An Act to Reauthorize Maine's New Markets Tax Credit Program
Maine Legislature, Session 131, LD 1974
Committee: Taxation
Sponsors: STEWART, PERRY, LIBBY
Amends: 10 MRSA §1100-Z, 36 MRSA §5219-H

Legislative Document
No. 1974
S.P. 808
In Senate, May 18, 2023
An Act to Reauthorize Maine's New Markets Tax Credit Program
Reference to the Committee on Taxation suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator STEWART of Aroostook.
Cosponsored by Representative PERRY of Bangor and
Senator: LIBBY of Cumberland.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  10 MRSA §1100-Z, sub-§3, ¶B-1 is enacted to read:
B-1.  A qualified community development entity that seeks certification as a Maine 
fund for an allocation of tax credit authority shall apply to the authority. The applicant 
shall submit an application on a form that the authority provides.
(1)  In addition to the requirements specified in paragraph B, subparagraphs (1) 
and (4), the applicant shall include in the application evidence of at least one 
executive officer whose primary residence is located in this State, who is employed 
or engaged to manage the funds and who has a minimum of 5 years of money 
management experience in the venture capital or private equity or lending industry.
(2)  As used in this paragraph, "Maine fund" has the same meaning as in subsection 
8, paragraph A, subparagraph (4).
Sec. 2.  10 MRSA §1100-Z, sub-§3, ¶B-2 is enacted to read:
B-2.  A qualified community development entity that seeks certification as a diverse 
Maine fund for an allocation of tax credit authority shall apply to the authority. The 
applicant shall submit an application on a form that the authority provides. 
(1)  In addition to the requirements specified in paragraph B, subparagraphs (1) 
and (4) and paragraph B-1, the applicant shall include in the application evidence 
the entity is:  
(a) More than 50% owned and controlled by individuals who are racial or 
ethnic minorities or members of a federally recognized Indian nation, tribe or 
band in this State; or  
(b) Is governed by a board of directors more than 50% of which is composed 
of individuals who are racial or ethnic minorities or members of a federally 
recognized Indian nation, tribe or band in this State.
(2) As used in this paragraph, "diverse Maine fund" means:
(a) An entity that:
(i) Is a Maine fund as defined in subsection 8, paragraph A, subparagraph 
(4); or
(ii) Is a community development financial institution, as defined in 12 
United States Code, Section 4702(5), with its principal place of business 
in this State; and
(b) An entity that is more than 50% owned and controlled by individuals who 
are racial or ethnic minorities or members of a federally recognized Indian 
nation, tribe or band in this State or is governed by a board of directors more 
than 50% of which is composed of individuals who are racial or ethnic 
minorities or members of a federally recognized Indian nation, tribe or band in 
this State.
For purposes of this paragraph, "principal place of business" has the same meaning as 
in subsection 8, paragraph A, subparagraph (6).
Sec. 3.  10 MRSA §1100-Z, sub-§3, ¶F, as enacted by PL 2011, c. 380, Pt. Q, §1 
and affected by §7, is amended to read:
F.  Within 24 months with respect to program 1 tax credit authority and 6 months with 
respect to program 2 tax credit authority, after receipt of the notice of the allocation of 
tax credit authority, the qualified community development entity shall issue the 
qualified equity investments or long-term debt securities and receive cash in the 
amount of the total amount of tax credit authority that the qualified community 
development entity was allocated.  The qualified community development entity shall 
provide the authority with evidence of the entity's receipt of the cash investment within 
business days after receipt.  If the qualified community development entity does not 
issue the qualified equity investment or long-term debt security and receive the cash 
purchase price within 24 months with respect to program 1 tax credit authority and 6 
months with respect to program 2 tax credit authority following receipt of the tax credit 
authority notice for any portion of its allocation, such unused allocation of tax credit 
authority lapses and the qualified community development entity may not issue the 
qualified equity investments or long-term debt securities without reapplying to the 
authority for additional tax credit authority.  Any tax credit authority that lapses reverts 
back to the authority and may be reissued only in accordance with the application 
process outlined in this section.
Sec. 4.  10 MRSA §1100-Z, sub-§4, as amended by PL 2011, c. 548, §5, is repealed 
and the following enacted in its place:
4.  Limit on amount of tax credits authorized.  Tax credits issued by the authority 
are limited as provided in this subsection.
A.  With respect to program 1 tax credit authority, the maximum aggregate amount of 
qualified equity investments for which the authority may issue tax credit authority 
under this section is $250,000,000; a tax credit claim may not exceed $20,000,000 in 
any one state fiscal year over the 7 years of the tax credit allowance dates as described 
in Title 36, section 5219‑HH, subsection 1, paragraph A.
B.  With respect to program 2 tax credit authority, the maximum aggregate amount of 
qualified equity investments for which the authority may issue tax credit authority 
under this section is $250,000,000; a tax credit claim may not exceed $20,000,000 in 
any one state fiscal year over the 7 years of the tax credit allowance dates as described 
in Title 36, section 5219-HH, subsection 1, paragraph A.
Sec. 5.  10 MRSA §1100-Z, sub-§6, as enacted by PL 2011, c. 380, Pt. Q, §1 and 
affected by §7, is amended to read:
6.  Report.  The authority shall report no later than January 1, 2015 2027 with respect 
to program 2 tax credit authority to the joint standing committee of the Legislature having 
jurisdiction over appropriations and financial affairs and the joint standing committee of 
the Legislature having jurisdiction over taxation matters on the activities of the program, 
including, but not limited to, the amount of private investment received and the total 
number of jobs created or retained.
Sec. 6.  10 MRSA §1100-Z, sub-§7, as enacted by PL 2011, c. 380, Pt. Q, §1 and 
affected by §7, is amended to read:
7.  Rules.  By December 30, 2011, the authority shall adopt rules necessary to 
implement this section. By December 30, 2023, the authority shall adopt rules necessary to 
implement this section with respect to program 2 tax credit authority. Rules adopted 
pursuant to this subsection are routine technical rules under Title 5, chapter 375, subchapter 
2‑A.
Sec. 7.  10 MRSA §1100-Z, sub-§8 is enacted to read:
8.  Impact qualified equity investments.  Impact qualified equity investments are 
subject to the provisions of this subsection.
A.  As used in this subsection, unless the context otherwise indicates, the following 
terms have the following meanings.
(1) "Community development financial institution" has the same meaning as in 12 
United States Code, Section 4702(5).
(2) "Diverse Maine fund" means:
(a)  A Maine fund; or
(b) A community development financial institution that has its principal place 
of business in this State and:
(i) Is more than 50% owned and controlled by individuals who are racial 
or ethnic minorities or members of a federally recognized Indian nation, 
tribe or band in this State; or
(ii) Is governed by a board of directors more than 50% of which are 
individuals who are racial or ethnic minorities or members of a federally 
recognized Indian nation, tribe or band in this State.
(3) "Impact qualified equity investment" means a qualified equity investment if the 
cash purchase price, as defined in Title 36, section 5219-HH, subsection 1, 
paragraph F, is used to make an investment in a qualified active low-income 
community business.
(4) "Maine fund" means a qualified community development entity as defined in 
Section 45D of the United States Internal Revenue Code of 1986, as amended, 
except that the entity must have its principal place of business in this State.
(5) "Principal business operations location" means the physical location of a 
business where at least 60% of the employees of the business work.
(6) "Principal place of business" means the primary physical location where an 
entity's officer or officers direct, control and coordinate the entity's activities.
(7) "Qualified active low-income community business" has the same meaning as 
in Title 36, section 5219-HH, subsection 1, paragraph G except that:
(a) The entity's principal business operations location must be in this State; and 
(b) The entity is more than 50% owned by individuals who are racial or ethnic 
minorities; women; lesbian, gay, bisexual or transgender persons; members of 
a federally recognized Indian nation, tribe or band in this State; or veterans 
who are disabled.
(8) "Qualified community development entity" means an entity that is a:
(a) Diverse Maine fund;
(b) Maine fund;
(c) Qualified community development entity as defined in Section 45D(c) of 
the United States Internal Revenue Code of 1986; or
(d) Community development financial institution.
(9) "Qualified equity investment" means any equity investment in, or long-term 
debt security issued by, a qualified community development entity that:  
(a) Has at least 85% of its cash purchase price, as defined in Title 36, section 
5219-HH, subsection 1, paragraph F, 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, as defined in Title 36, section 5219-HH, subsection 1, 
paragraph D;
(b) Is acquired after December 31, 2011 at its original issuance solely in 
exchange for cash; and
(c) Is designated by the issuer as a qualified equity investment and is certified 
by the authority pursuant to subsection 3, paragraph G. "Qualified equity 
investment" includes any qualified equity investment that does not meet the 
provisions of 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.
(10) "Qualified low-income community investment" has the same meaning as in 
Title 36, section 5219-HH, subsection 1, paragraph J and, with respect to an 
individual qualified active low-income community business, no more than 
$5,000,000 of an impact qualified equity investment may be made with the 
proceeds of a qualified equity investment that has been certified.
B.  A qualified active low-income community business is deemed to have its principal 
business operations location in this State if the business agrees to use the proceeds of 
a qualified low-income community investment in the business for:
(1) If the business is not located in this State at the time of application, the 
relocation of employees to this State; or
(2) If the business is located in this State, the hiring of employees in this State.
The requirements of this paragraph must be met at least 90 days prior to receiving the 
qualified low-income community investment or by another date as agreed to by the 
business and the authority.
C.  The authority shall certify $30,000,000 in impact qualified equity investments, of 
which 50% must be reserved for diverse Maine funds.  The limitations of subsection 4 
apply to impact qualified equity investments certified under this paragraph.
D.  Except as specifically otherwise provided in this subsection, an impact qualified 
equity investment is subject to the provisions of this section and Title 36, section 
5219-HH.
Sec. 8.  36 MRSA §5219-HH, sub-§1, ¶E-1 is enacted to read:
E-1.  "Program 1 tax credit authority" means tax credit authority allocated by the 
authority before January 1, 2023.
Sec. 9.  36 MRSA §5219-HH, sub-§1, ¶E-2 is enacted to read:
E-2.  "Program 2 tax credit authority" means tax credit authority allocated by the 
authority on or after January 1, 2023.
Sec. 10.  36 MRSA §5219-HH, sub-§1, ¶H, as enacted by PL 2011, c. 548, §33 
and affected by §35, is repealed and the following enacted in its place:
H.  "Qualified community development entity" means an entity that:
(1) Is a Maine fund, as defined in Title 10, section 1100-Z, subsection 8, paragraph 
A, subparagraph (4); or
(2) If not located in this State, is a community development entity as defined in the 
Code, Section 45D(c), except that the entity must have 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.
Sec. 11.  36 MRSA §5219-HH, sub-§7, ¶C, as enacted by PL 2011, c. 548, §33 
and affected by §35, is amended to read:
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 with respect to 
program 1 tax credit authority and within 12 months of the issuance of the qualified 
equity investment with respect to program 2 tax credit authority 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.
SUMMARY
This bill amends the Maine New Markets Capital Investment Program and the new 
markets capital investment income tax credit to establish a new tax credit authority, referred 
to as "the program 2 tax credit authority," for tax credit authority allocated by the Finance 
Authority of Maine on or after January 1, 2023.  This bill establishes an application process 
for community development entities recognized as Maine funds and diverse Maine funds 
to receive an allocation of tax credit authority.
The effect of this change on the Maine New Markets Capital Investment Program is to 
shorten the period, from 24 months to 6 months after receipt of the notice of allocation of 
the tax credit authority, by which a community development entity must issue the equity 
investments or debt securities and receive cash in the total amount of tax credits authorized. 
The limit on the amount of tax credits authorized is unchanged.
The effect of this change on the new markets capital investment tax credit is to shorten 
the time, from 24 months to 12 months after issuance of the qualified equity investment, 
by which a community development entity must invest at least 85% of the purchase price 
of the qualified equity investment in qualified low-income community investments before 
recapture of the credit is allowed.
This bill makes conforming changes to the new markets capital investment tax credit 
provisions to integrate impact qualified equity investments into the existing provisions 
governing the eligibility for an allocation of tax credits under the Maine New Markets 
Capital Investment Program.  The amount of impact qualified equity investments is 
$30,000,000, which may be made in exchange for tax credits, to be invested in historically 
disadvantaged groups located anywhere in this State. Fifty percent of impact qualified 
equity investments must be reserved for diverse Maine funds, which are community 
development financial institutions that have their principal place of business in this State 
and are more than 50% owned and controlled by individuals who are racial or ethnic 
minorities or members of a federally recognized Indian nation, tribe or band in this State 
or are governed by a board of directors more than 50% of which are individuals who are 
racial or ethnic minorities or members of a federally recognized Indian nation, tribe or band 
in this State.
The maximum amount of an investment made with a qualified equity investment by a 
qualified community development entity in a qualified active low-income community 
business is $5,000,000.