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Tax break for Liberty Mutual

March 8, 2010 By shirleykressel

The City Council is holding a hearing at noon on Friday, March 12, on a tax break Mayor Tom Menino and the Boston Redevelopment Authority have cooked up for insurance giant Liberty Mutual, to subsidize its construction of a tower in the Back Bay.  Since we have 20 years of office vacancy to absorb, and Liberty Mutual is only promising to hire an average of 30 people a year, this tower will either stand largely vacant or cannibalize others.  Either way, the result will be an overall drop in occupancy, a further slump in rents, and a further fall in commercial taxes, which will shift more of the ever-rising levy onto residents.  This is the classic race to the bottom: subsidize wealthy corporations, and starve public services – so that neither residents nor businesses want to be here.

The development team (which includes the Mayor and BRA) have declared the area “blighted and decadent” to qualify LM for a gift of $16 million in property tax waivers from the City and $20 million from the state. Hundreds of millions of tax dollars have been thus foregone in recent years, while the biggest corporations escape their fair tax obligation.  

Now, we’re seeing services slashed and taxes raised — but not for the chosen few who have the right lawyers and the right political friends.  LM is a member of the new vault, formed to give voice to the business community.  Evidently, the voice of the business community is already being heard behind closed doors.

If you want sensible taxation, come and testify, or send your message to the City Council via e-mail.

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Comments

  1. judy-meredith says

    March 9, 2010 at 8:15 am

    how do you think they will will respond to this……….

    <

    p>

    Since we have 20 years of office vacancy to absorb, and Liberty Mutual is only promising to hire an average of 30 people a year, this tower will either stand largely vacant or cannibalize others.  Either way, the result will be an overall drop in occupancy, a further slump in rents, and a further fall in commercial taxes, which will shift more of the ever-rising levy onto residents.

  2. farnkoff says

    March 9, 2010 at 9:01 am

    What part of the Back Bay is “blighted and decadent”?
    On the other hand, DTX has a gaping hole in it, courtesy of similar BRA/ developer shenanigans. Fix that monstrosity before investing in another fiasco.
    The BRA seems to have no idea what they’re doing. Screw the tax breaks.

  3. cannoneo says

    March 9, 2010 at 10:46 am

    Funny the Globe didn’t mention this in its editorial yesterday on how badly we need to turn over the keys to the city to Liberty’s CEO and his fellow corporate bosses.  

  4. liveandletlive says

    March 9, 2010 at 4:46 pm

    it does seem like nonsense in light of the fact that Governor Patrick wants to attach a fee to our auto insurance premiums as a way to balance the budget.

  5. marcus-graly says

    March 10, 2010 at 4:27 pm

    I’d be curious whose million dollar homes are considered “blighted”.

    • stomv says

      March 11, 2010 at 8:59 am

      Let me google that for you

  6. ray-m says

    March 10, 2010 at 8:56 pm

    Once again, Big Business gets subsidized and catered too. All the while a mom and pop store down the street is shutting down or rent is going up on a family because tax breaks for the Big Boys need to be funded.  This funding lays right on the backs of hard working middle class families.  They just allocate the subsidies on the small businesses and woking families

    <

    p>We need to change our focus on Beacon Hill and within our own municipalities.  Stop catering to Big Business.

    <

    p>In Fact give US the tax break instead of them.  This middle class, working familiy tax break will be paid for BY STOPPING TAX BREAKS for the Big Guys.  This will increase consumer demand, WHICH by the way…is what is lacking in this economy, NOT SUPPLY as many on the other side of the aisle will tell you.

    • liveandletlive says

      March 10, 2010 at 9:38 pm

      private sector jobs will not come back until a thriving middle class has money to buy products and services other than basic needs.  While a tax cut will definitely help, another big draw from meager paychecks is the cost of basic needs.  Gas, food, utilities, housing, health care.
      Until those big corporate entities are willing to cut into their billion dollar profits to lower prices, there will be no money on Main Street.  It’s not likely to happen until they are forced, because Wall Street brokers need their profit fix, and have now become accustomed to truly outrageous profit margins. Prices are still going up. It’s just amazing how disgustingly greedy this world has become.

      <

      p>Corporate America does not need middle class tax dollars redistributed to them so they can then turn around and increase prices on their products and services.  I can’t believe our government does not see what is happening. They are still anxiously anticipating job growth.  Hilarious.

    • seascraper says

      March 12, 2010 at 2:14 pm

      I like this Ray, you look like you want to win.

      <

      p>However you say some things that hurt your effort. When you propose to increase demand through tax cuts, you are supporting the efforts of these giant corporations, who ask for tax cuts for downtown buildings so their workers will buy salad and yogurt for lunch and support the local economy. Same with filmmaker’s tax credit… Cutting taxes to spur demand and paying out state money to public employment to spur demand are really the same thing.

      <

      p>The truth is that all supply is demand. Focus your efforts on making it easier for people to produce. Make it broad-based and you will include the small independent contractor who will never get a line written into the tax code for him. Do this and you will have all the demand you can handle.  

  7. seascraper says

    March 11, 2010 at 1:33 am

    The city is thrown open to these specialized cuts because the commercial real estate tax is so high. Just getting rid of these deals is not enough, because people want the retail and business. Last year, a majority of the commercially available land in Boston was occupied by non-profits. This is a classic sign of a tax rate that is so high that it is costing money.

    <

    p>The high tax rate allows the mayor to bargain for favors from developers who get ahold of federal clearances for blight, for low-income or artists housing, etc. This is what happens when you have targeted tax cuts for certain kinds of development, eventually it gets to be a tool of the ultra-rich you were trying to fight in the first place.  

    • mr-lynne says

      March 11, 2010 at 7:57 am

      Businesses contract in a down economy.  That goes the same for the commercial real estate market.  The fact that businesses have not moved into available commercial real estate is a classic sign that we’re in a recession.  It certainly isn’t proof that ‘but for the taxes’ business would be expanding right now.  Fools expand in a declining market, unless the tax breaks are so good that it amounts to a subsidy in excess of losses.

      • seascraper says

        March 12, 2010 at 2:05 pm

        Allston-Brighton has a lot of vacant commercial land, while just across the river Target is expanding. It’s not like Watertown is a great deal, but they are cheaper than Boston.

        <

        p>I’m sure residents who live next to other suburbs could tell you the same thing.  

    • stomv says

      March 11, 2010 at 9:01 am

      Last year, a majority of the commercially available land in Boston was occupied by non-profits.

      <

      p>Whether you mean square feet of land or square feet of office space, I’m calling B.S. on this claim.  Got any evidence?

      • ed-poon says

        March 11, 2010 at 9:21 am

        I was also really skeptical about this, so I did some googling.

        <

        p>http://www.bostonredevelopment…

        <

        p>Apparently, according to BRA, 52% of city land is tax exempt.  I’m sure this is land not square footage of buildings.  I’m also sure the biggest chunk of this is city/state/federal government owned land, not what we typically think of as “non-profits.”  

        <

        p>Still, I knew DC had this problem, but I didn’t think the percentage in Boston was so high.

    • paulsimmons says

      March 11, 2010 at 12:23 pm

      The Mayor’s leverage comes from the permitting process.

      <

      p>In addition the policy arms within City Hall are subject to the same hack-wonk dynamics that exist in State transportation agencies.  The interplay between The Boston Redevelopment Authority, Department of Neighborhood Development, Boston Transportation Department, Zoning Board of Appeals, etc; and the City Council, neighborhood groups, ad tedium, ad nauseum – and their various supplicants and patrons – has to be seen to be believed.

      <

      p>Granted, Mayor Menino makes the final decision, but he doesn’t make it in a vacuum.

      • roarkarchitect says

        March 11, 2010 at 5:49 pm

        The Fiscal Year 2010 tax rates are:

        <

        p>    Residential: $11.88 per $1,000 of value, and if you live in your property you get a 30% discount so it’s  $8.31 per $1,000.00

        <

        p>    Commercial and Industrial and Personal Property: $29.38 per $1,000 of value.

      • seascraper says

        March 12, 2010 at 2:17 pm

        Yes yes that’s my point. We have a high rate and lower rate for favoritism and kickbacks. You have to get rid of the chances for the lower rate for the connected, then you can lower the overall rate for the up and comers who don’t have any political connections, but do have the new ideas for the jobs of tomorrow blah blah.  

  8. kevinmccrea says

    March 11, 2010 at 8:15 am

    I don’t know when people are going to wake up that our business and political priorities are contrary to what is good for the majority of the citizens.

    <

    p>The leaders and executives at Liberty Mutual don’t need libraries, they live in communities that value education and libraries, not the inner city neighborhoods of Boston.  If they do live in Boston, you can be sure that they are relatively close to Copley which will always be there.

    <

    p>What they do need is even more money for their pockets, and few well placed contributions to candidates is well worth the return on investment.  I believe John Keith at Universal Hub did the research and showed that Liberty Mutual executives gave about $16,000 to Mayor Menino last year, what is that rate of return?   $16,000 to 16 million?

    <

    p>This tower will be near the corner of Berkeley and Columbus  the old Salvation Army building.  Blighted?  Hardly.  

    <

    p>But then again, the Mayor signed off on nearly 6 million in tax breaks a year for 1 Beacon Street because it is in a blighted area.   Perhaps being 180 steps away from so many lawmakers at the State House makes an area blighted.  

    • marcus-graly says

      March 11, 2010 at 8:59 am

      http://maps.google.com/maps?hl…

      • stomv says

        March 11, 2010 at 9:02 am

        on the link you provided, I count seven open air ground level parking lots.  One sign of urban decay is when the most valuable use for land is ground level parking.

    • striker57 says

      March 11, 2010 at 9:13 pm

      I believe the project will create construction and long term jobs. Immediate benefit. So Kevin, since you made the comparison, how many Boston libraries will stopping the tax break keep open?

      • farnkoff says

        March 12, 2010 at 1:51 am

        And I wonder whether these special tax deals have ever been tested as to their constitutionality. To me they seem to violate the “equal protection of the laws” clause. Why does this company over here get a $20 million dollar ($50 million??) while some other developer, or the mom-and-pop store on the corner, or little old Mrs. Jenkins on Kittredge Street, gets squeezed for every penny? We get snowed with these deals- they are a scam, an unholy fatcat/hack alliance that perturbs me to no end. Menino and Patrick should be ashamed of themselves for getting taken in by these con artists. Have you guys been to Berkeley and Columbus? It ain’t “blighted”, parking lots or no. On a scale of 1-10, with 10 being, I don’t know, Charles Street in Beacon Hill, I’d put this neighborhood at 7 or 8. Arbitrarily granting huge favors to bigshots is not “improving the business climate”- it serves only to further undermine faith in government, for businesses and average citizens alike.

        • roarkarchitect says

          March 12, 2010 at 7:10 am

          So that state increases the sales tax 125% and then  provides special deals to favored firms. How about stop playing favorites and keep the tax rate reasonable.

          <

          p>The 100M of loans the state gave to Evergreen is another case. In the globe today the CEO got a .5M bonus, even though the firm is struggling.

          <

          p>http://www.boston.com/lifestyl…

        • seascraper says

          March 12, 2010 at 5:07 pm

          This guy’s attitude is detestable and his numbers don’t add up, but as long as the high rate which stopped real use of this building is still in place, then he is right.  

  9. farnkoff says

    March 14, 2010 at 5:38 am

    a must read story on the generally lackluster performance, and poor oversight, of these types of tax incentives. Contrast this with the Herald’s shameless commercial for Ted Kelly last week.

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