Maryland Direct Financial Incentives 2012
Maryland's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include the Maryland Economic Development Assistance Authority and Fund (MEDAAF), Sunny Day Fund, and Maryland Industrial Development Financing Authority (MIDFA).
Area Development Research Desk (2012)
Maryland Economic Development Assistance Authority and Fund (MEDAAF):
There are five financing capabilities offered through this MEDAAF program. The assistance is provided to the business community and political jurisdictions with a variety of funding alternatives. To qualify for assistance from MEDAAF, all applicants are restricted to businesses located in a priority funding area and eligible industry sectors. Eligible industry sectors include agriculture and forestry; aerospace; biotechnology; transportation, distribution, and warehousing; environmental technology; financial services; healthcare technology and services; telecommunications; manufacturing; information technology and businesses with U.S. or regional headquarters located or to be relocated in Maryland. The specific capabilities are as follows:
Significant strategic economic development opportunities: Normally regarded as a project that causes a significant economic development opportunity on a statewide or regional level. Assistance is provided in the form of a loan. The low-interest loan can be used for land acquisition, infrastructure improvements, buildings, fixed assets, leasehold improvements, and working capital.
Local economic development opportunity: The project is to be sponsored by the governing body of the jurisdiction in which the project is located and the local jurisdiction must participate in the form of either a guarantee acceptable to the department, a direct loan, or a grant in an amount equal to at least 10 percent of the state's financial assistance. Assistance can be provided in the form of a loan, a conditional loan, or a grant. The low-interest loan can be used for land acquisition, infrastructure improvements, building, fixed assets, and leasehold improvements.
Direct assistance to local jurisdictions or the Maryland Economic Development Corporation (MEDCO) may be in the form of a loan, a conditional loan, or a grant. The total amount of the assistance cannot exceed $3 million. The use of funds includes land acquisition, infrastructure improvements, acquisition of fixed assets, leasehold improvements, up to 70 percent of the cost of a feasibility study, and up to 50 percent of the cost of preparing a local economic development strategic plan.
Regional or local revolving-loan fund provides incentive grants to local jurisdictions to help capitalize local revolving-loan funds. Each jurisdiction may receive a grant of up to $250,000 annually. To qualify for a grant, the local government must provide a matching grant of funds to the local revolving fund. The approved use of funds and respective terms of the assistance are set by the local revolving-loan fund programs. Financial assistance provided by the local RLF may be in the form of a loan, loan guarantee, or an interest rate subsidy, which is commonly referred to as a linked deposit (not subject to eligible industry sector requirements).
Special purpose loans: This category targets specific funding initiatives that are deemed critical to the state's economic health and development by the state legislature. The special purpose initiatives include such activities as brownfields, seafood and aquaculture, animal waste, arts and entertainment, and daycare (not subject to eligible industry sector requirements).
Economic Development Opportunities Fund (Sunny Day):
The purpose of the fund is to promote Maryland's participation in extraordinary economic development opportunities that provide significant returns to the state through creating and retaining employment as well as the creation of significant capital investment. Financial assistance can be in the form of a loan, conditional loan, or grant. A Sunny Day project is defined as an extraordinary economic development opportunity by the following criteria:
• The recipient must maintain a strong financial condition and a minimal risk profile
• The recipient is capable of accessing alternative sources of financing through financial institutions or capital markets
• Minimum of 5:1 capital investment by the recipient for each $1.00 of Sunny Day funds
• The recipient's project is consistent with the strategic plan of the state for economic development
• The recipient creates or retains substantial employment, particularly in areas of high unemployment.
Additionally, the local jurisdiction is required to participate by providing any one or a combination of the following: a loan, a conditional loan, a grant, an in-kind contribution, job training funds, tax credits, tax increment financing, or below market contributions.
Maryland Industrial Development Financing Authority (MIDFA):
• MIDFA stimulates private-sector financing of economic development by issuing bonds, providing credit enhancements and linked deposits that increase access to capital for small and mid-sized companies. The fund does not provide direct loans, but insures transactions resulting in reduced credit risk, and issues taxable and tax-exempt bonds. In addition to credit-risk assessment, consideration is given to the project's economic impact. The fund charges an annual one eighth of 1 percent bond-issuance fee and if insured, a one half of 1 percent annual insurance premium.
• Conventional Loan Program: Insures transactions made by conventional and asset-based financial institution for working capital, fixed assets, letters of credit, leasing, and other related activities. Insures up to 80 percent of the obligation (90 percent for exporting) to a maximum insurance of $2.5 million.
• Taxable and tax-exempt bonds: Issues and/or insures bonds with financial institutions, counties, municipalities, industrial development authorities and other public bodies for fixed assets and certain working capital. Federal law restricts the issuance of tax-exempt bonds to not-for-profits, manufacturers, and special-use ventures involved in the development of solid-waste and energy-related projects. Bond programs insure up to 100 percent of the obligation to a maximum insurance of $7.5 million.
• Linked deposits: Can provide a below-market certificate of deposit to banks as a funding source for below-market-rate loans in certain economically distressed rural areas. The certificate of deposit is the funding source but is not collateral to the loan.