Offering insight into how Essex landed the historic company, a recently inked deal between Blodgett Oven and the selectboard represents the first agreement reached under the town’s newly revised tax stabilization policy, which officials say allows for more flexibility when negotiating tax breaks.
Tax stabilization agreements are a transactional approach to encouraging economic development. The deals allow companies to request the town waive a percentage of taxes in return for a town benefit; in Blodgett’s case, the deal rides on a promise to maintain its 170 jobs in Essex.
The selectboard approved an agreement last month that will forgo about $225,000 in municipal taxes over a 10-year period.
Signed last Thursday, the agreement marks the town’s ninth since voters approved the current policy in 1996 and is the first to take form under a revised version approved by the selectboard in May.
Chairman Max Levy called tax stabilization agreements one of the selectboard’s few tools in its arsenal to encourage growth. He said by offering to waive some taxes — though a relatively small break compared to what’s allowed in some other states — the town can entice companies by demonstrating interest in their business.
“Sometimes that’s enough to tip the balance and have companies like Blodgett say, ‘Yeah you do want us,’” Levy said.
In a June interview with The Reporter, Blodgett’s vice president and controller Erica Havers alluded to the agreement, saying the company had help securing its move and called the selectboard “great to work with.”
“A lot of the work they put in help us get to where we are today,” she said, adding Blodgett experienced double-digit growth over the last decade, and with more space, it may be able to bring in more products to manufacture.
Multiple attempts to reach Havers for additional comment were unsuccessful.
The town policy’s revisions alter both activity eligible for tax breaks and the criteria projects must meet.
Only businesses improving or expanding commercial or industrial property could previously enter agreements.
Now those looking to build property or create or retain jobs, like Blodgett, are also considered.
They also had to meet three of four provisions. Now, businesses only need to hit one of three: Agreements must result in “significant” job creation or retention, be “essential to stimulating development” or in the best interests of the town to further its planning goals without placing “unreasonable burden” on municipal services, the policy says.
The fourth provision, dictating projects be in designated growth centers, was removed because the town doesn’t have any, Duggan said.
When presenting the revisions in May, recently-retired director of administrative services Doug Fisher explained staff intend for the incentivized developments or projects to offset the tax revenue lost.
The selectboard can help encourage this balance with stipulations ranging from construction of new buildings to improvements of existing structures, as well as one of the most easily quantifiable indicators of growth: job creation.
Unlike some previous agreements, Blodgett’s won’t require the company to increase its workforce. Levy said that requirement is most useful for unproven businesses that carry higher risk, since the policy details a recapture method for companies that fail to adhere to the terms.
Companies with established track records carry benefits beyond new jobs, however, Levy said. He then rattled off a few of Blodgett’s: stimulating the economy with new workers in the area, serving as a beacon to other companies considering relocation and diversifying the tax base to lessen the impact of the ever-looming potential of a GlobalFoundries’ exodus.
Levy added while there’s no “black and white formula” and the board weighs each application on a case-by-case basis, members should continue to enter agreements judiciously.
“Everybody wants a tax break,” he said. “So if you’re going to give one, you better have a good reason why you think it’s a good investment in your community.”