Eligible Participants
Urban Redevelopment Corporations are:
- private limited dividend entities that are formed to develop 121A projects.
The corporation may not:
- undertake more than one project nor,
- engage in any other type of activity
Under c.121A, a private entity bears the responsibility for planning and implementing the project and owns the project throughout its existence.
The following may enter into 121A Agreements:
- Non-profit corporations
- For-profit corporations
- Joint ventures
- Public/private partnerships
- Insurance companies and banks also qualify under special statutory provisions of the law.
Eligible Activities
- Acquire, sell and hold land, including the taking of land by eminent domain (in specified circumstances)
- Manage property
- Construct and improve facilities
- Borrow money and issue bonds, notes or other evidence of indebtedness
- Receive exemption from real and personal property tax
How it Works
Urban Redevelopment Corporations are exempt from real and personal property taxes, betterments and special assessments.
Instead, these 121A entities must make three types of substitute payments:
- Minimum Statutory Payment - paid to the Commonwealth’s Department of Revenue and returned to the general fund of the city or town where the project is located.
- Negotiated Payment: paid directly to the city or town, and local officials have wide latitude in determining the amount of this payment.
- Excess Income Payment: as “limited dividend corporations” any excess profits above 8% ROI must be returned to the city or town up to the level of tax that would have been assessed if the property were a non-121A entity.
Property that is under a 121A Agreement does not have its value counted in assessments of municipal land.
Chapter 121A Application Approval Process
EOHLC is responsible for the administration of the 121A program for all cities and towns in the Commonwealth, with the exception of Boston where it is administered by the Boston Redevelopment Authority (BRA).
The application for designation as a 121A entity must be approved by both the city or town in which the proposed project is to be located and EOHLC .
The statute and regulations assign specific responsibilities to a number of different local officials, which all have legally defined roles in the c.121A approval process. Generally, the Board of Assessors has played the dominate role in negotiating the level of payments to be made under Section 6A of c.121A.
- The local Chief Executive Officer (CEO)
- The City Council
- The Board of Assessors
- The Planning Board
There are several important distinctions between cities and towns in the local approval process.
- In a city, the City Council acts as the local governing body and the Mayor or City Manager acts as the CEO.
- In a town, the Planning Board plays the role of the local governing body and the Board of Selectmen act as the CEO.
The 121A Agreement
A 121A entity is required to sign two agreements, one with the city or town and one with EOHLC. The agreement signed with the city or town is known as a 6A Agreement because it is described in Section 6A of c.121A. The agreement signed with EOHLC is known as the 18C Regulatory Agreement because it is described in Section 18C of c.121A.
- Section 6A Agreement: Following application approval, the developer must execute the 6A Agreement with the city or town agreeing to carry out the 121A project in accordance with the approved application. The 6A Agreement describes the tax payment to be paid by the developer and includes the duration of the agreement, the schedule of any payments above the statutory minimum (i.e., the negotiated payment) and any special conditions which have been negotiated with respect to parking, resident employment, exterior design treatment or other aspects of the project. The 6A Agreement may also include an escalation clause, a provision for an increase in the tax payment over the length of the agreement
- Section 18C Regulatory Agreement: Following submission of the 6A Agreement, the developer must execute the 18C Regulatory Agreement with EOHLC , stating project costs and method of financing, limitations on cumulative annual return on investment to 8% of the amount invested in the project, the payment of excise as prescribed, and requirement that prior approval by EOHLC must be obtained in the event that the project is to be transferred, assigned or sold.
After EOHLC has reviewed and approved the application, the 18C Regulatory Agreement is executed, the letter of approval is issued and the Secretary of State approves the formation of the Urban Redevelopment Corporation.