2007-10-10 Appropriation Committee Report

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APPROPRIATION COMMITTEE REPORT, OCTOBER 9, 2007 TO STM Warrant Article Analysis and Recommendations Article 2: Approve TIF Agreement(s) Funds Requested Funding Source Committee Recommendation None n/a Approve (9 -0) Background Following its acquisition by new owners, Patriot Partners, about four years ago, the property which formerly housed Raytheon Corp. in Lexington became known as Lexington Technology Park. At the 2004 Annual Town Meeting, per request of Patriot Partners, the property zoning was changed to increase the allowed floor space and to permit biotechnology as well as office uses. Although the zoning now allows up to 631,600 sq. ft. of gross floor area, only a much smaller area is rented, and there are only three buildings on site (at 125 Spring St., 300 Patriot Way, and 500 Patriot Way) even though there is room for and allowance under the new zoning for two additional buildings (at 200 and 400 Patriot Way). Only the buildings at 125 Spring St. and 500 Patriot Way are presently leased; the building at 300 Patriot Way is vacant. Shire Human Genetic Therapies, a unit of a global company, is a biotechnology /pharmaceutical firm with operations in Cambridge that approached the Town earlier this year to discuss the possible relocation of its Cambridge office and lab space to Lexington Technology Park and, in particular, development of a manufacturing facility and additional lab /office space at the site. Shire has since occupied the building at 125 Spring St. by taking over the lease of another biotech company which vacated the building before its lease was up, and plans to lease and renovate the presently vacant building at 300 Patriot Way for lab and office use. Shire also proposes to construct new buildings at both 200 and 400 Patriot Way to house the manufacturing and additional lab and office space. Shire has requested that the Town agree to a Tax Increment Financing (TIE) arrangement that would provide them with a reduction in their property tax obligation (technically an obligation of the property owners but would effectively be an obligation of Shire) on the new construction only and allow them to qualify for an additional State investment tax credit benefit. Shire is also seeking additional State incentives, some recently proposed by the Governor. A team representing the Town (the Town Manager, the Assistant Town Manager for Finance, Lexington's Economic Development Officer, and Town Counsel) and representatives of Shire HGT have negotiated an agreement on a TIF schedule and terms. The purpose of this Article is to seek Town Meeting approval of the proposed agreement. The draft agreements and other pertinent information may be found on the Town's website at http:// ci. lexington. ma. us/ townmeeting /stm10_10_07documents.htm . Basic description of the TIF agreement with Shire The TIE agreement consists of two parts: one for general lab and office space buildings at 200 and 300 Patriot Way and one for a manufacturing facility at 400 Patriot Way. For the 200 and 300 Patriot Way buildings, the FY 2008 assessed value of the land and the currently existing 300 Patriot Way building is taken to be the initial base value; no building is currently standing at 200 Patriot Way. The base value will be increased each year by a percentage equal to the percentage increase in the total assessed value of commercial and industrial property in Lexington. However, if the total commercial /industrial value decreases, the base value will remain unchanged. The TIE applies to these properties over the 20 -year Page 4 of 18