2000-08-03CITY OF BEVERLY, MASSACHUSETTS
PUBLIC MEETING MINUTES
BOARD OR COMMISSION: Economic and Community Development Council
SUBCOMMITTEE:
DATE: August 3, 2000
LOCATION: Beverly Public Library
MEMBERS PRESENT:
MEMBERS ABSENT: Chairman Joyce McMahon, Vice-Chairman Bill
Rodenbnugh, Dick Mooney, Wayne Mastin, Don Stacey, Deb
Rosser, Brenda Spence
ALSO PRESENT: City Planner Tina Cassidy, Councilor John Murray,
Councilor Virginia McGlynn
RECORDER: Karen Bradley
Rodenbaugh calls the meeting to order at 6:13 p.m. Rodenbaugh explains that the Affiliated
Management Group (AMG) who has recently purchased the former Loeb Estate at 655 Hale
Sueet has filed a certified project application with the City and the State. Within that
submission, AMG is requesting to enter into a Tax Increment Financing (TIF) agreement with
the City of Beverly. Attending the meeting are two representatives for the Affiliated
Management Group; Mr. Jonathan Speros, Senior Manager for Price Waterhouse Coopers,
Attorney Mark Glovsky, and Mr. Dan Shea, Vice President of AMG.
Chairman McMahon arrives at 6:16 p.m.
Mastin: motion to approve last two meetings minutes, seconded by Rosser. All members in
favor, motion carries.
Rodenbaugh explains that the Mayor of Beverly has asked the Economic and Community
Development Council to examine the proposed TIF and make a recommendation. He asks the
AMG representatives what they would do differently if the proposed TIF were granted.
Cassidy asks Mr. Speros to explain the process and background of the TIF program for the
benefit of the newer members of the Council. He explains that he worked for the Weld/Cellucci
administration to help implement this program for the State. He helped work with Cassidy and
the Mayor on the very first TIF done in the City with the CP Clare Corporation-
Speros explains that the purpose of this program was to:
· encourage economic growth;
· help companies stay here in tha State when facing cost competitive pressures elsewhere;
· attract new companies to the region.
Most of the projects have been approved for companies that are already in a particular area that
need a little help to grow and expand. There have been over 500 TIFs approved over the last five
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August 3, 2000 meeting
Page two
years. Speros also explains that the program was designed as a three-way partnership where the
State, the community and the company all make some type of commitment. The company
makes a long-term commitment to stay and make an investment in the community, and also to
grow and hire people from the Economic Target Area (ETA). Once the company and the City
reach an agreement, the State offers a special tax credit, the Economic Opportunity Area Credit,
which is a 5% investment credit to offset the investment costs of the company and can he used to
reduce the company's State income tax liability. The company then negotiates with the City to
enter into a Tax Increment Financing Agreement (TIF) where the City offers a tax deduction on
new real property created on the designated site. The existing property taxes on the designated
site are not affected, they continue to be collected at 100%. Once the TIF Agreement is reached,
the company then applies to the State for the Certified Project Application. Both benefits must
coincide in length.
Glovsky states that the community receives a long-term agreement with AMG that assures a
relationship that will be mutually beneficial. Some of the benefits to the community are:
· relatively low traffic generated by only employing a maximum of 60 employees;
· offering a trail network for passive recreational use on the rear of the property;
· conservation restrictions will be granted on the 90 acre site;
· municipal services will not be required for the 40,000 square foot office building being
proposed
· commitment to on going financial support of municipal activities in local community
endeavors.
Glovsky explains thst these contributions will far exceed the proposed $16,000 savings in real
estate taxes over the next 15 years. The project will generate $2.7 million in taxes over the next
15 years and of that $2.7 million, $16,000 is a small percentage to be given in respect to the
benefits the community will receive. Glovsky states that AMG will be working with the City on
the Beverly Farms Library Project and is particularly interested in the school system and
supporting educational activities in the City.
Rodenbaugh asks the question again, what will AMG do differently if the TIF is granted.
Speros states AMG would be committed to the long-term growth of the company in the
community as well as the many long-term benefits already explained. Glovsky explains that the
relationship between AMG and the community would be more beneficial if the TIF were
granted. Glovsky states that the President of AMG now lives in Beverly, and the Senior
VP/CFO also just purchased property in Beverly Farms.
Rodenbangh asks if there are any questions at this point. Stacey asks Speros what is the
connection on the action the community takes on a TIF and the State granting the Investment
Credit. Speros explains that the law is written in such a way that this has to be a three-way
partnership between the community, the State and the company. In order to apply to the State
for any tax credit, the company must enter into a TIF agreement or have a special tax assessment
Economic and Community Development Council minutes
August 3, 2000 meeting
Page three
with the community in place. Sporos put together a summary of all thc TIF agreements in thc
North Shore Region for the Council's review.
Rodenhaugh explains that this TIF is different than any other TIF that has been granted in
Beverly. All the TIFs approved in Beverly have been for manufacturing organizations which
receive a different tax credit (5%) than a service organization. For a service organization, a TIF
creates the difference between 0-5%. Rodenbaugh reminds the Council that once a TIF is in
place, no personal property taxes are collected. Speros states that the estimates, based on the size
and type of building proposed, will create $2.8 million more in accessible property less the
percentage that AMG proposing. Existing taxes on property will not change. The taxes on the
new building will he approximately $65,000 per year. The exemption would be on that $65,000
each year using the 5%, 4%, 3%, 2%, 1% ...... method (see attached spreadsheet).
Mooney asks when the property was purchased. Glovsky answers that the property was
purchased a few months ago. He explains that construction has started and completion is
expected mid-2001. Glovsky explains that the City Council could make a decision on this by
early 2001. Shea explains that site preparation is going on now and plan to start operating at the
site next year.
Rodenbaugh asks what determined the length of the TIF. Speros explains that the long-term
commitment is more appealing to ensure the State benefit as long a possible. State law requires a
minimum of 5 years and a maximum of 20 years.
Mastin asks if the TIF terminates if AMG moves out. Speros explains that it depends on the
nature of the operation. Cnssidy states that with the Cummings TIF there is a provision that
ownership cannot be transferred without the approval of the City of Beverly. A built in safety
Rodenbaugh questions the number of employees per year through the period of the TIF. Shea
states that the proposed building should house approximately 60 -70 employees. He further
explains that if growth were to surpass that number, the proposed building would have to be
reconfigured. Cassidy comments that the projected number of new jobs would be 30 new jobs
over the next three years. McMahon explains that AMG needs to be clear and up front in the
beginning, it would be more beneficiaI to them with respect to the City.
Mastin states there are concerns on the impact in that area. Glovsky explains that there are
zoning constraints at the site and cannot exceed those constraints. Cassidy explains that if AMG
were to expand on the size of the building they could go back to the Zoning Board of Appeals
and ask for a special permit to expand on the existing non-conforming use with a 25% maximum
cap. Glovsky states that use on the Loeb property was permitted by variance, therefore the site is
not zoned as a non-conforming use site.
Stacey questions that if poor economic conditions occur and revenues for AMG decrease, what is
AMG's plan. Shea explains that the nature of AMG's business is volatile, however AMG's
Economic and Community Development Council minutes
August 3, 2000 meeting
Page four
strategy is a diversified pool of investments which works well for their nature of business.
Speros adds that by law, the agreement can be void if business turns bad.
Mooney questions the unemployment level stated on Exhibit A of the Certified Project
Application Speros emphasizes that this is only a draft at this point and is waiting for final
numbers.
Rodenbaugh asks if there are any more questions or comments.
Rosser states that AMG should be more specific on the economic benefits that they have to offer
the City. McMahon again emphasizes that AMG should be more specific on the benefits that
AMG will offer the community. Glovsky states that this Certified Project Application will be
redrafted in more specific terms.
McMahon asks when the new draft could be available. Speros responds that the draft could be
completed relatively soon. McMahon states that she would like to see more concrete facts before
presenting any recommendation to the Mayor.
McMahon thanks AMG representatives for their time. AMG representatives exit at 7:15 p.m.
The members of the Council conduct an open discussion regarding the proposed TIF submitted
by AMG. McMahon states that the Council's decision should be based on the maximum amount
of information available to all aspects for the community. Rodenbaugh questions the length of
the TIF and needs mom substantial information to approve the length of this proposal. Rosser
states that the benefits to the City will be valuable and giving them the long-term agreement will
only generate a positive attitude from AMG towards the community. Spence states that $16,000
is a small price to pay for the benefits the City will receive. Stacey states that this proposal if
very desirable, however he recommends only a 10 year commitment.
Stacey dismisses himself from the meeting at 7:40 p.m.
McMahon recommends reviewing all the informntlon and will send out any additional and/or
revised information that she receives from AMG. Cassidy states that she will distribute the
Zoning Board of Appeals decision to the Council. She also states that she will ask the Board of
Assessors what the determination was for the assessment change on the site. She states the
change could be based on the purchase price from AMG and will investigate it further.
Members decide to schedule the next ECDC meeting for September 12, 2000 at 6:30 p.m. The
location is to be determined. The Council is in agreement that a decision will be on the AMG's
TIF proposal will be made at the September 12th meeting.
McMahon: motion to adjourn, seconded by Rodenbaugh. All members in favor, motion carries.
The meeting is adjourned at 7:45 p.m.