2012-11-AC-STM-rpt2 (Article 8) - Laserfiche WebLink

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APPROPRIATION COMMITTEE 2nd REPORT TO THE NOVEMBER 2012 STM Warrant Article Analysis and Recommendations Article 8: Approve TIF Agreement(s) Funds Funding Committee Requested Source Recommendation N/A N/A Approve(5-2) Approving this article would authorize the Board of Selectmen to enter into a Tax Increment Financing(TIF) agreement with Vistaprint USA, Incorporated, covering a portion of anticipated new construction at 95 Hayden Avenue. Background Vistaprint provides marketing products and services to millions of small businesses and organizations globally. Its North American headquarters are currently located at 95 Hayden Avenue where the company leases 219,505 square feet of space. Rapidly growing, Vistaprint employs between 750 and 8801 permanent full-time workers in Lexington (including 28 Lexington residents) and expects to create an additional 300 new permanent positions in software development, engineering, marketing, video editing, information technology, and corporate support functions over the next few years. This growth is taxing the current facility and has led Vistaprint to search for new space. In 2009 Town Meeting approved a zoning by-law amendment requested by the then owners, The Beal Companies LLC, allowing construction of a new building for office and laboratory uses and associated parking on the property—to be known as Three Ledgemont Center(aka Ledgemont 3). The Beal Companies did not, however, proceed with construction and Vistaprint began exploring alternate locations for its expansion plans. In the summer of 2012 Hobbs Brook Management LLC purchased the property and has subsequently proposed plans to construct a roughly 150,000 square foot facility designed with a campus-style atmosphere and state-of the-art environment systems consistent with the 2009 Preliminary Site Development and Use Plan(PSDUP). This plan makes on-site expansion for Vistaprint viable again and Vistaprint seeks to lease an estimated 100,000 square feet of the new facility for ten years with an option to extend for two five- year periods and an option to lease the remainder of the space. Vistaprint also intends to renegotiate its lease on the existing space,which currently expires in 2017,to be co-terminus with the lease on the new facility. Vistaprint has requested that the town agree to a Tax Increment Financing (TIF) arrangement that would reduce their property tax obligation on the new facility for a period of thirteen years. Technically the reduction of the obligation is to the property owner Hobbs Brook, but the terms of the lease effectively transfer the tax obligation to Vistaprint. A Massachusetts TIF agreement may run between five and twenty years and can exempt between 5% and 100% of property taxation on all or part of the increased value resulting from development. In addition, Vistaprint is pursuing investment tax benefits from the Commonwealth under the Economic Development Incentive Program(EDIP). These additional benefits may be obtained as a Certified Expansion Project(EP) or as an Enhanced Expansion Project (EEP). Substantial sales outside the Commonwealth and plans to create an extraordinary number of jobs make Vistaprint eligible to obtain these benefits under either program. Oral remarks by Vistaprint at the November 13 TMMA Information Session identified 750 current employees, but written materials establish 880 as the baseline position count prior to expansion associated with the TIF request. 3