New Bedford city councilors move to decertify tax agreement with this local business

NEW BEDFORD — City councilors voted to ask the state to decertify a tax-incentive agreement with a local firm after learning that a company involved in the deal had gone out of business.

City Councilor Linda Morad said reporting requirements for three city tax-incentive agreements with local businesses were not being followed. State Special Tax Assessment agreements provide property tax exemptions in the interest of bringing new jobs, retaining jobs, and encouraging investment, and can run from five to 20 years.

She said three STA holders had been late in fulfilling reporting requirements that are supposed to show they are holding up their end of the bargains.

The council’s Committee on Finance met with Derek Santos, New Bedford Economic Development Council executive director, and Ramon Silva, the Council’s senior director of Real Estate Development/Financial Incentives, this week to discuss the lapse.

Morad wanted to know what was being done to enforce the STA agreements.

She said the companies on the STAs were Oceans Fleet Fisheries Inc., Quality Custom Packing Inc., and Shuster Corp. All three have five-year STA agreements.

Morad said Oceans Fleet hadn’t provided the annual reports since 2017 while Quality Custom Packing Inc. and Shuster Corp. hadn’t reported since 2018.

Silva said during an interview that a company that was subleasing from Oceans Fleet had gone out of business. “The company that was subleasing the building has basically gone out of business. That’s who that agreement was for.”

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Seafood processor Oceans Fleet Fisheries Inc. had agreed in 2017 to create 19 full-time jobs over the five-year agreement while investing $1.7 million in the property at 38 Blackmer St. In return, the company was to get a 100% exemption on the property’s assessed value in the 2019 fiscal year (FYs run from July 1 to June 30), 75% in FY2020, 50% in FY2021; 25% in FY2022; and zero in FY2023.

Silva said in other cases changes in personnel can cause lapses in reporting when a new controller is brought on the job. Sometimes, he said, the reports are filed inaccurately.

“It doesn’t mean they haven’t done what they’re supposed to do,” he said.

The state Economic Assistance Coordinating Council, which oversees the program, “has also given companies leeway that may not be on track for their job creation numbers because of the pandemic,” he said, and the hiring freezes it caused.

He added, “And in the last year there is no benefit. That’s why you’ll see sometimes companies don’t even bother reporting the last year because there’s no benefit in the last year anyway.”

He said state decertification of an agreement is typically a last resort.

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Seafood packager Quality Custom Packing Inc.’s STA was also approved in 2017. The company was to provide 40 full-time jobs, and invest $1.4 million at 8 South St. in return for 100% exemption in FY 2019, 75% in FY2020, 50% in FY2021; 25% in FY2022; and zero in FY2023.

A second STA agreement with Quality Custom Packing Inc. was also struck in 2017 to retain five jobs, create 21 new full-time jobs and invest approximately $900,000 at 1440 Purchase St. It called for 100% exemption in FY2018, 75% in FY 2019, 50% in FY2020, 25% in FY2021, and zero in FY2022.

Shuster Corp., which manufactures industrial bearings, signed its STA in 2015 to retain 37 jobs, create four new jobs, and invest $134,500 at 55 Samuel Barnett Blvd. in return for 100% exemption in FY 2017, 75% in FY2018, 50% in FY2019, 25% in FY2020, and zero in FY2021.

If a company fails to live up to its end of an agreement the city’s Tax Increment Financing Board can take action leading to decertification through the state Economic Assistance Coordinating Council.

If a company’s decertified, the city can cut off the tax benefits, starting with the fiscal year in which the company failed to meet its commitment.

According to the STA agreements, the total property tax that would have otherwise been due in the year of decertification has to be paid in lieu of taxes.

If companies can move to correct any deficiencies within 30 days of written notice, and complete the corrections within 90 days of the notice, they can avoid defaulting on the agreement. The percentages can also be changed to reduce the tax exemption in proportion to the number of jobs not being provided per the deal.

Morad’s motion for the New Bedford Economic Development Council to contact the EACC to begin decertification for the Oceans Fleet Fisheries STA was approved unanimously by the Committee on Finance.

This article originally appeared on Standard-Times: New Bedford City Council moves to decertify company's TIF agreement