General Electric’s warm welcome to Boston is getting warmer.
The deal to lure the company from Fairfield, Conn., to Boston already included $25 million in property tax relief. Now the city also plans to acquire some of the property GE desires for its headquarters — and future rent is very much up in the air.
Last week, GE announced plans to buy a roughly 2.5 acre piece of land along Fort Point Channel, where it plans to rehab two empty brick warehouses and construct a new building on a portion of a nearby parking lot. To “facilitate the development,” said John Barros, the city’s economic development chief, the Boston Redevelopment Authority stands ready to “take ownership” of the two existing buildings on the site through some yet to be determined urban renewal tool.
Once that happens, a provision tucked into the city and state’s agreement with General Electric clicks in. It states that if GE “occupies any properties owned or leased by the Boston Redevelopment Authority, for a lease term up to 20 years, the Company shall be responsible for only annual operating expenses, property taxes not abated . . . and interior renovations costs.”
Note: The word “rent” is not part of the language of this provision. But Barros insists that doesn’t mean GE won’t be paying any. “Those are things you would find in a rent agreement,” he said of what is listed in the provision. “This is not free rent.” He acknowledges, however, that Boston and GE “absolutely have to negotiate” what those payments will be.
Let’s hope the city starts to drive a hard bargain.
At GE’s request, Boston has already committed to spend up to $100 million to replace the Northern Avenue Bridge. The state, meanwhile, has committed $120 million in assorted grants, plus $25 million in “Commonwealth-financed improvements to streets, transit, bikeways, and water transportation service.”
Even as some critics question cuts to the Boston schools, Mayor Martin J. Walsh has defended the incentives, saying GE’s move is another step forward for Boston on the world stage, one that will ultimately pay financial dividends to the city. “These agreements are not expenditures, but net positives that unlock new taxable developments,” Walsh said in a speech to the Boston Municipal Research Bureau.
Walsh and Governor Charlie Baker both hailed GE’s move as a tremendous coup. The corporate welfare that made it happen is rationalized as the cost of competition. The total price tag is still unknown — and so is what we get in return.
GE’s new headquarters will employ 800 mostly white-collar workers and, beyond that, even more dazzling economic spinoff is projected. As GE CEO Jeffrey Immelt promised in a recent address to the Boston College Chief Executives Club: “Just take my word for this. We’re going to give back, for any dollar that you think was invested in GE being here — and there are a lot of places we could have gone other than here — and you will get back a thousand fold.”
The operative phrase: “Just take my word for this.”
GE has a history of doing everything it can to reduce its corporate tax burden. It is also one of the largest recipients of corporate incentives in the country, according to Richard Florida of the University of Toronto. And, remember, its move to Boston is not the first time it has abandoned one place for another. Some 40 years ago, GE left Schenectady, N.Y., for Connecticut.
As Immelt said in his recent address, “This move for GE is all about the next 40 years.” For that commitment, Boston’s welcome seems more than warm enough.Joan Vennochi can be reached at email@example.com. Follow her on Twitter @Joan_Vennochi.