Appendix

MOBD administers grant programs to help Massachusetts businesses obtain loans and financial support.

Overview

In addition to administering the Regional Economic Development Organization (REDO) Grant Program, the Massachusetts Office of Business Development (MOBD) administered several other programs during our audit period.

According to MOBD’s fiscal year 2017 annual report,

The Economic Development Incentive Program (EDIP) [is] a tax incentive program designed to foster full-time job creation and to stimulate business growth across the Commonwealth. Companies eligible for the EDIP program may receive state and local tax incentives in exchange for full-time job creation, manufacturing job retention and private investment commitments.

MOBD awarded $16,337,117 in state tax incentives to 28 companies in fiscal year 2016 and $21,994,071 in state tax incentives to 32 companies in fiscal year 2017.

MOBD also administers the Microlending Program. According to MOBD’s website,

Through the Microlending Program, MOBD will provide grants to eligible nonprofit lenders, including certified Community Development Financial Institutions (CDFIs) and Community Development Corporations (CDCs). . . .

The Microlending Program seeks to increase the flow of capital into Massachusetts’s small businesses and create growth. . . .

Successful grantees will leverage state funds, and other matching funds, to provide small businesses with a spectrum of potential credit products, including direct loans, participation loans, and loan loss insurance.

Generally, these small businesses are unable to obtain bank loans. MOBD expended $300,000 for this program in fiscal year 2016 and $100,000 in fiscal year 2017.

MOBD has been assigned the following appropriations,⁴ which represent legislative earmarks⁵ or involve agreements with other state or private entities:

• The Massachusetts Biotechnology Research Institute supports academic and science competencies and the commercialization of research and development. In each of fiscal years 2016 and 2017, $250,000 was awarded to operate four life-science incubators (organizations whose purpose is to act as a catalyst to grow or accelerate life science innovation). The University of Massachusetts administers the program under a contract with MOBD.
• The Massachusetts Small Business Development Center at the University of Massachusetts uses state funds to provide matching funding for grants provided by the US Small Business Administration and the US Department of Defense. MOBD expended $1,186,222 in each of fiscal years 2016 and 2017 to support this program. The center helps businesses obtain federal contracts, secure financing, generate responses to requests for proposals, and interpret bid documents. It also provides educational research and seminars.
• Commonwealth Zoological Corporation is a nonprofit organization established to support zoos by providing operating and capital funds, which foster economic development and job creation and promote private fundraising. Its funding totaled $4,900,000 in fiscal year 2016 and $4,000,000 in fiscal year 2017.
• The Massachusetts Technology Park Corporation, a public instrumentality corporation (i.e., a corporation created by the government to perform an essential government function) doing business as the Massachusetts Technology Collaborative, was established by Chapter 40J of the Massachusetts General Laws to “foster the expansion of industrial and commercial activity and employment opportunities in the commonwealth,” as Section 1A of that law states. The Secretary of Housing and Economic Development serves on the corporation’s board of directors. The corporation was established by Section 6I of Chapter 40J of the General Laws to create and implement a plan to “establish and promote computer science education in public schools,” with the goal of “increasing the number of students prepared to pursue computing technology careers.” In fiscal year 2016, MOBD disbursed $1,700,000 to the corporation. The corporation received no funding in fiscal year 2017 because of budget cuts.
• The Small Business Layoff Aversion Grant Program provides a grant to the private, not-for-profit New England Business Association (formerly known as the Small Business Association of New England) to provide technical assistance and consulting services to manufacturing companies, with the goal of preventing business closures and any resulting displacement of employees. MOBD disbursed $250,000 per year to the association in fiscal years 2016 and 2017.

Finally, MOBD’s general administrative account funds its operations, including administrative support for the REDO Grant Program and the other programs described above.

4.    Although these amounts are appropriated to MOBD in the state budget, MOBD staff members and the director of Finance for the Executive Office of Housing and Economic Development indicated that MOBD did not actively manage these programs.

5.    According to the website of the Executive Office for Administration and Finance, earmarks are “language included in a [state budget] line item which provides that a specific portion of the appropriation be spent for a particular purpose.”

Date published:	June 20, 2019