PHED Item 2
November 21,2011
Worksession
MEMORANDUM
TO:
FROM:
Planning, Housing and Economic Development Committee
~Michael
Faden, Senior Legislative Attorney
Worksession:
Bill 34-11, Biotechnology Investment Incentive Tax Credit
Supplement - Amendment
SUBJECT:
Bill 34-11, Biotechnology Investment Incentive Tax Credit Supplement - Amendment,
sponsored by the Council President at the request of the County Executive, was introduced on
October 25,2011. A public hearing was held on November 15. (See testimony, ©10-15.)
Summary
Bill 34-11 would revise the formula to determine the annual Biotechnology
Investment Incentive Tax Credit Supplement an investor may receive. Under the current law,
County Code §20-76A, enacted in Bill 5-10 in March 2010, a "qualified investor" in a "qualified
Maryland biotechnology company ... that has its headquarters and base of operations in the
County" who receives a tax credit certificate from the State is also entitled to an added 50% of
the State tax credit. The Council can set a lower percentage in the annual operating budget
resolution to reflect the relative proportions of the State and County appropriations for this
purpose.
As the Executive's memo on ©4 noted, the limited County appropriation for this
supplement in FY12 (the supplemental appropriation in Item 1 on today's Committee agenda
would set this amount) makes it impossible to pay the supplement as the law originally intended.
Under this Bill, the County supplement paid to a qualified investor would instead be calculated
as the proportionate share that company receives of the total credits received by all County
biotechnology companies, multiplied by the total appropriation for the County supplement.
However, the law would specify that an eligible investor cannot receive more than either 50% of
the state tax credit or 15% ofthe total County appropriation.
Council staff recommendation:
approve this formula revision.
Amendments
Former Councilmember Mike Knapp, speaking for several biotechnology
companies (see testimony, ©11-14), suggested several further amendments to this Bill (see ©16).
Those amendments would better integrate the state tax credit and County supplement and set an
annual January 31 deadline to pay the supplement. To have the data to pay the supplement on
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that schedule, the County would receive from the State the list of qualified investors that the
State law requires them to compile by January 10 of each year for the preceding calendar year.
While we have not received comments yet from Department of Economic Development
staff on these amendments, they seem reasonable and likely to make the process more efficient.
One question, which the Committee can discuss, is whether the process set up in these
amendments should replace, rather than augment, the current application process. If so, further
conforming amendments might be necessary.
Council staff recommendation:
approve the Knapp amendments.
Fiscal and economic impact statements
The Executive's fiscal impact statement (see
©6-7) asserted in several places that "Bill 34-11 does not have a fiscal impact." OMB's
reasoning apparently was that "The program is subject to annual appropriation." Council staff
disagrees with this conclusion and the reasoning behind it.
It
seems more accurate to conclude that a fiscal impact will occur every time the County
supplement is granted; the impact is equal to the amount of the supplement. We agree that the
actual annual impact cannot be determined now because the aggregate amount of the supplement
offered is subject to annual appropriation. But to conclude "no fiscal impact" gives an erroneous
impression; the supplement only has a zero fiscal impact if it is never granted. If the proposed
supplemental appropriation is approved, the fiscal impact in FY12 will be $500,000.
Interestingly, the fiscal impact statement for Bill 5-10, the predecessor bill which established this
supplement, estimated added annual personnel costs of about $45,000 in addition to the
supplement, which it did not calculate but assumed would have a cost to the County.
This packet contains:
Bi1l34-11
Legislative Request Report
Memo from County Executive
Fiscal Impact Statement
Economic Impact Statement
Hearing testimony
Knapp amendments
F:\LAW\BILLS\I 134 Biotech Tax Credit\PHED Memo.Doc
Circle
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1
3
4
5
8
10
16
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Expedited Bill No.
34-11
Concerning: Biotechnology Investment
Incentive Tax Credit Supplement ­
Amendment
Revised: 10-20-11
Draft No. 4
Introduced:
October 25. 2011
Expires:
April 25. 2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ----'-!.No""'n""'e:...--_:--_ _ __
Ch, _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN EXPEDITED ACT
to:
clarifY
the proportion of the annual Biotechnology Investment Incentive Tax Credit
(1)
Supplement an applicant may receive; and
(2)
generally amend the law relating to the Biotechnology Investment Incentive Tax
Credit Supplement.
By amending
Montgomery County Code
Chapter 20, Finance
Section 20-76A
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County} Maryland approves the following Act:
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EXPEDITED BILL.
34-11
1
2
Sec.
1.
Section
20-76A
is amended as follows:
20-76A.
Biotechnology [investment incentive tax credit supplement] Investment
3
4
Incentive Tax Credit Supplement.
*
(d)
*
*
5
The Supplement paid to each [recipient must equal] eligible applicant
must equal the product of:
6
7
ill
the amount of the credit received
Qy
the applicant under the State
Biotechnology Investment Tax Credit Program, divided
Qy
the
total amount of credits received
Qy
all Montgomery County
biotechnology
companies
under the
State
Biotechnology
8
9
10
11
12
Investment Tax Credit Program; and
ill
the total amount of funds appropriated to the Supplement
Program. The Supplement must not exceed 50% of [any] the
State tax credit [the recipient] an eligible applicant receives from
the [State biotechnology investment incentive tax credit program,
or a lower percentage, set in the annual operating budget
resolution, which reflects the relative proportions of the
respective annual appropriations for the state tax credit and the
County supplement] Maryland Biotechnology Investment Tax
Credit Program in any given year.
An
eligible applicant must not
receive more than
150/0
of the total annual appropriation for the
Supplement program.
l3
14
15
16
17
18
19
20
21
22
23
24
25
26
Sec. 2. Expedited Effective Date.
The Council declares that this legislation
IS
necessary for the immediate
protection of the public interest. This Act takes effect on the date when it becomes
law.
F:\LAW\BlLLS\1134 Biotech Tax Credit\1134 Bill 2.Doc
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LEGISLATIVE REQUEST REPORT
Bill 34-11
Biotechnology Investment Incentive Tax Credit Supplement
-
Amendment
DESCRIPTION:
ClarifY the proportion of the annual Biotechnology Investment
Incentive Tax Credit Supplement (Supplement) an applicant may
receive and generally amend the law relating to the Biotechnology
Investment Incentive Tax Credit Supplement.
Current law contains language mandating that the County provide an
eligible applicant with 50% of the amount the State Biotech Tax
Credit issued to eligible investors (applicants), unless a lower
percentage is set in the annual operating budget resolution.
The attached bill deletes language that requires the amount of the
supplement to equal 50% of the SBITCP and substitutes language
that provides that an eligible company will receive a supplement
amount that is proportionate to the amount of the credit received by
that company under the SBITCP as a percentage of the total amount
of credits allocated under the SBITCP to Montgomery County
biotechnology companies.
County Attorney, Department of Economic Development
Same as the original bill as this amendment will provide the County
with flexibility of providing matches.
The amendment will continue to support the same mission as the
original bill, i.e., stimulate investment activities in the biotechnology
industry in the County and provide the incentives to support the
growth of biotech companies in the County.
Department of Economic Development will monitor the business
growth of the tax credit supplement recipients and report annually.
State of Maryland is operating the program very successfully since
2008.
Department of Economic Development.
None. All applicants in the County will be eligible.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
None.
F:\LA W\BILLS\1134 Biotech Tax Credit\Legislative Request Report. Doc
f:\law\bills\ 1134 biotech tax credit\legislative request report. doc
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OFFICE OF THE COUNTY EXECUTIVE
ROCKV1LLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
October 17, 2011
TO:
FROM:
Valerie Ervin, County Council President
Ike Leggett, County
EXecutiV~~
SUBJECT: Proposed Legislation re: Montgomery County Biotechnology Investment Incentive
Tax Credit Supplement
I am submitting for Council introduction a bill that would modify the
Biotechnology Investment Incentive Tax Credit Supplement (Biotech Credit Supplement
Program) that was established when Bill 5-10, Biotechnology Credit Local Supplement was
enacted on March 16,2010. I am also enclosing a Legislative Request Report for this bill.
Under current law, the County is required to pay each eligible biotechnology
company an amount that is equal to 50% of the tax credit that the recipient receives from the
State Biotechnology Investment Tax Credit Program (SBITCP). However, due to County's
limited initial budget of $500,000 in FY12 and the uncertainty of future appropriations to the
program, the current mandatory supplement amount will make it impossible
to
implement the
Biotech Credit Supplement Program. The attached bill deletes language that requires the amount
of the supplement to equal 50% of the SBITCP and substitutes language that provides that an
eligible company will receive a supplement amount that is proportionate to the amount of the
credit received by that company under the SBITCP as a percentage of the total amount of credits
allocated under the SBITCP to Montgomery County bioteclmology companies.
Please contact Steve Silvennan, Director, Department of Economic Development,
at 240-777-2005 if you have questions about the Biotech Credit Supplement Program or any
aspect of this bilL Thank you for your consideration of this item.
Attachments (2)
cc: Steve Silverman, DED Director
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OFFICE OF MANPlGEMENT AND BUDGET
lsiah Leggett
County Executive
IenrriferPl.
fIu~es
Director
MEMORANDUM
November 14, 2011
TO:
FROM:
SUBJECT:
Valerie Ervin, President, County Council
Jennifer
A
~r
'
Bill 34-11, Biotechnology Investment Incentive Tax Credit Supplement - Amendment
Attached please find the fiscal and economic impact statements for the above referenced
legislation.
JAH:mob
c: Kathleen Boucher, Assistant Chief Administrative Officer
Lisa Austin, Offices ofthe County Executive
Joy Nurmi, Special Assistant to the County Executive
Steve Silverman, Director, Department ofEconomic Development·
Peter Bang, Department ofEconomic Development
Joseph F. Beach, Director, Department of Finance
Michael Coveyou, Department of Finance
David Platt, Department ofFinance
Mary Oneda-Brown, Office of Management and Budget
Amy Wilson, Office of Management and Budget
Alex Espinosa, Office of Management and Budget
Office of the Director
101 Monroe Street, 14th Floor • Rockville, Maryland 20850 • 240-777-2800
www.montgomerycountymd.gov
montgomerycountymd.gov/311
240-773-3556 lTV
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Fiscal Impact Statement
Council Bill 34-11, Biotechnology Investment Incentive Tax Credit
Supplement - Amendment
1. Legislative Summary
Bill 34-11 would clarify the proportion ofthe annual Biotechnology Investment Incentive
Tax Credit Supplement an applicant may receive and generally amends the law relating
to the Biotechnology Investment Incentive Tax Credit Supplement.
It
will allow the
County to provide a local supplement to the State Biotechnology Investment Tax Credit.
Program (SBITCP). The SBITCP provides income tax credits ofup to 50 percent of an
eligible investment for investors in qualified Maryland biotechnology companies.
Current law requires the County to pay each eligible applicant an amount equal to 50
percent of the
tax
credit that the recipient receives frorp the SBITCP. The proposed bill
deletes the language that requires the amount of the supplement to equal 50 percent ofthe
SBITCP and substitutes language that provides an eligible company to receive a
supplement amount that is proportionate to the amount ofthe credit received by that
company under the SBITCPas a percentage ofthe total amount of credits allocated under
the SBITCP to Montgomery County biotechnology companies.
2.
An
estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed
in
the recommended or approved budget. Includes
source ofinformation, assumptions, and methodologies used.
The total cost of the Supplement program is subject to annual appropriation. The County
Executive has recommended an FYl2 supplemental appropriation request of$500,OOO to
the Economic Development Fund to provide funding for the program in FY12.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
The program is subject to annual appropriation. Bill 34-11 does not have a fiscal impact.
4.
An
actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
Not Applicable
5. Later actions that may affect future revenue and expenditures
if
the bill authorizes future
spending.
The bill doesn't require future spending. Changes during the annual appropriations
process would affect future expenditures.
1
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6.
An
estimate ofthe staff time needed to implement the hill.
Bill 34-11 does not have a fiscal impact since it clanfies the proportion of the
annual
Biotechnology Investment Incentive Tax Credit Supplement an applicant may receive
and generally amends the law relating to the supplement.
7.
An
explanation ofhow the addition ofnew staff responsibilities would affect other duties.
Not Applicable
I
<,
i
8.
An
estiiriate< of costs when an additional appropriation is needed.
An
appropriation is required to
fund
the supplement program. The County Executive has
requested an
FY12
supplemental appropriation request of
$500,000
for the program.
However, Bill 34-11 does not have a fiscal impact.
9.
A description of any variable that could affect revenue and cost estimates.
Not Applicable
10.
Ranges ofrevenue or expenditures that are uncertain or difficult to project.
Bill 34-1 I does not have a fiscal impact.
11.
If
a bill is likely to have no fiscal impact, why that is the case.
Bill 34-11 does not have a fiscal impact since it clarifies the proportion ofthe
annual
Biotechnology Investment Incentive Tax Credit Supplement an applicant may receive
and generally amends the law relating to the supplement.
12.
Other fiscal impacts or comments.
None.
13.
The following contributed to and concurred with this analysis:
• Peter Bang, Department ofEconomic Development
• Mike Coveyou, Department of Finance
• David Platt, Department ofFinance
• Mary Oneda-Brown, Office ofManagement and Budget
• Alex Espinosa, Office of Management and Budget
Date
2
it/I5fl\
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ECONON.DCUMPACTSTATEMENT
BILL 34-11
Biotechnology Investment Incentive Tax Credit Supplement - Amendment
Background:
Bill 34-11 would
clarify
the proportion of the annual Biotechnology Investment Incentive
Tax Credit Supplement enacted on March 26, 2010
(Bill
05-10) available to each
recipient. The County's tax credit supplements the State credit, and for FY12 Maryland
.
appropriated $8 million to fund the State
tax.
credit.
Economic Impact Statement:
The goal ofBill 34-11 and its predecessor is to stimulate investment
in
the biotechnology
companies located
in
Montgomery County. Such investment would provide incentives
to
support start-up biotechnology (biotech) companies during the introduction stage ofthe
product life cycle. At
this
stage biotech companies face a number ofobstacles including
access to financing, and, research
has
shown that large corporations or commercial banks
show little interest in financing
s~ch
high-risk yet long-teon investments, causing biotech
companies to rely mainly on private investors to fmance their operations. The tax credit
provides support for start-up companies by encouraging investment
in
them during the
early stage ofthe product life cycle and, if successful, those companies will grow and
mature creating jobs and income for County residents.
The economic impact of this
tax
credit is prospective in that it attempts to provide access
to capital to even.imflly grow biotech companies to maturity. The specific economic value
ofthe biotech investment incentive credit cannot be quantified at
this
time since it is
dependent on the number of future successful applications received and the timing ofand
return on investment from the credit.
1.
Sources of Information, Assumptions and Methodologies
• Maryland Department of Business and Economic Development: Program page on
the Maryland Biotechnology Investment Tax Credit (showing 194 applicants for
the FY12 State credit, unofficially).
• Maryland FY12 Budget (HB70)
2.
Variables that Can Affect the Estimates
• Amount appropriated for the program
• Number of Biotech investors seeking the incentive
• Timing of and return on investment for Biotech investors receiving the credit
3.
Effect on Employment, Spending, Saving, Investment, Incomes, and Property
Values
(j)
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• Unlmown at this time. Funds have yet to
be
appropriated for the program. It is
assumed that
all
funds appropriated in any given year will be spent
in
that
year,
but the economic impact for this appropriation in any given year may not be
realized until several
years in
the future.
4.
If
a
~ill
is likely
to
have no economic impact, why that is the case.
Not Applicable
5.
The following contributed to and concurred with this analysis: David Platt,
Finance; Mike Coveyou, Finance
DJte
I
(j)
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Bill 34-11
Montgomery County Biotechnology Investment Incentive
Tax Credit Supplement
Amendment
November 15, 2011
Testimony of Steven A. Silverman, Director
Montgomery County Department of Economic Development
For the record, my name is Steven Silverman and I am the Director of the
Montgomery County Department of Economic Development. I am here this afternoon
testifying on behalf of County Executive Leggett in support of Bill 34-11, which seeks to
clarify the amount of the
tax
credit that an eligible applicant can receive under the
County's Biotechnology Investment Incentive Tax Credit Supplement Program.
The County Executive would again like to thank the County Council for enacting
last year's legislation, which created what we understand is the first local biotechnology
tax credit in our country. This program is sending a strong statement to investors,
entrepreneurs and companies looking to relocate or expand that Montgomery County
pro-actively supports its biosciences sector.
The original language approved for this initiative required the County to pay each
eligible biotechnology investor an amount equal to 50% of the
tax
credit that the investor
receives from the State's Biotechnology Investment Tax Credit Program (SBITCP).
However, recognizing today's uncertain economic times and our inability to project how
much money will be appropriated for this program in the years to come, we felt the need
to amend the language from "must pay 50%" to "pay up to 50%" to ensure that the
amount of the County supplement will be a function of the County appropriation as
opposed to the State's total tax credit given to investors ..
As was with the original Bill, under this amendment, an eligible applicant will
receive a supplemental amount from the County that is proportionate to the amount of the
credit that is received by that applicant under the SBITCP as a percentage of the total
amount of credits allocated under the SBITCP to those investing in Montgomery County
biotechnology companies.
I would also like to encourage the County Council to approve Supplemental
Appropriation #12-327 to the FY12 Operating Budget, which will provide $500,000 for
this very important economic development program.
Thank you for your ongoing support of the County's economic development
initiatives, and for your support of our local biosciences community.
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SEQUEIIA
Incorporated
Testimony to the Montgomery County Council
On Bill 34 -11 Biotechnology Investment Incentive Tax Credit Supplement Program
And Associated Supplemental Appropriation
November
15, 2011
Good afternoon Madam Chair and members of the County Council.
My name is Marty Zug and I am the Chief Financial Officer of Sequella, a clinical stage
biotechnology company with drugs in Phase 2 efficacy trials for H. Pylori related ulcers
and multi-drug resistant Tuberculosis. I am here to testify in support of the
Supplemental Appropriation for the biotech tax credit. I am also asking your
consideration for an amendment to changes in the tax credit program.
County Executive leggett's announcement of funding for the Montgomery County
Supplement came at exactly the right time on June
29, 2011
at the BIO Conference. The
State of Maryland started accepting applications for its tax credit program just two days
later and the announcement of Montgomery County funding influenced the decisions of
many of my investors. Not only did the County Executive's announc;ement help me get
fourteen investors to submit applications to the state, but it was also critical in getting
each and every one of those investors to close their investments in the statutorily
required period between August 1 and August 30. As a result, Sequella raised $2.4
million this summer.
As an example, one of my larger investors was BNP Paribas, the largest bank in the
world. BNP submitted an application to the state in June, but had not yet completed all
of their due diligence. They presented the investment to their investment committee for
approval in August and they have told me that the expected return of capital from
Montgomery County was an important factor in their overall decision to invest.
In August, I communicated to my investors that the County program would likely be
allocated on a pro-rata basis, which is what Bill 34
-11,
the Biotechnology Investment
Incentive Tax Credit Supplement - Amendment will do, and that they would likely
receive
6-12%
oftheir investment back from the county once they received their Final
Tax Credit Certificates from the state. All of my investors now have their Final Tax Credit
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Certificates and I would estimate that over 95% of the Final tax Credit Certificates for
FY2012 have already been issued by the state.
Accordingly, we would suggest the bill be amended as follows:
Identify a specific time for local biotechnology companies that have received their Final
Tax Credit Certificates from the state to apply to the County program. Since the tax
credit is used in conjunction with a company's filing of its tax returns, and eligible
st
investments occur on a calendar year basis, I would suggest having a December 31 cut­
off date each year. I believe that this simple addition will make this program simple for
the County to administer, more consistent with the State program and will assist
companies like ours working with investors to layout a specific timeline.
As it relates to the $500,000 supplemental appropriation for this program, we would
simply ask that given the examples of increased investment you have heard today, that
you may want to consider increasing the amount of the appropriation. This investment
has already yielded significant, tangible returns for the County and any additional
resources will see similar results.
Thank you for the opportunity to present to you today and for your consideration of our
proposal.
@
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J
TESTIMONY FOR MICHAEL KNAPP
ON BILL 34-11, THE BIOTECHNOLOGY INVESTMENT
INCENTIVE TAX CREDIT SUPPLEMENT PROGRAM
Madame Chair, members of the County Council and former colleagues,
My name is Michael Knapp and I work for Orion BioStrategies a local life sciences service
provider. Thank you for the opportunity to testify today on Bill 34-11, Biotechnology
Investment Incentive Tax Credit Supplement Program and the associated Supplemental
Appropriation of $500,000.
I am very pleased to see this bill which many of you and I cosponsored and passed into law
nearly two years ago move forward to implementation with funding. I know that many of you
have been trying to find ways that a local government can have an impact on the economy,
especially during these continued difficult times. This legislation is one of those rare
opportunities where you can actually see a tangible return on your local investment. Every
dollar that a company or investor applies for under this program by definition must already
have brought at least three more dollars into our local community that is being spent on jobs
and purchase goods and services that our biotechnology firms require for continued growth. In
fact, with just the companies testifying this afternoon you can account for increased investment
of more than $6 million in the local economy on just the promise that this program would be
funded at only 20% of the level that was anticipated under the original legislation.
I was driving my daughter to school this morning and was listening to two economists on NPR
discuss the value of government investment in specific industries, and each of them was
somewhat skeptical because it is very difficult for governments to predict future markets. One
ofthe key attributes to this program is that it doesn't try to create a market where one may not
exist, instead it encourages the market to fund companies that are located in Montgomery
County. As some of the companies testifying today have indicated, there were investors
interested in the products they were developing and this helped those investors make their
final decision. Which is what you want to see - validation from the marketplace through
investment in local firms. If local biotechnology firms can't attract investment on the promise
of their products and services then no one will be eligible to apply for the tax credit and you can
re-direct the resources.
I know that these are challenging fiscal times, and I encourage you now just as I did when I was
on your side of the dais, to look closely at any supplemental appropriation req uest that comes
before you. When this original legislation was introduced it was indexed to the Maryland tax
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credit program and authorized for $4 million because that was 60% of the state funding level of
$6 million and Montgomery County firms generally receive about 60% of the state allocation.
This proposed $500,000 is good because it makes the program operational, yet I would ask you
to consider increasing this amount by another $500,000 given the amount of direct local
investment that you will see in companies on the ground in our community and your goal to
spur on local economic activity. There few other activities that you can fund that will provide
this type of additional outside investment.
Finally, Bill 34-11 is drafted to allow local companies to apply for the Montgomery County tax
credit once the state has allocated all of the resources in its program. I have spoken with some
people at the State and spoken with some of our companies and believe that this should be
modified to establish a date certain each year when firms can apply. Since a firm can only
calendar year, I believe that it would make sense to allow firms to apply by December 31
st
each
year and this will make it clear to companies, their potential investors and ease the
administrative burden on the County.
Thank you for your support of the life science in the community.
receive a tax credit on a qualified investment received during a current tax year, which is a
I
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POSITION STATEMENT
ATECHCOUNCILOFMo
kldBlo
I
.MdT@ch
Montgomery Biotechnology Investment Incentive Tax Credit - Funding
Montgomery County Council
November
15, 2011
Support
The Tech Council of Maryland (TCML a non-profit membership organization with over 400
technology and biotechnology member companies who employ more than 200,000 people in
our region, strongly supports Montgomery County's Biotechnology Investment Incentive Tax
Credit and urges the Montgomery County Council to support funding the program.
During these difficult economic times, it is important that the public sector and private sector
partner to create high quality jobs. The Montgomery County Biotechnology Investment
Incentive Act is one such example. Appropriating money for this program will help create and
retain good jobs in Montgomery County. The average salary for people employed in
biotechnology is as much as $90,000 a year and requires highly skilled, educated workers.
Keeping and creating these jobs in Montgomery County is important, especially during a time
where the economy is struggling.
The existing Maryland tax credit has been a great success in helping early stage biotech
companies secure needed capital to grow their businesses. Starting a biotech company is
very risky and capital intensive, so such incentives often are the difference between success
and failure. It takes a number of years for a biotech company to go through its development
stages before bringing a product to market. During this process, a biotech company typically
requires significant investment to survive before products are brought to market and a profit
can be realized. The business model is one of high risk and high reward. Incentives like these
help nurture companies that create family-supporting jobs that are vital to Montgomery
County's long-term economic development efforts.
Again, the Tech Council of Maryland urges the Montgomery County Council to support
funding the Montgomery County Biotechnology Investment Incentive Act.
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Sec. 1. Section 20-76A is inserted as follows:
20-76A. Biotechnology investment incentive tax credit supplement.
Amend "Section
all
to define when the Supplement must be paid each year.
a) The Director of Finance must pay by Januarv 31 each year, subject to appropriation, a
Biotechnology Investment Incentive Tax Credit Supplement to each applicant who meets certain
eligibility standards;
Amend "Section b" to define ((year" as ((calendar year"
b) An applicant, who need not be County resident, is eligible to receive the Supplement if:
1) the applicant has been designated as a qualified investor under
state law and has received final tax credit certificate for the
Maryland biotechnology investment incentive tax credit for the
calendar year in which the Supplement is claimed; and
Amend "Section
e"
to utilize the reporting requirements from state statute that require DBED to provide
a complete list of the tax credit certificates awarded in the prior year to the Governor and General
Assembly by January 10 each year and use this list as the basis for the calculation and distribution of the
Montgomery County Supplement each year.
e) The Director must request from the Comptroller and Department of Business and Economic
Development by January 15 of each year a
list
of each qualified investor for a qualified Maryland
biotechnology company, as defined in Section b
(2),
that was issued a final credit certificate during the
prior calendar year for the purposes of calculating the Supplement to be issued to each qualified
investor under Section d and may take any other action necessary to administer the Supplement. The
Executive may issue regulations under Method 1 to implement this Section.