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2007-10-10 Patriot Partners Q&A on TIF
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2007-10-10 Patriot Partners Q&A on TIF
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The Lexington -Shire TIF <br />Frequently Asked Questions <br />Q: What is Tax Increment Financing (TIF)? <br />A: Tax Increment Financing (TIF) is an economic development tool regulated by state law enabling <br />cities towns and the state to compete nationally for corporate investment and jobs by abating part <br />of the increased tax revenues associated with a company's re- location. <br />Q: Why is a TIF important for the town and Shire? <br />A: Shire is a well - established, credit worthy international company that would be a stable tenant at <br />Lexington Technology Park for many years into the future. Lexington's local TIF agreement is <br />necessary for Shire to access state incentives as well. Combined, these state and local incentives <br />will make Lexington an attractive location for Shire to expand its operations and to locate <br />manufacturing facilities. <br />Q: Why would a large, financially strong company like Shire need a tax abatement in order <br />to locate in Lexington? <br />A: While the tax abatement that has been negotiated under the TIF agreement is relatively small <br />compared to overall project costs, the TIF is a key element to Shire's committing to the current <br />Massachusetts expansion proposal. The TIF is essential to access state incentives. Shire has to <br />operate in the best interests of its shareholders, and when other states and localities are offering <br />substantially better deals, there has to be some offset to justify locating in Lexington. <br />Q: Could the town achieve the same result with a minimal TIF? <br />A: Lowering the level of the local TIF could jeopardize its approval at the state level, which discourages <br />minimum local contributions especially in cases of significant employment retention and growth and <br />capital investment like that in the Shire proposal. Any reduction would likely reduce Shire's level <br />of investment here and increase the risk that Shire would move its manufacturing and technical <br />operations component elsewhere. Shire has explored other locations that have attractive incentives <br />that do not require similar, local approval but are instead available through established state plans. <br />Q: How will the TIF benefit the Town of Lexington? <br />A: The TIF will help to generate $67.7 million in tax revenue from Lexington Technology Park over <br />the next 20 years. This revenue is $20 million more than the town anticipated when Town Meeting <br />approved rezoning the park in 2004. <br />Q: What other benefits will this development bring? <br />A: Shire's development plans will generate $890,000 in permitting fees paid to the town, and the <br />state and /or Shire will provide $2.6 million to the town for infrastructure improvements. Shire <br />will also contribute $400,000 to the town over 10 years for community support and developer <br />Patriot Partners will contribute $100,000. The development will create more than 600 new jobs, <br />averaging in the $100,000 salary range. <br />(Over) <br />
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