An Act To Create and Sustain Jobs through Development of Cooperatives
Maine Legislature, Session 127, LD 1300
Committee Amendment CA_A_H396 (House)
Amends: 5 MRSA §135, 5 MRSA §13035, 7 MRSA §2, 32 MRSA §16201

COMMITTEE AMENDMENT ",4" to H.P. 886, L.D. 1300, Bill, "An Act To 
Create and Sustain Jobs through Development of Cooperatives" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 5 MRSA §135, first ~, as amended by PL 2005, c. 386, Pt. CC, §2, is 
further amended to read: 
The Treasurer of State may deposit the money, including tmst funds of the State, in 
any national bank or in any banking institution, trust company, state or federal savings 
and loan association or mutual savings bank organized under the laws of this State or 
having a location in the State except as provided in chapter 161. The Treasurer of State 
may place 1 % or more of all deposits made under this section in institutions devoted 
primarily to meeting the borrowing needs of cooperatives organized under Title 13, 
chapter 85 if the institutions meet the requirements of !his c~aRter as effectively as other 
institutions with which the Treasurer of State makes deposits, make loans to cooperatives 
in the State in amounts equal to at least the amount d~posited by the ~reasurer of S~ate 
and pay a market rate of return. Before making a deposit, the Treasurer of State must 
consider the rating of the banking institution, tT\lst company, state or federal savings and 
loan association or mutual savings bank on its most recent assessment conducted pursuant 
to the federal Community Reinvestment Act, 12 United States Code, Section 2901 and 
must consider whether the banking institution, trust company, state or federal savings and 
loan association or mutual savings bank has demonstrated an abiiity to meet the needs of 
coo}?eratives o~ganized under Title 13, chapter 85 througp. representation of c()operatives 
in a loan portfolio 9r through development of lending policies that address the unique 
needs of cooperatives. The Treasurer of State may transfer funds into and out of the 
respective funds in the cash pool as circumstances may require to meet current 
obligations and shall request the State Controller to effect such transfers by journal entry 
as set forth in section 131-B. When there is excess money in the State Treasury that is 
not needed to meet current obligations, the Treasurer of State may invest, with the 
concurrence of the State Controller or the Commissioner of Administrative and Financial 
Services and with the consent of the Governor, those amounts in bonds, notes, certificates 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT "A" to H.P. 886, G.O. 1300 
of incjeptedness or other obligations of the Uniteg States and its agencies and 
instrumentalities that mature not more than 36 months from the date of investment or in 
repurchase agreements that mature within the succeeding 12 months that are secllred by 
obligations of the United States and its agencies and instf1.)mentalities, prime commercial 
paper, tax-exempt obligations and corporate bonds rated "AM" that mature not more 
than 36 months from the date of investment, banker's acceptances or so-called "no-load" 
shares of any investment company registered under the federal Investment Company Act 
9f 1940, as amended, that complies with Rule 2a-7 gllidelines and maintains a constant 
share price. The Treasurer of State may participate in the securities loan market by 
loaning state-owned bonds, notes or certificates of indebtedness of the Federal 
Government, only if loans are fuIly collateralized by treasury bills or cash. The Treasljrer 
of State shall seek competitive bids for investments except when, after a reasonable 
investigation, it appears that an investment of the desired maturity is procwable by the 
State from only one source. Interest earned on those investments 9f money must be 
credited to the respective funds, except that interest earned 9n investments of special 
revenue funds must be credited to the General Fund of the State. Effective July 1, 1995, 
interest earned on investments of the Highway Fund ml,lst be credited to the Highway 
Fund. Interest earned on funds of the Department of Inland Fisheries and Wildlife ml.jst 
be credited to the General Fund. 
Interest earned on funds Of the Baxter State Park 
Authority mllst be credited to the Baxter State Park Fund. This section does not prevent 
the deposit for safekeeping or custodial care of the securities of the several funds of the 
State in banks or safe deposit companies in this State or any other state, nor the deposit of 
state fund~ required by the terms of custodial contracts or agreements negotiated in 
accordance with the laws of this State. All custodial contracts and agreements are subject 
to the approval of the Governor. 
. 
Sec. 2. S MRSA §135, 6th an«;l 7th ~~, a~ amended by PL 2003, c. 2Q, Pt. T, §3, 
are further amended to read: 
The Treasurer of State may deposit an Ilmount not t9 exceed $4,000,QOO in each 
calendar yellr with responsible financial institutions authorizeq to do business in the State 
at a rate of retllrn not more than 2% per yellr below the rate of reh}rn otherwise obtainable 
had the funds been invested with such financial institutions for a similar term, as 
determined by the treasurer, for periods not to exceed one year, provides. th\lt as long as 
each such financial instimtion covenants with the treaswer as a condition of the dep~sit' t~ 
loan an amount at least equal to the amount so deposited with the financial institution by 
the treasurer under this paragraph to agricultural enterprises located within thy State for 
agricultural purposes and to provide an eqllal opportunity for participation to agricultural 
enterPrises organized a~ cooperatives under Title h, chapter 85. All the' loans must be at 
interest'rates that' are below the interest rates 'the loans w~~id' have borne \lnder existing 
market conditions and loan standards of the financial institution but for the deposit by the 
treasurer under this paragraph, and the interest rates must fully reflect the savings t9 the 
financial institution d\w t9 the reduced interest rate paid on the deposit. Notwithstanding 
any provisions of this section to the contrary, the treasurer is not obligated to seek 
competitive bids for investments or deposits pursl,lant to this paragraph. The Finance 
Authority of Maine shall provide assistance to the treasurer in implementing this 
paragraph. 
For purposes of this section, "agrict)itural enterprises" means a business 
involving cultivating soil, producing cr9PS and raising livestQck or their by-products. In 
adopting rules to implement this paragraph, the treasurer shall consider criteria targeting 
COMMITTEE AMENDMENT 
~, 
~~. 
~ 
J4 
CQMMITTEE AMENOMENT "A" to H.P. 886, L.O. 1300 
loans under the program to geographic areas of financial neeo and borrowers who are 
new entrants to agriculture, and may establish limits on oeposits to anyone financial 
institution and limits on deposits supporting loans to anyone borrower. 
The Treasurer of State may deposit an amount not to exceed $4,000,000 in each 
calendar year with responsible financial institutions authorized to do bl1siness in the State 
at a rate of retum not more than 2% per year below the rate of return otherwise obtainable 
hao the funds been invested with such financial institlltions for a similar term, as 
determined by the treasurer, for periods not to exceed one year, provided,that as 10l1g as 
each such financial institution covenants with the treasurer as a c;ondition of the deposit to 
loan an amount at least eqllal to the amount so deposited with the financial institution by 
the treasurer under this paragraph to commercial enterprises approved by the treasurer 
p1.)rsuant to this paragraph. All the loans must be at interest rates that are below the 
interest rates the loans would have borne under existing market conditions and loan 
standards of the financial institution but for the deposit by the treasurer under this 
paragraph, and the interest rates must fully reflect the savings to the financial institution 
due to the redlJced interest rate paid on the deposit. 
Notwiths~anding any provisions of 
this section to the contrary, the treasurer is not obligated to seek competitive bids for 
investments ot deposits pursuant to this paragraph. The Finance Authority of Maine shall 
provide assistance to the treasurer in implementing this paragraph. For purposes of this 
paragraph, eligible commercial enterprises are for-profit hl.)sinesses with 20 or fewer 
employees or annual sales of less than $2,500,000, whose sales of services or products 
are primarily out of state or that are manufacturers, that are primarily owned and operated 
by Maine residents or by corporations that are primarily owned and operated by Maine 
residents, when the treasurer determines that not less than one jOb will be created or 
retained per $20,000 of deposited funds. The maximllm loan to any borrower for which a 
deposit may be applied under this paragraph is $200,000, and businesses are eligible to 
receive subsidies pursllant to this paragraph for a maximum of an aggregate of 24 
months. 
In adopting rules to implement this paragraph, the treasurer shall consider 
criteria targeting loans under the program to geographic areas of financial need, shall 
facilitate access to capital for cooperatives organized under Title 13, chapter 85 and may 
~st~bli~h iimit~ ~n dep~~its t~ ~nyon~' fin~n~iaiinstitution, 'furth~r limfts ;n deposits 
supporting loans to anyone borrower, and further restrictions on eligibility. 
Sec. 3. 5 MRSA §13035, sub-§4 is enac;ted to read.: 
~. Advance employee ownership and cqop~rative ~evelopmen~. The commission 
s1.1a~1 e!1sl:,lre. ~h~t ~ach sma~l busil1ess deyel~p.fl?~rt 9.enJ~~ rec((iv~s~,ainit~g. regan,ling 
employee ownership and cooperative organizatiol1: .In carrying ou,t its duties, the 
c,?mmission shall give due considerati~n to the ecol1omi.c and c0ll1P1;unity deve!opt,nent 
benefits of employee ownership and shall advise the commissioner, the Governor and the 
Legislflture' with respe~t' to ensuril1g th~t small business' assistal1ce' an'd ~l1trep~eneurial 
programs Qrovide equal access to employee-owned and coollerative businesses and to 
b~sine.sses s~eking to convert to ef\1pioxee ownership or co~peraii~e org~l1izati~n. 
" 
Sec. 4. 5 MRS A §13058, sub-§20 is enacted to read: 
20. Consideration of employee ownership and cooperatives. In carrying out the 
p'rovis~~l11s Of this chapter al1d in particular with respect, to a progral? thilt ex~~~d.s ,credit 
or technical assistance, the commissioner shall act in a manner that advances the 
COMMITTEE AMENDMENT 
'{\" 
~('0' 
2~ 
COMMITTEE AMENOMENT "A" t9 H.P. 886, L.D. 1300 
de.v~lopment of businesses that are employ:ee-:oYlned ororganizeci as cooperatives ,u,nd((r 
Title 13, chapter 85 and the conversion of businesses, t,o employee ownership or 
co~per~t'ive o~gal1izatio£l a~d shall ensure that programs provide, eQual access to 
elllployee~owned and co()per~tive bllsil1ess.es and, to ~usil1ess~s seekil1,g to convert ~o 
ernployee .ownership or cooperative orgal1ization. 
Sec. 5. 7 MRSA §2, 4th '1T, as amended by PL ZOll, c. 655, Pt. MM, §5 and 
affected by §26, is further amem,led to read: 
In additio.n, the commissioner shall be concerned with the quality of life of Maine 
farmers and rural communities. The commissioner shall promQte: farm finanGing and 
rural development prQPosals; conservation and preservation of agricultural lands; 
increased and improved prQduction Qfbeef, PQultry, sheep, dairy beef and o.ther livestock; 
expanded and improved productio.n of potatoes, fruits and o.ther vegetables and 
horticultural ventures; coordinated foreign and domestic marketing Qf Maine agricultural 
products; in CQnjunction with the university, crQP develo.pment and integrated pest 
management; and conservation of nonrenewable energy rellources and utilization of 
renewable energy resources in conjl,l11ction with the Oovel11Qr's Energy Office. To. 
accomplish these o.bjectives, the cominissioner is authori;z;eq fQr, or on behalf of, Maine's 
farmers and rural community: to engage in research and educational pro.grams; to 
participate directly or indirectly in programs to encourage and enable individuals to enter 
agricultural or other rural enterprises;, to institute litigation or upon request to represent 
farmers or other members of the rural community in litigation where the oommissiont?r 
determines that such litigation may be beneficial to. agricultural industry as a whole; arid 
to exercise all other PQwers of an agency of State Government. The commissioner may 
study such issues and, consistent with statute, take such actions either individually, for, or 
o.n behalf of, the State'll farmers or rural residents, or jo.intly with such Qther persons, 
agencies or organizations as the cQmmissioner determines may benefit the State's fanners 
and rural cQmmunities. To. further accomplish these objectives, the commissio.ner is 
autho.rized beginning July 1, 1991, on behalf of the State's rural co.mmunity, to administer 
fo.od assistance programs inch,lding the receipt, distributio.n and administration of federal 
and state funds, including block grants, for food assis~ance. Incanxi!lgoutt,he provisjons 
of this chapter and in particular with respect to a l?rogJ.;am that extends credit or technical 
a~~is~~n~~, #ie, co~~si~ti~rs.hall ~~t' iIi it 'ma~er t~at, ~.civa~~es "the <fevelo12~en~ .of 
busines~ys, t~at ,are, orgal1,ized ,as <?9ope,ratives :U,l)der. Tit},e ,q, ,qha:p~er ,8,5 and the 
conversion Rf bus~nesses. to c90perative organizati,?n. alfd ,shall, (!llsure ,that, programs 
Rr,?V~d,e y91ja! a«~es~ to. c()oRe~a~iye 91.lsines~es ~lfd !? bllSil)ys,s~ s,~eki11,g to .convert to 
cooper.ative o~ganization. 
Sec. 6. 10 MRSA c. 110, sub-c. 13 is enacted to reac;l: 
SUBCHAPTER 13 
COOPERATIVE DEVELOPMENT GRANTS PROGMM 
§1100-AA. Cooperative Oevelopment Grants Program 
, 
.. 
1. 'prQgram. 
~he, Qooper,ative ,Developm~~~ Qr~~ts ,Program" r~fer~~d to ,in t~is 
section as "theprogram," is createq under the iurisdic~ion, of the authority, 
COMMITTEE AMENDMENT 
COMMITTEE AMENQMENT "A .. to H.P. 886, L.D. 1300 
2. Cooperative De~elopment Grants F1.Jn~. T~e C90pe!·~tive Dev.e,l,oRment Gran\,§. 
Fund, referred to in this section as "the fund," is created as a nonlapsing, interest-earning, 
revOlvi~gfund. The' fun~ is manag~ci by the au~ho.ritybut helclsep~i:atef~o~ ot.her tlJnds 
of tge authority and is used by the authority to carry o~t this subchapter .. N.[oney i~ the 
fund consists of: 
A.Allmoney appropriated 9r allocated for inc1usiqn in the prog[(ll11; 
B. Subject to any pledge, contract or other obligation, all interest, dividends or other 
R~~u~i~ry gain~frorl-; i~vestment ·ofmo~eYi~t.he·t'tI~d; 
.,.. 
. " ' '" 
C. Subiect to any pledge, contract or other obligation, any money that the authority 
r~c~ive~'in ~ep'ayine~t~{advances from the hind; and' ' 
"" 
' ' 
, " ,',' 
D. Any money available to the, authority and directed by t~e authori ty to be paid into 
the fund. 
3: 
App,li~ation of funds: The authority shal,l apply fu,nds from the fur~~o provide 
tnatching grants of up to $5,000 per ~usiness to cover the cost of a technical feasibility 
stlldy to help employers or employees determine ,~he appropriateness of en1ploy~e 
ownership for the business's particular circumstances. 
The, aut90rity may reqllire 
conversion of a grant to a loan in the event of a conversion of a business to employee 
o\;Yn~rship. 'The ~l.fthority shail adopt rules to det~n'n~~~ elig~bility, w'hi~h inay add~ess 
issues such as financial condition and employee and employer interest. Rules adopted 
pursua~t to this subsection are routine technical rules as defined in Ti'tle.5,chapter 375, 
~u9chapter 2-A, C~stsa~d expenses of maintaining, servidngand,adrni;1istering the fund 
an!;! of admjnistering the program l\laybe paid out Qf al110unts in the fund. Tl1e authority 
rn~y contract administration qf the program to an.other entity as tl1e authoritYcle~ertnines 
~pproprif!te. 
Sec. 7. 32 MRSA §16201, sUb-§8, as enacted by PL 2005, c. 65, Pt. A, §2, is 
amended to read: 
8. Cooperatives. A member's or owner's interest in, or a retention certificate or like 
security given in lieu of a cash patronage dividend issued by, a cooperative organized and 
operated as a nonprofit membership cooperative under the cooperative laws of a state, but 
not a member's or owner's interest, retention certificate or like SeclJrity sold to persons 
other than bona fide members of the cooperative; and 
Sec. 8. 36 MRSA §S122, sub-§2, ~OO ill enacted to read: 
00. To the extent included in federal adjusted grOSS income and to the extent 
otherwi~~ subject to' Maine in'c~rne' tax,' for ~ period of'tip' to' i 6 'year~"after the taxable 
year, an amount equal to any gain recogt!ized on th~4i,;positionbythe taxp'ay~~ of an 
ownership interest in a business of which the taxpayer was the principal owner to the 
extent t,hat the ta~,payer ~ansferred the busin~ss. to a!1.em.ploy~e ~to~~ ~wners~ip plan 
or an eligible worker-owner cooperative as defined in 26 United States Cgde, Section 
1042(c)(2) and to the extent' and in the amount tlIat th~' owner provides equity 
final}cing for the transfer or junior debt financing with m.aturity of at least 5 years for 
the transfer. 
Recognition occurs at the year t~at return of capital for the junior 
financing is complete or 10 years after the ta,xable y,ear, wh~che.v~r occl!rs earlier. 
COMMITTEE AMENDMENT 
C, 
\1\ ~ v' 
\'., 
COMMITTEE AMENDMENT "A" to H.P. 886, L.D. 1300 
Sec. 9. 
Coordination of state agencies in seekjng federal funding for 
development of cooperatives and employee ownership. 
The Depaliment of 
Agricultl,lre, Conservation and Forestry, the Department of Economic and CommlJnity 
Oevelopment, the Department of Labor, the Finance Authority of Maine and the 
University of Maine System shall identify and make best efforts to pursue federal sources 
of funding for development of cooperatives and employee ownership. 
Sec. 10. Employee ownership and cooperative cJevelopment training for 
small 
business 
development 
centers. 
The 
Maine 
Small 
BlJsine~s 
ano 
Entreprenevrship Commission, established in the Maine Revised Statlltes, Title 5, section 
130)4, shall ensure, to the extent feasible within existing reSO\lfces an9 con~istent with 
the State's obligations to the federal Small Business Aqministration under the Small 
Business Development Center Program, defined in Title $, section Q031, s1,lbsectiQn 5, 
that each small business development center receives training on issues r~lating to 
employee ownership and cooperative development and provides appropriate information 
regarding employee ownership and cooperative development. 
ThecommissiQn shall 
report within one year to the joint standing committee of the Legislature having 
jlJrisdiction over labor, commerce, research and economic development matters with 
respect to the commission's implementation of this provision. 
Sec. 11. Application. That section of this Act that enacts the Maine Revised 
Stah,ltes, Title 36, section 5122, subsection 2, paragraph 00 applies to income tax years 
beginning on or after January 1,2016. 
Sec. 12. Appropriations and allocations. The following appropriations and 
allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, 1)EPARTMENT OF 
Revenue Services, Bureau of 0002 
Initiative: Provides one-time funding for computer programming costs. 
GEN:J!:RA.L Fl)ND 
All Other 
GENERAL FUND TOTAL 
SUMMARY 
2015-16 
$0 
, 
I. .. 
$0 
2016-17 
$ll,QOO 
$11,bOO 
This amendment is the majority report of the committee. It replaces the bill and does 
the following to SIJpport employee-owned 1;msinesses and cOQperatives. 
1. It permits the Treasurt<r of State to place 1 % or more of deposited state funds in 
institutions that meet the borrowing neeos of Gooperative~. 
2. It requires the Maine Small Business and Entrepreneurship Commission to ensure 
that the State's small business development centers receive training and provide 
information on employee ownership and cooperative development. 
COMMITTEE AMENDMENT 
C;:OMMlTTEE AMENDMENT "A" to H.P. 886, L,P. 1300 
3. 
It requires the Commissioner of Economic and C.ommunity Development to 
ensure eqlJal access to Department of Economic and Community Development programs 
for employee-owned businesses and cooperatives, as well as bllsinesses seeking to 
convert to employee ownership or cooperative organization. 
4. It reql)ires the Commissioner of Agriculture, Conservation and Forestry to ensure 
equal access to Department of Agriculture, Conservation and Forestry programs for 
employee-owned businesses and cooperatives, as well as businesses seeking to conveli to 
employee ownership or cooperative organization. 
5. It creates the Cooperative Development Grants Program. 
6. 
It modifies the exemption from registration for certain membership securities 
issued by cooperatives .. 
7. 
It subtracts from the Maine income tax the amount of gain recognized by a 
business owner in transferring the business to an employee stock ownership plan or 
eligible worker-owner cooperative. 
8. 
It requires the Department of Agriculture, Conservation and Forestry, the 
Department of Economic and Community Development, the D.epartment of Labor, the 
Finance Authority of Maine and the University of Maine System to identify and make 
best efforts to pursue federal sources of funding for advancement of employee ownership 
and development of cooperatives. 
9. It requires the Maine Small Business and Entrepreneurship Commission to ensure, 
to the extent feasible, that each small business development center receives training on 
issues relating to employee ownership and cooperative development. It requires the 
commission to provide a report to the joint standing committee of the Legislature having 
jurisdiction over labor, commerce, research and economic development matters on the 
commission's implementation of this provision. 
10. It also adds an appropriations and allocations section. 
FISCAL NOTE REQI.JIR,ED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 06109/15 
::9-/czc 
LD 1300 
LR 1555(02) 
An Act To Create and Sustain Jobs through Development of Cooperatives 
Fiscal Note for Bill as Amended by Committee Amendment ,~, [Ii -3q~ 
Committee: Labor, Commerce, Research and Economic Development 
Net Cost (Savings) 
General Fund 
Appropriations/Allocations 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
FY 2015-16 
$0 
$0 
$0 
$0 
FY 2016-17 
$87,000 
$11,000 
($76,000) 
($4,000) 
Projections 
FY 2017-18 
$76,000 
$0 
($76,000) 
($4,000) 
Projections 
FY 2018-19 
$76,000 
$0 
($76,000) 
($4,000) 
This legislation allows a business owner to subtract from taxable income the gain recognized when transferring a 
business to an employee stock ownership plan or eligible worker-owner cooperative and would reduce General Fund 
revenue by $76,000 beginning in fiscal year 2016-17 and reduce Local Government Fund revenue by $4,000 
begimling in fiscal year 2016-17. The bill includes a one-time General Fund appropriation to the Department of 
Administrative and Financial Services of $11,000 in fiscal year 2016-17 for computer programming charges. 
This legislation allows costs to the Finance Authority of Maine to maintain, service and administer the Cooperative 
Development Grants Fund to be paid by the fund. Therefore, no General Fund appropriations to FAME are required. 
Additional costs to the Department of Agriculture, Conservation and Forestry (ACF), the Department of Labor, the 
Department of Economic and Community Development and the University of Maine System to identify and make best 
efforts to pursue federal sources of funding for the development of cooperatives and employee ownership can be 
absorbed within existing budgeted resources. Additional costs to ACF to ensure that ACF programs provide equal 
access to cooperative businesses and businesses seeking to convert to cooperative organization can be absorbed within 
existing budgeted resources. 
The State Treasurer already has two programs that allow banks to pay the State rates on deposits that are 2% below 
market with the agreement that the banks will pass the lower interest rates on to celiain borrowers. One is for 
commercial enterprises and one is for agricultural entities. Each is capped at $4,000,000 for a total of $8,000,000 in 
state deposits at reduced rates. This bill expands eligibility for the agriculturallinlced investment program to include 
agricultural enterprises organized as cooperatives. Expanding eligibility but keeping the same $4,000,000 cap will not 
lose any additional revenue to the State. 
LR1555(02) - Fiscal Note - Page 1 of 1