I attended Governor Patrick’s campaign event at the Boston Architectural College last Monday, and again asked to meet with him, to discuss the tax break he gave to Liberty Mutual to subsidize its new office tower. He had his aide, Haven Nichols, take my phone number. I have heard nothing.
I despair of getting to talk to the Governor. So I will use this forum to make my plea: How can we rescind this regrettable award, which is unjustified, unnecessary, and actually harmful to the office economy. LM’s project notification form reveals that LM will fill its new tower by shifting its employees from its current office space at Arlington/St James, which it will lease out. So we are giving away $38.5 million in public funds to subsidize the shuffle of a few workers around the block from one LM building to another, leaving the recently constructed building it bought just a few years ago to survive by cannibalizing other struggling commercial buildings in the city.
And I will add to this plea a Public Record Request, for all communications between the office of the Governor, Secretary Greg Bialecki, and any other state employee, and Liberty Mutual personnel, in the year preceding the March 31, 2010, state award.
I look forward to your response, Governor Patrick.
dispersed to cities and towns. Maybe our school can get it’s music program back.
don’t know the details here.
I found a similar post last month, it’s a 1 mil/yr TIF.
The City of Boston gave Liberty Mutual a $16 million property tax waiver ($24 million, adjusted for net present value) as a subsidy for building its new tower. The Governor gave the company $22.5 million as an “investment credit.” I wrote about this here and here, and I refer therein to a Globe piece as well.
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p>The yearly amount varies because of the ways the forumulas work (the state money is more front-loaded), but the total is $38.5 million.
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p>TIF subsidies are available only in areas of “blight.” Liberty’s property is in the Back Bay.
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p>Please note that the Liberty spokesman assured the City Council at a public hearing that the company never considered moving out of town; the tax breaks aren’t to keep Liberty here. Also, note that the company is funding the construction of the $300 million tower from its own sizeable ($110 billion) assets, no loan is necessary. (But this tax break, Liberty says, is absolutely required.)
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p>And Liberty’s “job creation” commitment consists of hiring an average of 30 people a year over the course of 20 years — 75% FEWER than the 125 people it hired annually in the past six years without a tax break.
taxes are to high in MA…
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p>BTW Shirley, remember candidate Deval, whom I’m sure had plenty of time for you…and completely agreed with you, I’m sure. He is just a disappointment.
Could you reassure those of us worried about transparency if the $41,500 in campaign contributions made by Liberty Mutual employees contributed to the sweetheart deal given Liberty Mutual?
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p>Regards,
David Whelan
Liberty Mutual also said at the Cyt Council Hearing that while they were not looking to locate out of state without the TIF they would not build this project.
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p>Building this project now means 400+ construction jobs at a time when the industry badly needs employment. The Boston City Council did exactly the right thing in approving this.
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p>My union wasn’t with Governor Patrick in the 2006 Primary but his commitment to creating jobs in the worst economy in decades makes us strong supporters in 2010.
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p>Sydney Asbury – thank Governor Patrick for doing the right thing to create jobs in the construction industry and keep money in the City of Boston economy.
Of course they’d say that. They have to make some kind of threat, to give the politicians cover for this give-away. But the fact is that they could easily afford to build it by themselves, and it was a bluff — a no-risk bluff. And the mayor and city council have given enough of these TIFs and 121As now that developers know they need only raise their hand, make some vague threats using the words “competitive” and “leaving town,” and they get millions in tax money.
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p>The government could use that money to hire construction workers, and other unemployed people, to produce things we, the public, really need, with those millions.
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p>We can’t just pour taxes into building whatever any private company wants (in fact, it’s against the law — these projects actually have to meet certain “public purpose” criteria, which are being twisted to simulate “compliance”). I’m sure you are an ardent believer in capitalism; that’s not capitalism.
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p>Do you think the government should pay unneeded public employees just to keep them on the payroll? Probably not. Do you think the government should be a partner in private businesses, deciding how many people a company hires, or picking winners and losers, or tilting the competitive playing field to favor some companies over others? Probably not. You probably don’t believe in indefinite unemployment benefit payments either, right?
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p>Well, when the government pays private companies just to keep workers on the private payroll, it is essentially doing all these things.
At least that’s what the BRA claims.
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p>If one considers 600 new jobs and the income tax, sales tax, and spending that come with those jobs, ABSOLUTELY build that building.
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p>And I don’t include all the local or regional purchases that will be made, things like office equipment, furniture, computers, etc. Certainly it’s not all local spending, but a lot of it will be … commissions on the office partitions, sales tax, etc.
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The BRA is part of the development team, and touts the 600-jobs figure, but as I said, LM has been hiring four times as many employees annually, without any tax break. An average of 30 jobs a year (even the 60 jobs a year LM promises to front-load for the first few years and then taper off) is bupkis. BUPKIS. It’s certainly not “job creation” — it’s not even level job maintenance, not even a blip in LM’s 2500-person local workforce, and even less than not a blip in Boston’s unemployment situation (only 20% of LM’s Boston workforce is Boston residents).
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p>This 600 jobs is a made-up number, pulled out of thin air; and when Deval wanted to give LM more than the state per-job subsidy formula would have allowed, his peeps simply made up another number, 750, just to inflate the amount of the subsidy.
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p>If the company itself had done this, it would be liable for fraud. As it stands, the Governor has committed the fraud.
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p>Look, the question here is not whether LM should build the tower (that’s also a question, but not here), but whether the public should be giving LM $40 million. The answer, by any criterion, is no. If LM wants to speculate in real estate, it should do so without public money. And it easily can.
Obviously 600 people cannot fill 585,000 square feet. It’ll be more like 2,000. That suggests LM might need some help subsiding their operating expenses, especially in a poor commercial leasing market.
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p>The annual TIF amounts to $3.12 per square foot per year, perhaps JUST enough for LM to justify spending $500+ per foot … they’ll have 300,000 SF of empty space to lease out.
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p>Net net, unless we’re being lied to, it’s better to build the building than not.
Liberty is going to hire so few people annually that the 600 number is meaningless, 30 a year on average for 20 years. It is not building this tower for these “new jobs.”
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p>Liberty’s application states that they will fill this new tower by moving over their employees from their existing tower at St. James/Arlington. And that existing tower will be leased out, to tenants who could be holding up other struggling commercial buildings. (We are already helping them out with their expenses, by forfeiting millions a year in taxes on the existing building, which enjoys another ridiculous tax break.) So after they build the tower, they will have to fill that existing building by cannibalizing other buildings which…you want to also help out with their expenses, perhaps?
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p>Here’s my question to you, net-net shepherd: Why are you recommending that the taxpayers help LibMu build a tower it can’t fill, instead of advising LibMu not to build a gigantic new office tower to be filled by vacating and leasing out their existing building “in a poor commercial leasing market”?
…here and everywhere. Liberty Mutual has over 2000 employees in Massachusetts. This deal…as most…has nothing to do with jobs and incomes, but rather the drive to see commercial and industrial real estate tax revenue. Boston wins this deal and some other town loses. But it is next to impossible to evaluate these deals without transparent reporting of information (a point that Sen Eldridge and others have made). Shirley is right we need the release of the application data, and the annual reports to see if companies are doing what they promise.
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p>Otherwise we will keep seeing reports like the Glove two-parter about how these programs get abused.
The fact is that Boston didn’t “win” this deal at the expense of another town. Liberty wants to build a tower in its headquarters city of Boston, a monument to its greater glory and a great real-estate investment, since it got the land for peanuts because the seller looked at the zoning while LM had already arranged for spot zoning to build triple the legal height. It’s a rising Forbes 100 company, making money hand over fist. It bought a huge new complex next door at St. James/Arlington and got that building’s 121A tax break thrown in — against state law — by Mayor Menino (who deprived Boston of $40 million in taxes with 121A transfers on just one project, One Beacon, just since 2000, and who knows how many more millions on others). So the whole threat of “creating” those “600 new jobs” in its little digs in New Hampshire or wherever was just a bluff, such a silly one that they probably had to rehearse in front of a mirror to keep from laughing in public, just enough “tough talk” to give cover to politicians who WANT TO GIVE LIBERTY MUTUAL MONEY. Just as they wanted to give money to JPMorganChase, Jurys Hotel, and Manulife in previous TIF boondoggles and untallied others I can’t tally right now.
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p>The motive here is merely political: To be able to claim credit for “investment” and “job creation.” (I have even been told this by electeds. They figure thus: a couple million dollars missing from our bloated budget, no one will notice, but come next campaign, some opponent might beat them for voting against “job creation”).
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p>So, any money given to private corporations is an “investment” (any money given to poor people is, of course, a “subsidy”), and any person hired, or even not fired, represents “job creation” or that new money-sump, “job retention,” even if it was just in the ordinary course of employment for business needs (which is the only hiring that really takes place).
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p>That’s what it is all about. Not about new tax revenues. If it were about taxes, we could and should get ALL the taxes on the new LM building. We could and should have terminated that 121A tax break on the building next door when LM bought it, to bring in millions of dollars more a year.
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p>Giving tax breaks is also, of course, a good campaign financing strategy. Liberty Mutual has given Deval Patrick $50,000 and Tom Menino, $10,000.
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p>The only time politicians can be held accountable for this wanton squandering of public resources for their own self-aggrandizement is at election time. And because they addle people’s brains with all their false claims (“I gave them money, therefore I created jobs”), we let them off the hook.
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p>I can’t even begin to tell you, here, all the tax boondoggles in this city and state that I know about, which of course is a tiny part of the total. If people understood it, there would really be a revolt. That’s why transparency is obstructed.