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HomeMy WebLinkAbout2007-10-10 Patriot Way TIF Zone PlanDRAFT Draft Town of Lexington Tax Increment Financing Plan 1. Location A. Economic Opportunity Area The Patriot Way Economic Opportunity Area (EOA) is located within the Lexington Regional Technology Center Economic TargetArea (ETA), which was approved on Tune 28, 2007 by the Economic Assistance Coordinating Council (EACC). The Patriot Way EGA is being submitted to the EACC for approval at its October 25, 2007 meeting. B. Municipality The Town of Lexington is located 15 miles northwest of Boston and is part of the Boston Metropolitan Area. Bordered by Routes 128 and 2, the Lexington Regional Technology Center is adjacent to the Bedford and Burlington ETAS. According to the 2000 U.S. Census, the Town of Lexington had a population of 30,355 and a median age of 43.7 years. C. Tax Increment Financing (TIF) Zone 1. Map Please refer to the map of the TIF Zone in Appendix I. This map shows the relationship of the TIF Zone to the Patriot Way EGA and the boundaries of the TIF zone. 2. Description (common and legal) The TIF Zone is comprised ofproperty owned by Patriot Partners Lexington, LLC (Patriot) and leased to Shire Human Genetic Therapies, Inc. (Shire). The Expansion Project will be located on several parcels or portions of parcels owned by PATRIOT. A portion of the Expansion Project is to be built under a long -term lease between SHIRE and PATRIOT on the following parcels, or portions thereof, owned by PATRIOT and identified as Board ofAssessors Map 18, Parcels 14B, 3C and 4B, a 1.88 acre portion of Parcel 14A and a 17.789 acre portion ofParcel 15 (the "200 Parcel" and the "300 Parcel ", respectively, as shown on Exhibit A). The balance of the Expansion Project will be located on portions of parcels owned by PATRIOT and identified as a 4.931 acre portion of Board ofAssessors Map 18, Parcel 15 and a 12.003 acre portion ofMap 26, Parcel 44D (the "400 1500 Parcel'), shown on ExhibitA as the 400 Parcel ( "the 400 Parcel ", which, together with the 200 Parcel and the 300 Parcel is referred to herein as the "Site') under a long term lease between SHIRE and PATRIOT and /or the subsequent acquisition of the 400 Parcel by SHIRE. The legal description of the proposed TIF Zone is as follows: I U•rV, �I I, tri:: D_l DRAFT Insert legal description 3. Narrative Description of TIF Zone, needs, problems, opportunities. The TIF Zone is created in response to the intent by Shire HGT to locate the expansion of their research & development and technical operations. Currently, Shire leases 50, 000 square feet of space in Building 125, which is within the Patriot Way Economic Opportunity Area, but outside the proposed TIFZone. Shire plans to renovate the vacant Building 300 and to occupy 125,000 square feet by the end of2008. This facility would be used as a lab /office facility, which would include office support, information technology, warehousing and an R & D laboratory. Building 200 would be a newly constructed building and would be occupied by 2010. This building, which will consist of] 70, 000 square feet, will include the Executive Headquarters, office support and a laboratory. Building 400 would be constructed and occupied by 2011 and be utilized as a technical operations facility. The total available space in this building is expected to be 200, 000 square feet. The proposed size of Shire's operations in Massachusetts will nearly double from the current space in Cambridge and Lexington totaling 325, 000 square feet to its anticipated size of 620, 000 square feet in 2011. This expansion effort at the Patriot Way EOA will enable Shire to establish Lexington, Massachusetts as the global center for their business in helping people around the world fight genetic diseases. Shire was attracted to this site due to the economic development incentives provided by the EDIP, as well as the cluster of biotechnology and pharmaceutical industries in this area. The combination of the EOA Tax Credit, the TIFAgreement and the abandoned building tax credit for Building 300 has served as incentives for Shire to consolidate and grow their workforce in Lexington. Bringing the Lexington Technology Center back into useful production through the attraction of a world - class biotech company like Shire is a true benefit to the Town of Lexington and the Commonwealth ofMassachusetts. This TIF Zone establishes the foundation for additional private investment in the Lexington ETA and will benefit the region as well. 4. Property owners within the proposed zone. Shire will be the sole tenant of the property within the TIF Zone. While the property is owned by Patriot, the EDIP benefits will be passed directly to Shire. IL TIME The duration of the TIFPlan will be twenty (20) years, commencing on July 1, 2008 (beginning ofFY2009) and ending on June 30, 2028. III. TIF ZONE & ECONOMIC DEVELOPMENT fuwa 2 DRAFT A. Discuss how the TIF Zone is poised to create new economic development opportunities. As outlined in the EOA application, the economic development opportunities being generated by this project are as follows: • The investment of $ 350 million in private funds by Shire; • The retention of 550 jobs in the Commonwealth and the creation ofmore than 600 jobs; • Total economic output at the state level generated during the first 5 years of the project is estimated to exceed $ 2 billion; • Generate up to $ 40 million of state personal income tax through 2014; • Ten year $ 80, 000 bi- annual payment by Shire to The Town of Lexington to support library and educational -based initiatives; • Anticipated local property taxes in excess of $ 35 million in from Shire TIF properties; • $ 890,000 in buildingpermitfees; • $ 2.6 million in infrastructure improvements through the public /private partnership; and • The attraction of high technology and biotech firms to this area through a partnership relationship with the Massachusetts Office of Business Development (MOBD) Shire expects to transfer 550 current employees to the Patriot Way TIF Zone, as well as to add 680 new employees. Shire expects to create 385 jobs by 2009 at an average salary of $ 100,000. Employment opportunities will be available to residents of the Lexington Regional Technology Center ETA, as well as residents of the ETAS in Billerica, Burlington and Bedford. B. Discuss how the TIF Zone will result in a net economic benefit to the local municipality. The investment of approximately $ 350 million in private funds by Shire and its landlord in building improvements and equipment will have a positive impact upon this area. The investment by Shire and its landlord will increase the value significantly. These improvements will aid the local construction industry, as well as the local hotel and restaurant business. The salaries paid the 550 retained employees and the additional 680 employees will result in purchases within the community, the payment of residential property taxes and the payment of income and sales taxes to the Commonwealth ofMassachusetts (a portion of which is returned to the local municipality in the form of local aid). Some of these new employees may move into Lexington and contribute to the local property tax base as residents. C. Analysis of proposed and potential land uses. Shire will utilize the site, which will be the sole occupant of the `parcels. " D. Zoning in TIF Zone. IU'rtill �I I, tri::�LJ�I DRAFT The zoning for the property within the TIF Zone is under a Planned Development District, which was approved at the 2004 Lexington Town Meeting in order to attract high tech and biological firms like Shire. The proposed uses are consistent with the Planned Development District. E. Identify any parcels, public or private, in the zone, which are confirmed hazardous waste disposal sites, in accordance with Chapter 21 E, MGL. There are no confirmed hazardous waste sites that the Town of Lexington is aware ofwithin the zone. IV. TIE ZONE PROJECTS A. Private Projects The proposed project will be going through the local approval process. For a complete description of the Shire project proposal for the TIF Zone, please refer to the Certified Project application included with this submission. B. Public Projects The Town has applied for state funds to improve the transportation and pedestrian infrastructure in the Patriot Way EOA to support the private investment by Shire. The Town will apply for $ 600, 000 under the Massachusetts Opportunity Relocation and Expansion (MORE) Jobs Capital Program to complete improvements to the intersection at Spring, Marrett and Bridge Streets. The Town will also apply for $ 1.4 million in Public Works Economic Development Grant (PWED) funds for sidewalk improvements to Spring and Hayden Avenue. In order to improve the Marrett/Waltham intersection and the Hayden Avenue corridor, the Town will apply for $ 1 million in Community DevelopmentAction Grant (CDAG) funds. V. FINANCING FOR TIF ZONE PROJECTS Shire will not be utilizing any public funds for this project. However, the Town of Lexington will apply for $ 2.6million inMORE, PWED and CDAG funds to improve the street and sidewalk infrastructure adjacent to the TIF Zone. Instead, Shire will invest over $ 250 million directly into the expansion and an additional $ 74 million in capital equipment as part of ongoing operations. Additionally Patriot will invest $ 70 million for base building infrastructure and building mechanical systems. The combination ofprivate investments by Shire and Patriot, the infrastructure funding from the Commonwealth ofMassachusetts and the TIFAgreement with the Town of Lexington provides an excellent opportunity for a long -term partnership. VL TAX INCREMENT FINANCING A. Authorization to use TIE r,•,l: r.: : 4 DRAFT The Town of Lexington shall grant a tax increment financing exemption to Shire Human Genetic Therapies, Inc. based upon their Certified Project in accordance with M.G.L. Chapter 23a, Section 3, Chapter 40, Section 59, andM.G.L. Chapter 59, Section 5. The exemption shall apply only to the value on the new buildings constructed and additions to the facility as described on Lexington Tax Assessor Maps for 200, 300 and 400 Patriot Way. The base year for determining assessed value of the property shall be the fiscal year commencing on July 1, 2008. Approval of the TTFAgreements was provided at Special Town Meeting on October 17, 2007 and the Board of Selectmen's meeting on October , 2007. Copies of these documents are included in Appendix II. Final approval by the EACC is being requested at their October 25, 2007 meeting. B. Amount of proposed tax increment exemptions from property taxes and applicable criteria. The exemption schedule and exemption percentage will apply towards the assessed value, as determined by the Board of Assessors, of the proposed expansion. The exemption shall be valid for a period of twenty (20) years, beginning with fiscal year 2009 and ending with fiscal year 2028. The exemption schedule is as follows: TIF: Year 1 Fiscal Year 2009 95% of the increment Year 2 Fiscal Year 2010 94% of the increment Year 3 Fiscal Year 2011 32% of the increment Year 4 Fiscal Year 2012 52% of the increment Year 5 Fiscal Year 2013 45% of the increment Year 6 Fiscal Year 2014 40% of the increment Year 7 Fiscal Year 2015 35% of the increment Year 8 Fiscal Year 2016 30% of the increment Year 9 Fiscal Year 2017 30% of the increment Year 10 Fiscal Year 2018 25% of the increment Year 11 Fiscal Year 2019 22% of the increment Year 12 Fiscal Year 2020 20% of the increment Year 13 Fiscal Year 2021 15% of the increment Year 14 Fiscal Year 2022 15% of the increment Year 15 Fiscal Year 2023 10% of the increment Year 16 Fiscal Year 2024 10% of the increment Year 17 Fiscal Year 2025 6% of the increment Year 18 Fiscal Year 2026 6% of the increment Year 19 Fiscal Year 2027 5% of the increment Year 20 Fiscal Year 2028 5% of the increment C. Maximum percentage of public project costs that can be recovered through betterment or special assessments in lieu of the incremental real estate taxes. NotApplicable. D. TIF Exemption from property taxes. i. Term of exemption IU'rtill �I I, tri::�LJ�I DPAFT The term of the TIF exemption is twenty (20) years. ii. Calculation 1. Exemption Percentage The exemption percentage for TIF is as follows: 95% for Year 1, 94% for Year 2, 32% for Year 3, 52% for Year 4, 45% for Year 5, 40% for Year 6, 35% for year 7, 30% for Year 8 and 9, 25% for Year 10, 22% for Year 11, 20% for Year 12, 15% for Year 13, 15% for Year 14, 10% for year 15, 10% for Year 16, 6% for Years 17 -18 and 5% for Years 19 -20. 2. Base Valuation The base valuation for the "parcels" under the TTF shall be the assessed value of the Property for the fiscal year commencing July 1, 2007. 2. APPROVAL OF TIF PROJECTS A. Approval Process The Board of Selectmen approved the Patriot Way EOA and the resolution to utilize TIFAgreements at their October , 2007 meeting. The Lexington Special Town Meeting approved the proposed TIFAgreement between the Town of Lexington and Shire on October 17, 2007. The Board of Selectmen approved the TIFAgreement and associated TIFPlan and the Certified Project application at their October , 2007 meeting, thereby making the project eligible for the Massachusetts incentives under the EDIP. The EOA, TIFZone and Certified Project applications are being submitted for approval at the October 25, 2007 meeting of the EA CC. B. Person or Board authorized to execute TIF Agreements. The Town Manager and the Board of Selectmen, with the support of Lexington Town Meeting, are authorized to execute TIFAgreements on behalf of the Town of Lexington. C. Evidence of local approvals of TIF Zone. Attached is a copy of the vote at the October , 2007 Board of Selectmen's meeting approving the TIF Zone. D. Evidence of local approvals of TIF plan. Attached is a copy of the vote at the October , 2007 Board of Selectmen's meeting approving the TIFPlan. fuwa 6 DPAFT E. Executed TIE agreements (any and all) See attached copy of the executed TIFAgreement as voted by the Lexington Special Town Meeting on October 17, 2007 and authorized by the Board of Selectmen at their October , 2007 meeting. (Appendixll) F. EACC approval of TIE plan. This TaxlncrementFinancing Plan is being submitted to the EACC for approval at its October 25, 2007 meeting. Appendix I: Tax Increment Zone Map Appendix II Certified Project Application TIE Agreement Appendix III: Copy of vote on Board of Selectmen Resolution on TIE Zone Copy of vote on Board of Selectmen Resolution on Patriot Way Economic Opportunity Area Copy of vote on Board of Selectmen Resolution on Certified Project Iuwa '7