REPORT OF THE TOWN OF RUSSELL
TAX INCREMENT FINANCING (TIF) AGREEMENT
FOR THE 50 MEGAWATT RUSSELL BIOMASS PROJECT
April 2010
1
Executive Summary
Following receipt of a 20-year tax agreement proposal by Russell Biomass in January
2008 the Selectmen appointed a 5-person TIF Committee to review and negotiate
terms acceptable to the Town.1 Negotiations were held periodically to March 2010.
Under state law a Tax Increment Financing agreement (TIF) is a joint partnership
agreement among the Town, state and project applicant that guarantees the Town an
immediate and fixed tax payment stream and specified number of jobs while providing
the applicant with a predicable payment stream with lower payments in the early
years that facilitates his project loan agreement. This compares to a non-TIF tax
payment stream that does not immediately provide significant payments to the Town
until construction is complete and does not guarantee the Town jobs or tax payments
over any period of time. The TIF must be approved by Town residents through a Town
Meeting vote.
The Committee proceeded on the basis that the Town would make any agreement
conditional on the project demonstrating safe operation through the receipt of its
roughly two dozen environmental and health permit approvals. With this as a given
the Committee pursued two objectives:
1 Consider the Town’s financial situation. In summary, Russell had the lowest
tax rate in the hilltowns 25 years ago when three paper companies were
operating four mills, but Russell now has the highest tax rate with the loss
of industrial tax revenues over the last two decades. There is the prospect of
severe state revenue limitations in the foreseeable future with a steadily
increasing school system budget taking 2/3 of the Town tax revenues.
2 Negotiate the best possible agreement to lower the Town’s financial risk and
limit tax rate increases while allowing for a viable project. Specifically, the
Committee would strive to negotiate immediate financial relief for the Town,
a long-term payment guarantee and special benefits for important Town
resident needs.
In 2007 Russell Biomass initially proposed a minimum annual payment of $300,000
and a 20-year average of $600,000. At the DPU hearing in 2007 the Selectmen
testified that the increasing plant capital cost (the basis for the tax valuation) called
for higher tax payments. The full report (available on the Town web site) describes the
evolution of the negotiations and special benefits.
1The Committee members were Selectman and TIF Committee Chairman Dennis Moran, Finance Committee
Chairman Phil Winterson, Assessor Ted Gloss, ZBA Alternate and Town Moderator Illtyd Fernandez-Sierra, and
Planning Board member Jim Unger. Jim was a valuable contributor until increasing job responsibilities prompted
his resignation.
2
A summary of the final benefits negotiated is:
1 A $700,000 minimum annual payment, starting at the beginning of
construction
2 $28 million over 20 years for an average of over $1.3 million per year
3 In addition to the above payments significant non-tax financial and quality of
life benefits during construction and each operating year during the 20-year
agreement
Given the expected 50-year lifetime of the plant the Town Assessor estimates that total
tax payments will exceed $100 million over that period. The full report contains a
table comparing the 20-year TIF tax revenue stream to a non-TIF tax revenue stream
and it also contains a table showing the additional special benefits negotiated by the
TIF Committee.
During the negotiations the Committee checked the tax payments of other power
plants and other TIF agreements in Massachusetts. The final proposed Russell TIF
payment terms compare extremely favorably to other power plants and other TIFs in
the state. Comparison tables are provided in the full report.
In summary, in comparison to the benefits without a TIF, the proposed TIF agreement
provides the following:
1 Over $2 million higher payments in the first 4 years
2 Certainty of payment for 20 years with no right of Russell Biomass to contest
the payments. This will allow for higher tax relief planning because of that
certainty.
3 A predictable, increasing stream for better Town budget planning, as opposed to
a variable and sometimes decreasing stream that could occur without a TIF
4 Fairness compared to other towns and power plants
5 An additional $1 million during construction and $125,000 per operating year
for 20 years for non-tax benefits for Town recreation improvements, electric
power system reliability, Gateway School teacher conferences and after-
school busing, Main Street beautification, stove replacements to support
wintertime air quality improvements, and other community support
activities
In the final analysis no benefits will occur without the plant being built. The tax
payments will be 10 percent of the total plant operating costs. While the plant can
ultimately be financed without the TIF the fixed TIF payment stream will provide the
Town badly needed immediate payments, guaranteed payments over 20 years, special
benefits the Town would not otherwise receive and would better support the plant’s
financing plan. We believe a proper partnership balance has been struck between the
Town’s financial and residents’ needs and those of the proposed biomass plant.
3
Full Report
Following receipt of a 20-year tax agreement proposal by Russell Biomass in January 2008 the
Selectmen appointed a 5-person TIF Committee to review and negotiate terms acceptable to the
Town.2 Negotiations were held periodically to March 2010. Under state law a Tax Increment
Financing agreement (TIF) is a joint partnership agreement among the Town, state and project
applicant that guarantees the Town an immediate and fixed tax payment stream and specified
number of jobs while providing the applicant with a predicable payment stream with lower
payments in the early years that facilitates his project loan agreement. This compares to a
non-TIF tax payment stream that does not immediately provide significant payments to the
Town until construction is complete and does not guarantee the Town jobs or tax payments
over any period of time. The TIF Agreement must be approved by Town residents through a
Town Meeting vote.
The Committee proceeded on the basis that the Town would make any Town Meeting vote to
approve the TIF agreement conditional on the project demonstrating safe operation through the
receipt of its more than two dozen environmental and health permit approvals (see attached list
of permits). It was not part of the charter of this Committee to determine whether this would
occur, and with this report the Committee is not making any representation about the plant
design and safety. That is up to the several permitting agencies to decide and also the courts
with respect to any permit appeals. Rather, the Committee’s job was to negotiate the best
possible agreement for the Town if the environmental and health impacts of the biomass plant
were ultimately deemed acceptable.
With the safe design and permit receipts as a firm and absolute condition given the Committee
pursued two objectives:
1 Consider the Town’s financial situation. 25 years ago Russell had the lowest tax rate in
the hilltowns at a time when three paper companies were operating four mills. Russell
now has the highest tax mil rate in the hilltowns (see attached table of tax mil rates in
the hilltowns) because of the loss of industrial tax revenues over the last two decades.
And importantly for the Town, there is the prospect of severe state revenue limitations
in the foreseeable future with a steadily increasing school system budget taking 2/3 of
the Town tax revenues.
2 Negotiate the best possible agreement to lower the Town’s financial risk and limit tax
rate increases while allowing for a viable project. Specifically, the Committee would
strive to negotiate immediate financial relief for the Town, a long-term payment
guarantee and special benefits for important Town resident needs. Because of the
severe pressure on the Town revenues and budget there would be particular value to
substantial immediate financial relief for the Town.
2The Committee was composed of five members – Selectman and TIF Committee Chairman Dennis Moran, Town
Finance Committee Chairman Phil Winterson, Town Assessor Ted Gloss, ZBA Alternate and Town Moderator Illtyd
Fernandez –Sierra and Planning Board member Jim Unger. Jim was a valuable contributor to the process until
increasing job responsibilities prompted his resignation.
4
We first describe the history and outcome of the TIF negotiations. In 2007, prior to their formal
TIF proposal, Russell Biomass initially proposed a minimum annual payment of $300,000 and
a 20-year average of $600,000. At the DPU hearing in 2007 the Selectmen testified that the
increasing plant capital cost (the basis for the tax valuation) called for higher tax payments. In
January 2008 Russell Biomass submitted a revised proposal with increased payment
guarantees – a minimum of $400,000 in the early years, with a 20-year total of $20 million, or
an annual average of $1.0 million. Negotiations then took place over the following 2 years with
a particular focus on (a) the up-front payment amount for the Town and (b) the special resident
benefits for social services, recreation and other Town priorities.
A summary of the final benefits negotiated and proposed to the Town is outlined below:
1 A $700,000 minimum annual payment, starting immediately at the beginning of
construction
2 $28 million over 20 years for an average of over $1.3 million per year. This compares to
current property tax revenues of $2.5 million.
3 In addition to the above payments special non-tax benefits of $1 million during
construction and $125,000 per year during the 20-year agreement
Given the expected 50-year lifetime of the biomass plant the Town Assessor estimates total tax
payments of more than $100 million over that period.
Under the TIF the value of the real property taxable assessment is estimated at $72 million of
the $165 million estimated plant capital costs, against which a percentage exemption averaging
28 percent is applied over 20 years. For comparison a table is attached showing the assessed
value of the twelve largest taxpayers in Russell.
Attached to this report are three summary tables: (1) a table showing a summary of TIF tax
benefits and the value of these benefits on a per-household basis, (2) a table showing a 20-year
comparison of TIF versus non-TIF tax payments and (3) a table showing the special additional
non-tax financial and other benefits negotiated by the Committee.
To provide a basis for Town residents to judge the proposed TIF agreement we comment further
in the rest of this report on how the agreement compares to tax payments without a TIF, the
value of the certain, guaranteed stream of increasing payments, how the TIF compares to other
state power plants and other Town TIFs (i.e., its fairness) and what non-financial benefits the
TIF would provide.
To provide a perspective for the final benefits outlined above the key points of comparison of
the proposed TIF agreement that would not occur without a TIF are:
1 An immediate tax payment of $700,000 upon construction start
2 Over $2 million higher tax payments in the first 4 years
3 Certainty of payment for 20 years with no right of Russell Biomass to contest the
payments. This will allow for higher tax relief planning because of that certainty.
5
4 A predictable, increasing stream for better Town budget planning, as opposed to a
variable and sometimes decreasing stream that could occur without a TIF
5 Fairness compared to other towns and power plants
6 An additional $1 million during construction and $125,000 per operating year for 20
years for non-tax benefits for Town recreation improvements, electric power system
reliability, Gateway School teacher conferences and after-school busing, Main Street
beautification, stove replacements to support wintertime air quality improvements, and
other community support activities
Beyond the absolute amount of the tax payments there will be special value to the Town from
the guaranteed certainty and the guaranteed annual increases in the 20-year payment stream.
First, this will allow for higher tax relief planning because of that certainty – i.e., any tax relief
decision must assume the minimum assured tax payment so that the budget will be covered
for certain. Second, a predictable, increasing stream will allow better planning for the
inevitable increases in the Town budget, as opposed to a variable and sometimes decreasing
stream that could occur without a TIF. Also, with fixed, guaranteed payments there will no
right of Russell Biomass to contest the payments during the 20-year agreement period.
Regardless of the amount or guaranteed nature of the TIF payments there is the need for the
agreement to be fair to the Town compared to tax agreements for other power plants in the
state and other TIF agreements in the state.
The proposed Russell TIF payment terms compare extremely favorably to other power plants
and other TIFs in the state. The attached table showing comparable power plant tax
assessments on a per-megawatt shows that the negotiated Russell Biomass plant tax payments
would be 2 to 4 times higher per megawatt than other Massachusetts power plants. As an
historic comparison within Russell the former Westfield River Paper Company paid $50,000 per
year in taxes, or less than 1/20th of the proposed Russell Biomass plant tax payments.
Currently, the Texon plant pays $15,000 per year in taxes.
For a comparison to other TIFs see the attached list of over 20 Westfield TIFs, 90 percent of
which provide greater tax exemptions to the applicant than the proposed Russell TIF. Under
the state TIF property tax program there is a percentage exemption of the taxes applicable to
real property. For reference the proposed percentage exemption for the Russell Biomass plant
is a maximum of 62 percent in four of the early years and averages 28 percent for the 20-year
period. You will note in the table showing the Westfield TIFs that, for 90 percent of the
agreements (ranging from 5 to 12 years) the percentage exemption averages much more than
28 percent. The most current project in Westfield is the proposed 400 MW gas-fired plant,
which has recently had a tax agreement approved that reduces the taxes the plant would pay
by $100 million over 15 years, or more than half of what they would otherwise pay. See the
attached Boston Globe article on the Westfield plant.
Another instructive comparison to Westfield is the tax revenues per capita. Adjusting for the
population of Westfield and Russell the proposed Russell Biomass tax revenues per resident of
Russell are 15 times those of Westfield gas-fired plant for Westfield residents.
6
Then there are other important factors to consider - the qualitative benefits to the Town that
cannot be measured in dollar terms alone. The Committee paid particular attention to a
number of Town needs that currently suffer from lack of funding. Referring to the attached
table of special additional non-tax benefits several of these benefits support:
Improved quality of Town services across the board from a stronger financial position
Improvements along Main Street from (a) the relocation of the RMLD maintenance
building and the highway department to land near the Town transfer station at the end of
Frog Hollow Road, and (b) Main Street beautification improvements. This will create a
more appealing Town Center.
Town recreation and community activities support as shown in the attached special
additional non-tax benefits table
After-school athletic team busing and special teacher development programs not covered
in the normal budget
An annual college scholarship for one or more Russell students
Improved electric power system reliability
Reduced electric power costs by 2 cents per kWh for the first 400 kWh for all RMLD
customers
School activities not covered under the normal school budget
Reduced wintertime air pollution from the free replacement of older wood stoves with
clean-burning pellet wood stoves, as well as reduced pellet costs from wholesale
purchases and redistribution to all pellet wood stove owners.
Job and family income for Russell residents who obtain jobs from the biomass plant.
Under the TIF agreement the 50 construction and 22 permanent operating jobs and job
training would be preferential for Russell residents and a legal obligation of Russell
Biomass.
The above quality of life and air quality health improvements offer a value that each resident
must judge for himself or herself. In addition, there was a special localized issue that was
brought to the attention of the Committee in later 2009 – the concern over property value
impacts from the plant trucking traffic on residences on Frog Hollow Road, River Street and the
corners of the intersection of Frog Hollow Road and Main Street. The Committee directed
Russell Biomass to respond to this concern, and a provision was put into the TIF Agreement
requiring Russell Biomass to fund any shortfall in property sale proceeds within 4 years after
construction start for any of these residences that sold for less than its highest assessed value.
At some point after the Russell special permit and site plan review permitting processes are
completed later this year there will be a public information meeting in which the TIF will be
presented and resident questions answered. Following this a Town Meeting will be held to
obtain a public vote on whether or not to approve the agreement.
The full TIF agreement is available for inspection in the Town Hall.
7
In the final analysis no benefits will occur without the plant being built. Because the tax
payments will be 10 percent of the total plant operating costs the plant may ultimately be
financed without the TIF, but the fixed TIF payment stream will better support the plant’s
financing plan and will provide payment certainty and special benefits the Town would not
otherwise receive. We believe a proper partnership balance has been struck between the
Town’s financial needs and those of the proposed biomass plant.
Submitted to the Town residents of Russell by:
Dennis Moran – Selectman and TIF Committee Chairman
Phil Winterson – Russell Finance Committee Chairman
Ted Gloss – Town Assessor
Illtyd Fernandez-Sierra – ZBA Alternate and Town Moderator
8
Required Permits and Approvals for the Russell Biomass Project
PermitRegulatory
Agency
Permits Required Prior to Construction Financing
1 Major Comprehensive Plan Approval
Generation Facility – Air and Noise
Massachusetts
Department of
Environmental
Protection (MADEP)
2 Environmental Impact Review
Generation Facility and Transmission
Facilities
Massachusetts
Environmental Policy
Act (MEPA)
3 Special Permit
Generation Facility
Town of Russell
Zoning Board of
Appeals/ Planning
Board
4 Water Management Act (WMA)
WMA Order to Complete
Generation Facility
MADEP
5 Chapter 91 - Request for Determination of
Applicability
Generation Facility
MADEP
6 National Pollution Discharge Elimination
System (NPDES) Individual Permit
Generation Facility
MADEP/ United
States Environmental
Protection Agency
(USEPA)
7 Request for Interconnection for a Large
Generating Facility
Transmission Facilities
Independent System
Operator – New
England (ISO-NE)
8 Petition for Approval of Construction/ Section
72 Petition/ Petition for Zoning Exemption
Transmission Facilities
Energy Facility Siting
Board (EFSB)
9 Petition for Zoning Exemption
Generation Facility
Dept. of Public
Utilities (DPU)
10 Authorization to Access
Transmission Facilities
Massachusetts
Turnpike Authority
11 Water Quality Certification
Section 401 Clean Water Act
Generation Facility and Transmission
Facilities and Frog Hollow Road Extension
(FHX)
MADEP
12 Programmatic General Permit/Individual
Permit
Section 404 Clean Water Act
Generation Facility and Transmission
Facilities and FHX
Army Corps of
Engineers (ACOE)
13 Orders of Resource Area Delineation
Generation Facility and Transmission
Facilities
Russell, Montgomery,
Westfield
Conservation
Commissions and
MADEP
9
PermitRegulatory
Agency
4A Orders of Conditions
Generation Facility
Russell Conservation
Commission and
MADEP
14B Orders of Conditions
Transmission Facilities
Russell Conservation
Commission and
MADEP
14C Orders of Conditions
FHX
Russell Conservation
Commission and
MADEP
15 Orders of Conditions
Transmission Facilities
Westfield
Conservation
Commission and
MADEP
16A Determination of No Adverse Impact / Take
Generation Facility and Transmission
Facilities
NHESP/Massachuset
ts Division of
Fisheries and Wildlife
(DFW)
16B Determination of No Adverse Impact / Take
including FHX
NHESP/Massachuset
ts Division of
Fisheries and Wildlife
(DFW)
17 Conservation and Management Permit
Generation Facility and Transmission
Facilities and FHX
NHESP/DFW
18 Permit to Access State Highway at Main
Street/Route 20
Generation Facility and FHX
Massachusetts
Highway Department
19 Determination of No Adverse Impact
Generation Facility and Transmission
Facilities and FHX
MHC
20 Article 97
Transmission Facilities
MA Legislature
21 Russell Special Permit - Amendment
Generation Facility to include FHX as access
Russell Zoning Board
of Appeals
22 Russell Site Plan Review
Generation Facility to include FHX as access
Russell Planning
Board
23 Russell Special Permit for Earth Removal
Generation Facility
Russell Zoning Board
of Appeals
24 Russell Site Plan Review
Transmission Facilities
Russell Planning
Board
25 Russell Special Permit for Earth Removal
Transmission Facilities
Russell Zoning Board
of Appeals
26 Westfield Zoning Permit
Transmission Facilities
Zoning Enforcement
Officer
27 Westfield Building/Structure Height and
Stormwater Management Special Permit
Westfield Planning
Board
10
Required Permits and Approvals for the Russell Biomass Project
Permit Regulatory Agency
Permits to be Submitted Post Construction Financing
and Design
28 NPDES Notice of Intent (NOI) to be
covered under the General Permit for
Stormwater Discharges from
Construction Activities, Storm Water
Pollution Prevention Plan (SWPPP)
Generation Facility and Transmission
Facilities
USEPA
29 Subsurface Sewage Disposal Works
Permits
Generation Facility and Transmission
Facilities
Russell and Westfield Boards of
Health
30 Stack Registration
Generation Facility
Federal Aviation Administration
(FAA)
31 Transmission Line Structure
Registration
Transmission Facilities
Federal Aviation Administration
(FAA)
32 Fuel Oil Tank Permits (requires final
design)
Generation Facility
State Fire Marshal/Local Fire
Department
33 Use Permit Under 502 (requires final
design)
Generation Facility
State Fire Marshal/Local Fire
Department for ammonia and fuel
oil storage tanks
34 Permit for Construction Related
Activities and Traffic Management
Transmission Facilities
Massachusetts Turnpike
Authority
35 Building Permits
Generation Facility, Transmission
Facilities and FHX
Russell, Montgomery, Westfield
Building Inspectors
State Building Code
36 Beneficial Use Determination (BUD)
(ash reuse)
Generation Facility
MADEP
11
Single Family Assessed Value/Single Family Parcels)* Residential Tax Rate/1000
* Average single family tax bills are calculated by dividing the (single family assessed value by
the single family parcels) for each community and then multiplying the average value by the
residential tax rate and dividing by one thousand.
Massachusetts Department of Revenue
Division of Local Services
Municipal Databank/Local Aid Section
Fiscal Year 2009 Average Single Family Tax Bill
DORCode Municipality
AssessedValue Parcels
AverageValue
TaxRate
SingleFamilyTax Bill
256 RUSSELL 105,876,020 527 200,903 17.16 3,447
059 CHESTER 85,679,000 489 175,213 16.33 2,861
183 MIDDLEFIELD 37,272,500 195 191,141 15.59 2,980
331 WESTHAMPTON 194,420,000 643 302,364 13.98 4,227
329 WESTFIELD 2,230,402,000 9,281 240,319 13.94 3,350
194 MONTGOMERY 76,590,800 314 243,920 13.20 3,220
143 HUNTINGTON 147,766,500 734 201,317 13.17 2,651
033 BLANDFORD 115,887,600 521 222,433 12.92 2,874
313 WASHINGTON 47,668,900 248 192,213 12.86 2,472
279 SOUTHWICK 775,154,300 2,988 259,422 12.55 3,256
112 GRANVILLE 146,910,800 566 259,560 11.00 2,855
260 SANDISFIELD 162,469,700 583 278,679 8.96 2,497
022 BECKET 415,310,100 1,676 247,798 7.98 1,977
225 OTIS 477,843,200 1,512 316,034 6.39 2,019
297 TOLLAND 154,682,400 488 316,972 4.64 1,471
Total 5,173,933,820 20,765 249,166
Largest Taxpayers in the Town of Russell - 2010
Name Assessment
1. Westfield Paper Lands, LLC $2,555,5002. Thomas O’Brien 1,130,2003. Texon 953,8004. Littleville Power 950,8005. Woronoco Power 806,3006. Lucier Family Trust 787,4007. Oleksak Trust 780,1208. Russell Land Company 706,4009. John Kurtz 586,70010.Howard Noe 540,70011.Howard Freedman 522,70012.B&N Lands, LLC 467,715
16
WESTFIELD TIF AGREEMENTS (1)
Shaded numbers are percent of real property tax exemptions by year
Old Colony Envelope, Inc. (MFG/paper, allied products) (12/96)
TIF (10 years, 100-75-50-25-25-25-20-15-10-5)
18 new jobs; 400 jobs retained; $6 million in investment
Angy's Food Products, Inc. (MFG/food and kindred products) (12/96)
TIF (5 years, 80-75-50-50-40)
8 new jobs; 32 jobs retained; $2.6 million in investment
Advance Mfg Co., Inc. (MFG/machinery, except electrical) (3/97)
TIF Tax Increment Financing, (5 years, 80-75-50-50-40)
10 new jobs; 176 jobs retained; $2.6 million in private investment
Jen-Coat, Inc. (2 Projects) (MFG/paper, allied products) (12/97)
TIF Two 10 year TIFs (50% per year)35 new jobs; 202 jobs retained; $4.5 million in private investment
Toys “R” Us Mass., Inc. (SERVICES/retail) (12/97)
TIF (12 yrs, 60-50-50-40-40-40-40-40-40-40-40-40)
28 new jobs; 172 jobs retained; $30 million in private investment
The Caldor Corporation (SERVICES/retail) (1/98)
TIF (10 years, 5-5-5-5-5-2-2-2-2-2)
30 new jobs; 290 jobs retained; $212,000 in private investment
Lawry Freight System, Inc. (SERVICES/transportation) (8/98)
TIF (5 yrs, 80-75-50-50-40)
new jobs; 18 jobs retained; $1 million in private investment
Finishing Solutions (SERVICES/commercial) (6/99)
10-year TIF (80-75-50-50-40-40-30-30-20-10)
20 new jobs; 3 jobs retained; $400,000 in private investment
Westek Architectural Woodworking Co Inc. (MFG/lumber/wood products) (6/99)
10-year TIF (80-75-50-50-40-40-30-30-20-10)
5 new jobs; 10 jobs retained; $920,000 in private investment
DBLS Realty, LLC/Millrite Machine (11/01)
5 year STA ()
8 jobs created, 35 jobs retained, $2,240,000 in private investment
94 North Elm Street/Ronald E. Schortmann (12/02)
STA (To be determined)
30 jobs created, $5,000,000 in private investment
Electric Motor Service & Sales, Inc (11/03)
5 year TIF (80- 75- 50- 50- 40)
2 jobs created, 9 jobs retained, $750,000 in private investment
17
WESTFIELD TIF AGREEMENTS (2)
Shaded numbers are percent of real property tax exemptions by year
Lowe’s Home Center (12/04)
10 year TIF (60-60-60-60-60-50-50-50-50-50)
45 jobs created, $26,300,000 in private investment.
Manufacturing Technology Group (Amendment) (12/05)
11 Year Amendment to an existing TIF (50-100-100-100-75-50-40-30-20-10-5)
5 jobs created, 50 jobs retained, No additional Private Investment
required as this is an Amendment
CVS (6/06)
5 year STA (100-75-50-25-0)
4 jobs created, 26 jobs retained, $8,000,000 in private investment
Target Inc. (Provisional) (6/06)
5 year TIF (60-50-50-40-40-)
350 jobs created, $105,000,000 in private investment
Angy’s Food Products (12/05)
7 year TIF (80-80-75-75-50-50-40)
24 jobs created, 24 jobs retained, $1,200,000 in private investment
American Canvas & Aluminum Products (3/06)
5 year TIF (80-75-50-50-40)
3 jobs created, 5 jobs retained, $500,000 in private investment
NES Worldwide (3/06)
5 year TIF (80-75-50-50-40)
4 jobs created, 22 jobs created, $1,800,000 in private investment
Sage Engineering (3/06)
5 year TIF (80-75-50-50-40)
2 jobs created, 2 jobs retained, $500,000 in private investment
Preferred Freezer Services, LLC/Preferred Freezer Services of Westfield (10/06)
9 year TIF (50-50-50-50-50-50-50-50-50) (Provisional)
45 jobs created, $23,035,000,000 in private investment
Hodell-Natco Indiustries, Inc. (4/07)
5 year TIF (50-50-50-50-50)
16 jobs created, 9 jobs retained, $2,100,000 in private investment
Advanced Manufacturing (11/07)
5 year TIF (50-50-50-50-50)
5 jobs created, 185 jobs retained, $1,750,000 in private investment
18
Power plant gets $100m breakWestfield shaves property taxesBy Todd Wallack, Globe Staff | April 2, 2010
It turns out Liberty Mutual Insurance Co.’s $38.5 million tax break wasn’t the largest one approved by astate economic development board on Wednesday after all.
According to documents released after the board meeting, the Economic Assistance CoordinatingCouncil also ratified a $100 million tax break for a new power plant in Westfield — bigger than the taxbreaks given to Bristol-Myers Squibb Co., Liberty Mutual, and some other major employers that arebuilding large facilities in Massachusetts.
But unlike the Liberty Mutual and Bristol-Myers deals, only a sliver of the subsidy is coming from statetaxpayers.
As previously reported, the state gave the Pioneer Valley Energy Center $320,000 in state tax credits tobuild the $426 million plant, which will use natural gas to generate up to 400 megawatts of electricity.But Westfield also offered the company a 15-year deal that would shave the plant owner’s local propertytaxes by more than half. The net worth of that reduction is $99.5 million, documents show.
The company behind the Westfield plant is a subsidiary of Energy Management Inc., the Boston powercompany that is trying to build Cape Wind, the wind-turbine farm in Nantucket Sound.
Larry Smith, the city’s director of community development, said Westfield hired a consultant to figure outhow large an incentive it needed to offer to entice the developer to build there. Smith said it is commonfor power plants to receive large incentives, because the plants require huge amounts of investmentand generally face steep taxes on their equipment.
Even with the large tax incentive, Westfield said it will still come out ahead. The city will net nearly $2.5million in additional revenue, a substantial amount for a community its size. The site location is currentlyempty and generates little tax revenue.
“Something is better than nothing,’’ said State Representative Donald F. Humason, a Republican fromWestfield. “This was a fairly competitive siting process, and the principals had several other options.’’
Matt Palmer, the project manager for the Westfield plant, said the company would have been forced tofind an alternate site in another city without the aid.
“The project simply wouldn’t have been viable,’’ Palmer said. “When you add that kind of tax burden, theproject makes no sense.’’
The company plans to begin construction late this year and open in late 2013, creating 200 constructionjobs and 16 permanent full-time jobs. Palmer said it will be the city’s largest taxpayer, even with thediscount.
The power plant would have received an even larger tax break under the old rules for the EconomicDevelopment Incentive Program, which offers incentives to companies that promise to expand in targetareas.
Under the old system, when the state approved a local tax break, it automatically chipped in a state taxbreak worth 5 percent of the company’s investment. In the case of the Westfield plant, that would workout to $21 million, or $1.3 million per job.
But a new law gave state officials more discretion over the size of the award starting this year. In thiscase, the council offered state tax breaks worth $20,000 per job.
Overall on Wednesday, the council approved tax breaks to eight companies potentially worth $27million off their state taxes, and an estimated $124 million off their local property taxes.
Todd Wallack can be reached at [email protected].