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DEPARTMENT OF BUSINESS & ECONOMIC DEVELOPMENT

FUNCTIONS


[photo, World Trade Center Baltimore, at Inner Harbor, 401 East Pratt St, Baltimore, Maryland] To generate jobs in Maryland, the Department promotes biotechnolgy, attracts new businesses, encourages the expansion and retention of existing facilities, and provides financial assistance and training. The Department publicizes Maryland's attributes, and markets local products at home and abroad to stimulate economic development, international trade, and tourism. The Department also invests in the arts and promotes film production in Maryland.


World Trade Center Baltimore, at Inner Harbor, 401 East Pratt St., Baltimore, Maryland, November 2009. Photo by Diane F. Evartt.


The Department's objectives are carried out by three divisions: Business and Enterprise Development; Marketing and Communications; and Tourism, Film, and the Arts. The Department also is aided by the Maryland Economic Development Commission and the Maryland Life Sciences Advisory Board. Further assistance is provided by the Office of Policy and Government Affairs, and the Maryland Biotechnology Center.

In January 2009, the Department moved from Redwood Tower, 217 East Redwood St., to the World Trade Center Baltimore, at 401 East Pratt St., Baltimore.

OFFICE OF SECRETARY

World Trade Center Baltimore, 9th floor, 401 East Pratt St., Baltimore, MD 21202

As the chief executive officer of the Department, the Secretary of Business and Economic Development sets policy, promulgates rules and regulations, and determines the strategies necessary to fulfill the Department's mandate. Appointed by the Governor with Senate advice and consent, the Secretary is responsible for the budget of the Department, its boards, commissions, and offices. The Secretary is assisted by the Deputy Secretary who is appointed by the Secretary with the approval of the Governor.

The Secretary serves on the Governor's Executive Council; the Base Realignment and Closure Subcabinet; the Governor's Subcabinet for International Affairs; and the Smart Growth Subcabinet. The Secretary also chairs the Task Force on Industrial Job Creation in Baltimore County, and the Maryland Military Installation Council, and serves on the Board of Directors of the Maryland Agricultural and Resource-Based Industry Development Corporation; the Maryland Agricultural Education and Rural Development Assistance Board; the Bainbridge Development Corporation; and the Maryland Workforce Corporation. The Secretary is a member of the Governor's Intergovernmental Commission for Agriculture; the Maryland Aviation Commission; the Climate Change Commission; the Critical Area Commission for the Chesapeake and Atlantic Coastal Bays; the Interagency Disabilities Board; the Maryland Economic Development Assistance Authority; the Maryland Economic Development Commission; the Education and Workforce Training Coordinating Council for Correctional Institutions; the Commission on Environmental Justice and Sustainable Communities; the Federal Facilities Advisory Board; the Maryland Green Purchasing Committee; the Maryland Heritage Areas Authority; the State Highway Access Valuation Board; the Governor's Commission on Hispanic Affairs; the Governor's Interagency Council on Homelessness; the Commission to Study the Impact of Immigrants in Maryland; the Maryland Industrial Development Financing Authority; the Maryland Life Sciences Advisory Board; the Maryland Advisory Commission on Manufacturing Competitiveness; the Maryland Integrated Map Executive Committee; the Interdepartmental Advisory Committee for Minority Affairs; Maryland Council for New Americans; the Board of Directors, PenMar Development Corporation; the P-20 Leadership Council of Maryland; the Maryland Port Commission; the Renewable Fuels Incentive Board; the Maryland Rural Broadband Coordination Board; the Rural Maryland Council; the Governor's Commission on Small Business; the Maryland Small Business Development Financing Authority; the State Center Executive Committee; the Maryland Sustainable Growth Commission; the Board of Directors of the Maryland Technology Development Corporation; the Tri-County Council for Southern Maryland; the Maryland War of 1812 Bicentennial Commission; the Governor's Warrior to Worker Council; the Maryland Wine and Grape Promotion Council; and the Governor's Workforce Investment Board.

Reporting directly to the Secretary are the Governor's Economic Development and Job Creation Fast Track Initiative Coordinating Committee; the Maryland Economic Development Commission; the Federal Facilities Advisory Board; the International Advisory Council; the Maryland Life Sciences Advisory Board; and the Chief Operating Officer.


CHIEF OPERATING OFFICER

The office of Chief Operating Officer was created in March 2009 to oversee Agency Performance Measurement, Fair Practices, Internal Audits, and the Office of Administration and Technology.

OFFICE OF ADMINISTRATION & TECHNOLOGY
World Trade Center, 10th floor, 401 East Pratt St., Baltimore, MD 21202

In 1987, the Office of Administration and Technology originated as the Division of Administration. It became the Division of Administration and Information Technology in July 1999, and was renamed the Office of Administrative Services in July 2000. In December 2003, it reorganized as the Office of Support Services, and in 2005 resumed its earlier name as Office of Administrative Services. With the addition of Information and Technology Management in July 2007, it became the Division of Administration and Technology, and the Office of Administration and Technology in September 2008.

The Office develops departmental budget proposals and projections, and advises Department agencies and senior program directors on fund accounts, personnel, and purchasing. Requests for proposals and contract awards are reviewed by the Office for compliance with State purchasing regulations. The Office also provides mailroom services, monitors the use of departmental motor vehicles, and maintains liaison with building management.

Under the Office are five units: Budget and Finance; Contracts and Procurement; General Services; Human Resources; and Information and Technology Management.


DEPUTY SECRETARY

The Deputy Secretary oversees three divisions: Business and Enterprise Development; Marketing and Communications; and Tourism, Film, and the Arts. The Deputy Secretary also is responsible for the Maryland Biotechnology Center, and the Office of Policy and Government Affairs.

OFFICE OF POLICY & GOVERNMENT AFFAIRS
World Trade Center Baltimore, 9th floor, 401 East Pratt St., Baltimore, MD 21202

The Office of Policy and Government Affairs began as Economic Development Policy in 1995. At that time, the Assistant Secretary for Economic Development Policy also served as the Governor's Ombudsman. In 1998, Economic Development Policy was renamed the Office of Economic Policy and Legislation, and in October 2003, it reorganized as the Division of Economic Policy, Research, and Legislative Affairs. In September 2008, Division legislative function transferred to the Office of Business Relations, and the Division reformed as the Office of Policy and Research. In March 2009, it reorganized as the Office of Policy, Planning, and Research, and in May 2009 under its present name.

Progressive economic development policies for the State are developed, evaluated, and advocated by the Office. The Office advises the Secretary of Business and Economic Development on how changes in State and federal regulations effect Maryland's economy, and on the effectiveness of economic development policies and programs. To the Governor, the General Assembly, and the private technology sector, the Office acts as a liaison.

The Office oversees Policy and Government Affairs.


DIVISION OF BUSINESS & ENTERPRISE DEVELOPMENT

World Trade Center Baltimore, 15th floor, 401 East Pratt St., Baltimore, MD 21202

The Division of Business and Enterprise Development originated in 1959 when the Department of Economic Development was created to encourage businesses to locate in Maryland and to retain and expand existing enterprises (Chapter 185, Acts of 1959). These functions later devolved on the Division of Business Development. In 1995, the Division was renamed Division of Marketing and resumed its former name as the Division of Business Development in 1999. The Division reorganized in December 2003 into three regional components: Business Development-Baltimore Region; Business Development-Capital Region; and Business Development-Rural Region. In February 2007, Business Development-Rural Region was discontinued. In September 2008, Regional Development reformed as the Division of Economic Development, and in July 2009 under its present name.


[photo, World Trade Center Baltimore,
401 East Pratt St, Baltimore, Maryland] The Division of Business and Enterprise Development oversees five offices: Business Development; Business Services; Finance Programs; International Investment and Trade; and Military and Federal Affairs.

By attracting new and expanding businesses, the Division helps create jobs and improve the State's economy. It assists domestic and international firms in finding attractive locations in Maryland, produces market data and economic studies, and promotes international trade opportunities to Maryland firms.

World Trade Center Baltimore, 401 East Pratt St., Baltimore, Maryland, July 2008. Photo by Diane F. Evartt.


MARYLAND INDUSTRIAL TRAINING PROGRAM
Formerly under the Office of In-State Business Services, the Maryland Industrial Training Program transferred to Business Development-Baltimore Region in December 2003. To develop new workforces and underwrite the training necessary to start and expand operations, the Maryland Industrial Training Program gives grants to businesses. It helps firms use the Maryland Job Service to determine staffing needs and recruit employees. The Program also links businesses to other State services, to resources available for productivity and training needs assessments, and to training curricula and resources for curriculum development.

OFFICE OF BUSINESS DEVELOPMENT

In July 2009, the Office of Business Development began its work of promoting Maryland as a site for new and existing business and industrial facilities.

OFFICE OF BUSINESS SERVICES

Formed in July 2009, the Office of Business Services oversees three offices: Small Business; Strategic Initiatives; and Strategic Assistance.

OFFICE OF SMALL BUSINESS
Functions of the Office of Small Business started in 1993 when the Office of Regulatory and Environmental Assistance began to focus on the needs of small and minority businesses. Within the Division of Regional Development, the Office reorganized as the Governor's Office of Business Advocacy in January 1997. In 1999, the Office transferred to the Office of Secretary and, in December 2000 was renamed the Governor's Office of Business Advocacy and Small Business Assistance. In February 2007, the Office reorganized as the Division of Small Business. In September 2008, the Division became Small Business Development under the Office of Economic Development and, in July 2009, restructured as the Office of Small Business under the Office of Business Services.

The Office of Small Business continues to facilitate communication between the business community and government, and provides a regional ombudsman service to Maryland businesses, guides them through the regulatory and permitting processes, and serves as a source of information about government for them. It 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. It also advocates for, advises, and assists small and minority-owned businesses.

OFFICE OF FINANCE PROGRAMS

World Trade Center Baltimore, 401 East Pratt St., Baltimore, MD 21202

In 1987, the Office of Finance Programs began as Financing Programs under the Department of Economic and Employment Development. It reformed as the Division of Financing Programs in 1995 under the Department of Business and Economic Development. In September 2008, it restructured as the Finance Team under the Office of Economic Development. In July 2009, it assumed its present name under the Division of Business and Enterprise Development.

The Office of Finance Programs directs and supervises certain State funds used as incentives or seed money for businesses in Maryland. These funds enable the State to retain businesses and attract new ones; foster economic growth; create new jobs; support commercial and industrial redevelopment; and help small, minority and high technology businesses.

The Office is responsible for the Economic Development Opportunities Program (Sunny Day) Fund; the Enterprise Fund (includes Challenge Investment Program); the Maryland Competitive Advantage Financing Fund; the Maryland Economic Adjustment Fund; Maryland Economic Development Assistance Authority and Fund; the Maryland Industrial Development Financing Authority; the Maryland Small Business Development Financing Authority; and the Maryland Venture Fund.

MARYLAND ECONOMIC ADJUSTMENT FUND
From the Maryland Economic Adjustment Fund, loans originally were made to companies in communities adversely affected by reductions in the budget of the U.S. Department of Defense. Beginning in July 2010, the Fund began to authorize loans to companies with fifty or fewer employees. These loans enable Maryland companies to modernize manufacturing operations, develop commercial applications for technology, or enter and compete in new economic markets (Code Economic Development Article, secs. 5-203 through 5-209).

MARYLAND ECONOMIC DEVELOPMENT ASSISTANCE AUTHORITY
Under Financing Programs (now Office of Finance Programs), the Maryland Economic Development Assistance Authority was authorized in 1999 (Chapter 301, Acts of 1999). After Departmental review, the Authority evaluates requests for loans from the Maryland Economic Development Assistance Fund, determines which to approve, and sets the terms and conditions for loans. From the Fund, loans may be used only to finance costs incurred for acquisition or construction of a building or real estate; acquisition, construction, or installation of machinery, equipment, furnishings, fixtures, leasehold improvements, site improvements; or working capital. Loans are intended for projects with a strong potential for expanding or retaining employment in the State.

The Authority's financing is through loans and grants (including conditional loans and grants), and investments (only in conjunction with a loan or grant). These go to specific growth-industry sector businesses which locate or expand in a Priority Funding Area, or to a local jurisdiction on behalf of such a business. Priority Funding Areas include municipalities, land within the Washington, DC or Baltimore Beltways, areas already designated as enterprise zones, neighborhood revitalization areas, heritage areas, industrial land, or other areas where local government wants to encourage development and which meet other criteria.

The Authority consists of the nine members who also serve on the Maryland Industrial Development Financing Authority. Seven are appointed to three-year terms by the Governor, and two serve ex officio (Code Economic Development Article, secs. 5-305 through 5-307).

MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY
In 1965, the Maryland Industrial Development Financing Authority was created (Chapter 714, Acts of 1965). Through consolidation in 2000, the Maryland Industrial Development Fund replaced the Day Care Loan Facilities Loan Guarantee Fund, the Maryland Enterprise Incentive Deposit Fund, and its own Authorized Purpose Fund and Bond Insurance Fund (Chapter 305, Acts of 2000).

The Authority insures conventional loans made by financial institutions. It also 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. The Authority insures up to the lesser of either 80 percent (or 90 percent in the case of export financing) of the obligation, or $2.5 million.

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 (Federal Internal Revenue Code, sec. 146). A company also must be in a Priority Funding Area.

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 Maryland, as designated by the Governor, serve ex officio. The Authority appoints the Executive Director who serves as Secretary (Code Economic Development Article, secs. 5-401 through 5-420).

MARYLAND SMALL BUSINESS DEVELOPMENT FINANCING AUTHORITY
The Maryland Small Business Development Financing Authority began in 1978 (Chapter 879, Acts of 1978). Initially providing financial assistance to socially and economically disadvantaged persons who own small businesses within the State, the Authority's eligibility criteria was extended in 2001 to all small business owners who are unable to obtain adequate financing on reasonable terms through traditional financing methods.

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.

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). Since 1994, funds under the Authority have been managed privately. 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 Economic Development Article, secs. 5-501 through 5-514).

Under the Authority are four programs: Contract Financing; Equity Participation Investment; Long-Term Guaranty; and Surety Bonding.

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.

Equity Participation Investment Program. To encourage and assist the start up, development, and retention of Maryland-based franchises and technology businesses, owned and operated by persons socially or economically disadvantaged, this program was created in 1985. 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 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 to be repaid in ten years.

Long-Term Guaranty 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.

Surety Bonding Program. Since 1985, the Surety Bonding Program has helped eligible small businesses obtain bonds they need to fulfill contracts funded primarily by government agencies or public utilities. These may be bid, performance or payment bonds. The Program either guarantees a bond up to 90 percent or $5,000,000 (Code Economic Development Article, secs. 5-561 through 5-575).

MARYLAND VENTURE FUND
The Maryland Venture Fund organized as the Investment Financing Group in 1995. Formerly under the Division of Financing Programs, the Maryland Venture Fund transferred to Technology Strategy and Business Development in December 2003, and reformed as Venture Capital under the Deputy Secretary in 2005. It reorganized in July 2009 under the Office of Fiance Programs.

The Fund provides for direct investment in Maryland companies through Challenge Investment; Enterprise Investment; and Enterprise Venture-Capital Limited Partnership (Code Economic Development Article, secs. 6-501 through 6-529).

Challenge Investment Program. The Program initially 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. As the new business progresses and attains certain milestones, Venture Capital may authorize up to two increments of $25,000. The investment is to be repaid over a ten-year period. A Challenge recipient must keep its principal place of business in Maryland for three years. After two years, the business should have at least the potential to be considered for a direct equity investment from the Enterprise Investment Fund. Since FY1993, the Program has made 80 investments, totalling $4.35 million. Although the Program's investments are all start-up financing with higher risks, 75 percent of recipients are still in business, and ten recipients have qualified for direct equity investment from the Enterprise Investment Fund.

Enterprise Investment Fund. Created in late 1993, the Fund enables the Department to make direct equity investments (i.e., buy stock) in "early-stage" technology-driven businesses in Maryland. Investments range from $150,000 to $500,000. 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 has invested $11 million in 32 firms since FY1993.

Enterprise Venture Capital Limited Partnership Fund. Since FY1995, the Enterprise Investment Fund has invested in six private sector Venture Capital Limited Partnerships to encourage private investment in early stage, high technology Maryland-based firms.