On Nov. 14, 2012, the Town of Needham’s Board of Selectmen paved the way for the realization of years of efforts to revitalize the New England Business Center zoning district (NEBC) and to ignite developmental presence along the Needham stretch of Route 128 by approving and signing TIF documents with TripAdvisor and Normandy Real Estate Partners subject to Town Meeting approval at the Special Town Meeting on Dec. 3
TripAdvisor, the award-winning travel site, is a world leader in travel planning and exactly the type of high tech company, with its current requirement for 230,000 sq. ft. of space and possible expansion into another 200,000 sq. ft., which could spur redevelop of vacant and underutilized parcels into an upscale technology corporate campus. With infrastructure improvements of Add-A-Lane on the visible horizon, especially the new Kendrick Street interchange directly serving the NEBC, now was the time to make the vision a reality.
Just two years ago, after years of study and analysis, the Council of Economic Advisors proposed and the Planning Board agreed to change the image of the NEBC by increasing allowable height, increasing allowed density, and allowing a greater mix of commercial uses on the first floor of multistory office buildings. Both as of right development and special permit development were greatly expanded. The zoning changes adopted by Town Meeting last year prompted Normandy to propose and obtain approval from the Planning Board for 740,000 sq. ft. of office space (divided among four buildings) together with a 128 room Marriott Residence Inn, already under construction. The project is branded Center 128.
But the efforts to incent development began back in 2007 with an approved application to make the NEBC an Economic Target Area. Upon this approval by the state, the town was in a position to encourage economic development by offering tax increment financing (TIF) to desirable parties.
Essentially, TIF allows a municipality to exempt a portion of the increased real estate taxes derived as a result of the redevelopment of the property for a specific project, while at all times capturing the real estate taxes for the base value of the property. The TIF is basically a negotiated agreement between a tenant and/or developer and the host community which provides for a proposed public and private investment in an economic target area. Once the project is certified by the State, it is also eligible for certain State tax benefits.
The town, TripAdvisor, and Normandy worked closely over a two month period to negotiate and finalize the TIF Agreement, the Host Community Agreements and other requisite documents for State approval on Dec.19. Under the TIF documents, the Town will offer exemptions for thirteen years, with 76 per cent of the incremental tax revenue exempted for the first five years and 1 per cent of the incremental tax revenue exempted for the remaining eight years. In exchange, TripAdvisor, among other things, will relocate 450 full-time jobs to Needham and pursuant to the documents will create an additional 250 new full-time jobs. Using a constant dollar, fiscal year 2012 basis, the Town would exempt approximately $1.8 million in incremental tax revenue to TripAdvisor in consideration of its investment in the property. During the same period the Town would receive more than $6 million in new incremental real estate tax revenue. (If the property remained vacant, the taxes owed on the property would be less than $2 million.)
By its historic vote on Dec. 3, 2012, Town Meeting approved its first TIF—to TripAdvisor, a company which began in Needham and is now coming home to Needham.