§5219-HH. New markets capital investment credit








1. Definitions. 
As used in this section, unless the context otherwise indicates, the following terms
have the following meanings.





A. "Applicable percentage" means 0% for each of the first 2 credit allowance dates, 7%
for the 3rd credit allowance date and 8% for the next 4 credit allowance dates. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











B. "Authority" means the Finance Authority of Maine. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











C. "Commissioner" means the Commissioner of Administrative and Financial Services. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











D. "Credit allowance date" means, with respect to any qualified equity investment, the
date on which the investment is initially made and each of the 6 anniversary dates
of the date thereafter. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











E. "Long-term debt security" means any debt instrument issued by a qualified community
development entity, at par value or a premium, with an original maturity date of at
least 7 years from the date of its issuance, with no acceleration of repayment, amortization
or prepayment features prior to its original maturity date. The qualified community
development entity that issues the debt instrument may not make cash interest payments
on the debt instrument during the period commencing with its issuance and ending on
its final credit allowance date in excess of the cumulative operating income, as defined
in the regulations adopted pursuant to the Code, Section 45D, of the qualified community
development entity for the same period prior to giving effect to interest expense
on such debt instrument. This paragraph does not limit the holder's ability to accelerate
payments on the debt instrument in situations when the qualified community development
entity has defaulted on covenants designed to ensure compliance with this section;
section 191, subsection 2, paragraph SS; section 2533; and Title 10, section 1100-Z
or the Code, Section 45D. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











F. "Purchase price" means the amount of the investment in the qualified community development
entity for the qualified equity investment. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











G. "Qualified active low-income community business" has the same meaning as in the Code,
Section 45D and includes any entity making an investment under this section if, for the most recent
calendar year ending prior to the date of the investment:



(1) At least 50% of the total gross income of the entity was derived from the active
conduct of business activity of the entity within any municipality where the average
annual unemployment rate for that year was higher than the state average unemployment
rate;




(2) A substantial portion of the use of the tangible property of the entity was within
any location of the State where the average annual unemployment rate for that year
was higher than the state average unemployment rate; or




(3) A substantial portion of the services performed by the entity by its employees
was performed in a municipality where the average annual unemployment rate for that
year was higher than the state average unemployment rate. [2013, c. 331, Pt. C, §37 (AMD); 2013, c. 331, Pt. C, §41 (AFF).]












H. "Qualified community development entity" has the same meaning as in the Code, Section
45D, except that the entity must have entered into or be controlled by or under common
control of an entity that has entered into an allocation agreement with the Community
Development Financial Institutions Fund of the United States Department of the Treasury
with respect to credits authorized by the Code, Section 45D. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











I. "Qualified equity investment" means any equity investment in, or long-term debt security
issued by, a qualified community development entity that:



(1) Has at least 85% of its cash purchase price used by the issuer to make qualified
low-income community investments in qualified active low-income community businesses
located in the State by the 2nd anniversary of the initial credit allowance date;




(2) Is acquired after December 31, 2011 at its original issuance solely in exchange
for cash; and




(3) Is designated by the issuer as a qualified equity investment and is certified
by the authority pursuant to Title 10, section 1100-Z, subsection 3, paragraph G.
"Qualified equity investment" includes any qualified equity investment that does not
meet the provisions of Title 10, section 1100-Z, subsection 3, paragraph G if the
investment was a qualified equity investment in the hands of a prior holder. The
qualified community development entity shall keep sufficiently detailed books and
records with respect to the investments made with the proceeds of the qualified equity
investments to allow the direct tracing of the proceeds into qualified low-income
community investments in qualified active low-income community businesses in the State. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]












J. "Qualified low-income community investment" means any capital or equity investment
in, or loan to, any qualified active low-income community business made after September
28, 2011. Except as otherwise provided in this paragraph, with respect to any one
qualified active low-income community business, the maximum amount of qualified low-income
community investments that may be made with the proceeds of qualified equity investments that have been certified under
Title 10, section 1100-Z, subsection 3, paragraph G is $10,000,000 per project constructed, maintained or operated by the qualified active low-income
community business whether made by one or several qualified community development entities. With respect
to investments in a qualified active low-income community business that is a manufacturing
or value-added production enterprise, the limit on the qualified low-income community investment is $40,000,000 per project constructed, maintained or operated by the qualified active low-income
community business. For the purposes of this paragraph, with respect to projects to which the $10,000,000
limitation applies, "project" includes all land, buildings, structures, machinery
and equipment located at the same location and constructed, maintained or operated
by the qualified active low-income community business. For the purposes of this paragraph,
with respect to projects to which the $40,000,000 limitation applies, "project" means,
and refers separately to, each manufacturing or value-added production facility that
projects to create or retain more than 200 jobs, including the land, buildings, structures,
machinery and equipment functionally related to, and integrated with, the manufacturing
or production process conducted on the site of that facility. "Project" does not
mean or include the component pieces of an integrated manufacturing or production
process conducted on the site of a particular facility. [2013, c. 75, §1 (AMD).]







[
2013, c. 75, §1 (AMD);
2013, c. 331, Pt. C, §37 (AMD);
2013, c. 331, Pt. C, §41 (AFF)
.]








2. Credit allowed. 
A person that holds a qualified equity investment certified by the authority pursuant
to Title 10, section 1100-Z, subsection 3, paragraph G on a credit allowance date
that falls within the taxable year is allowed a credit equal to the applicable percentage
that applies to the credit allowance date multiplied by the purchase price paid for
the qualified equity investment. Notwithstanding any other provision of law, other
than the recapture provisions of subsection 7, the person, and any subsequent person,
that is the holder of the credit certificate issued by the authority for a qualified
equity investment is entitled, in the aggregate, to the entire 39% credit amount computed
with respect to the 7 credit allowance dates. In no event may the credit amount in
the aggregate exceed 39% for any single qualified equity investment certified by the
authority.


[
2011, c. 548, §33 (NEW);
2011, c. 548, §35 (AFF)
.]








3. Memorandum of agreement. 
Upon receipt of the authority's written notice of the certification of a qualified
equity investment's tax credit eligibility, the commissioner shall enter into an agreement
on behalf of the State with the person eligible to claim the credit pursuant to Title
10, section 1100-Z, subsection 3, paragraph G. That agreement must provide that the
State shall, with the exception of recapture pursuant to subsection 7, allow the tax
credit as provided for in subsection 2 and recognize that the person named as eligible
for tax credit pursuant to Title 10, section 1100-Z, subsection 3, paragraph G is
entitled to claim the tax credits and the respective tax credit amounts in the aggregate,
to the entire 39% credit amount computed with respect to the 7 credit allowance dates.


[
2011, c. 548, §33 (NEW);
2011, c. 548, §35 (AFF)
.]








4. Carry-over to succeeding year. 
Any unused portion of the credit may be carried over to the following taxable year
or years, except that the carry-over period for unused credit amounts may not exceed
20 years.


[
2011, c. 548, §33 (NEW);
2011, c. 548, §35 (AFF)
.]








5. Pass-through entity; allocation of the credit. 
Credits allowed pursuant to this section to a partnership, limited liability company,
S corporation or other similar pass-through entity must be allocated to the partners,
members, shareholders or other owners in accordance with section 5219-G or pursuant
to an executed agreement among the partners, members or shareholders or other owners
documenting an alternate allocation method.


[
2011, c. 548, §33 (NEW);
2011, c. 548, §35 (AFF)
.]








6. Credit refundable. 
The credit allowed under this section is fully refundable.


[
2011, c. 548, §33 (NEW);
2011, c. 548, §35 (AFF)
.]








7. Recapture of credits. 
The State Tax Assessor may recapture all of the credit allowed under this section
if:





A. Any amount of federal tax credits available with respect to a qualified equity investment
that is eligible for a tax credit under this section is recaptured under the Code,
Section 45D. In such a case, the recapture must be proportionate to the federal recapture
with respect to the qualified equity investment; [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











B. The qualified community development entity redeems or makes a principal repayment
with respect to the qualified equity investment that generated the tax credit prior
to the final credit allowance date of the qualified equity investment. In such a case,
the recapture must be proportionate to the amount of the redemption or repayment with
respect to the qualified equity investment; or [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]











C. The qualified community development entity fails to invest at least 85% of the purchase
price of the qualified equity investment in qualified low-income community investments
in qualified active low-income community businesses located in the State within 24
months of the issuance of the qualified equity investment and maintain this level
of investment in qualified low-income community investments in qualified active low-income
community businesses located in the State until the last credit allowance date for
the qualified equity investment. For purposes of calculating the amount of qualified
low-income community investments held by a qualified community development entity,
an investment is considered held by the qualified community development entity even
if the investment has been sold or repaid as long as the qualified community development
entity reinvests an amount equal to the capital returned to or recovered from the
original investment, exclusive of any profits realized, in another qualified active
low-income community business in this State within 12 months of the receipt of the
capital. A qualified community development entity may not be required to reinvest
capital returned from qualified low-income community investments after the 6th anniversary
of the issuance of the qualified equity investment, the proceeds of which were used
to make the qualified low-income community investment, and the qualified low-income
community investment is considered to be held by the issuer through the qualified
equity investment's final credit allowance date. [2011, c. 548, §33 (NEW); 2011, c. 548, §35 (AFF).]








The qualified community development entity must be provided 90 days to cure any deficiency
indicated in the authority's original recapture notice and avoid such recapture.
If the entity fails or is unable to cure the deficiency within the 90-day period,
the assessor shall provide the qualified community development entity and the person
from whom the credit is to be recaptured with a final order of recapture. Any amount
of tax credits for which a final recapture order has been issued must be recaptured
from the person that actually claimed the tax credit.


[
2011, c. 548, §33 (NEW);
2011, c. 548, §35 (AFF)
.]





SECTION HISTORY

2011, c. 548, §33 (NEW).
2011, c. 548, §35 (AFF).
2011, c. 657, Pt. P, §1 (AMD).
2013, c. 75, §1 (AMD).
2013, c. 331, Pt. C, §37 (AMD).
2013, c. 331, Pt. C, §41 (AFF).