By Seth Daniel
ACS Development’s Patricia Simboli explains that the FBI building is a unique project and it isn’t sustainable without the proposed TIF during a meeting of the Council on Tuesday night. A vote on the controversial TIF agreement is expected Jan. 23.
Developers of the FBI Building on Maple Street – ACS Development – gave an impassioned presentation on Tuesday night that made the already difficult decision about granting a 20-year Tax Increment Financing (TIF) agreement to the company even more difficult – though some councillor did seem to indicate they were leaning towards granting what was described as a very unique situation.
All but four councillors were in attendance Tuesday night for the two-hour presentation and question period, with those not attending being Councillors Luis Tejada, Judith Garcia (who has recused herself entirely from the debate having won a scholarship from the company in high school), Matt Frank and Dan Cortell (who watched from home after having had minor surgery).
A vote on the TIF is expected to take place at the Jan. 23 Council meeting.
Patricia Simboli of ACS made a heartfelt presentation for about 30 minutes, explaining the long history of the building which began years ago when they responded to an RFP the City put out asking to develop the property into office uses. After a series of disinterested parties, Simboli said they began pursuing the FBI in 2007 and began to feel they had a winning bid in 2010.
After three long legal suits and surviving the economic collapse, she explained that construction costs rose during the recent boom years and the cost of the very unique, high-security building sent costs from $42 million in 2008 to $57 million in 2016.
The company is asking that the City bestow a TIF for 20 years on the new FBI building in an agreement that would allow them a 50 percent reduction on the value of the building for tax purposes over 15 years and a 40 percent reduction over five years. It is a break from the norm as most TIFs have been 10 years or less. The reduction in taxes only comes on new value added, and the taxes on the property before the development was $55,000. Even with the TIF, the taxes paid per year would be more than $800,000, the City has pointed out.
The taxes with the TIF would start out at $870,000, and without the TIF they would start at $1.739 million.
“We really would not be here if we did not have a real and serious financial need,” she said. “It’s not like us to ask for help. We have never asked the City for a TIF before…We had the strongest real estate economy in the country. We experienced an absolutely astronomical jump for construction costs. We also experienced an astronomical increase in the City’s commercial tax rates in Chelsea. It went from $20 per $1,000 of value to $30. That’s a 50 percent increase…We need the City to help us in a way we can’t help ourselves. In the past when we had financial problems, we have never come to the City, but we dug out of the hole ourselves.”
The FBI building process went through many stops and starts through the procurement process, and the subsequent legal challenges, and then further legal challenges to the lease by the government. Following all that, construction began three years ago, and the building became occupied last November. It is widely seen as a regional economic boon and City Manager Tom Ambrosino said he supports the TIF because it has already generated significant economic development activity – such as the new hotels and the new apartment buildings and the new Mystic Mall.
All of those developments, he and Simboli said, were done with the knowledge that the FBI was coming.
He and Simboli also stressed that when ACS took control of the building long before the FBI was a though, a 50 percent TIF was contemplated and understood to be part of the deal.
Anthony Simboli said he was sorry he didn’t come to the Council before now, but having done development in the City since 1984, he thought Chelsea would be with him hands down.
“I want to apologize for putting this burden of this decision on you,” he said. “I say that because this decision should have been done two, three, four or five years ago…The worst thing is I didn’t make a deal with you before now…We’re not going to make any money on this deal. I’ll prove it. Anyone who wants to know, I’ll let you look at my returns after one year. This City has taken my word for over 30 years that what I say is what I’m going to do. My word is my bond.”
Simboli also spoke at length about how her father came to Chelsea in 1984 when no one was investing in the City, especially Everett Avenue. They built several buildings, taking many risks, and ended up developing the Mass General building and the Harbour Pointe office park – as well as several other office buildings.
“How many other developers will be here 15 years from now?” Simboli asked. “How many will have become community partners and ow many will commit to 14 projects here? We have been. We will remain committed to the community. It’s part of who we are.”
Several councillors hinted at their approval of the TIF.
Councillor Giovanni Recupero said he would support it, after thinking long and hard about opposing it.
“I will give you a TIF because it’s a good thing to do,” he said. “If I don’t give it to you, the more taxes are going to have to come the the people…I’m in support because you’ve proved your with us. I’ll give it to you even though the people might say it’s the wrong thing.”
Councillors Yamir Rodriguez, Luis Tejada, Leo Robinson and Paul Murphy also showed their support.
“This is a totally unique situation and building,” said Murphy. “We’re talking about taxes that are almost a million dollars a year and they will go up. I can’t be against this. What you’ve done for the City is inspirational. If anyone doesn’t think this is a good idea, they have to be crazy. You have my full support.”
Councillor Leo Robinson pointed out the first TIF program approved by the City was for Admiral’s Hill, and it was for a term of 40 years.
“Without that agreement, there would be no Admiral’s Hill today and they did that for 40 years,” he said.
Councillor Enio Lopez said he would support it, but he wondered if ACS could survive with a 10-year TIF instead of 20 years.
Simboli said they could not do that because the FBI lease payments are fixed for 20 years, and without more revenue, they would be right back asking for help again in 10 years.
Councillor Damali Vidot asked how she could justify a 20-year agreement at those percentages to her constituents, many of whom are against the idea in total.
“This project is unlike any other,” said Simboli. “You are not setting a precedent for establishing a 20 years as your benchmark for TIFs…You’re never going to encounter another situation like this…If we don’t get the TIF, the financial stability of this project is unquestionably in jeopardy. You would bankrupt it. It is unsustainable without the TIF. I don’t think your residents want to do that and I don’t see how it’s good for them.”
The verdict will come more in focus over the coming weeks, with the vote expected on Jan. 23.