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City Council approves tax break for Innovation District tech company
By adamg on Wed, 12/10/2014 - 3:47pm
The City Council today unanimously approved giving LogMeIn a $2.5-million tax break over 13 years for the new headquarters it wants to build at 327-347 Summer St.
City Councilor Bill Linehan (South Boston, South End, Chinatown) said the tax break would keep a fast growing company in Boston - the company pledged to add 400 to 500 new jobs over the next five years - and return the fire-ravaged building LogMeIn will restore to full value on the tax rolls. He said the city would more than recoup the lost revenue from the deal in the added property taxes the building will pay. LogMeIn, which makes software that lets users log into computers and mobile devices remotely, is currently at 320 Summer St.
Linehan said that he continues to believe judicious use of such "tax increment financing" agreements represent a good return for the city - but that as the economy continues to revive, the city can shrink their value. He noted the city gave Liberty Mutual a $17-million tax break several years ago, back when the local construction business had basically collapsed - and then $12 million to bring Vertex across the river from Cambridge.
"Each investment should be less in a market like this," he said.
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Comments
No.
No.
EDIT: Someone posted this gem of an Onion story: "States Now Offering Millions in Tax Breaks To Any Person Who Says ‘High-Tech Jobs’"
http://www.theonion.com/articles/states-now-offering-millions-in-tax-bre...
They are going to regret that
I've heard there are areas of the city that are in line for HUGE tax increases this year - especially commercial properties. Wonder if anyone will ever start to pay attention. I'm sure this $2.5 million break was the difference between building/not building in the city - sarcasm stuck in the ON position!
Ehhh, don't sweat it...
...it's not like they'll actually be around for anything like 13 years.
I agree
No. Tired of 'tax breaks' to get companies to move to an area. If they want to build there, they will without it. And if they don't, there will be someone else who will be just as interested in the space.
And much like many of these 'tax breaks' there's no incentive to stay once the tax break ends. Such as the case with Fidelity and Putman (from many years ago). They all moved out of state once the tax break ends. They all just pander for them, get them, stay as long as required, and leave. How is this job creation? it's not, especially if the jobs don't stay here after the tax break is done.
Time to stop corporate welfare.. because that is all this is.
You be the judge
Haven't seen the paperwork on this one - but when they gave Rosenthal $5 million in tax breaks he had to sign a sworn document that basically said without the $5 million break the project was not financially feasible. There were zero financial analyses in the supporting paperwork to back up that statement. Apparently the BRA directly and the City Council indirectly relies on that statement alone to support the validity of the request which washes their hands of any due diligence.
Personally, I don't believe that, nor do I believe that anyone with an ounce of common sense believes it, but it's up to the AG and the Inspector General to determine if there is actual legal fraud involved. Anybody with more pull than me that gives a damn have a hotline?
Would be interesting too - I think the statute of limitations on fraud is a couple decades. Any ambitious AG/IG could go back and investigate dozens of these cases and recover tens if not hundreds of millions for the city.
of course they are going to say that
Of course they are going to say that. Come on.. they aren't stupid. They know if they say "oh well its not really required for us to build" do you think the city will fork over the tax break after that? Doubt that.
But nevermind that, you just wave "oh job creation" flag in front of a politician, and they bend over and take it like a cheap whore.
Only partly the point
a) the city does no due diligence to confirm the veracity of the statement - not even requesting pro forma financials - it relies 100% on the developer's statement
b) if the developer signs off on that and it's ever proven to be a knowingly false statement, I would imagine some pretty serious legal repercussions, including jail time are in order.
c) if anyone cared to investigate, I would be willing to bet there are MOUNTAINS of paperwork proving what a crock of bologna these "sworn statements" are
yup
A) No surprise. This is pretty sad actually on the city's part. Makes me wonder how many other breaks were given under false pretenses or just unfactual statements. Shame on the city for not doing its homework or background checks.
B) Yeah and when was the last time a big wig corporation went to jail for lying to a gov't entity? It's been a while..
C) I'm totally sure of it.
Hence, stop corporate welfare. It's all a big crock of shit.
Headquarters
Is already located on Summer Street. As a matter of fact right across the street from where they want to move. Sounds like a crappy deal for the City.
A Stir-Fried Chinese Noodle Dish?!!
Mmm, log mein!
Which reminds one of the 2014 Hater's Guide to the Williams-Sonoma Catalog, because this year the catalog features mushroom logs (in either shiitake or oyster):
So while rent in Boston
So while rent in Boston skyrockets the city is subsidizing....office space? Not to mention a billion dollars to expand the convention center. Walsh talks about increasing the supply of middle income housing, but these types of subsidies do the opposite.
plus...
Plus, where are the new employees going to come from? Definitely not from Boston. They'll just import more gentrifying yuppies who'll take over new neighborhoods, and zip around in their Ubers and in their new bike lanes that were created from cannibalizing needed traffic lanes.
/rant
Hey Markkkkkkk
...your parking space is in Arlington.
Huh?
I'm not Mark.
Hey, they're paying property tax
That's one of the few things in our society that should be taxed. I like this deal.
Like negotiating with ISIS
This never, ever works. They (the corpo) get what they want up front. And then when it suits them, they break either the letter or the spirit of the agreement. How many times does this have to play out?
What's the opposite of giving them the break?
They'll just go out of state or overseas.
Here's the harsh reality of human life in 2014: There are only so many things that people will buy, and there's a maximum dollar amount that people will pay for them, not only because of competition, but also because you can't buy things with human (expletive.)
So, if somebody who has a product or service that can be made and sold to people seeks to use Bostonians to make and sell it, at this point, I think you take what you can get. If we balk, some Chinese guy who is willing to live on dollars a day will work a 16 hour day and go home to a slum that an Allston undergrad wouldn't live in just to have the job that somebody else wanted more money to do.
The middle is dead, folks. So the choice is to either let the poor make the rules or the rich make the rules. Well, at least the rich have a dollar or two to spend once in a while that might end up in my pocket one way or another.
They'll just go out of state
Putting it bluntly: horsefeathers.
Where are they going to go, exactly? They can't just take any warm bodies, they need a workforce with certain skills -- and that workforce doesn't live in Kentucky or Nebraska. As for "overseas", if that was viable, what makes you think tax breaks from the City of Boston would make enough of a difference for them to stay here?
Been to NH
More specifically Fidelity's sprawling campus?
Talked to anyone from State Street - where people trained their Indian colleagues and then got laid off when they transferred the operations to India.
Labor is mobile and fungible - and these days even skilled labor is fungible anywhere you can charge a lap top and hook into the internet.
Yeah, I've been to NH
Back in the day (read: 20 years ago), it was quite the thing. Now? Notsomuch. Fidelity is not a tech company. Neither is State Street, and your State Street example directly undermines your point and proves mine, i.e., if offshoring is viable, they do it and don't stick around. If the labor was so "fungible" that they could find what they wanted somewhere cheaper, they'd be doing exactly that -- do you dispute that?
Banking is a tech biz
If you don't understand that, you haven't dealt with a bank in 20 years either.
Not arguing they stay for the tax breaks - those are freebies politicians throw around to make it look like they are doing something good (in return for campaign donations and union support). But they don't stay for the labor either. That's a far more complicated issue - but if it made strategic sense to outsource, I'm sure you could find competent people. There's a lot more to it than cost and skills though.
You're dancing around the
You're dancing around the main point. If they could locate somewhere cheaper, they would. The tax breaks aren't going to make a substantial difference over 13 years, assuming they're around that long, which is a long shot.
And no, banks are not a "tech biz". They are businesses that rely on technology. So does General Motors. A "tech biz" is a business that produces technology.
I'll keep it short
a) I agree - the tax breaks don't mean diddly other than a bit of free money to the companies. It's for the politics
b) Companies do not locate their HQ in low cost areas - it's a complex strategic decision and cost is only one relatively small factor. It's the growth/expansion that gets more price sensitive (fact - number one reason for location of a HQ is where the CEO/founder lives)
c) I assure you Fidelity - and all major banks are tech businesses - by your definition or mine. If you are not, you get eaten (or a security breach destroys you). Half the reason I do biz with Fidelity is for their technology. If I bring on another vendor (which I'm contemplating) it will also be about half for their technology. The biz model says they make their money from financial services, but a lot of that simply subsidizes enormous largely proprietary technical infrastructure.
I dunno. It still seems to
I dunno. It still seems to me that saying that Fidelity is a tech business because of their "technical infrastructure" is rather like saying that Google is in the food service business because they have a cafeteria. It's not their product; therefore it's not their business.
TIF?
To call deals like this a TIF deal gives TIFs a bad name (and thereby makes them less attractive from an "optics" standpoint when they are proposed for things we actually need them for). They should be used for larger public infrastructure projects, not what amounts to a private deal between one business and the city.
TIF
But I like TIFs, they aren't compressed like jpg or gif are..
oops wrong TIF.
the developers dont get the
the developers dont get the money for the TIF until ground is broken, broke up into yearly increments to ensure project gets built. pols are not that dumb
Today's Stenograph Record is available.
a) Today's Stenograph Record of the Wed 10 Dec 2014 Public Meeting of Boston City Council is available, request at
http://www.cityofboston.gov/contact/?id=138
b) An additional public record of the Full Captions for hard of hearing/deaf/ESOL from the Webcast of the Public Meeting can be requested too.
Not the right place
I can see giving tax breaks to build in a depressed area or where it is financially difficult to build (air rights), but this is in a booming area that seems to have a lot of demand. Not too bright.