16-year tax break urged; Office/lab is proposed.

Byline: Nick Kotsopoulos

WORCESTER - City Manager Michael V. O'Brien is recommending a 16-year tax-increment financing deal for a developer who wants to build a four-story, 92,000-square-foot office-laboratory building in Gateway Park.

Under the terms of the so-called TIF, the developer (50 Prescott Street LLC) of the $24 million project would save an estimated $4.4 million in property taxes over the 16-year period - money that can then be reinvested and used to help finance the project.

During that same period, the city expects to receive nearly $5.2 million in property taxes, and upon completion of the TIF in fiscal 2027, the city will begin receiving an estimated $600,471 in tax revenues annually from the property, according to City Manager Michael V. O'Brien.

A tax-increment financing deal exempts the property owner from having to pay taxes on a negotiated percentage of the increased value of the property resulting from the new construction, while continuing to pay taxes on the base value of the property.

In this instance, the developer would be exempt from having to pay taxes on 47 percent of the increased value, on average, over the 16-year period. It ranges from no exemption in the first year; a 65 percent exemption during years 2-6 of the deal; a 43 percent exemption in years 7-11 and a 42 percent exemption in years 12-16.

The 33,204-square-foot project site, owned by Gateway Park LLC, is now a vacant lot. It is the second of four new life sciences-office buildings planned for Gateway Park, which is north of Lincoln Square.

"The city administration has analyzed the application for Certified Project designation received from 50 Prescott Street LLC and strongly recommends approval of the application," Mr. O'Brien wrote in a report that goes before the City Council tomorrow night.

The manager added that 50 Prescott Street LLC, whose sole member is the O'Connell Development Group of Holyoke, plans to secure a 50-year land lease with two 25-year options with Gateway Park LLC.

Assistant City Manager Julie A. Jacobson said the new building will house tenants. She said lease negotiations are under way for about 50 percent of the building space.

Ms. Jacobson said the new tenants include Massachusetts Biomedical Initiatives, which will keep its current space in the Worcester Polytechnic Institute Life Sciences and Bioengineering Center at Gateway Park, and expand into the proposed new building.

She said MBI's subtenant at 50 Prescott St. will...

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