Audit of the Massachusetts Office of Business Development Overview of Audited Entity

This section describes the makeup and responsibilities of the Massachusetts Office of Business Development.

Overview

The Massachusetts Office of Business Development (MOBD), within the Executive Office of Economic Development, was established by Section 1(a) of Chapter 23A of the Massachusetts General Laws. The Governor appoints MOBD’s director. According to its website,

The Massachusetts Office of Business Development assists businesses relocating to Massachusetts as well as businesses wishing to expand their current operations, with specific attention being paid to jobs created, jobs retained, and capital invested. Our team provides a highly responsive, central point of contact that facilitates access to resources, expertise, and incentive programs.

As stated in MOBD’s [Economic Development Incentive Program] Fiscal Year 2020 Annual Report, MOBD’s mission is to do the following:

• Facilitate access to resources
• Promote job growth and job retention
• Stimulate private investments
• Help businesses thrive in Massachusetts

MOBD actively engages with businesses, business partners, and municipalities to assist them in accessing state resources.

MOBD’s state budget appropriations for fiscal years 2021 and 2022 were $1,951,313 and $1,851,313, respectively. As of the end of the audit period, MOBD had a total of 10 employees. MOBD is located at 136 Blackstone Street in Boston.

Economic Development Incentive Program

MOBD began awarding Economic Development Incentive Program (EDIP) grants, which take the form of tax credits, in 2016. According to MOBD’s EDIP webpage,

The Economic Development Incentive Program (EDIP) is designed to foster job creation and stimulate business growth. A company that participates in EDIP may receive state tax credits . . . in exchange for a commitment to new job creation, existing job retention, and private investment in the project. There are many factors and criteria that the EDIP Review Team and Economic Assistance Coordinating Council (EACC) will consider throughout the process, chief among them being whether a project is unlikely to move forward without state and local government support.

The Economic Assistance Coordinating Council (EACC), as referenced in the above quotation, is a 15-member council that oversees the EDIP. This oversight regarding the EDIP includes establishing regulations, policies, and procedures; certifying and contracting projects; ensuring that awardees submit their annual progress reports and reviewing these reports on a regular basis; and decertifying projects that are not compliant.

EACC meets on a quarterly basis to review applications to the EDIP. Before these meetings, applicants must submit certain materials to MOBD by staggered deadlines, each of which MOBD posts to its EDIP webpage. To apply for EDIP tax credits, a business must submit the following materials to MOBD:

• a letter of intent to both the chief executive / chief elected official of the municipality in which it wishes to implement its proposed plan and that same municipality’s MOBD regional director;
• the EDIP Preliminary Application; and
• the EDIP Supplemental Application, which includes the business’s equal opportunity employment / affirmative action statement or plan. Alternatively, the business could include a statement describing its hiring and placement policies.

MOBD employees conduct a preliminary review of each applicant’s submitted materials then make recommendations to EACC. After this, EACC reviews each applicant’s submitted materials and either certifies the project or does not certify the project, based on certain factors detailed in Section 3C(b) of Chapter 23A of the General Laws. These factors can include, but are not limited to, whether the project will (1) be located in the Commonwealth, (2) enable the business to create new jobs, (3) enable the business to retain at least 50 jobs in a gateway city,² or (4) allow the business to hire new, permanent, full-time employees in the Commonwealth. For more information on these factors, see the Appendix.

If EACC certifies a business’s application, then that business must submit an annual progress report to EACC, detailing the project’s job creation, the amount of funding the business pledges to commit to its proposed EDIP project, and tax credit use. If the business does not submit an annual progress report, then EACC could decertify the project, which may result in the loss of state tax benefits.

Section 3B(c) of Chapter 23A of the General Laws states,

The MOBD shall annually submit to the governor, the chairs of senate and the house committees on ways and means and the senate and house chairs of the joint committee on economic development and emerging technologies within 90 days after the end of its fiscal year a report setting forth its operations and accomplishments, including a listing of all projects certified pursuant to the EDIP. The report shall also include recommended policies or actions, if any, to improve the effectiveness of the EDIP.

In fiscal year 2021, EACC certified 8 EDIP projects, totaling $1,602,000 in tax credits. In fiscal year 2022, EACC certified 14 EDIP projects, totaling $4,487,200 in tax credits.³

Massachusetts Vacant Storefront Program

Section 3C(d) of Chapter 23A of the General Laws created the Massachusetts Vacant Storefront Program (MVSP) in fiscal year 2019. According to the Executive Office of Economic Development’s website, “The purpose of the program is to help municipalities of the Commonwealth in their efforts to revitalize their downtowns and commercial areas.”

The MVSP makes tax credits available to businesses proposing to move into a vacant storefront⁴ located in an EACC-certified vacant storefront district. In order for a district to receive EACC’s vacant storefront district certification, an official from that district’s municipality must submit a petition to EACC. According to the Executive Office of Economic Development’s Vacant Downtown Storefronts Program Guidelines, this petition includes a map of the area; the EDIP Municipal Application for Certification as a Vacant Storefront District, which details goals for the area’s development; and a letter of support from the chief executive / chief elected official of the municipality, which details the amount of funding the municipality pledges to commit to its proposed MVSP project.

Working in conjunction with the municipality in which it wishes to implement its proposed plan, a business applying for tax credits must submit the EDIP Application for Certified Vacant Storefront Project to EACC. According to the Vacant Downtown Storefronts Program Guidelines, this application includes a letter of support from an official from that district’s municipality, a business plan (if the business is under two years old), a Certificate of Good Standing and/or Tax Compliance document from the Massachusetts Department of Revenue, an estimated storefront occupancy start date, and an agreement to operate the business at the storefront for at least two years.

According to the Vacant Downtown Storefronts Program Guidelines,

Applications will be considered on a competitive basis taking into account factors such as the potential synergy with other downtown businesses; commitment to storefront improvements; whether the municipality has made local plans or investments to revitalize the downtown; the amount of matching funds provided by the municipality to the business applicant.

MOBD presents each application to EACC during its quarterly meetings. EACC either certifies or does not certify the projects during these meetings.

In fiscal year 2021, EACC certified five MVSP projects, totaling $45,100 in tax credits. In fiscal year 2022, EACC certified one MVSP project, totaling $10,000 in tax credits.

EDIP and MVSP

Presentations

MOBD regional directors conduct presentations about the EDIP and the MVSP. These presentations are meant to help educate audiences on topics such as the availability of tax credits, the application process, criteria considerations, and the requirements for certified projects, such as annual progress reporting. MOBD conducts these presentations using a webinar format and supplements them with Microsoft PowerPoint files. MOBD has two different types of presentations: one is a training for MOBD employees who perform the preliminary review of applications, while the other is a general information session to help municipalities inform businesses about the EDIP and/or the MVSP. MOBD promotes the general information session presentations by sending emails to municipal employees.

Goals and Initiatives

In MOBD’s EDIP Fiscal Year 2020 and 2021 Annual Reports, MOBD set goals. One goal was to encourage businesses owned by people within minority groups, women, veterans, and people with disabilities to apply for tax credits through either the EDIP and/or the MVSP.

Another one of MOBD’s goals was to track key metrics associated with each program’s awardees. MOBD officials told us that they set this goal as a result of general awareness of and concern for the disproportionate impact of the COVID-19 pandemic on people within minority groups, women, veterans, and people with disabilities.

Cybersecurity Awareness Training

The Executive Office of Technology Services and Security has established policies and procedures that apply to all Commonwealth agencies within the executive branch. EOTSS recommends, but does not require, non-executive branch agencies to follow these policies and procedures. Section 6.2 of the Executive Office of Technology Services and Security’s Information Security Risk Management Standard IS.010 states,

The objective of the Commonwealth information security training is to educate users on their responsibility to help protect the confidentiality, availability and integrity of the Commonwealth’s information assets. Commonwealth Offices and Agencies must ensure that all personnel are trained on all relevant rules and regulations for cybersecurity.

To ensure that employees are clear on their responsibilities, EOTSS’s policies require that all employees in state executive agencies complete a cybersecurity awareness course every year. All newly hired employees must complete an initial security awareness training course within 30 days of their orientation.

MOBD is required to follow this standard, since it is an executive branch agency. MOBD used two training systems during the audit period to administer required initial and annual cybersecurity awareness training to its employees at the end of fiscal year 2021.

2.   Section 3A of Chapter 23A of the General Laws defines a gateway municipality as “a municipality with a population greater than 35,000 and less than 250,000 with a median household income below the commonwealth’s average and a rate of educational attainment of a bachelor’s degree or above that is below the commonwealth’s average.”

3.    In this report, the tax credit amounts referenced relate to the projects approved (and their cost) for the year reported. It does not include tax credits amounts from projects approved in prior years and does not represent the total cost of the project.

4.   The Executive Office of Economic Development’s Vacant Downtown Storefronts Program Guidelines defines a storefront “as a first-floor space zoned for commercial activity and occupied by a use accessible to the general public.” It defines storefronts as being vacant “if they have been unoccupied for at least 12 months.”

Date published:	July 2, 2024