Burlington Selectmen Recommend Tax Incentive to Lure Keurig From Reading

The Burlington Board of Selectmen voted 5-0 Monday night to recommend that Town Meeting approve a Tax Increment Financing agreement with the K-Cup makers.

The proposed plan for the from Reading to Burlington advanced another step at last night's Burlington Board of Selectmen meeting.

The board voted 5-0 to recommend to Burlington Town Meeting that the body approve a Tax Increment Finance (TIF) agreement with the company. The board also voted to recommend that Town Meeting designate a development district and submit the agreement to the State Economic Assistance Coordinating Council, the agency that oversees these arrangements.

A TIF agreement is a tax-alleviation incentive that a municipality can give to a business to sweeten a deal to have it locate in town. .

The full details of the TIF agreement will be released to the public later this week, Burlington Town Administrator Robert Mercier told Patch. management must first agree to the negotiations before the details are made public. However, at the meeting Mercier did say that the deal right now is for 15 years and includes a maximum 40 percent tax break. The tax incentive under negotiation, he said, starts off high and by the end of the 15 years is at about 5 percent per year.

Mercier said TIF's were a good way to attract businesses the town would like to have within its borders but should be used sparingly.

"The TIF is a tool in our pocket we use occasionally to attract businesses like Keurig," he said. "We don't hand them out but they can be useful. Right now we have two TIF agreements in town, with Sun Microsystems and Oracle, and I think most towns in the area would love to have those two."

Keurig also made it clear that it had chosen a possible site in Burlington. As last reported there were two possibilities but at this time Keurig is focusing on 63 South Avenue, the old iRobot building owned by the Gutierrez Company.

John Heller, vice president of finance for Keurig, was at the meeting with Lynn Tokarczyk, president of Business Development Strategies, Inc. to discuss the possible move. Both spoke to the benefits Keurig would bring to the Burlington community.

First, Heller said the company is looking to stay in Massachusetts.

"Keurig has been headquartered in Massachusetts for 10 years and we're interested in maintaining a base here," he said. "The town of Burlington has a very attractive setting for us. The town has great amenities and is a place that will attract well educated employees. Keurig is a technology company and we hire many degree-holding professionals; engineers, marketing professional, financial experts and accountants and they will be attracted to Burlington. We are also going to be hiring hundreds of new employees as we go on and we'd love to have Burlington residents work for Keurig."

Tokarczyk added that Keurig would be moving 368 permanent full time jobs and over 150 contract employees with the headquarters move if the deal is finalized. The company is also looking to hire up to 400 new employees in the next few years as the business expands. She said these employees will spend their money locally, giving a boost to the Burlington economy.

Also, Heller said that if a plan is reached, Keurig would invest $100 million into the site with the Gutierrez Company and invest in $20 million of personal property at the location. Though Keurig is planning to lease rather than to buy, the agreement would be for a minimum of 15 years. 

Karl Weld April 24, 2012 at 04:07 PM
Hmm, why can't we get companies like Kuerig in Reading? Oh, drat. Every reason given for considering Burlington is available in Reading except the most crucial one...a building big enough to hold them as they grow. The crushing blow is this quote: "She said these employees will spend their money locally, giving a boost to the Burlington economy." It's time to get serious about expanding our commercial space. THESE are precisely the jobs we want and need in Reading. Not only does this affect Town revenue, it is also a boon to local businesses that these people will frequent.
Dave Miskinis April 24, 2012 at 04:24 PM
Well said Karl. The problem - as you state - is that Reading cannot accommodate large employers of this type. Therefore, even if we can accommodate smaller growth companies, their size offers less benefit to other local businesses. Where would you propose that larger commercial space be developed - and by this I mean something that would have accommodated Keurig?
Karl Weld April 24, 2012 at 04:55 PM
Well, Dave, the obvious choice would've been where Reading Woods is adding 400+ housing units. But that ship has sunk. We need to look at what's available and buildable on Walker's Brook and along South Main St. One interesting option I've heard and would support is to go to curb-side pick-up for yard waste and close the compost area. The thought would be to move the DPW garage to that property. Currently the DPW site is around 7 acres(?) and is assessed at $3.5 million. But that's $3.5 million that's not on the tax rolls because it's Town property. So, think about this, what if that land were available for development and Keurig had partnered with a commercial developer and sunk $100 million into a new facility there? Tax revenue from a $100 million building is not to be discounted. Plus 1,000 well-paying jobs in Reading with the associated spill-over to existing businesses? If only...
Mitchell Jacoby April 25, 2012 at 12:24 PM
As a commercial real estate and workforce consultant who advises companies like Keurig, we see this happen frequently in Massachusetts and across North America. Cities may have great available workforce and educational resources, but the lack of an existing building too often is a determining factor in whether or not a new 1,000 job project comes to town. It's all about timing for these companies. They seek to initiate a rapid recruitment program and hiring ramp. Consequently, a vacant parcel that requires 12-24 months for permitting, excavation, site work, plans and construction of a building plus installation of tenant improvements, furniture, fixtures and equipment will NOT be a viable option for many companies. Mitch Jacoby, Cresa Boston
Karl Weld April 25, 2012 at 01:16 PM
Mitchell, thanks for the insight. You have, in essence, made my point that Reading needs to get more proactive in finding development partners to get the properties built and available for suitable companies. It's too late to keep Keurig, but there are other Keurigs out there. And right now Reading doesn't have a suitable location for them. Adding housing units, even ones providing one-time state revenues under 40R and 40B, will only be a drain on town services. We need to expand our commercial office space to increase the share of tax revenue from non-residential properties or face the consequences of higher residential property taxes and service drain.
Mitchell Jacoby April 26, 2012 at 02:50 PM
New businesses that create jobs will take the strain off the residential property tax base. There are some communities that we have visited that have created "fast track" or "shovel ready" sites, similar to Devens, in order to attract businesses. However, when they ask us what they can do to attract companies and new jobs in the near term, we suggest providing existing real estate solutions. Some have been progressive and partnered with area developers in constructing a building or made surplus city-owned property available, offering low or zero rent for extended periods. Our experience is that many cities do have a desirable workforce and fungible incentives (not just tax credits) available to businesses that create jobs. However, if there is no existing real estate, these cities are placed on a "B" list until such time as they have the necessary "bricks and mortar". Your assessment is a good one Karl.


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something