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City decides businesses need $8 million in tax breaks to convince them to move into luxury tower
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Taxes are for the little
Taxes are for the little people. The rich get corporate welfare and the poor get social welfare. The middle gets stuck with the bill. Is it any wonder that the middle class has been fleeing and being priced out of the city?
Boston isn't quite as stratified as New York City. But it is only a matter of time if politicians continue to get away with class warfare and redistribution policies that steer capital from those that earned it to those favored by the ever so fickle political machine.
Probably not
I think all of the low-paid entry level academic and nonprofit jobs will keep Boston from getting that bad. There are a lot of jobs in those sectors.
City of Boston
should give longtime homeowners a tax break to keep the middle class from leaving the City. The next Mayor ought to be FOR families and the working class.
Let me guess: You're not a Boston homeowner
Because otherwise you'd know that homeowners already get an exemption on their property taxes. Or do you want even more of one?
On top of how much tax
On top of how much tax revenue that has already been lost from the businesses that were chased out of DTC because of the hole?
*facepalm*
sigh here we go again...
Real estate in Boston is a
Real estate in Boston is a smarmy business, no matter where you turn.
$600,000 a year for 13 years?
I don't get it? As abatements go, this is next to nothing. How could this possibly make a difference regarding the success of the project? It doesn't seem like its worth risking bad PR for what has been an otherwise well regarded developer. (Millennium developed the two Ritz towers and is finishing MP III across the street)
I wonder if this is geared toward a specific "game changing" tenant?
It's Not the Tax Breaks, It's the Cronyism
All you've got to do is look across the street to the Walgreens at the corner of Washington and School streets to understand that, left to their own devices, many developers will opt to sign national chains that can commit to long-term leases, even if that undermines the appeal and dynamism of the neighborhood. If these tax incentives help the developers sign a more interesting mix of commercial and retail tenants, particularly those with genuinely local roots - and I certainly hope that the BRA knows who's signing on here - then they'll be cheap at the price.
The real headline here is that our mayor told the last developer that tax breaks were absolutely out of the question, and is now extending them to a developer with whom he enjoys a cozier relationship. That's not how the game is supposed to be played. It's a flagrant foul. People should be up in arms about it. Menino has used the zoning code and the BRA to dole out development rights to those firms that toe the line, and to bar those firms that dare to cross him from exercising their right to develop their properties. His approach backfired at Downtown Crossing, where it left a gaping hole in the ground for years. It's hurting the city along the waterfront, where an enormous ugly garage persists despite Chiafaro's efforts to turn it into something more attractive and useful. And it's something that, in the hands of most of those currently running for mayor, could turn from odious to catastrophic. (Imagine, if you will, Marty Walsh using the BRA in this fashion.)
This should be an enormous scandal. But I'm not holding my breath.
According to the Herald, the
According to the Herald, the breaks are for two specific tenants - Arnold Worldwide and a retail tenant, which they hope to announce today at the groundbreaking. (Based on previous reports, it will probably be Roche Bros., which I would categorize as a "game changer" for the neighborhood)
Apparently, the lease agreements between the developer and these two tenants call for the tenants to pay property taxes for their portion of the building, and these breaks will stabilize their property tax burder for the first 13 years.
I take issue with the idea that Menino is being hypocritical with this developer. First of all, the previous developer (Vornado) was given an expedited approval/demolition permitting process, which brought us the hole in the first place. (A mistake no doubt) Had that project gone forward, that expedited process would have saved them hundreds of thousands of dollars in legal/administrative fees, plus reduced inflation costs. Secondly, the CEO of Vornado publicly spoke of leaving key sites in large cities fallow for the purpose of extracting tax concessions out of the host cities. He actually said this during a pubic speech in which he was telling members of the audience how to squeeze extra profits out of their businesses.
At that point, if you're Menino, how could you give them any sort of tax break? Wouldn't you be playing right into their hands? The media has made a big deal of Menino's alleged hypocrisy toward the new developer, but have made no mention of Vornado's public behavior and comments. I think that's an important part of the context of Menino's decision. Not to mention, I do think Millennium's project is superior to Vornado's initial proposal and has the bigger potential to boost the neighborhood.
As for the waterfront, I honestly don't think the current proposal for the harbor garage site is a serious one. I think the mayor knows that and isn't going to waste political capital resisting pressure from the Harbor Towers/Greenway constituencies to fight for a project that has nearly zero chance of happening.
But why is this on the taxpayers?
Or any of the other breaks Menino has handed out over the years for that matter?
Why doesn't the landlord just give them a break on the rent which would accomplish the same thing? Since when is it the taxpayers' responsibility to make sure the developer makes a profit?
This and all the other tax breaks are nothing more than a scam benefiting the politically connected.
A couple of points. And for
A couple of points. And for the reocrd, I do believe these types of agreements should be used very sparingly. But I do think a case can be made in this situation.
The landlords financing package is likely contingent on certain rent/per square footage ratios, which could be thrown off if the developer agrees to a lower up-front rent. That's probably why they had the tenants agree to pay property taxes to faciliate this agreement, while keeping the rent to square-foot ration intact.
For the record, the city will still collect taxes on this property and the taxes revenue will certainly be sizeably increased once the project is finished. It will simply not as increase as sharply as it would have without the agreement. Once the 13 years expires, everything returns to normal based on the full assessment/tax rates.
Regarding the recipient of these breaks - and btw Roche Bros. officially signed on this morning so that's no longer a theory - there is a sizeable amount of risk to signing onto this project. The consensus seems to be that Downtown Xing is on the upswing, but there are still a lot that needs to come into place. One of those key components is a full-service grocery store, which we now have. But make-no-mistake, Roche has taken on a tremendous amount of risk at this site. There has never been a grocery store like this in this neighborhood and there is no way to truly know if this will work.
The store is destined to be a "shrink trap" for its first few years of existence as the neighbhorhood transitions, construction is stil occuring, and new residents slowly begin to fill the apartments and condos. Perhaps it could be argued that this "break" is sort of a carrot toward a new business for the risk they are taking in opening what is a very critical business to downtown's success? If at the end of this transition, we have a vibrant, 24-hour neighborhood with a variety of restaurants, shops, and offices - haven't we all benefited?
Plus, Roche is a local company, which I think is a big plus.
Roche Bros. should draw from beyond the immediate neighborhood
Since it will be within a block of all four subway lines, it should draw people from throughout the inner-Boston metro area. Plus all the office workers who can shop there after work and before taking a train home.
Actually, tenants pretty much always pay the taxes
Nearly all commercial leases pass the real estate taxes on to the tenants, along with insurance and "common area maintenance" (CAM). Generally, the tenant pays a certain amount each month with the rent to escrow and then the bills are trued up once a year. It is rare for the tenant to pay the taxes directly, and that typically only happens when they lease the entire taxed parcel (think a restaurant at the edge of a parking lot).
So financing tends to ignore taxes, insurance, and CAM since the owner usually gets all of that back (roughly) unless the leases are written to give the tenants breaks on those things.
The Great American Jobs scam
Every time corporate tax break deals come up, I mention this - google "the great American jobs scam" to read about how corporations demand tax breaks, milk them for what they're worth, then jump ship to another city the second they're offered a better deal.
The tax breaks are usually for "jobs", but the breaks end up working out to several times what the hired employees make.
Support small, local businesses - small businesses across the country employ most of the country's workforce, not megacorps!
the great American jobs scam?
Is that why Fidelity Investments left after Deval refused to renew their tax credit (Thousands of jobs lost). Face it MA is not a competitive/ welcoming environment for Business. Its poor policy that creates the need to incentives corporations to build here. Even more recently Deval's Tech Tax, its a good example of how our Democratic leaders are squeezing private business until the point where they no longer want to invest in MA. The US is a large country, if we dont make our state a competitive option for companies, well they have 49 other locations to move to.
Intel
Yeah, hot off the news of Intel leaving their MA plant soon. Corporate welfare is not a job solution.
apples and oranges
Intel is leaving because the factory they had here wasn't advanced enough to make their newest and most popular chips. I'd imagine if it were cheaper to do business in Mass, they'd retrofit the plant, but it wasn't feasible. Tell me this, if you worked there, and a $1 million tax break over 5 years would keep Intel in Mass. and allow them them to bring the plant up to speed, thus keeping 700 jobs...would you be for it?