GE has announced it will pull out of its Fort Point headquarters plan and give back its massive subsidy package, according to the Boston Globe’s Jon Chesto:
General Electric says it will reimburse the state for the massive incentive package that helped convince the company to move its headquarters here from Connecticut, as it looks to sell its future Fort Point headquarters property and scales back its ambitions.
The board of MassDevelopment — a quasi-public agency that owns part of the property — approved a plan on Thursday to jointly market the 2.7-acre site with GE. The sale proceeds will reimburse the agency for the $87.4 million in state money that has been used to acquire and prepare the Fort Point parcel.
GE, however, is not leaving Boston. The struggling company said it will still move into two brick buildings at Necco Court after renovations are completed, but won’t come close to creating the 800 jobs it originally promised.
Progressives had complained the GE subsidy could’ve been spent on more pressing needs and may have been superfluous. “Whether GE needed a publicly financed incentive to move to a high-technology and highly educated hub like Boston is debatable,” wrote the Tax Policy Center’s Megan Randall.
GE’s announcement comes on the same day Amazon canceled plans to locate 25,000 jobs in New York City, rejecting the $3 billion subsidy package officials had offered. Critics similarly complained the subsidy package was a waste of money to throw at a wildly profitable company in a city with an already-booming economy.
The collapse of these misguided deals is a lesson for local leaders: We should focus on making our communities great for the people who already live and work here, and economic growth will follow.
In the long run, losing GE is a ripple in Boston’s economic ocean. But failing to invest in transit and schools is the economic equivalent of global warming, generational neglect whose effects could be felt for decades to come.
The details of the deals may have left something to be desired, but I’m disturbed by the cheering I’m hearing from some that these businesses are leaving town. On balance attracting potential job creators and economic engine primers should be considered a positive, though I do believe that tax breaks should be awarded after the jobs are proven to have been created rather than in anticipation thereof.
My own reaction mirrors my response to the failure of the Olympic bid and to the Grand Prix fiasco. I’m not sure I call it “cheering”. Something more like satisfaction that the consequences of this terrible policy decision were approximately as awful as I thought they would be.
Sites like this report that the total package offered to GE included:
– $25 M in property tax “incentives”
– $120 M in “targeted improvement projects” in Fort Point.
– $125 M in “bridge renovation and transit upgrades” in Fort Point
What might have happened if the same enormous amounts of money were invested in expanding public rail transportation, especially in western MA? What might have happened if these funds were invested in rebuilding our gateway cities?
This deal exemplifies “legal corruption”, where wealthy white men (and perhaps a handful of women) plunder public funds for their own pet projects. Fort Point, in particular, is already outrageously expensive even by current Somerville standards.
I cheer the well-deserved comeuppance for corrupt politicians who should have known better.
There’s a concept called Economic Gardening which builds up local business infrastructure and markets local businesses to the world with the help of the municipality and the state instead of offering tax breaks to lure new businesses to move to a city or town. It has a decades-long track record and seems to provide more jobs and builds more business than tax breaks for large corporations.
About 4 years ago, I was at a conference with one of the innovation people from the Commonwealth and told her about Economic Gardening. She’d never heard of the term but had practiced something like it when working in Holyoke. Oh well. Too bad she and others, like the Globe, remain so out of the loop. Has Boston made another pitch to Amazon yet?
Article by Richard Florida on the results of the most recent edition of the Menino Survey of Mayors, conducted annually by BU’s Initiative on Cities, covering 110 mayors of USA’s cities with more than 75,000 people, asking what U.S. mayors believe about economic-development incentives:
https://www.citylab.com/life/2019/02/business-tax-breaks-mayors-amazon-hq2/582166/