Cherrytree Group LLC Blog

Massachusetts gave millions of dollars in commercial tax credits last year to subsidize everything from cleaning polluted land in Quincy to filming the upcoming Mark Wahlberg movie, according to a new report by the Massachusetts Department of Revenue.

Overall, the state gave companies more than $171 million in 2011 in refundable or transferable tax credits for making films, rehabilitating old historic buildings, redeveloping contaminated land, creating life sciences jobs, and other activities. These special types of tax credits can be bought, sold, or exchanged for cash.

The report, mandated under a 2011 budget amendment, is the first ever detailing all recipients of the tax credits. The commercial tax credits are a way to attract new investment and economic activity to the state.

Other major beneficiaries include the Los Angeles production company that made “Ted,” which received $9 million; an affiliate of Boston real estate developer The Congress Group, which received $8 million in brownfields tax credits for an apartment complex on a polluted site in Quincy; and Partners HealthCare System Inc., which received $6.8 million in brownfields credits to clean a Charlestown site where it is moving Spaulding Rehabilitation Hospital from its current location near TD Garden.

Congress Group president Dean F. Stratouly said the tax credits were helpful because the firm had to spend $40 million on cleanup costs alone for the $260 million Quincy project, which will eventually include more than 1,000 units. The site was polluted by landfill from the urban renewal project that razed much of Boston’s West End decades ago.

The brownfields program offers developers a rebate of a portion of expenses for cleaning up and redeveloping contaminated property.

The report covers 13 tax credit programs. The state has in the past disclosed recipients in a few of the programs, including life sciences awards, but considered the rest confidential.

But the Governor and the Legislature agreed to change the law two years ago because companies typically trade them back to the state for cash, or sell them to corporations and wealthy individuals seeking to lower their tax bills.

The new report did not detail who bought the tax credits. The state also said it planned to continue to treat as confidential most of the tax credits awarded before 2011.

Still, some watchdogs and lawmakers praised the increased disclosure.

For assistance in applying for commercial tax credits, or the sale or syndication of commercial tax credits, contact Warren at the Cherrytree Group.

Boston Globe

The latest unemployment rates tell you what you need to know about these Massachusetts cities’ economies. Lawrence’s topped the list, at 15.8%. Fall River’s wasn’t far behind, clocking in at 15.5%. Its South Coast sibling, New Bedford, was at 14.1%.

Once again, the “gateway cities” had some of Massachusetts’ highest jobless rates. The rates in February were also high on Cape Cod and the Vineyard. But those economies will come alive in a couple months, as they always do. The same rebirth won’t happen this spring in many of the states old industrial cities.

This has been a problem in Massachusetts for years, if not decades, amid the slow decline of our once powerful manufacturing industry. Mayors of these cities have long pressed state officials for solutions.

Well, there’s at least one possible fix on the way now. The state Department of Housing and Community Development is putting the finishing touches on a tax credit program for projects in these mid-sized cities that would bring new market-rate housing into the mix.

State and federal agencies have plenty of ways to spur the creation of affordable housing. But many city officials don’t want affordable housing to be the sole driving force behind downtown construction. It’s not easy to build a strong economy on a population that doesn’t have much in the way of expendable income.

Industry experts say there is no tax credit geared for creating homes for the middle class. There are programs that help renovate specific kinds of properties, such as historic buildings or polluted sites. But none are specific to market-rate housing.

That’s going to change with the launch of the Housing Development Incentive Program this spring. As one of his first actions the new undersecretary of housing and community development, Aaron Gornstein, is ensuring this program is ready for developers by June.

The Legislature authorized the program in a broad economic development bill. The program, for now, will be capped at $5 million for each fiscal year — a budget that likely could help finance 5 to 10 projects each year.

The program will give a developer a 10% tax credit on eligible rehab work. The credits will be capped at 50 market-rate units and at $1 million per project. Because most of these tax credits are sold off at a slight discount, he says, a typical developer could reap up to roughly $900,000.

The credit would only be available for projects in one of 24 designated mid-sized Massachusetts cities. Some already have relatively healthy economies, others are struggling. Most, if not all, fall under the “gateway cities” umbrella. Most of these cities now face constant cycles of high crime rates, low graduation rates and weak employment opportunities.

The cities have to play a role in this new program. Local property tax exemptions need to be offered and city officials have to approve the best places to put such projects.

Many Developers view this tax credit as an important tool to breathe new life into some of these economically-distressed cities. South Shore Housing will approach officials in Brockton, Taunton, New Bedford and Fall River to see if they have any local properties in mind that would be suitable. South Shore Housing might go it alone, or it could partner with a commercial real estate developer for a mixed-use project.

The credits would be best suited for cities that already have some demand for market-rate housing in their downtown areas. Otherwise, a 10% credit might not be big enough to draw interest from developers.

Some developers believe that the program but it would only work in cities where market-rate housing is viable or close to being viable already. Higher-rent areas, such as Lowell, would be good targets. Regardless of the city, lining up these tax credits could mean a significant amount of work for relatively short dollars.

The most successful proposals would be those that are part of broader redevelopment visions. In some cases, the tax credits could be that one critical piece to get a deal financed, the difference between a loan closing and a loan falling apart.

This program won’t solve all the problems that these cities face. It’s not going to turn them around overnight, by any means. But it could provide an important spark. Who knows? Maybe it won’t be long before the economies in some of these distressed cities are humming once again.

Herald