Worcester Business Journal

10 Worcester Business Journal | February 4, 2019 | wbjournal.com F O C U S B A N K I N G & F I N A N C E BY GRANT WELKER Worcester Business Journal News Editor Differing philosophies PHOTO/EDD COTE Certain Central Mass. communities are quicker to give out tax breaks, especially those with higher tax rates W hen Framingham officials wanted to spur the redevelop- ment of a centu- ry-old brick mill building downtown, they offered a five-year tax break to a developer to kick-start what was planned as a $26-million project. When global retailer TJX Cos. was looking to expand its headquarters, when Jack's Abby Craft Lagers wanted to expand its brewery and when three devel- opers were looking to build new apart- ments downtown, Framingham officials reached tax break agreements again. Framingham has been among the most proactive Central Massachusetts communities when it comes to using tax-increment financing agreements, or TIFs, to entice existing companies to stay and expand or to draw others from outside the city. Its next-door neighbor, Natick, offers a stark contrast. While Framingham has signed nine tax breaks in the past two decades, Natick has agreed to just one: with MathWorks when the software compa- ny was building a planned $150-million campus starting in 2009. "We don't see the need to compete with other communities in offering TIFs," said Melissa Malone, the Natick town administrator. "We are in a unique and fortunate position where businesses are naturally looking for general space between our boundaries." A Worcester Business Journal exam- ination of 148 tax breaks given by 19 of the largest Central Massachusetts com- munities in the past 20 years shows local governments have varying philos- ophies with how tax breaks should be used as an economic development tool. Worcester has signed 28 such agree- ments, Leominster has made 21 and Fitchburg has made 18. While the region's largest communi- ties might be expected to most often reach tax-break agreements, another correlation shows. Tax breaks have been more common in communities where commercial and industrial tax rates are highest, demonstrating cities and towns might be choosing the success of some companies over offering the lowest tax rates for all businesses. The tax rate in Framingham, for example, is close to three times as high as Natick's. Worcester has the region's highest such rates in 2019, at $34.90 per $1,000 in valuation, followed closely behind by Hudson and Framingham. Fitchburg and Milford also have split tax rates, where commercial and indus- trial property owners pay a higher rate than residential homeowners. "It's a valuable tool," Thomas Moses, the Hudson executive assistant, said of tax breaks, of which the town has had six in the past 20 years. The town pri- oritizes job creation when looking to offer companies incentives, he said. "We're very concerned with employ- ment for Hudson residents, and if a big company is taking a look at Hudson, we have been very active and interest- ed in providing a TIF," Moses said. "We use it as lever- age to make sure jobs stay here in Hudson." Other communi- ties haven't used tax breaks at all, including Auburn. That's not due to any philosophy against them, Auburn Town Manager Julie Jacobson said, but simply because there haven't been any companies that have asked who were good fits for the town. "We do not get a lot of requests from companies," Jacobson said. "We are absolutely supportive of [tax breaks] for companies that are qualified and that will produce a tangible benefit to the town." Proactive cities While communities like Natick and Auburn have rarely or never used tax breaks, others have been heavily active, like Fitchburg, Leominster and Marlborough. Fitchburg is focused on building a broader commercial tax base, said Tom Skwierawski, Fitchburg's executive director of planning and commercial development. That means the city helps with tax breaks for both manufacturers to keep jobs in the city and places like Great Wolf Lodge to bring hotel tax revenue and visitors. Fitchburg has issued tax breaks to keep blue-collar jobs in the city, includ- ing its 2000 deal with Caraustar Industries, in which the Georgia pack- aging company received a 20-year tax break in return for a $100-million investment to its paper mill. The city has gone in the other direction, too, giving a tax break in 2009 for a Marriott Courtyard – and again just five years later when the same property was turned into Great Wolf Lodge. "That could have been anywhere else," Skwierawski said of Great Wolf Lodge, part of a national chain of hotel-and-waterpark developments. "But it came to Fitchburg." Gardner, in an area reliant on manu- facturing, has only so many choices to 1st in a 4-story series Tax Breaks Paying for Growth In this issue After the first two stories in the Jan. 21 edition of WBJ examined 148 tax breaks by 19 prominent Central Massachusetts communities and the major successes and failures, the two stories in this edition look at communities' philosophical differences in using tax breaks for economic development and how publicly financed stadium deals have fared nationally. Tom Skwierawski, Fitchburg executive director of planning and commercial development Natick Town Administrator Melissa Malone visits the site of the ABI- LAB expansion in Natick with the company's managing partner, Gary Kaufman. The town did not offer a tax break for the expansion. 3rd in a 4-story series

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