Massachusetts Enacts Comprehensive $1 Billion Life Sciences Initiative
Life sciences and biotech companies should evaluate the
opportunities for their businesses.
On June 16, 2008, Massachusetts Governor Deval Patrick
signed into law an "Act Providing for the Investment in
and Expansion of the Life Sciences Industry in the
Commonwealth" (the "Act"). The Act brings to
fruition a proposal made by Governor Patrick more than a year
ago to invest $1 billion in the life-sciences and biotech
industries in Massachusetts. The Act provides tax incentives
for companies to embark on expansions or new initiatives and
addresses federal funding shortfalls by providing seed money to
develop new ideas and provide financial aid for graduate
students. The Act also provides money for the state's
vocational and technical high schools and colleges to purchase
new equipment to train life sciences workers.
The Act authorizes $1 billion in spending. Of that, $500
million is earmarked for the Massachusetts Life Sciences
Investment Fund, $250 million for the award of grants, and $250
million in tax credits.
Administration of the Act and Certified Life Sciences
Companies
The Act delegates its administration to the Massachusetts
Life Sciences Center (MLSC), a quasi-public agency of the
Commonwealth of Massachusetts, created by the Massachusetts
legislature in June 2006.
Only "certified life sciences companies" are
eligible for the grants and tax credits established by the Act.
To become certified, a company must apply to the MLSC, and its
application must be approved by a majority of the MLSC's
board. Applications must contain a certification proposal,
which must include, but is not limited to, (1) an estimate of
the projected new state revenue the company expects to generate
during the period of certification and a plan to achieve that
new state revenue (also, the plan should include certain
information, including an estimate of new commercial revenue,
new full-time employees, projected average salaries of the new
employees, and so on), (2) documentation of any agreement
between the company and any banking institutions by which the
company has agreed to establish accounts with the bank (and by
which the banking institutions shall have agreed to commit a
specified percentage of the funds deposited in the accounts for
loans made to companies under the small business capital access
program), and (3) if appropriate, documentation that the life
sciences company has received approval for a certified
project.
In acting upon a company's application, the Act directs
the MLSC to consider the likelihood that the company will meet
any other requirements the MLSC may impose and the likelihood
that the company will meet the new state revenue and employment
growth projections, as specified in the certification proposal.
The MLSC also may consider whether the life sciences company
has sufficient business contacts within Massachusetts, whether
the company has potential to offer breakthrough treatments and
technological advances, and other similar criteria.
Once certified, a life sciences company is entitled to a
variety of benefits and assistance from the MLSC. The benefits
include: (1) the tax incentive program established by the Act;
(2) grants, loans and other investments from the Massachusetts
Life Sciences Investment Fund; (3) investments from the Mello
Fund (described below); (4) assistance from regional technology
and innovation centers; (5) assistance from the center to
obtain designation as a certified project; (6) assistance from
the center in accessing...
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