The Patrick-Murray administration has filed draft regulations to implement a new program aimed at supporting job growth and economic development by creating a new partnership between the state, communities and businesses to finance major new development projects.
The announcement made at the Boston Chamber of Commerce breakfast by Lt. Gov. Timothy P. Murray, highlighted how the program, known as the Infrastructure Investment Incentive Program (I-Cubed) will help finance significant new public infrastructure improvements necessary to support major new private development. The new development will result in additional jobs and new revenues for the commonwealth and for cities and towns.
“This innovative financing program is another tool we will use to promote and support smart economic development in the commonwealth,” said Murray. “The projects I-Cubed will help are those that will produce jobs and new local and state revenues. They are projects that are smart investments and those that otherwise would not be possible.”
The program will provide $250 million in state funding to make infrastructure improvements necessary for new private developments. The infrastructure improvements will be financed from the new state tax revenues generated from the private development. Until the private development is completed and occupied, the developer is assessed for the debt service cost on the bonds issued to fund the improvements. Once the project is occupied and generating new state tax revenues, the commonwealth pays the debt service.
If there is a shortfall in new state revenues, the municipality is responsible for covering the shortfall.
The I-Cubed concept was first approved by the Legislature in 2006, in response to a proposal by Boston Mayor Thomas Menino, but was not implemented by the previous administration. The Patrick-Murray Administration, working with the Legislature, improved upon the original legislation earlier this year, authorizing the investment for certified economic development projects throughout the commonwealth.
“If we were looking for an economic boost, we just got one,” Senate President Therese Murray (D-Plymouth) said. “The Senate has been a big supporter of I-Cubed legislation, and I’m happy to hear the announcement today of regulations that will get this program working for the commonwealth. The I-Cubed program will allow us to make significant improvements to our infrastructure that will support and encourage private development projects around the state, with an emphasis on economically distressed areas. It will create jobs and spur economic development at a time when we need it most.”
“Governor Patrick and Lieutenant Governor Murray have provided the strong leadership to make the I-Cubed Program a reality,” Menino said. “Now Boston, along with many other cities and towns, [has] a new way to provide the infrastructure investment that is necessary for growth. This legislation allows us to be more competitive in changing economies in ways that we could not previously.”
The regulations give priority to projects in economically distressed municipalities as well as to projects consistent with the administration’s Growth Districts Initiative and to projects that commit to obtaining LEED Silver certification from the U.S. Green Building Council.
Projects will be financed using bonds issued by MassDevelopment and will be secured by a general obligation of the commonwealth. Developers must demonstrate that their projects are likely to result in new state revenues that are at least 1.5 times the projected debt service on the related bonds. Developers also must demonstrate to the administration that projects would not otherwise have been built or expanded to the proposed level if not for the state investment.
Infrastructure improvements eligible for funding under this program must be at least $10 million and cannot exceed $50 million. Further, no more than two projects may be financed through I-Cubed in a single city or town, and cannot receive any other public financing such as tax increment financing, tax credits for economic development incentive programs or community development action grants.
I-Cubed is another tool for supporting partnership between municipalities and the commonwealth.