An Act To Increase Allowed Investments under the Maine New Markets Capital Investment Program
Maine Legislature, Session 127, LD 0297
Committee Amendment CA_A_S294 (Senate)
Amends: 36 MRSA §5219-H

COMMITTEE AMENDMENT" A " to S.P. 112, L.D. 297, Bill, "An Act To 
Increase Allowed Investments under the Maine New Markets Capital Investment 
Program" 
Amend the bill by striking out the title and substituting the following: 
'An Act To Provide Additional Oversight of and Protections to the Maine New 
Markets Capital Investment Program and New Markets Capital Investment Credit' 
Amend the bill by striking out everything after the title and before the summary and 
inserting the following: 
'Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, the Maine New Markets Capital Investment Program, established by the 
Legislature in 2011, was enacted to supplement the federal program and encourage 
investments in Maine businesses that are located in economically distressed areas of the 
State and help retain and create jobs in these distressed areas; and 
Whereas, critical changes are necessary to the Maine New Markets Capital 
Investment Program to ensure that the State's investments are protected and the program 
functions as intended by the Legislature; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRS A §5219-HH, sub-§l, ~-1 is enacted to read: 
B-l. 
"Capital at risk" means the estimated amount of a qualified low-income 
community investment in a qualified active low-income community business, 
excluding any fees charged to an investor, lender or borrower, that does not include 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT "A "to S.P. 112, L.D. 297 
any related transactions or ownership interests that reduce, mitigate or offset the 
comprehensive risk to a person eligible to claim a tax credit under this section for a 
qualified equity investment under Title 10, section 11 OO-Z. 
Sec. 2. 36 MRSA §5219-HH, sub-§l, ~J, as amended by PL 2013, c. 75, § I, is 
further amended to read: 
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, as long as no more than 5% of that investment is used to 
refinance costs, expenses or investments incurred or paid by the qualified active low-
income community business, or a related party, prior to the date of the qualified low-
income community investment; make equity distributions from the qualified active 
low-income community business to its owners; or acquire an existing Maine business 
or enterprise. Except as otherwise provided in this paragraph, with respect to anyone 
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 II OO-Z, subsection 
3, paragraph Gis $10,000,000 per project constrl,lcted, 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 
prodl,lction 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. 
Sec. 3. 36 MRSA §5219-HH, sub-§l, ~ 
is enacted to read: 
1(, "Sham transaction" means any business transactions by an entity that invested 
under this section, or by a person eligible to claim a tax credit under this section for a 
qualified equity investment under Title 10, section IIOO-Z, if the business 
transactions giving rise to the investment and the corresponding tax credits authorized 
under this section are determined by the State Tax Assessor to have achieved a result 
that is inconsistent with the purpose of the Maine New Markets Capital Investment 
Program under Title 10, section 1100-Z and its implementing rules or of the credit 
authorized under this section and rules adopted under this section. 
Sec. 4. 36 MRSA §5219-HH, sub-§8 is enacted to read: 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" Pi" to S.P. 112, L.D. 297 
8. Recapture of credits associated with sham transaction. NotwithstandinK th~ 
federal recapture provisions under the Code, Section 45D or any other provisions of this 
section, the State Tax Assessor shall recapture any tax credits issued under this section 
that the State Tax Assessor detennines to be connected with a sham transaction, including 
but not limited to any fees charged by a qualified community development entity to an 
investor, lender or borrower under the Maine New Markets Capital Investment Program 
under Title 10, section 1100-Z using the tax credit under this section. The State Tax 
Assessor shall consider the following factors when making the determination of a sham 
transaction under this section: 
A. Whether the qualified low-income community investment had sufficient capital at 
risk as demonstrated by either a qualified equity investment or a loan with a 7 -year 
maturity date that is equal to or greater than the amount of the claimed investment; 
B. Whether the capital at risk in the qualified low-income community investment 
was used to purchase ownership interests from existing investors instead of directly 
from the qualified active low-income community business through the issuance of 
new stock and 
C. Whether the capital at risk in the qualified low-income community investment 
was used to refinance existing loans of the qualified active low-income community 
business instead of providing new capital to the business to support its operations. 
Sec. 5. 
Government Oversight Committee review. 
The Government 
Oversight Committee may consider whether a review of the Maine New Markets Capital 
Investment Program established under the Maine Revised Statutes, Title 10, section 
1100-Z and the new markets capital investment credit under Title 36, section 5219-HH 
and all approved investments made under the program since 2011 is warranted. If the 
Government Oversight Committee detennines that a review is warranted, the committee 
may assign this review to the Office of Program Evaluation and Government 
Accountability .. If a review is perfonned, the Government Oversight Committee shall 
provide a repmi to the Joint Standing Committee on Labor, Commerce, Research and 
Economic Development by February 1, 2016. The Joint Standing Committee on Labor, 
Commerce, Research and Economic Development is authorized to report out a bill on this 
topic to the Second Regular Session of the 127th Legislature, whether or not the Joint 
Standing on Labor, Commerce, Research and Economic Development receives a report 
from the Government Oversight Committee. 
Sec. 6. Application. This Act applies only to applications received after the 
effective date of this Act by the Finance Authority of Maine for the Maine New Markets 
Capital Investment Program pursuant to the Maine Revised Statutes, Title 10, section 
1100-Z. 
Sec. 7. 
Appropriations and allocations. 
The following appropriations and 
allocations are made. 
FINANCE AUTHORITY OF MAINE 
Finance Authority of Maine 0582 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A "to S.P. 112, L.D. 297 
Initiative: Provides funds for the additional costs associated with the Government 
Oversight Committee review of the Maine New Markets Capital Investment Program and 
the State Tax Assessor review of sham transactions. 
GENERAL FUND 
All Other 
GENERAL FUND TOTAL 
2015-16 
$35,000 
$35,000 
2016-17 
$10,000 
$10,000 
Emergency clause. 
In view of the emergency cited in the preamble, this 
legislation takes effect when approved.' 
SUMMARY 
This amendment is the majority report of the cOlmnittee. It replaces the bill and adds 
an emergency preamble and clause. It makes th~ following changes to the Maine New 
Markets Capital Investment Program and the new markets capital investment credit. 
1. It adds new definitions of "sham transaction" and "capital at risk." 
2. It requires the State Tax Assessor to recapture new markets capital investment 
credits issued that are determined to be connected with a sham transaction, including fees 
charged by an entity to an investor, lender or bon-ower under the Maine New Markets 
Capital Investment Program under the Maine Revised Statutes, Title 10, section 1100-Z 
using the tax credit. 
3. 
It eliminates the eligibility of certain refinancing and ownership transfer 
transactions as qualified low-income community investments for the credit if those 
transactions exceed 5% of the investment. 
4. It allows the Government Oversight Committee to consider whether a review of 
the Maine New Markets Capital Investment Program and the new markets capital 
investment credit and all approved investments made under the program since 2011 is 
warranted. 
If the Government Oversight Committee determines that a review is 
warranted, the committee may assign this review to the Office of Program Evaluation and 
Government Accountability. 
If a review is performed, the Government Oversight 
Committee shall provide a report to the Joint Standing Committee on Labor, Commerce, 
Research and Economic Development by February 1, 2016. 
It authorizes the Joint 
Standing Committee on Labor, Commerce, Research and Economic Development to 
report out a bill on this topic to the Second Regular Session of the 127th Legislature, 
whether or not the Joint Standing Committee on Labor, Commerce, Research and 
Economic Development receives a report from the Government Oversight Committee. 
5. It adds an appropriations and allocations section. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Revised: 06/16/15 
~ac 
LD297 
LR 1423(02) 
An Act To Increase Allowed Investments under the Maine New Markets Capital Investment Program 
Fiscal Note for Bill as Amended by Committee Amendment ':q' (S-dL1Lj-') 
Committee: Labor, Commerce, Research and Economic Development 
Net Cost (Savings) 
General Fund 
"~ppropriations/ Allocations 
General Fund 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
FY 2015-16 
FY 2016-17 
$10,000 
$10,000 
$10,000 
$10,000 
Projections 
FY 2017-18 
$10,000 
$10,000 
Projections 
FY 2018-19 
$10,000 
$10,000 
This bill includes General Fund appropriations of $1 0,000 in fiscal year 2015-16 and $10,000 in fiscal year 2016-17 
to the Finance Authority of Maine for the additional costs associated with the State Tax Assessor review of sham 
transactions. 
This legislation requires the State Tax Assessor to recapture credits under the Maine New Markets Capital Investment 
Program if the credits are deemed to be the result of sham transactions. It also eliminates the eligibility of certain 
refinancing and ownership transfer transactions that can qualify as investment. These provisions could result in an 
increase in General Fund and Local Government Fund revenue if sham transactions are found. No estimate of the 
potential revenue impact is made at this time. 
It is assumed that the Legislature's Office of Program Evaluation and Government Accountability would perform any 
additional work required by the bill using existing budgeted resources.