Saint-Gobain: tax deal helps expansion

The city administration of Worcester has negotiated a tax-relief deal with Saint-Gobain Inc., allowing the company to use tax savings generated under the incentive to help finance expansion of its ope…

The city administration of Worcester has negotiated a tax-relief deal with Saint-Gobain Inc., allowing the company to use tax savings generated under the incentive to help finance expansion of its operations at 717 Plantation St., which will cost about USD 31.8 million. According to city manager Michael V. O“Brien, the tax-increment-financing plan, also known as a TIF, is structured in two phases over a 15- year period, and will provide about USD 1.7 million in tax savings for Saint-Gobain. The city will, during that period, receive about USD 3.3 million in tax revenue from the property. Saint-Gobain presently pays the city about USD 90,000 in taxes on its property in Plantation Street. Once the first phase of the project and TIF plan have been completed, those tax revenues will increase to USD 122,749 per year, reaching USD 208,909 annually when the second phase is completed. Saint-Gobain“s expansion will generate more than 50 new green jobs, almost doubling the work force at the Plantation Street plant. O“Brien said the city faced intense competition from another location in New Jersey for the project, and had worked together with the Massachusetts Office of Business Development to identify incentives and make the case for Saint-Gobain to expand in Worcester. “This will enable the city to assist this long-standing manufacturing business in retaining its operations in Worcester, improving and expanding its facility, creating new permanent, full- time jobs and increasing the assessed value of the property,” the manager said. According to assistant city manager Julie A. Jacobson, the project involves the conversion of about 30,000 sq.ft. of warehouse space into manufacturing space, and the construction of an addition of 10,200-sq.ft. to Saint-Gobain“s 75,920-sq.ft. facility. She added that the first phase of the project, to be completed by 2011, includes an investment of USD 15.6 million for new equipment and USD 2.2 million for the conversion of warehouse space into manufacturing space, increasing the assessed value of the property from USD 3.13 million to USD 4.27 million. As per the TIF deal, Saint-Gobain would be exempt from paying taxes on approximately 61% of the incremental new value generated by the improvements and expansion, amounting to USD 302,560 in tax savings over 15 years, Ms. Jacobson said. At the same time, Saint-Gobain will pay the city more than USD 1.5 million in property tax revenues. Moreover, 41 new full-time jobs are expected to be created during the first phase of the project. According to Ms. Jacobson, the second phase of the project, from 2012 to 2015, involves construction of a further USD 4 million addition and the acquisition of new equipment worth USD 10 million. Once the second phase is completed, the assessed value of the property will increase again to USD 7.24 million. O“Brien underlined that the second phase of the TIF plan will start up if and when Saint-Gobain begins that work. As per the second phase of the TIF, Saint-Gobain would be exempt from tax payments on about 78% of the incremental new value generated by the improvements, resulting in almost USD 1.4 million tax savings. At the same time, the city will receive at least USD 1.7 million in tax revenues from the company during this second phase, while Ms. Jacobson added that up to 15 new full-time jobs could be created.