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2006-05-10 CITY OF BEVERLY PUBLIC MEETING MINUTES BOARD OR COMMISSION: Economic and Community Development Council SUBCOMMITTEE: DATE: May 10, 2006 LOCATION: Beverly Public Library MEMBERS PRESENT: Tina Cassidy, Carla Cox, Frank Killilea, Pat Grimes, Neil Douglas, Bill O’Hare, Don Fournier, Don Stacey MEMBERS ABSENT: Planning Board and Conservation Commission representatives RECORDER: Eileen Sacco The meeting is opened at 7:00 p.m. Cox calls the meeting to order and asks Cassidy to introduce this evening’s guests. Cassidy introduces Michelle Cammarata of BDO Siedman, representing Cell Signaling who begins the presentation while awaiting the arrival of Peter Milano of the Massachusetts Office of Business Development. Cammarata explains that the Economic Development Incentive Program (EDIP) was established to promote increased business development and expansion in economic target areas in the Commonwealth and is administered by an organization called the Economic Assistance Coordinating Council. She notes that they must go through the same process in Danvers and will be going before the Town Meeting there on Monday. Peter Milano arrives at the meeting at this time and continues the presentation. Milano explains that the intent of the program is to drive job creation and job retention, attract private investment, encourage existing businesses to stay and grow in Massachusetts, increase local and state tax revenue, and to make the Commonwealth more competitive against other states and countries. He also notes that the program is administered by a state level board called the Economic Assistance Coordinating Council (EACC) comprised of both public and private sector officials. Milano explains that the program is a three way partnership whereby the municipality offers a tax exemption from local real estate taxes (TIF). The state offers a 5% EOA Credit and 10% abandoned building tax deduction (when applicable). The Certified Project component is an agreement to create and retain jobs and create private investment. He notes that a base line for local taxes is agreed to as part of the document, and that base line value cannot be touched and the municipality doesn’t lose anything in terms of tax revenue. Milano explains that the EDIP is a locally driven process where the municipality makes application for designation as an Economic Target Area with the EACC. Beverly already did this a number of years ago, partnering with the City of Salem. The municipality designates Draft Minutes 5-10-06 ECDC Meeting Page 1 of 5 Economic Opportunity Areas (EOA’s) and requests EACC approval of it. The municipality and business also negotiate a TIF agreement and request project certification from EACC. Everything must be approved at the local level before it is acted on by the EACC, which in turn must approve everything before it becomes effective. Grimes notes that the purpose of the EDIP is to entice businesses to come and invest in the community. Milano agrees and notes that the job retention piece is key and explains that they track the jobs created and notes that Beverly has a great track record with the Cummings Center TIF. Milano explains that the company will be required to file an annual report with the state which the city will get a copy of and it will detail a head count of the number of employees hired and retained, and how much of a tax credit they filed for in that year. Milano explains that the EOA must be wholly with an ETA, selected by the host municipality, and can be from 5-20 years in duration. He notes that the clock starts ticking upon certification of the first project within the EOA. It must be site specific versus a large area and there is no statutory minimum. He notes that with this TIF Danvers, which is a non-EOA community, is included because the property is partially in Danvers and partially in Beverly. He explains that Danvers has the opportunity to create an EOA for just this site with no effect on the rest of the town. He explained that it can be established by the Board of Selectmen and the TIF will have to be approved by Town Meeting. Cox asks if Cell Signaling sells the property in less than the 20 years, could the City recapture some or all of the taxes exempted to date. Milano explains that the TIF is arranged such that it stays with the parcel. There would be no recapture of taxes already “forgiven”, but also notes that the community can withdraw from the EDIP program at any time and stop the local tax exemption. Neil Douglas leaves the meeting at this time. Cammarata addresses the committee and explains that Cell Signaling purchased the former Kings Grant property and renovated it to create a state of the art headquarters. She explains that phase I of the company’s project includes $36.25 million in real estate investment, renovations, and new machinery and equipment by June 30, 2006. She also explains that phase II includes an estimated $15 million in additional improvements to the building and estimated $25 million in technology and equipment. Cammarata explains that they will add another 50 jobs by the year end and the company will create approximately 40 jobs in 2007 and 30 in 2008. She also notes that the average salary is $68,000 and 65% of employees are scientists, researchers and technology professionals. Mike Melnick addresses the ECDC and explains the company. He notes that they are a science rich company that develops innovative research tools to help define the mechanism underlying cell function and disease which accelerates processes in biomedical research and medicine. He further notes that they make a product useful in cancer research and export it to Japan and the UK. He explains that they use antibodies to detect special cancer causing genes for the development of new drugs to fight cancer. Draft Minutes 5-10-06 ECDC Meeting Page 2 of 5 Melnick notes that they have a high school internship program for high school seniors and they have contributed more than $60,000 to local civic groups in the past two years. Cassidy states that she is impressed with the strength of the application, the kinds of jobs they have and the average salaries. She also notes that the estimation of new jobs is impressive as well. Fenel Eloi, Chief Financial Officer from Cell Signaling addresses the ECDC and notes that the majority of their employees hold PH D’s. Cox asks if the new employees are relocating to Beverly or the North Shore. Melnick states that he himself relocated to Beverly and some others have as well. Killilea asks if they outsource any of their work. Melnick states that they pride themselves in manufacturing their products in house. Cammarata reviews the proposed TIF as follows: ?? 20 year term ?? Base value of property today is $6,366,300 ?? Estimated value in FY 07 (Beverly Assessors) $7,957,875 ?? TIP Exemption percentage is applied annually to the increment between the FY06 base value and the assessed value ?? Average exemption percentage over the life of the TIF: 5% ?? Estimated taxes generated for Beverly during the TIF term: $4.5 million ?? Estimated TIF savings to CST over 20 years: $76,000 Cassidy asks Cammarata or Milano to explain the requirement that the application apply to a site that meets the definition of either “blighted/open”, “substandard” or “decadent” in order to qualify for participation in the program. Milano states that he does not have the definitions with him, but gives the basic definition of “decadent”. O’Hare asks if “decadent” is defined in the statute. He notes that the Boston Globe made a big deal about the AMG project in Beverly Farms with respect to whether or not it met the statutory definitions as required. Cammarada explains that the condition of the building at the time of sale in 2004 is what is considered, not what they have done to the property since then. Cassidy suggested that the members be invited to express their opinion for a consensus. Grimes states that right now she is going to vote against recommending the TIF. She explains that she is delighted with the renovations but she feels that the climate in the city is that there is a feeling that a lot of TIF’s have been given out. She also notes that the schools are in trouble and fighting for money in the budget and she feels that the atmosphere right now is that there is a perception that we are giving a business a break when we are in such dire straights. Fournier states that he feels that there is a pro business atmosphere and that this project could be significant to the City of Beverly and he is in favor of it. Draft Minutes 5-10-06 ECDC Meeting Page 3 of 5 Killilea states that he is in favor of the TIF noting that Beverly needs to attract business. O’Hare referred to a Globe article regarding cities that are friendly to scientific businesses and noted that Beverly was not mentioned in it. He noted that the NE Biolabs is moving out of Beverly. He stated that he considers this a modest proposal and anything that they can contribute to the community is tremendous and he is in favor of the TIF. Cox states that she is in favor of the TIF noting that it is an appropriate business and the ECDC should support it. She noted that she feels that the this is a really good business to keep and root in Beverly. She also noted that we need to push the sciences on kids and would like to see them continue with their educational partnership. Cassidy states that she is impressed with the job creation and average salary level. She also notes that the $76,000 in local taxes that would be forgone over the life of the twenty year TIF would nearly be recouped in a single year (2010) when the phase two investment is in place. In that year alone, the taxes will increase an estimated $60,000 over what they pay the previous year. She also explained that the Cummings TIF Agreement provided for an estimated $13.5 million in taxable investments over the life of the ten year TIF. In actuality, the company invested $70 million during that time. She suggests that the same might be true for the Cell Signaling project. Stacey states that he supports this kind of business and we should actively seek more for the community. Fournier states that he supports the TIF for a lot of the same reasons members stated and noted that he is particularly impressed that they made $60,000 in contributions to civic groups. He notes that the proposed expansion in this location is an ideal way to expand the tax base with no pain to neighbors of the site, and with benefits to the entire community. Cox asks if there are any additional questions or comments regarding this matter. There are none. Stacey: motion to recommend to the Mayor that the EOA and TIF applications for Cell Signaling be submitted to the City Council for consideration, seconded by Cassidy. O’Hare, Killilea, Cox, Cassidy, Stacey, Fournier in favor, Grimes against. Motion carries (6-1). Grimes notes that while the committee may have recommended approval of this application, as a City Councilor she is the only ECDC member who will get an actual vote on the applications when they are considered by the Council. She states that she intends to keep an open mind on the issue during upcoming deliberations. Update on Letter to Mayor Scanlon Cassidy states that Douglas had a suggestion with regard to presenting the letter to the Mayor. She explains that his suggestion is to send the letter to the Mayor and invite him to meet with the ECDC. Cox agrees and states that it seems like a more efficient way of doing Draft Minutes 5-10-06 ECDC Meeting Page 4 of 5 it. She states that she will send the letter to the Mayor and invite him to attend the June 14, 2006 meeting. Approval of Minutes Cox asks if there are any changes to the draft minutes of the April 12, 2006 meeting. There are none. Grimes: motion to approve the draft minutes of the April 12, 2006 meeting, seconded by Killilea. All members in favor, no one in opposition. Motion carries 7-0. New Business Cox updates the ECDC on the RFP for the McDonald’s site. She noted that one response was received and the evaluation committee met and will make a recommendation to the Mayor on whether or not the proposal should be accepted. She notes that the applicant is the Black Cow Restaurant, which has existing facilities in Newburyport and Wenham. Cassidy will make a copy of the proposal for members of the ECDC for review. Stacey notes that he has been monitoring the national real estate market and the hot markets are cooling off. He notes that some condo projects are being canceled because of a reversal in the supply and demand equation. He also notes that he has not seen that in Beverly but it may get here eventually. He also reviews the number of condominiums under construction or slated for construction within the City of Beverly. Next Meeting The next meeting of the ECDC will be held on June 14, 2006. Adjournment Cassidy: motion to adjourn, seconded by Stacey. All members in favor, no one in opposition. Montion carries 7-0. The meeting is adjourned at 9:00 p.m. Draft Minutes 5-10-06 ECDC Meeting Page 5 of 5