DEPARTMENT OF BUSINESS & ECONOMIC DEVELOPMENT

The Secretary serves on the Governor's Executive Council; the Cabinet Council for Career and Technology Education; the Maryland Economic Development Commission; the Maryland Industrial Development Financing Authority; the Maryland Small Business Development Financing Authority; and the Maryland Advisory Commission on Manufacturing Competitiveness. The Secretary also serves on the Community Reinvestment Board; the Emergency Management Advisory Council; the Maryland Aviation Commission; the State Information Technology Board; the State Use Industries Advisory Committee; the Governor's Council on Adolescent Pregnancy; the Maryland Advisory Council for Individuals with Disabilities; the Interagency Committee on Aging Services; the Interagency Economic Growth, Resource Protection, and Planning Committee; and the Interdepartmental Advisory Committee for Minority Affairs.

Under the Secretary are offices for communications, legislative liaison, and the Governor's Ombudsman.

DIVISION OF ADMINISTRATION

The Division provides mailroom services, monitors the use of departmental motor vehicles, and maintains liaison with building management. Requests for proposals and contract awards are reviewed by the Division for compliance with State purchasing regulations. The Division also coordinates data and word processing, and operates the Department's central computer.

DIVISION OF FINANCING PROGRAMS

The Maryland Industrial and Commercial Redevelopment Fund (MICRF) began operations in 1980. To support local commercial or industrial redevelopment efforts, the Fund administers State loans, grants, and loan guarantees to local governments.

Fund money is used to encourage private investment in industrial and commercial redevelopment projects that retain or create jobs and increase tax revenues. MICRF funds may be used directly by a local jurisdiction, or passed through to a third party committed to carrying out the project (Code 1957, Art. 83A, secs. 5-801 through 5-807).

The Maryland Industrial Land Act (MILA) Program started in 1972 (Chapter 360, Acts of 1972). The intent of the Program is to ensure appropriate sites for industry throughout the State. The Program may acquire and preserve such sites for the State in partnership with local governments (Code 1957, Art. 83A, secs. 5-701 through 5-715).

Annually, Maryland receives federal funds from the Community Development Block Grant Program administered by the Department of Housing and Community Development. A portion of those funds is set aside to provide loans and grants to municipalities for economic development with an industrial or commercial focus. That set-aside amount is overseen by the Community Financing Group.

The Day-Care Facilities Loan Guarantee Fund was organized in 1983 to help small businesses providing day care (Chapter 585, Acts of 1983). The Fund guarantees up to 80 percent of loans by a bank or private lender. It is available to day-care centers for infants, toddlers, and preschool-age children, as well as elderly and medically handicapped adults. Loans can be used for the purchase of land, equipment, and supplies; renovation; building construction; and working capital (Code 1957, Art. 83A, secs. 6-101 through 6-113).

The Child-Care Facilities Direct Loan Fund was formed in 1988 (Chapter 248, Acts of 1988). To day-care providers, the Fund lends up to 50 percent of the cost of construction, renovation, or acquisition of real property. It may not be used to finance the purchase of equipment and supplies. Neither may it be used as working capital, nor to refinance existing liens. For in-home day care, a minimum amount of $15,000 may be borrowed from the Fund (Code 1957, Art. 83A, secs. 6-201 through 6-213).

The Child-Care Special Loan Fund began in 1992 (Chapter 50, Acts of 1992). The Fund lends child-care providers from $1,000 to $10,000 to expand or improve their facilities, meet State and local licensing requirements, and improve the quality of care (Code 1957, Art. 83A, secs. 6-301 through 6-312).

The Challenge Investment Program may invest $50,000 as "seed money" in a technology-driven Maryland company. Matched with $50,000 from a co-investor, the Program provides a new business with $100,000 in capital. The investment is to be repaid over a ten-year period. Annually, the Program invests $500,000, making five $50,000 investments, every six months.

The Enterprise Investment Fund was created in late 1993. The Fund enables the Department to make direct equity investments in "second-stage" technology-driven businesses in Maryland. Investments range from $150,000 to $250,000. The decision to invest is based on the potential return, the range of economic development, and the number of jobs that will be created. Requiring a three-to-one co-investor match, the Fund expects to make five to six investments annually.

The Maryland Venture Capital Trust also is administered by the Department through the Investment Financing Group.

Under the tax-exempt Traditional Bond Programs, nonprofit organizations (501(c)(3)) can finance land acquisition and the purchase of all types of buildings and equipment. The Bond Insurance Fund is used as reserves for financial assistance provided under the Bond Programs. The Bond Programs benefit companies by providing loans for a higher percentage of the costs of the facility, at a lower interest rate, and for a longer term than conventional financing.

Through the Traditional Bond Program and its Bond Insurance Fund, the Authority may insure all or any part of the payments of principal and interest under tax-exempt economic development revenue bonds issued by Maryland counties, municipalities, industrial development authorities, and other Maryland public bodies to finance a specific facility for a manufacturing company. There is a $5 million ceiling on the insurance for each transaction. Certain revenue bonds are exempt from federal and Maryland income tax (but not from real estate or personal property taxes). Therefore, interest rates on these bonds are generally lower than interest rates on conventional loans.

The Authority also may issue bonds under and in accordance with the Maryland Economic Development Revenue Bond Act.

Under its Conventional Loan Program, the Authority insures conventional loans made by financial institutions. The Authorized Purpose Insurance Fund is used as reserves for loans and other obligations insured under the Conventional Loan Program.

By the Conventional Loan Program or the Export Financing Program, the Authority may insure a loan or other obligation, or pay or insure the payment of premiums or fees for insurance, guarantees, or other credit support from a third party. Insurance provided by the Authority may not exceed the lesser of either 80 percent (or 90 percent in the case of export financing) of the sum of the principal amount of the loan or other obligations plus accrued interest thereon, or $1 million per transaction.

To participate in programs of the Maryland Industrial Development Financing Authority, a company must qualify generally in each of three basic categories: legal eligibility, economic impact, and creditworthiness (Code 1957, Art. 83A, secs. 5-901 through 5-941; Federal Internal Revenue Code, sec. 146).

The Maryland Industrial Development Financing Authority also administers the Maryland Enterprise Incentive Deposit Fund. Started in 1989, the Fund assists eligible small businesses in fixed asset financing (Chapter 822, Acts of 1989). This financing assistance is provided through the placement of a certificate of deposit with a participating lender who agrees to make a five-year term loan to the business at a loan interest rate three percent less than the rate normally charged. Concurrently, the Fund agrees to accept an interest rate on the certificate which is three percent less than the market rate on certificates of similar maturity. This assistance may not exceed $500,000.

An eligible business is a for-profit business, employing 500 people or less, located in a county with a population of less than 200,000 and an unemployment rate of at least 130 percent of the rate for the State during the most recent four consecutive quarters.

Established in 1990, the Maryland Seafood and Aquaculture Loan Fund fosters expansion, modernization, and innovation in the seafood processing and aquaculture industries (Chapter 511, Acts of 1990). Administered by the Maryland Industrial Development Financing Authority, the Fund can provide a loan of up to half the cost of a project with the maximum loan being $250,000. The interest rate on loans is fixed at a rate below the prime rate of interest at the time the loan is approved. Loans may be used for equipment, real estate acquisition, and construction of aquaculture parks, but not for working capital. The maximum loan term is 20 years.

The Maryland Industrial Development Financing Authority has nine members. Seven are named to five-year terms by the Secretary of Business and Economic Development with the Governor's approval. The Secretary of Business and Economic Development, and either the State Treasurer or Comptroller of the Treasury, as designated by the Governor, serve ex officio. The Authority appoints the Executive Director who serves as Secretary.

Government Contract Financing Program. For eligible firms with government or public utility contracts, the Authority may guarantee a loan from a financial institution; it also may provide a direct loan for working capital and equipment. These guarantees or loans may be offered only to fulfill contracts on projects financed by federal, State or local government, or by a utility regulated by the Public Service Commission.

Long-Term Guarantee Program. For all eligible firms, the Authority may guarantee and/ or pay an interest rate subsidy on a long-term loan made by a financial institution. The loan may be used for working capital, acquisition and related installation of machinery and equipment, or needed improvements to real property owned by the applicant.

Equity Participation Investment Program. For all eligible firms, the Authority may invest up to 45 percent or $100,000 (whichever is less) of funds to start a franchise operation. The Authority also may invest up to 25 percent or $500,000 (whichever is less) of funds to acquire a profitable business. For each of these options the Authority requires the initial investment to be recovered within seven years. The Authority also may invest up to $500,000 in technology-based businesses.

Surety Bonding Programs. For any small contractor, the Guaranty Assistance Program helps secure bonding by guaranteeing up to 90 percent of the losses that a surety company incurs in the event of a breach of contract. Total exposure may not exceed $900,000. All small businesses also are eligible for the Direct Bonding Program. Small contractors secure bonding by issuing bid, performance and payment bonds directly. Bonds issued under this program cannot exceed $250,000 each.

Programs of the Maryland Small Business Development Financing Authority are unique. A major criterion for approval of Authority guarantees and loans is the economic impact resulting from the use of available funds. This impact is measured according to the projected number of jobs retained and created, and the projected amount of tax revenue generated from the use of these funds.

Since 1994, funds under the Authority have been managed privately. In 1992, the U.S. Congress allowed states to use public funds to establish specialized small business investment companies to serve disadvantaged business owners (P.L. 102-366). Two years later, the Maryland Small Business Development Financing Administration was authorized to organize itself into a private Maryland corporation that would be such a company (Chapter 691, Acts of 1994). The Department contracted with that privatized organization to administer programs for a period of three years and has an option to renew the contract for two years.

The Authority has nine members. Seven are appointed to five-year terms by the Governor. The Secretary of Business and Economic Development and either the State Treasurer or Comptroller, as designated by the Governor, serve ex officio (Code 1957, Art. 83A, secs. 5-1003 through 5-1012).

DIVISION OF MARKETING

Within the Division of Marketing are four offices: Business and Economic Research; Business Development; Industry Sector Assistance; and International Business.

In addition, the Office oversees the State Enterprise Zone Program. The Program helps local governments promote economic development in their areas, or zones. To encourage businesses to locate, expand, or remain within the zone, local governments grant property tax credits. Tax credits also become incentives for businesses to create jobs. Certified new and existing businesses are eligible for local property tax credits equal to 80 percent of the additional tax assessed for improvements for five years; thereafter, smaller credits are given for an additional five years.

In this country and abroad, the Office conducts marketing campaigns to encourage the location and development of new business in Maryland. It provides information to corporations about the economic resources of the State, including raw materials, power and water resources, transportation facilities, markets, labor, banking and financing options, industrial sites, and incentives offered by the State.

Under the Office are two programs: Business Location Assistance; and National Marketing.

The Office directs and coordinates State efforts to promote international business development. Its goal is to expand job and income opportunities through international trade, commerce, and reverse investment programs.

The Office helps Maryland firms sell their products and services in the international marketplace through participation in international trade fairs and promotional events. The Office also encourages foreign companies to locate new business enterprises in Maryland and retain or expand international enterprises here. The work of the Office is coordinated with federal, State and local agencies.

Within the Office are five units: Export Manager; Foreign Investment; Maryland Trade Assistance; Trade Development; and Trade Promotion.

DIVISION OF REGIONAL DEVELOPMENT

The Division forms productive relationships between the Department and public and private regional economic development organizations. The Division coordinates programs and strategies that help companies and regions become even more competitive and productive.

Under the Division are three offices: Business Advocacy; Federal Response and Technology Commercialization; and Regional Response.

OFFICE OF BUSINESS ADVOCACY

Created to facilitate communication between the business community and government, the Office provides a regional ombudsman service to Maryland businesses, guides them through the regulatory and permitting processes, and acts as a source of information about government for them. The Office works to enhance Maryland's business environment by reviewing proposed legislation and analyzing its impact on economic growth. By identifying any duplicative, excessive or cumbersome regulations at all levels of government, the Office removes obstacles for business.

The Office stimulates development, application, and commercialization of new technologies for Maryland industries concerned with manufacturing, information services, biotechnology, aerospace, and environmental technology. In this way, it works to retain and expand existing firms and encourage new enterprises within the State.

To support technology businesses, Federal Response and Technology Commercialization coordinates and leverages resources in the public, private and academic sectors. It also serves as liaison to federal government agencies located in Maryland. In addition, the office provides financial support and training grants to companies affected by federal budget cuts and relocations.

Through four regional offices, the Office works directly with Maryland businesses. It serves as liaison to the many State programs and services designed to enhance the competitiveness of Maryland businesses. The Office also oversees the Maryland Industrial Training Program and serves as an advocate for business in dealing with government-related issues and problems.

DIVISION OF TOURISM, FILM, & THE ARTS

The Division promotes Maryland as a destination for domestic and international travelers. The Division also supports the performing, visual and creative arts and promotes Maryland as a location for film and television production.

Under the Division are the Maryland State Arts Council, the Maryland Film Office, and the Office of Tourism Development.

In 1966, the Maryland State Arts Council originated as the Governor's Council on the Arts in Maryland, established by Executive Order. It became the Maryland State Arts Council in 1967 (Chapter 644, Acts of 1967). Formerly under the Department of Economic and Community Development, the Council joined the Department of Economic and Employment Development in 1987 (Chapter 311, Acts of 1987), and the Department of Business and Economic Development in 1995 (Chapter 120, Acts of 1995).

The Maryland State Arts Council supports the performing, visual and creative arts, including dance, drama, music drama, architecture, painting, sculpture, graphics, crafts, photography, design, film, television and creative writing (Code 1957, Art. 83A, sec. 4-608). The Council makes grants to individual artists, arts organizations, and county arts councils. Through the Council, some 210 arts organizations receive operating grants which support performances and exhibitions and the work of artists throughout the State. The Council also conducts programs of its own: Fine Arts in Public Places Program, Artists in Education Program, Arts Facility Assistance Program, and State Folklife Program. Annually, the Council receives a grant from the National Endowment for the Arts for program support.

The Council has seventeen members. Thirteen are appointed to three-year terms by the Governor in consultation with the Secretary of Business and Economic Development. Two (one a senator) are appointed by the Senate President, and two (one a delegate) are appointed by the House Speaker (Code 1957, Art. 83A, secs. 4-601 through 4-609).

For film and video production, the Office promotes Maryland's diverse locations. For feature films, and television programs and commercials, it works to provide facilities throughout the State. The Office helps with location scouting, permits, casting, film crew housing, catering, and equipment rental. The Office also prepares and distributes materials highlighting desirable film locations in the State.

In 1993, the Office assisted in bringing the following films to Maryland:

Major League II, directed by David Ward;
Silent Fall, directed by Bruce Beresford;
Serial Mom, directed by John Waters; and
Guarding Tess, directed by Hugh Wilson.

In 1994, Boys, directed by Stacy Cochran, was filmed in Maryland, and in 1995 came

Home for the Holidays, directed by Jodie Foster;
Twelve Monkeys, directed by Terry Gilliam;
Die Hard with a Vengence, directed by John McTiernan; and
The Shadow Conspiracy, directed by George Pan Cosmatos.

In 1996, the Office helped bring the following films to Maryland:

Absolute Power, directed by Clint Eastwood;
G. I. Jane, directed by Ridley Scott; and
Washington Square, directed by Agnieszka Holland.

In 1997 (as of August), the following films have used Maryland locations:

For Richer or Poorer, directed by Brian Spicer;
Species 2, directed by Peter Medak;
Beloved, directed by Jonathan Demme; and
Dead Man's Curve, directed by Dan Rosen.

Also, the television series Homicide: Life on the Streets has filmed on location in Baltimore since 1992.

To increase tourism, the Office of Tourism Development showcases Maryland's unique recreational, historical and cultural attractions. The Office promotes Maryland as a travel destination for domestic and international tourists. It publicizes major events and advises travel agents, tour operators, writers, and the Maryland travel industry about attractions, services, and facilities.

Free publications describing Maryland tourist attractions, accommodations, historic sites, State parks, camping facilities, and recreational opportunities are updated annually. These publications include Destination Maryland (travel and outdoor guide), Maryland Calendar of Events, and an official Maryland State highway map. The Office also works with travel and outdoor writers to provide tours of Maryland, research and information, and promotional photographs.

In addition to answering mail and phone inquiries, the Office runs a visitors' center and guide service at the State House in Annapolis, and ten highway information centers. The Office's matching funds and cooperative marketing programs strengthen and support county and regional travel promotion councils as well.