LD 1276, An Act to Create and Sustain Jobs and Affordable Housing through Development

Sponsored by: Senator Cameron Reny (D-Lincoln County)

Co-sponsored by: Senators Daughtery (D-Cumberland County), Poulliot (R-Kennebec County), and Grohoski (D-Hancock County); Representatives Eaton (D-Deer Isle), Hepler (D-Woolwich), Stover (D-Boothbay). 

• Preserve and grow jobs, businesses, farms and affordable housing. 

• Attract and retain more young Maine workers.

• Strengthen local ownership and control. 

• Promote economic and community development. 

What would LD 1276 do? 

LD 1276 would incentivize the conversion of business assets to cooperative or employee ownership, and reduce the cost of financing the sale. It would: 

1. Make the sale of any business, farm, manufactured home community, or rental property exempt from income taxation if sold to a cooperative or employee-owned enterprise, including consumer, producer, resident or worker cooperatives or Employee Stock Ownership Plans (ESOPs). 
2. Make interest income earned from financing these transactions tax exempt for sellers and Maine-based lenders. 
3. Expand education and training opportunities and technical assistance for business owners and their workers interested in pursuing employee ownership.  

Why do we need LD 1276?

• Strengthen local economies. 

University of Maine School of Business estimated that Maine has 12,790 small businesses, employing 108,000 workers, where the owner wants to retire in the next several years, yet only around 15% have a documented exit plan. The smaller and more rural the business, the more likely the business will be liquidated and closed when an owner retires.

• Create Maine jobs. 

Employee ownership can help stem Maine’s “brain drain” and attract and retain more young workers. Research shows that young workers in employee-owned companies are in much better financial shape, with 33% higher wages, 92% higher household wealth, and 53% higher job tenure.

• Preserve affordable housing. 

Maine has over 600 manufactured housing parks that are home to over 20,000 people, many of them young families, seniors, and people living with disabilities. Meanwhile, in many communities apartment buildings provide a primary source of affordable housing. The affordability of these communities can be threatened when a property is sold to investors or developers. Rents often go up substantially, or worse, residents are forced to move or relocate their homes so the buyer can redevelop the property. Resident-owned cooperatives preserve affordable housing. 

• Support our seniors. 

For most business owners, farmers, and rental property and manufactured housing  community owners, the value of their business assets are the only retirement savings they have. Selling to employees, consumers or residents can often provide the best chance for an efficient and cost-effective exit. 

• Support existing and future farmers. 

Up to 400,000 acres of farmland in Maine will soon change hands, and many farmers over 65 do not have identified successors. Maine farming and food production is enjoying a renaissance, but the cost of entry for young farmers is throttling potential growth in this sector. 

Where else have ideas like LD 1276 been implemented? 

• Over a dozen states have created similar incentives and technical assistance programs to support cooperative and employee ownership. 
• Eight states provide tax incentives for the sale of manufactured home parks to a resident-owned cooperative. 
• Since 1984, large C Corporations have been able to benefit from federal tax exemptions when the business is sold to employees as an ESOP or worker cooperative. However, because of the benefit’s complexity the vast majority of small Maine businesses can’t use it. 
• Starting in 2024, the federal government will provide grants to states to expand employee ownership education and technical assistance programs. States that have established Employee Ownership Centers will be first in line to get these federal grants.

Support for cooperative and employee ownership from across the political spectrum: 

“As they prepare for retirement, many older business owners are concerned about what will happen to the enterprise they created and nurtured with so much time and effort. Employee ownership helps to ensure that the business will continue to thrive with a loyal workforce that is literally invested in its future.”

• Maine Senator Susan Collins

“We need to provide assistance to workers who want to purchase their own businesses. Study after study shows that when workers have an ownership stake in the businesses they work for, productivity goes up, absenteeism goes down and employees are much more satisfied with their jobs.” 

• Vermont Senator Bernie Sanders 

Read the full text of LD 1276, An Act to Create and Sustain Jobs and Affordable Housing through Development of Cooperatives and Employee-owned Businesses, at www.legislature.maine.gov