The Boston-based insurance giant Liberty Mutual Group plans to invest $300 million to expand its operations in Back Bay, potentially creating 1,100 new jobs in the city, according to the Boston Redevelopment Authority.
“Boston is our home,” said Liberty Mutual spokesman John Cusolito. “As we look forward to having continued growth we see the need to have new positions to support that growth.”
The firm has estimated that the expansion would create 500 temporary jobs in construction, aside from the permanent 600 jobs.
“This is a shot in the arm to Boston’s economy,” said spokeswoman for Mayor Thomas Menino Dot Joyce.
Liberty Mutual, first established in Boston in 1912, is asking for a tax break from the city and state to complete this project, Cusolito said.
The company has filed a Tax Increment Financing request, which would mean that the company might partner with both the municipal and state government to receive tax exemptions.
“We started to think about applying for these economic incentives after we purchased the buildings,” Cusolito said. “It was also after we purchased those buildings that we began to have conversations with the city about the possibility of developing those properties.”
The expansion would take place opposite Liberty Mutual’s current headquarters on the corner of Berkeley Street and Columbus Avenue. The property was purchased from the Salvation Army and Benjamin Franklin Smith Inc. in 2009.
According to the BRA, companies are eligible for TIF when the proposed project increases both employment and capital investment.
Cusolito said Liberty Mutual is especially viable for a TIF plan because the Salvation Army was designated as a non-profit organization and did not generate any tax revenue.
A press statement released by the mayor’s office announced that Liberty Mutual is seeking a $16 million real estate tax exemption over a 20-year period and that the city would net $50 million over that same time.
“The quick investment now will help put people back to work,” Joyce said. She also cited the current unemployment situation in Boston as an additional reason to encourage business growth.
“We have people in the construction and trade industry that have some of the highest unemployment rates they have ever seen, people sitting on the bench without jobs that have families,” Joyce said. “This will boost our economy immediately by putting those people back to work.”
The TIF incentive plan was approved at a BRA board meeting Tuesday evening, and still needs to be authorized by both the City Council and the state, according to BRA Twitter post.
Before the meeting, BRA spokeswomen Jessica Shumaker hinted at the BRA’s plans to accept the TIF plan.
“Liberty definetely considered going elsewhere to expand and we felt very strongly about keeping them in their headquarter city,” Shumaker said. “In addition to the redevelopment of these two properties, which are certainly underutilized, it would allow a Fortune 100 company to stay within the city and to grow within the city.”
If the TIF plan is passed on the city level, Liberty Mutual will apply for economic incentives on the state level in March. The state can choose to pair the tax break granted by the city with an investment tax credit, which could run up to 10 percent.
This will not be the first time that Liberty Mutual has received a tax break from the state to expand and bring in new jobs. The state granted Liberty Mutual breaks in Springfield in winter 2008.
“Our number-one priority is putting people back to work,” said spokeswoman for Gov. Deval Patrick Kofi Jones. “It’s a great company and we are eager to continue partnering with the company.”
However while Liberty Mutual’s expansion may be welcomed by municipal and state government alike, Boston University finance professor Jack Aber said he is skeptical that the city and state will make the tax money back.
“You would have to work a very complicated problem to understand whether the tax forgiveness is less than the anticipated tax revenue over a considerable period of time,” Aber said.
Aber also questioned the number of jobs that this plan claims to bring in, saying, “the construction jobs will last only during the length of the construction period.”
Even though Aber cautioned to take the released statistics with a grain of salt, he said he understands the government’s keenness in promoting development.
“Right now jobs are very important, so I could certainly understand why the city would consider offering that tax break,” said Aber. “I believe personally it is a risk worth taking.”
This is an account occasionally used by the Daily Free Press editors to post archived posts from previous iterations of the site or otherwise for special circumstance publications. See authorship info on the byline at the top of the page.
