2007-10-10 Patriot Partners Q&A on TIF

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