Will Walpole benefit from its tax agreement with Siemens?
Clifton K. Snuffer Jr.
Chairman, Walpole Board of Selectmen
The phone rang at the Walpole town administrator’s desk last July. It was an inquiry from a prestigious law firm in Troy, Mich., probing to see whether there was interest on the part of the town to enter into a competitive process with a global health care firm looking to expand in the United States.
We were, of course, very interested -- especially after the law firm indicated that it would entail $300 million in new construction as well as 400-700 new high-paying, clean jobs.
We were instructed that a nondisclosure agreement would be required for further discussions and that the project would have the code name “Project Bluebird.”
Internal speculation went out of control over the next few weeks with maps being studied in advance of a first meeting. At that session, we learned that “Project Bluebird” was an expansion plan by Siemens Healthcare Diagnostic Corp., a longtime presence in our community.
We knew it would cost Siemens about $60 million more to expand in Walpole than to relocate to its then-favored site. So we knew we had to get creative.
After months of talks, the state was able to narrow the gap by $20 million through a state tax incentive. Through an aggressive local tax increment financing agreement, the town closed the remaining gap.
Many in town did not like the aggressive posture. Yet, with four selectmen voting with the majority, Town Meeting approved the agreement by a vote of 76-51.
The agreement gave us $8.3 million in new tax revenues over the 20-year duration of the agreement, on top of $31.05 million in revenues from the existing plant. We are keeping a company whose combined employee local spending will approach $7 million annually, and whose local business spending will grow above $500,000 per year, according to estimates.
The town will also get $100,000 for athletic fields, $160,000 for snow-removing equipment, $200,000 for fire equipment, increased meals tax revenue, reimbursement for about $50,000 in third-party expenses, and, most important, a positive continuation with a great corporate partner who just happens to be a global leader.
Yes is good for Walpole!
Member, Walpole Board of Selectmen
The Massachusetts law, Chapter 23A, states that tax increment financing agreements, or temporary local tax breaks, may only be granted to developers for projects in blighted open areas, decadent or substandard areas, or where there have been plant closings.
None of these criteria are met in this case. The Siemens site may be one of the most advanced industrial areas in the region; it is neither blighted nor substandard in any way.
Tragically, a 2014 state law, Chapter 287, allows communities a way around those requirements. A state economic development official’s edict that the project presents “exceptional opportunities for increased economic development” is all that is needed for the state to approve the tax break, negotiated by the town.
The benefits of this project are regional, and the burden is local. Of the 620 current employees at the Siemens plant, a mere 33 are Walpole residents; most are not even from Norfolk County, and 83 are from Rhode Island. There is no assurance that the 700 new employees will include many more town residents. And the expansion of the plant workforce will pose significant costs to the town because of the increased services we will need to provide.
The argument in favor of the agreement is that it provides Walpole with $8.3 million in net new taxes over the next 20 years, and that without the deal Siemens might expand its operations elsewhere. This argument fails to factor in the costs of providing services which, according to a report by RKG Associates, reduces the net value to $3.8 million spread over the 20 years. The vast majority of the revenue is realized in the second 10 years. Given the changing nature of the medical diagnostics field, we may be waiting for a payoff that may never come. In fact, in its 37-year history, no entity has owned the Walpole plant more than nine years.
This was not a public-private partnership as contemplated by Chapter 23A; it was solely a request for and grant of corporate welfare. We undervalued our services, our employees, and our school children. We have undervalued Walpole. We have made Walpole a discount brand.
Last week’s Argument: Should Massachusetts raise the minimum wage to $15 for employees of fast-food restaurants and big-box stores?
Yes: 34 percent (18 votes)
No: 66 percent (35 votes)