2021-10-05 00:00:00 - Joint Committee on Economic Development and Emerging Technologies

[THIS ONE]

SHOW NON-ESSENTIAL DIALOGUE

[SEN CYR:][SB261][SB260] Good morning, Chair Lesser, Parisella and all the members of the committee. Thank you for this opportunity to testify in favour of two bills, the first Senate bill 261, an act enabling the Massachusetts centre for employee ownership. In 2019, I was proud to help lead the Senate enabling revival of the Massachusetts office of employee involvement and ownership, Mass EIO with strong leadership from the Senate president and in partnership with Representative paul Mark as well as the Massachusetts Office of Business development. I also see former Senator Damiani who was very involved in this effort.

I was proud of the legislature continued to fund Mass EIO over the past several years. Our work was timely given the unforeseen pandemic that we all continue to navigate and the impact that it's had on thousands of small businesses across the commonwealth. Employee ownership has really many355 advantages for business is not the least of which is just greater resilience during recessions and increased agility while experiencing economic turbulence. Without a doubt, employee ownership options will provide and do prove to be vital tools as370 we look to build back better in the coming months and years, especially as we look ahead to economic challenges that will loom both anticipated and those that aren't expected.

One such potential challenge is the so-called silver tsunami, the business succession crisis that many are predicting are coming in this decade as baby boomers who own small businesses look to exit the workforce and retire. There are roughly 20,000 small businesses across the commonwealth that are owned by baby399 boomers who are approaching retirement age. While there are a number of options available to these business owners as they approach sort of the end of this407 career and whatever is next, I'm mindful of the vast population of Massachusetts residents who are employed in these small businesses417 and the effect that the choices that the current business owners may have on their employees.

If these businesses are sold to large, out of state corporations or private equity firms, as is often the only option for owners who are relying on their business to provide a financial foundation for the retirement or they simply liquidate the assets and shuttered their doors altogether, thousands and thousands of jobs could be lost. I'll speak to the Cape and Islands district where we have an absurdly red hot real estate market were basically the most valuable part of your business is448 the real estate and I can think of dozens of examples of restaurants and stores that were sold for the real estate and I have now been converted to private homes or condos or457 Airbnb and are no longer businesses that are operating the community.

Employee ownership, I really believe offers one solution, an opportunity for retiring business owners and their employees and it enables owners to transition out of the business while ensuring that that business can retain their employees, maintain local ownership and stay open, right? Think of your favourite Cape Cod summer destination, right? That that business um probably won't be, may not be around right486 when the current owners decide to retire or sell.

In my own family's instance, my family owned a restaurant for 28 years in North Korea, it was seasonal. When my dad was sick of flipping eggs after 28 years, there really weren't very good options for us to continue the business. I really wish my family knew about employee ownership. In fact, several of their employees have since launched their own restaurant-style businesses. This would have been a very513 helpful tool for us. I think we know that business ownership is a very519 powerful wealth creation tool, but we also know that it takes quite a bit of wealth to launch a business in the first place.

We have thousands of business owners who are in a position to profit hand over the reins of their employees um and who will in turn have the ability to create wealth for themselves through business ownership. So this is dynamic, I think that we really should be fostering, right, it increases resilience agility loyalty and the overall success of employee-owned businesses. Employee ownership gives workers not just a financial benefit546 from the business, but a personal statement of success and it further routes our businesses into the fabric of our communities.

We know the capital expenditures that are necessary to start a business, a new business is particularly steep and so I just think this is a really good model, particularly in a time of rising wealth and equity, employee ownership is exactly the type of business structure we need more of that allows middle-class workers not only to survive but to thrive and grow their wealth. So the bill itself would expand581 upon the success of the Mass EIO and would ingrain employee ownership further into the ethos of the Massachusetts economy.

By establishing the Massachusetts centre for employee ownership within the Massachusetts Office of Business Development, there would be an advisory board that would be created to advise that process and overall, having an entity with a mandate in statute to promote efforts around employee ownership are very important. As I said earlier, my family didn't have623 a clue about this being an option, even though the employee ownership incentives that exist, I think date back from tax reform during the Reagan and tip O Neill era, so a little before our time, Mr. Chair.

Really now, more than ever though, I think we really, as we're sort of emerging from, or kind of trying to figure out life in this pandemic or in this latest phase of the pandemic, employee-owners are just a powerful tool and I think we should be working to promote it. I think we need a centre for employee ownership and I hope this bill will receive a favourable report on the committee and the committee will continue to do this good work. I also want to mention Senate 260, an act relative to investing in Massachusetts based jobs.

This bill pertains to certain tax credits within the Massachusetts Economic Assistance coordinating council that are eligible to certain businesses, more part of the state's Economic Development incentive program. We have one of the most highly educated and skilled workforces in the world and we've seen to some extent that we've had real success here, but I really worry that these incentives sort of leave out communities that are not in our urban hub. I think that we need to make sure that we are incentivizing programs to692 operate headquarters and their activities all across the commonwealth.

So the bill would direct the state to give preference for awarding tax credits to businesses that already based their operations or headquarters in the commonwealth of Massachusetts and it would preclude businesses that locate their headquarters and executive operations outside of the commonwealth from qualifying for multiyear tax credits. Further, the bill would direct the state to create a new incentive program to encourage businesses located within the commonwealth to hire additional new, permanent full-time employees right here in the state.

Finally, the bill would encourage special consideration for tax credits that are given to businesses located outside of the traditional urban business hubs, particularly in seasonal and rural communities. I've heard time and again, we have a number of several firms in the Cape and Islands who are in global technologies who simply just haven't been able to access the existing tax credits. These incentives would really encourage companies to create more jobs across the region and I757 think this is particularly important given the real population shift we've seen.

The Cape and Islands district is the third highest with a population increase that we've seen in part because of the pandemic and so I think people are now living here. We should have opportunities for them to work here. Thank you for taking me out of turn and for your consideration. I appreciate to be taken out of turn, I respectively, request a favourable report781 of both bills. I'm glad to take any questions the committee may have.

SHOW NON-ESSENTIAL DIALOGUE

[REP GENTILE:][HB511] Thank you, Chair Lesser and Chair Parisella. I am here to testify in support of House 511,846 an act enabling the Massachusetts centre for employee ownership. This legislation seeks to strengthen and expand the role of the Massachusetts centre for employee ownership, Mass Ceo and create a statewide advisory board on employee ownership. Revived in 2019 by $150,000 appropriation from the commonwealth, Mass CEO currently provides training, education and direct assistance to grow and sustain a strong network of employee-owned businesses in the commonwealth.

This legislation would expand on this revival by placing Mass CEO within the Mass Office of Business Development, allowing Mass CEO to retain unused funds for expenditure in the future and requiring the Mass CEO director to prepare a report for the Legislature, including an inventory of employee-owned businesses in the state and the specific activities taken by the Senate to support employee ownership. A new board with seats for 19 stakeholders, including 13 for companies with employee stock ownership plans, worker cooperatives and advocates, in addition to relevant state agencies, would advise the Governor and Mass CEOs director on matters related to employee ownership policy.

This legislation is important to enable the commonwealth to do more to encourage employee ownership in the state. In addition to being principally democratic in nature, ESOPS and worker cooperatives have been shown to improve company performance and create better working environments for employees. This corporate structure usually formed a closely held company when a principal owner retires provides a strong incentive for employees to work productively because they share the benefits of success. Likewise, employee-owned businesses create opportunities for greater employee participation that enhance productivity by encouraging ideas and innovation.

Perhaps, most importantly, these companies have every incentive to treat their employees fairly by providing adequate pay, benefits and working conditions. Many successful companies in the commonwealth used employee ownership models. I see Dan Canary from Harpoon Brewery in Boston with us today. One great example of employee-owned business and also C. D. M. Smith, a major engineering and construction company, another example. Well, thank you for taking me out of turn today, Mr. Chairman. I urge the committee to act favourably on House 511. Thank you.

SHOW NON-ESSENTIAL DIALOGUE

[PAT GAROFALO(AMERICAN ECONOMIC LIBERTIES PROJECT):][HB528] Thank you, Chairs Lesser, Parisella and the members of the committee. I'm here to testify in favour of H 528. I'd like to thank Rep Mark for introducing this bill. My name is Pat Garofalo. I'm the director of state and local policy at the American economic liberties Project, a progressive think tank dedicated to reducing the influence that dominant corporations have over our economy and democracy. H 528, the agreement for best practices and Economic Development Act would form an interstate compact to curb and eventually eliminate the use of company-specific corporate tax incentives across state lines.

Creating a1072 legally binding agreement between Massachusetts and like-minded states to abandon decades of failed economic development strategies will help save Massachusetts taxpayers money, level the playing field1081 for your1082 state small businesses, improve local accountability and democracy and allow elected officials to focus state resources on the sort of policies that boost overall economic growth and quality of life. States across the country right now spend tens of billions of dollars every1095 year on company-specific corporate tax incentives.

Massachusetts according to just the disclosed records has spent nearly two billion on such incentives, most of that since 2014. According to the vast bulk of research done on this policy area that money is buying you next to nothing as corporate tax incentives have a negligible effect on economic growth, job creation or incomes. There are several reasons why that's the case but one of the most important is that the vast majority of the time incentives don't actually entice corporate leaders to do anything they wouldn't have done anyway because location decisions are based on several other factors, such as workforce requirements, supply chains, access to transportation and other infrastructure, education,1129 local labour laws, the sort of stuff Massachusetts actually does excel on.

According to Tim Martic of the Upjohn Institute, between 75 and 98% of granted corporate tax incentives have literally1140 no bearing whatsoever on where the firm ultimately chooses to locate. Massachusetts actually learned this when General Electric decided to move a large facility from Connecticut to Boston and then changed its mind and downgraded its plans despite there being tens of millions of dollars in state incentives on the table. States across the country are competing against each other in a game that is rigged so that none of them can actually win.

Why then do these incentives persist? Because there's a prisoner's dilemma at work, understandably, no officeholder wants to appear to be doing nothing for their constituents while those the next state over announced the deal after deal cutting ribbons, getting positive press coverage even if the promised benefits of those deals don't actually materialize once the ink is dry. Research has shown that the Governor's use of incentives increased during the years in which they are up for reelection because there's political capital to be gained by engaging in corporate incentives.

Even if actual capital doesn't follow in their wake, the interstate compacts solve this issue by having states multilaterally disarmed together because the complex terms only apply to other compact states, there's no danger of Massachusetts going it alone, which is key because actually some of the most profligate users of corporate tax incentives are nearby trying to poach all of your businesses. Kansas and Missouri implemented a version of this in 2019 in order to prevent corporations from moving across the greater Kansas City metro area which straddles the border there in order to claim incentives.

That solution deserves to go national. Now,1215 I think this is a good idea even before the pandemic, but it's even a better one now because while the pandemic has disproportionately harmed small businesses, corporate incentives disproportionately benefit larger entrenched corporations. States are actually paying for the privilege of putting their own small businesses at a disadvantage visibly larger national and multinational1233 change and conglomerates. Also by facilitating information sharing and the development of1237 best practices, the compact can foster the introduction of transparency and accountability to this policy area, which is desperately lacking both.

Again, Massachusetts has actually taken some important steps in recent years on this front, but without similar measures being pursued across state lines, there's only so much good they can do. With at least 14 other states this year having introduced versions of the same legislation to get1257 on board with an interstate compact against corporate1259 tax giveaways, the moment is now to begin to make the compact in reality. Thank you so much for your time and for pushing me to the top of the schedule.

SHOW NON-ESSENTIAL DIALOGUE

[DENNIS WIEBOLD(BOSTON INTERCOLLEGIATE GOVT):][HB524] Thank you for the opportunity to testify today. My name is Dennis Wiebold and I'm a BA MA candidate of Boston college. I'm also proud to serve as the chairman of the Boston Intercollegiate Government first found in nearly two decades ago and recognized in 2003 by the city of Boston as an effective means of advocacy for students in the Greater Boston area. The Boston Intercollegiate government represents over 130,000 undergraduates in the Greater Boston area.

As a coalition of undergraduate student government, we sponsor student-centred civic engagement events and advocate for student interests on local state and federal levels. I am before you today, on behalf of BIC and the students that we represent to endorse with amendments H 524, an act relative to a loan forgiveness task force. For those who are not familiar with this legislation, it would establish a task force to quote, review and report on the economic impact of loan forgiveness programs to ensure that college graduates stay, work and build businesses in Massachusetts. Sponsored by Minority leader, Jones, the House H 524 is a timely bill with the potential to significantly enhance the Legislature's understanding of the impact of loan forgiveness programs on the commonwealth's economic vitality.

For this reason, we're excited to announce our endorsement of this legislation but with one small amendment. As introduced, this task force would not be required to have any members of college-age, although H 5 24 does allow five individuals nominated by the Chancellor of the University of Massachusetts to serve on the task force. There is no requirement that these or any other individuals be of college-age. As such, we ask that an amendment be made to this1383 legislation to ensure that at least one member of the task force is a1386 college student between 18 and 25 years of age at the time of the task force's first meeting.

This simple amendment, which I've had the opportunity to discuss with Minority Leader Jone's team is fundamental to ensuring that the perspectives of college students are considered in conversations around loan forgiveness programs. Indeed, the task force is required consideration of key labour sectors that would best benefit from grants and fellowships within the commonwealth, for example, would undoubtedly be bolstered by the experiences of college-age task force members who may be able to provide insight into how current students and recent graduates are navigating post-graduation employment searches and loan repayment programs.

Similarly, because the task force is tasked with developing recommendations on1431 how to improve loan forgiveness programs, a college-age member of the task force may be able to provide additional insight into effective outreach strategies to the college community so that individuals who can benefit from these programs know how to access them. These are just two examples of how the task force might benefit for college-age membership, but I think we can agree that there are many more.

On behalf of the Boston Intercollegiate government and 130,0001453 plus students that we serve, I urge you to support H 524 with the amendment I've described. This is a great opportunity to ensure that the needs and perspectives of college-age students in the Commonwealth are included in this timely and critically important conversation around loan forgiveness and economic development. Thanks to my minority leader, Jones for his leadership on this issue and thank you to Senate Chair Lesser and House Chair Parisella for the opportunity.

SHOW NON-ESSENTIAL DIALOGUE

[JACK MORIARTY(OWNERSHIP AMERICA):][HB511][SB261] Chairs, Lesser and Parisella, vice-chairs, Brady and Vargas, members of the joint committee, thank you for the opportunity to testify in support of H 511, S 261, an act enabling the Massachusetts centre for employee ownership. My name is Jack Moriarty and I am the founder of Ownership America, a new Cambridge based nonprofit1522 policy and grassroots advocacy organization. The mission of ownership America is to pass policies that build wealth by broadening access to property ownership, whether that's owning a stake in the business where you work or equity in the home where you live.

According to decades of research, expanding employee ownership consistently produces higher wages, greater worker wealth and increased job retention. Research by the employee ownership Foundation and Rutgers University demonstrated that employee-owned firms were 3-4 times more likely to retain their workforce during the pandemic and were significantly less likely to cut hours and salaries compared to other firms. Imagine how different the last 18 months might have been had employee-owned businesses constituted a greater share of the Massachusetts economy, fortunately, the commonwealth is home to well over 100 employee-owned companies across a wide range of industries and geographies.

These companies include1572 Web industries, a Marlboro based manufacturing supplier that responded to the pandemic by delivering over 30 million rapid antigen tests and PV squared, a worker-owned cooperative in Greenfield, that's a leading provider of solar energy panels and doubles as a certified B Corp. Data from the National Centre for employee ownership indicates that in 2018 Massachusetts employee stock ownership plans or ESOP companies had a total of over $2 billion in retirement, wealth held in trust for the workers.

I'll emphasise that that number is in addition to traditional retirement benefits such as a 401 K that are already provided by most employee-owned companies. Testimonial after testimonial from employee-owners confirms how transformative this wealth-building opportunity is for themselves and their families, many of whom have been left out and otherwise marginalized by an economy with unequal opportunity. Ownership America was pleased to partner with Massachusetts democrats during the platform convention last month where delegates reaffirmed support for employee ownership in the party platform and overwhelmingly passed a resolution endorsing H 511 and S1634 261.

Employee ownership has a long history of bipartisan support at every level of government. With this legislation, this committee has the opportunity to remove a key barrier to employee ownership adoption, awareness on the part of business owners that are getting ready to retire and sell their business. According to data published by project equity, Massachusetts is home to over 68,000 businesses that have an owner in the baby boomer demographic. If even a fraction of these exiting owners pursued employee ownership as part of their business exit strategy, the potential impact on workers' communities and the overall Massachusetts economy would be extraordinary.

However, many business owners are not even aware of employee ownership as an option and as a result, many of these stable businesses will instead shut down or1679 sell to outside investors who may not be interested in preserving and growing local jobs here in the commonwealth. A fully resourced Massachusetts centre for employee ownership will help to ensure that business owners and employees don't miss this transformative opportunity offered by employee ownership and would allow the commonwealth to join the ranks of other states like Colorado, that have already made employee ownership a cornerstone of their state economic and1702 community development strategies. Thank1704 you all for your time and1705 consideration of this important legislation.

SHOW NON-ESSENTIAL DIALOGUE

[DAVID MAGNANI(CONCERNED CITIZEN):][HB511] Thank you, Chairman. I appreciate this. Chairman, I have sat on your side of the desk for 20 years as a member of that committee and I must say I've never been so excited about a hearing in all those years given that this legislation, house 511 is being heard today. My own history with employee ownership began 45 years ago when I taught the first graduate class at UMass Amherst in Industrial Democracy and1775 that was a graduate course in 1978.

In 1987, I helped establish and Chair the Massachusetts Commission on employee ownership in Massachusetts, and we held hearings at that time across the Commonwealth, which led to the establishment of the Massachusetts Office of Employee involvement ownership in 1989. The legislation was written by the way, by a dear friend of mine, a young lady who was a labour lawyer1809 at the time by the name of Karen Spilka. She did an extraordinary job for us then and still does. I made an appropriate decision telling her that if she ever ran for Congress should never become the presence of the Senate.

I'm hoping my judgment today is better than it was then. The commission was chaired by a World World Bank economist, dr john Simons and the office was established as a result of the almost I think, 15 hearings across the state uh which we held to establish this office, Which was founded in the legislature by the legislature in 1989 and operated1852 through a consulting contract with Harvard economist dr Chris McCann, who is here today of the Industrial Cooperative Association until 2007.

If I'm correct, then of course fell victim like many other state programs of the global economic crisis. The office was then funded again through 2015 through a contract again with the Industrial Cooperative Association. Through 2020, I don't believe I may be mistaken that it's actually in this year's budget and 2021. I must say it's for this for all these reasons that I asked today that this bill be passed to establish the office no longer is a consulting contract but as a part of the mass Office of Business development. One of the things that struck me about that was that one of the roles of MOBD is to run the six or seven state small business development centres and we want to be sure that the employee ownership model is offered to startups as well as to retiring owners in the commonwealth of Massachusetts.

The economic data that Jack just cited is extraordinarily compelling and it gets better every year. Massachusetts has an opportunity here to become as it has many times before a national leader in economic development and I hope that the committee looks favourably on the bill, H 511. I'm happy to take any1952 questions and thank you again, Mr. Chairman for holding the hearing and including House 511 in this hearing.

SHOW NON-ESSENTIAL DIALOGUE

[DAN KENARY(HARPOON BREWERY):] Thank you very much for the opportunity to testify before you today. My name is Dan Kenary and I'm the co-founder and Ceo of Mass paper and company, also known as a Harpoon brewery. I'm testifying today to express my support for employee ownership, to build a more resilient post-pandemic economy and workforce right here in Massachusetts. I lead harpoon to become 48% employee-owned in 2014. The alternative pushed by my business partner was the sale of the business to out of state owners who may very well have moved production to another location.

Since we established the harpoon brewery, employee stock ownership plan or ESOP, you have sunk our roots even deeper into Boston in the commonwealth. We've created almost 200 employee-owners, increased productivity and employee engagement and fought our way successfully, we hope, through the pandemic. The evidence is overwhelmingly clear that employee ownership is a win for employees, a win for business and a win for local communities. According to research from the National Center for employee ownership, employee-owned companies generate over double the retirement wealth for employees, lay off workers far2057 less frequently during economic downturns, pay higher wages, grow faster and keep their jobs located in the community when compared to2066 conventionally own company.

However, and I know this from first-hand experience, too many business owners still don't know that selling their business to an ESOP is even a possibility. This lack of awareness about employee2079 ownership is a succession planning option. It's a significant barrier to growing the number of employee-owned companies in Massachusetts. Fortunately, this committee has the opportunity to help solve this problem. Bypassing an act enabling the Massachusetts centre for employee ownership. This legislation would authorize a permanent Massachusetts senator for employee ownership or Mass Ceo in the mass office of Business Development.

Building on initial funding approved by the2107 legislature in 2017, this legislation will allow the mass CEO to fully realize its mission of conducting outreach and promoting efforts to create an overall environment in the commonwealth, which will expand and2120 enhance employee ownership, increase the number of employees of companies to publicize and2125 promote the benefits of employee ownership from the general public research and evaluate employee ownership in the commonwealth and facilitate the distribution of existing information and resources.

From 2015 to 2019, I served as chair of the Associated Industries of Massachusetts and got to know many other baby boomer business owners facing the same fork in the road that my ex-partner and I face. How helpful it would be if we had a state agency helping to make the case for employee ownership is a great option in such situations. A true four-wave wind for the selling owner, the employees, the communities in which they live in the Commonwealth? Imagine2166 what it would look like if many of the businesses in Massachusetts are owned by their employees?

The local economy would be more vibrant and deliver higher productivity. The wealth created would be shared more widely, leading to more broadly based prosperity. The employee-owned companies would be less likely to move away and their employees would be less likely than others to be laid off during the recession. You would have the opportunity to champion an economic program that enjoys broad bipartisan and public support. Many other states have employee ownership centres and they have affected tools and promoting this wonderful outcome.

In fact, we were lucky to have another brewery in Vermont so we can take advantage of2205 the support offered by the Vermont Center for employee ownership when we made our transition. We shouldn't have to rely on out of state resources in such situations. I urge the committee to vote favourably on these bills to create a permanent Mass centre for employee ownership. I also welcome you to learn more about what employee ownership means to our employees and our cheers to employee ownership video which has been submitted as written testimony2228 and is publicly available on Youtube. Thank you for the opportunity to testify today, cheers.

SHOW NON-ESSENTIAL DIALOGUE

[SEN LESSER:] A quick follow up if it's okay, can you kind of walk us through some kind of what this looks like for the rank and file employees at harpoon and I think kind of on an abstract level we understand this idea of employee ownership but is it a vesting schedule? Is that after a certain number of years, you kind of walk through the eyes?

[KENARY:] Absolutely. I'll tell you a little bit too about because there is a special moment the night we announced a lot of crap rules that have sold out and we had everybody up in our beer hall, the whole company and I said, I'd like to introduce you to2276 the new 48% owners of the company and there was silence. You know you could hear a pin drop and the taps were opened. That's unusual. I said please stand up and shake the hand of the person next to you are. Now all owners of 48% of the company is a remarkable night. So we went into a very significant educational outreach at that time to explain what ESOP are and what they're not.

There's a vesting schedule, you're correct. So employees do not pay for these shares, they are given shares over time. We were what's called a leveraged ESOP meaning we had to borrow money to buy out my partner so that we could then take his shares, put them into the trust and start allocating them to employees over time as the loan was paid back. So every year, employees are awarded shares based on their compensation as a percentage of total compensation. So you make $100,000 and our total comp is 10 million, you're going to make 1% of the shares allocated that year and then your overtime best that I believe in our case, it's after six years, you're 100% vested in the program.

[LESSER:] Are those shares just to follow up? Are they available the way a stock share would be or how?

[KENARY:] Companies can handle it somewhat differently. For the shares, you do an annual evaluation to put a value on2355 those shares every single year and then when employees retire, when they hit retirement age, you have to buy those shares back to the employees. You can buy them back sooner if you'd like to, it kind of depends on the situation of the companies. Again, this legislation was really well crafted all those years ago because it allows you were in a very competitive business, we're able to2377 run our business as a business, okay?

Make decisions that we have to make, were not overburdened with regulations that preclude us from doing so. We're not overburdened with liquidity demands. The one being when employees hit retirement age, they have to be able to sell those shares back to the company, but then they will be paid out over five or six years. So it's all kind of by the regulations in the original2401 legislation that tells companies what options you have, like for example investing, you can do it immediately or you can take up to six years, you can't go beyond that.

[LESSER:] Then once they're vested though, can they sell them to like a member of the public or they can only sell them back to the company at retirement?

[KENARY:] Again, in our case, they can only sell them back to the company. Other experts on here would know if you can structure so they could sell them to anybody. Most privately-owned companies don't want that, so you are able to say, hey when you retire or leave2435 the company, depending on how you set it up, the company will buy your shares back and that's how it's structured. You cannot just go and sell them to a third party.

SHOW NON-ESSENTIAL DIALOGUE

[VINCENT LAWRENCE DICKSON(CONCERNED CITIZEN):][SB274] This is regarding S2510 274 community institution stabilisation. My name is Vincent Lawrence Dickson, 60 Lake Street Unit Dean, Winchester Mass 01890. I well know the unique characteristics of numerous towns as well as cities such as Boston and Cambridge where I lived for many years and many towns including Winchester where I now live and the realities of development and many aspects of local character, I am a historian as well. Each and every community in our Commonwealth, all 351 municipalities, the cities and towns of our state have a considerable length of known history, centuries of value and often quaint, discrete and unique flavour.

2552 This proposed legislation recognizes these unique and wonderful realities and provides some additional and unique tools for local neighbours and officials to retain aspects of local character in the midst of economic change in the dynamics of communities. Too often when organisational leadership, whether commercial, nonprofit or other chooses to cease operations,2578 local properties become vacant or even semi-abandoned, sometimes even virtually totally abandoned. As2585 is important is that the still often lively activities of commerce, community service and other unique activities are frequently damaged.

This includes many times the loss of continuity and locally valuable2600 activities, whether it is a viable local business, a valuable historic school, a church community with local quality leadership or some other local service organization, this proposal adds an option for local residents to continue and or to band together to continue such local activities. I think that this proposal is carefully designed to be flexible and responsive to local communities and local government officials. It2628 does not prevent transfers of property or changes in purpose, but it does provide a caution light that is community-friendly.

There have been too many examples of supervising authorities whether commercial or noncommercial deciding to close a viable organization facility into our building and not permitting its continued function but seeking to prevent others who often may have in fact been loyal to its purpose, from even having the opportunity to continue the commerce or service that is a hallmark of the location and the community. Property rights are important in our system and interact in many distinct ways with the broader public interest.

They are derivative and do not absolute. In fact, legitimate public purposes, interact with property owners in numerous ways through zoning use, licensure public safety and other aspects of our open government system. This legislation, by providing an opportunity or opportunities for local residents to have a right of first refusal can strengthen and continue local values and character. In so doing it actually improves the range of choices available to local communities. In effect, this legislation encourages continued viable local community and service uses that provide real services to local2708 residents often visible building characteristics and local character in the continuity of both commercial and non-commercial entities that are a hallmark of strong local communities.

Nominal property owners, organizations who fail or choose to end their operations would in fact have an additional opportunity to extract their investments from the activities that they choose to discontinue but be potentially redirected insofar as they in effect could not make decisions that totally ignore future operations of businesses and organizations or the longer term. In conclusion, surely, unless there is some preponderant public interest in health and safety, we should not want a property owner to prevent a future property owner from having a less encumbered choice on usage for years to come.

Part of the American success story and the success of many of our local communities is because an individual and a group saw an opportunity to succeed and made it happen even though their predecessors had failed. Please support a favourable recommendation on behalf of S 274 and by so doing, strengthen local choices and community autonomy. I want to just briefly mention that I also would join my support to S 261 and H 511 that were testified on earlier because they are in some ways compatible with this2791 kind of mentality of recognizing community economic development as crucial to the success of our local communities. Thank you.

SHOW NON-ESSENTIAL DIALOGUE

[CHRISTOPHER MACKIN (CONCERNED CITIZEN):][SB261] Thank you, Mr. Chair. My name is Christopher Mackin. I am a private sector advisor in the field of employee ownership since the late 70s in both nonprofit and for-profit capacities. I am a part-time professor at Rutgers and at Harvard teaching about this topic. You've heard from prior speakers, so I won't recapitulate the research findings and what is pretty much a consensus across the political spectrum that employee ownership is a pro-growth and pro-worker tool for economic development.

I would urge the bill S 261 and I'm sorry I forget the house number be adopted. The issue here is that the program as it exists now is a bit of an orphan program. Ex-Senator Magnani referenced this, we were able to get through the support of Senator Cyr and Senator Spilka some funding to restart this on a line item contract, consulting contract basis and the contractor is doing a great job with quite small businesses in this in this space. We're advocating through this bill that the idea of employee ownership needs to be integrated into the2914 more mainstream economic development infrastructure and planning.

We should be looking at this as a tool for companies like Harpoon, companies in the lower middle and middle market that2926 would have revenues of 20 million to a billion and could employ anywhere from 200 to 1000 employees. That we have plenty of those businesses dotted across the countryside in Massachusetts and if there were an office like this, the chances are that many more of those businesses would do as Harpoon has done. Now what the office does just to give you a little insight because as David mentioned, my company ownership associates, which is Cambridge Massachusetts had a contract to manage2960 this from 1999-to 2008 before the financial crisis.

The role of this office would be better done with more resources and more staff than I had, we had a tiny little $127,000 appropriation but the role of the offices is to act as a sort of a coordinator and coach to business owners like the Dan Kenary's of the world, being able to bring them in and explain how this works and to act as an information broker for the private sector. There is a healthy private sector of law firms, evaluation firms, accounting firms who do this work. One of2999 the important roles of the centre is to make sure our Massachusetts businesses are getting fair prices and good service from the private sector.

Hiring a staff who have some knowledge of the M&A business community and who the professionals are taking the side of our businesses and our workers would be an advantageous thing. Finally, I would say, I'm very heartened by the fact that other states basically followed our lead. Senator Magnani got this ball rolling across the country as far as I'm concerned in 1989 but the state of Colorado now, for example, is in the lead nationally, they have3041 set up special loan programs for this, they have full-time staff working on it.

Dan Kenary mentioned Vermont, Pennsylvania has a very robust centre were a little bit behind and our resources and our application here and we need to get this idea with a permanent desk and economic development and have it be part of what the state does. Thank you very much.

SHOW NON-ESSENTIAL DIALOGUE