Worcester Business Journal

wbjournal.com | July 24, 2017 | Worcester Business Journal 21 Seeing the whole economic development picture The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. I n response to the closing of TechSandbox, WBJ polled its readership about their perception of how industry should engage with business incubators. Or at least the question posed was, "If your company chooses to sponsor an incu- bator or startup, are you more likely to look locally or to Boston and Cambridge?" The multiple choice options were: • Boston-area incubators, because of the variety of start- ups and the innovative culture they've created. • Local incubators, because we should be working towards building our own innovative culture out here. • Whatever incubator is most in- line with our industry regardless of geography. • Whatever incubator has the best track record of creating successful companies. While I love the interest in incubators, I think you may be asking the wrong questions. As director of the Worcester Clean Tech Incubator I know that incubators have an inher- ently local sphere of impact and drive investment and eco- nomic activity into the surrounding region. The strength of an incubator is the community it supports and the engage- ment of strategic partners, entrepreneurs and mentors. Sponsorship by a company is a rare event among startups – a company-sponsored startup will often be given space at the company itself. Company-sponsored startups don't have the same risk profile entrepreneurs in an incubator face. So the questions you ask may have been asked of the wrong audience. The communities supporting entrepreneurs, startups and incubators are defined by those who take an active role of engagement necessarily constrained by proximity. This has two implications. 1) We as a community must go out of our way to support the entrepreneurs around us, regardless of their sector. Any local success will in turn drive the commu- nity as a whole. 2) As a region, we must coordinate our exist- ing assets, thereby continuing to build the community's established strengths. One of the greatest values sponsors and ecosystem sup- porters of all kinds get from participation in places like MassChallenge is a spotlight within the local entrepreneurial community. This gives corporate partners an opportunity to engage and build meaningful relationships with the local business landscape of the future. Sponsors often engage in these ecosystems so they can learn about the future of their own industries and identify opportunities to leverage their existing assets. At WCTI, we focus on three types of engagement with our members to help drive success. 1) Physical assets, from offic- es and computers to electronics testing equipment. 2) Business services and mentorship. 3) Targeted programing and business development. The first two are relatively easy to do. The third area is the toughest, but brings the most value to all involved. I challenge us to work together to frame our capabilities in a cohesive manner and broadcast the message loudly that Central Mass has a robust ecosystem and is a great place to start and grow companies. Joe Bush is executive director of the Worcester CleanTech Incubator. Incubators need local support V I E W P O I N T E D I T O R I A L BY JOE BUSH Special to the Worcester Business Journal Joe Bush WO R D F R O M T H E W E B Comment of the issue "In the absence of a reasonable competitive commercial real estate tax rate, the city must offer tax breaks or other incentives for property owners to improve existing buildings. Unfortunately, that means current property owners have a disincentive to invest in their property and the government in the position to pick winners and losers." - Anonymous commenter, July 11, on a Flash Poll asking what the best way to revitalize a neighborhood is in light of recent economic development efforts in Worcester WBJ Tweet of the month "Follow-up study: Worcester County would actually benefit economically from climate change, thanks to Boston sinking into the ocean." - Tom Quinn (@bytomquinn), July 6, on a story about a study finding Worcester County would benefit economically from climate change thanks to milder winters W Facebook feedback "#teamWorcester #goWorcester" - Heather L. Stanley, July 7, on a story about first time beer and wine festivals coming to Worcester N o one could look at the contributions The Hanover Insurance Group, Saint- Gobain, Unum, the Beechwood Hotel and Harr Motor Group have made to the Greater Worcester economy and dub them as failures or a drag on the community. In fact, the opposite is true. They are stunning successes in a city trying to remake itself for the better. It would have been easy to scandalize the cover story from this issue, Grant Welker's "Hit & Miss" deep dive into the 24 tax-break deals Worcester had active in the last five years. Six of the compa- nies failed to meet the job creation and invest- ment requirements, resulting in the state decerti- fying the deals; yet Worcester held up its end of the bargain for five of them. The headline "Worcester keeps sweetheart deals after major employers fail to create enough jobs" would have attracted a lot of reader interest. Even though such a headline technically isn't wrong, it wouldn't have been right either. Yes, Hanover didn't create the 225 jobs required for its 5-percent tax break on the improvements to its Lincoln Street headquarters (largely due to the economic downturn), but having the company make those improvements still increases the value of its properties and the ones around it. Plus, as Worcester's only publicly traded company, fluctuations in its 2,000-ish local employee base aren't as important as the strength of the company. Look at any of the five companies missing their tax-break requirements and keeping the local ben- efits – Hanover, Unum, Saint-Gobain, Beechwood, Harr – and imagine if they had endangered their long-term viability for the sake of meeting the requirements of the short-term tax break. Unum could have not cut 97 jobs and retained the 600 as required by its tax-break deal, but keeping those positions on the books would have created a slug- gish and less market-responsive company. The company would be losing the war for the sake of winning a battle. City Manager Edward Augustus is right in what he told the Worcester City Council. The companies may not have met the letter of their agreements, but their economic contributions have grown and continue to grow. That is worth running out a tax break for the length of its original term. The larger issue here isn't a handful of tax-break deals, but the city's tax rate. Worcester still main- tains the property tax rate structure it set up in 1984, where commercial/industrial property own- ers pay a significantly higher tax rate than resi- dential owners. As other Central Massachusetts communities have worked to eliminate this imbal- ance – only 15 others remain with such a struc- ture – Worcester has grown the disparity the last two years; creating tax rate 71 percent higher for business properties. Despite numerous studies showing how such policies hurt tax collections and proposed long-term plans to move toward a single-tax rate, Worcester remains fixated on 33-year-old tax policies. Business property tax breaks are good for busi- ness and the community. Even if 25 percent don't meet the exact requirements, they still move the economy in the right direction. What would be better, though, is to have a tax structure where such deals aren't necessary. W

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