Tax break in exchange for local manufacturer's expansion heads to North Adams City Council
But does it warrant a tax break?
The City Council will be tasked with answering that question as a proposed tax increment financing deal — reported by The Eagle last month — hits the agenda for council review at Tuesday's meeting.
TOG Manufacturing is seeking a five-year agreement with the city that promises tax savings on its new investment.
The company produces machined components that are used by everyone from the U.S. Defense Department to turbine manufacturers at its headquarters at the Hardman Industrial Park on South State Street.
The proposed agreement with TOG's parent company, Stanley Black & Decker, would provide it with tax incentives to carry out a 20,000-square-foot expansion of its existing facility, as well as add 28 new jobs atop its current staff of 29 employees.
"In addition to establishing the parameters for the tax increment the agreement also ensures that should Stanley Black & Decker fail to meet its specified investment and job creation commitments the City has the option to request decertification of the TIF," Bernard wrote in a letter to the City Council.
In exchange for the investment — estimated at $2.6 million for new manufacturing equipment and $3.5 million for new building improvements in an August letter from the company — the city would offer a tax break on that new growth.
A TIF works by taxing a business on only part of the value it adds by expanding. The deal acts as a reward for new investment while maintaining the tax revenue already on the books under the business's current operations.
In addition to council review, such agreements must be approved through the state's Economic Development Incentive Program.
The deal would be structured so that on new growth — and only on new growth — Stanley Black & Decker would receive a 100 percent tax break in year one, an 80 percent break in year two, and continue decreasing in increments of 20 percent annually until the company is paying its full bill in 2025.
Last year, the company paid $12,317.64 in property taxes on an assessed value of $309,100.
TOG Manufacturing has operated in the city for more than 30 years, but its parent, Nelson Fastener Systems, was only recently acquired in April by a new corporate parent — Stanley Black & Decker — that sought expansion.
Stanley Black & Decker notified the mayor of its intention to seek a TIF in August, setting the table for negotiations that led to Tuesday's discussion.
The council could opt to vote on the proposal on Tuesday or refer it to a committee for further review.
When The Eagle first reported the proposal last month, representatives for Stanley Black & Decker declined to comment while the application process is ongoing.
Adam Shanks can be reached at email@example.com, at @EagleAdamShanks on Twitter, or 413-629-4517.
TALK TO US
If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.