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Maine Direct Financial Incentives

Feb/Mar 09
Industrial development bonds:
The Finance Authority of Maine (FAME), as well as municipalities in the state, issues bonds to provide tax-exempt financing for private businesses. Proceeds may cover the cost of land, land improvements, utilities, buildings, engineering, architectural and legal fees, and machinery and equipment.

Loan guarantees:
The Commercial Loan Insurance Program insures up to 90 percent of a loan to a maximum loan insurance exposure of $4,250,000. 100 percent insurance available for loans to veterans, oil storage facility projects, clean fuel vehicle projects, and waste oil disposal site cleanup projects. Loan proceeds may be used for purchase of - and improvements to - real estate, machinery, and equipment.

Direct lending:
The Economic Recovery Loan Program is a direct lending program designed to help small businesses remain viable during difficult economic times. Existing businesses may apply. In considering loan applications, FAME looks to support creditworthy projects demonstrating substantial public benefit that have utilized other sources of capital.

The program is meant to be a lending program of last resort after a business has exhausted conventional lending sources. Loans may not exceed $200,000, except in cases where substantial public benefit exists. The interest rate will not exceed Wall Street prime plus 2 percent. Terms may be structured to meet the borrower's specific needs.

Community Development Block Grant (CDBG) Program:
The CDBG Economic Development Program provides gap funding in the form of grants and loans for communities to assist businesses in the creation/retention of quality jobs for low- and moderate-income persons. The maximum cost per job created/retained with these funds is $20,000 and $30,000 in a Designated Pine Tree Development Zone. Program activity groups and maximum grant and loan amounts are as follows:

Category 1 - Business Assistance Grant (BA)

Activity Group 1 -Municipal Owned
1. Acquisition, relocation, demolition, clearance, construction, reconstruction, installation, and rehabilitation associated with public infrastructure projets such as water and sewer facilities, flood and drainage improvements, publicly owned commercial and industrial buildings, parking, streets, curbs, gutters, sidewalks, etc. that are necessary to create or retain jobs in the non-retail sector for low- and moderate-income persons. Maximum grant award: $400,000.
2. Required local match necessary to secure new funds to the state for eligible economic development planning activities. Maximum grant award: $50,000.

Category 2 - Development Loan Fund (DF) Non-Municipal Owned
1. Acquisition of existing facilities, land and site improvements necessary for the construction of a new facility, rehabilitation of commercial or industrial buildings, structures, capital equipment, and real property improvements. Maximum loan award: $400,000
2. Non-capital equipment and operating capital. Maximum loan award: $200,000.

Tax increment financing (TIF):
Local governing bodies can designate areas in their municipalities as development districts to facilitate redevelopment activities. Public financing, usually in the form of bonds, provides necessary improvements, and developers obtain financing to carry out the major redevelopment. The public debt is retired through the increase in property taxes generated by the redevelopment.

Employment tax increment financing (ETIF):
This program provides project financing to businesses that add five or more employees at wages above the regional average and provide health insurance and a retirement program. The amount of financing is based upon state income tax withholdings and is available for up to 10 years.

Pine Tree Development Zone Program:
This program uses a combination of tax incentives to spur economic development in targeted areas of the state where unemployment is relatively high and wages are relatively low. The state will offer to qualified new and expanding businesses (1) an enhanced employment tax increment financing that returns 80 percent of the state income taxes withheld from qualified net new employees for up to 10 years; (2) a 100 percent refund of corporate income tax and insurance premium tax for years one through five, and 50 percent for years six through 10; (3) a local option tax increment financing that will not be counted against a municipality's existing TIF area and value caps; and (4) a 100 percent sales tax exemption for construction materials and equipment purchases.

Training programs:
Governor's Training Initiative: This program seeks to promote a globally competitive work force for Maine industry by directly linking Maine's education and training resources to employer-driven work force needs. The program reimburses qualifying Maine employers for a portion of their training and/or retraining costs. Some reimbursable costs include specialized recruitment, training for high-performance skills, customized technical training, workplace safety, on-the-job training, and competitive retooling of a business' current work force.

Maine Quality Centers: The Maine Quality Centers, administered by the Maine Community College System, provide a pretrained, competitively tooled work force for new or expanding Maine businesses that create at least eight full-time jobs with benefits. The education and training, provided at no cost to the company, is fast-track, guaranteed, and customized to an employer's specifications.

Maine Apprenticeship Program: This program is a customized, systematic training program designed to meet the needs of Maine employers through on-the-job training and related classroom instruction. The program may reimburse the apprentice (or employer if the company is providing tuition assistance) for up to 50 percent of tuition for college credit courses. At the end of the program, an employer has a certified, skilled journeyperson.

Maine State Contact:
Maine Department of Economic and Community Development
59 State House Station
Augusta, ME 04333-0059
(207) 624-9800

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