Pine Tree Development Zone to be designated;
B. Maps and any other information necessary to clearly identify the geographic boundaries of the Pine Tree Development Zone and any subzones it may include;
C. Evidence that the Pine Tree Development Zone meets the requirements of subsection 3;
D. Any information evidencing economic distress; and
E. A development plan that includes:
(1) Documentation of all municipal commitments required under subsection 2;
(2) A description of how the Pine Tree Development Zone will be administered, including any related interlocal cooperative agreements;
(3) A description of the goals and objectives to be accomplished through the Pine Tree Development Zone;
(4) A description of the resources to be committed to the Pine Tree Development Zone by the applicant or applicants; and
(5) Plans for accomplishing the goals and objectives, including a marketing plan and related time line and milestones.
5. Termination. All Pine Tree Development Zone designations approved under this subchapter and all Pine Tree Development Zone benefits are terminated on December 31, 2018.
1. Notice and hearing. Before designating a Pine Tree Development Zone or adopting a development plan, the legislative body of each applicant unit of local government or the legislative body's designee must hold at least one public hearing. Notice of the hearing must be published at least 10 days before the hearing in a newspaper of general circulation within the unit of local government.
2. Vote of unit of local government legislative body. Each applicant unit of local government must designate that portion of the Pine Tree Development Zone contained within its boundaries and take all actions required to satisfy the requirements of section 5247, subsection 2 by majority vote of its legislative body.
3. Effective date. The establishment of a Pine Tree Development Zone is effective upon designation by the commissioner.
4. Administration of zone. The participating units of local government may create an organization, designate an existing department or agency or enter into a contractual arrangement with a private entity to administer activities authorized under this subchapter.
5. Amendments. A participating unit of local government may amend the designation of that portion of a Pine Tree Development Zone contained within its boundaries or an adopted development plan only after meeting the requirements of this section for designation of a Pine Tree Development Zone or adoption of a development plan and with the concurrence of all other participating units of local government. A participating unit of local government may not amend the designation of a Pine Tree Development Zone if the amendment would result in the zone's being out of compliance with any of the requirements in section 5247.
1. Review and selection. The commissioner shall review applications and select zones for designation based upon the following criteria:
A. Severity of economic distress within the region affected by the Pine Tree Development Zone;
B. Viability of a development plan described under section 5247, subsection 4, paragraph E;
C. Commitment of local and regional financial resources;
D. Partnerships with public and private organizations; and
E. Impact on surrounding regions of the Pine Tree Development Zone.
§5250. Program administration; rules
The commissioner shall administer this subchapter. The commissioner shall adopt rules pursuant to the Maine Administrative Procedure Act for implementation of Pine Tree Development Zones, including, but not limited to, rules for determining and certifying eligibility, selecting zones for designation and evaluating on a periodic basis the progress and success of each zone in achieving its goals. Rules adopted under this section are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
§5250-A. Unorganized territory
For the purposes of this subchapter, a county may act as a municipality for the unorganized territory within the county and may designate development districts within the unorganized territory. When a county acts under this section, the county commissioners act as the municipality and as the municipal legislative body, the State Tax Assessor acts as the municipal assessor and the unorganized territory education and services fund receives the funds designated for the municipal general fund.
§5250-B. Certification of qualified business
A business may apply to the commissioner for certification as a qualified Pine Tree Development Zone business. Upon review and determination by the commissioner that a business is a qualified Pine Tree Development Zone business, the commissioner shall issue a certificate of qualification to the business that includes a description of the qualified business activity for which the certificate is being issued.
By January 15, 2004, the commissioner shall report to the joint standing committee of the Legislature having jurisdiction over economic development matters regarding rulemaking and progress in implementing Pine Tree Development Zones. Not later than April 1, 2005 and April 1st of each odd-numbered year thereafter, the commissioner shall report to the joint standing committee of the Legislature having jurisdiction over economic development matters on the status of the Pine Tree Development Zones.
Sec. NNN-3. 36 MRSA §1760, sub-§§86 and 87 are enacted to read:
86. Construction contracts with qualified development zone businesses. Beginning July 1, 2005, sales to a construction contractor of tangible personal property that is to be physically incorporated in, and become a permanent part of, real property that is owned by or for sale to a qualified Pine Tree Development Zone business, as defined in Title 30-A, section 5246, subsection 17, which real property will be used in the qualified business activity, as defined in Title 30-A, section 5246, subsection 16, of the qualified Pine Tree Development Zone business in a Pine Tree Development Zone, as defined in Title 30-A, section 5246, subsection 13. The exemption provided by this subsection is limited to sales to a construction contractor occurring within a period of 10 years from the date the qualified Pine Tree Development Zone business receiving the property is certified pursuant to Title 30-A, section 5250-B or until December 31, 2018, whichever occurs first.
87. Sales of tangible personal property to qualified development zone businesses. Beginning July 1, 2005, sales of tangible personal property to a qualified Pine Tree Development Zone business, as defined in Title 30-A, section 5246, subsection 17, for use directly and primarily in one or more qualified business activities, as defined in Title 30-A, section 5246, subsection 16. The exemption provided by this subsection is limited for each qualified Pine Tree Development Zone business to sales occurring within a period of 10 years from the date the business is certified pursuant to Title 30-A, section 5250-B or until December 31, 2018, whichever occurs first.
Sec. NNN-4. 36 MRSA §2529 is enacted to read:
§2529. Pine Tree Development Zone tax credit
1. Credit allowed. A taxpayer that is a qualified Pine Tree Development Zone business as defined in Title 30-A, section 5246, subsection 17 is allowed a credit in the amount of:
A. One hundred percent of the tax associated with premiums sold by a qualified business located in a Pine Tree Development Zone that would otherwise be due under this chapter for each of the first 5 taxable years that the taxpayer is required to file a return pursuant to this chapter beginning after the taxpayer commences its qualified business activity, as defined in Title 30-A, section 5246, subsection 16, and that are directly attributable to a qualified business activity; and
B. Fifty percent of the tax associated with premiums sold by a qualified business in a Pine Tree Development Zone that would otherwise be due under this chapter for each of the taxable years beginning with the 6th taxable year and ending with the 10th taxable year that the taxpayer is required to file a return pursuant to this chapter after the taxpayer commences its qualified business activity, as defined in Title 30-A, section 5246, subsection 16, and that are attributable to a qualified business activity.
2. Apportioned credit in certain circumstances. In the case of a qualified Pine Tree Development Zone business as defined in Title 30-A, section 5246, subsection 17, including any affiliated members of the qualified business, that has a business presence in the State other than that conducted within a Pine Tree Development Zone, as defined by Title 30-A, section 5246, subsection 13, the credit provided for in this section is to be calculated based upon a pro forma determination. The pro forma determination must be based on the assumptions that all of the business activities conducted by the qualified Pine Tree Development Zone business and the affiliated members, if any, within this State constitute a unitary business and that only the qualified business activity conducted in the Pine Tree Development Zone is subject to tax imposed by this chapter. The portion of the tax liability of the qualified Pine Tree Development Zone business and the affiliated members, if any, related to the business activity conducted in the Pine Tree Development Zone must be determined by use of a percentage, the numerator of which is the property value and the payroll for the taxable year directly attributed to the qualified business activity of the business and the denominator of which is the statewide property value and payroll for the taxable year of the qualified business and its affiliated members.
3. Limitation. The credit provided by this section may not be claimed for calendar years beginning on or after January 1, 2019.
Sec. NNN-5. 36 MRSA §5219-W is enacted to read:
§5219-W. Pine Tree Development Zone tax credit
1. Credit allowed. Except as provided by subsection 2, a taxpayer that is a qualified Pine Tree Development Zone business as defined in Title 30-A, section 5246, subsection 17 is allowed a credit in the amount of:
A. One hundred percent of the tax that would otherwise be due under this Part for each of the first 5 taxable years that the taxpayer is required to file a return pursuant to this Part beginning after the taxpayer commences its qualified business activity, as defined in Title 30-A, section 5246, subsection 16; and
B. Fifty percent of the tax that would otherwise be due under this Part for each of the taxable years beginning with the 6th taxable year and ending with the 10th taxable year that the taxpayer is required to file a return pursuant to this Part after the taxpayer commences its qualified business activity, as defined in Title 30-A, section 5246, subsection 16.
2. Apportioned credit in certain circumstances. In the case of a qualified Pine Tree Development Zone business, as defined in Title 30-A, section 5246, subsection 17, that has a business presence in the State other than that conducted within a Pine Tree Development Zone, as defined by Title 30-A, section 5246, subsection 13, including, but not limited to, a qualified Pine Tree Development Zone business that is required to file a combined report pursuant to section 5220, subsections 5 and 6, the Maine income tax liability of the qualified Pine Tree Development Zone business, and the affiliated members of its unitary group, if any, upon which the credit provided for in this section must be calculated based upon a pro forma determination. The pro forma determination must be based on the assumptions that all of the business activities conducted by the qualified Pine Tree Development Zone business and the affiliated members of its unitary group, if any, within this State constitute a unitary business and that only the qualified business activity conducted in the Pine Tree Development Zone is subject to tax imposed by this chapter. The portion of the tax liability of the qualified Pine Tree Development Zone business and the affiliated members of its unitary group, if any, related to the business activity conducted in the Pine Tree Development Zone must be determined by use of a percentage, the numerator of which is the property value and the payroll for the taxable year directly attributed to the qualified business activity of the business and the denominator of which is the statewide property value and payroll for the taxable year of the qualified business and the members of its unitary group.
3. Sole proprietors and owners of pass-through entities. In the case of a sole proprietor or the owner of a partnership, limited liability company, S corporation, trust or other entity that is treated as a pass-through entity for income tax purposes under the Code, the amount of the credit allowed under subsection 1 is the amount of tax otherwise due under this Part that relates to taxable income received by the sole proprietor or owner from the qualified business as apportioned.
4. Limitation. The credit provided by this section may not be claimed for tax years beginning on or after January 1, 2019.
Sec. NNN-6. 36 MRSA §6754, sub-§1, ¶D is enacted to read:
D. For qualified Pine Tree Development Zone employees, as defined in Title 30-A, section 5246, subsection 18, employed directly in the qualified business activity of a qualified Pine Tree Development Zone business, as defined in Title 30-A, section 5246, subsection 17, for whom a certificate of qualification has been issued in accordance with Title 30-A, section 5250-B, the reimbursement under this subsection is equal to 80% of the withholding taxes withheld each year for which reimbursement is requested and attributed to those qualified employees for a period of no more than 10 years. In no event may reimbursement under this subsection be paid for years beginning after December 31, 2018.
Sec. NNN-7. Administrative costs to be absorbed. The Department of Administrative and Financial Services, Bureau of Revenue Services shall absorb within existing resources any administrative costs involved in the implementation of this Part.
Sec. NNN-8. Application. That section of this Part that enacts the Maine Revised Statutes, Title 36, section 2529 applies to calendar years beginning on or after January 1, 2004. That section of this Part that enacts Title 36, section 5219-W applies to tax years beginning on or after January 1, 2004. That section of this Part that enacts Title 36, section 6754, subsection 1, paragraph D applies to withholding taxes withheld by a qualified Pine Tree Development Zone business on or after January 1, 2004.
Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved, except as otherwise indicated.
Effective June 12, 2003, unless otherwise indicated.
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