Politics and the City: Tiff Brewing at City Hall Over TIF Policy

Worcester's tax-increment financing policy is at the center of a most interesting battle at City Hall, featuring a fight for a $15-per-hour minimum wage and increased employment opportunities for city residents, especially for women, people of color and those considered "low income."

Local community activists would like to see the city incorporate into that policy language that addresses those issues, and puts more teeth into compliance monitoring of those agreements.

The City Council Economic Development Committee Tuesday is expected to take up revisions to the policy that has been drafted by the city administration, but there is concern in the local business community as to just how far the city should go.

Some fear that if the city loads up its TIF policy with so many requirements in terms of wages and employment that it would make Worcester less attractive for businesses to invest here.

The Worcester Regional Chamber of Commerce, in particular, believes the city's TIF policy should be more of a road map rather than requirements cast in stone. It contends that each TIF application is different and needs to be evaluated as such.

But others feel that if the city is going to give businesses tax breaks to come to Worcester or grow here, then it has a moral obligation to look after the best interests of its residents and turn economic development into community development for all.

"We believe we need to create an economy that serves all of those that work in that economy," 25 local religious leaders and representatives of communities of faith in Worcester wrote in a letter last week to City Manager Edward M. Augustus Jr., Mayor Joseph M. Petty and the City Council.

"We believe that everyone that works 40 hours or more in our city should be receiving a livable wage," the letter went on to say. "And in order for this to happen, we believe that when our city plans and evaluates new economic development opportunities, together we must also be asking, 'Does this economic development help our neighbors?' "

For more than 20 years, tax increment financing, more commonly known as a TIF, has been an important and frequently used tool in Worcester's economic development toolbox.

It has allowed the city to provide local tax relief to developers, which in turn has helped make their projects financially feasible and become a reality.

With a TIF, the developer of a commercial property is still responsible for paying full real estate taxes on the base assessed value of a property before improvements are made to it. The tax break comes in the valuation added to a property as a result of the investment and improvements.

Under state law, the City Council can exempt up to 100 percent of all new taxes assessed on the property resulting from those improvements, and that tax exemption can be spread out for up to 20 years.

The Worcester Community-Labor Coalition has been aggressively pushing for items to be included in the city's TIF policy that its members feel would benefit the entire community and not just developers.

In particular, it has been pushing for a $15-per-hour minimum wage in all future TIF agreements, though the city has balked at including that as a requirement.

As a compromise, city officials have added new wording to the TIF guidelines that set a wage goal of $15 per hour, or 125 percent above the state minimum wage, whichever is greater, beginning with tax-relief deals that are approved in 2018.

Until then, the city has set a wage goal for TIF applicants of 125 percent above the state minimum wage. The state minimum wage, which is now $10 per hour, will be calculated as of Jan. 1 in the year of the approved TIF plan and multiplied by 1.25.

But local religious leaders do not feel that is enough.

"We do not think it is too big of a hurdle or discouragement to ask developers that are the recipients of million-dollar tax breaks from our community to make a commitment to hiring women, people of color, youth and low-income residents," their letter states. "Nor do we think it is too big of a request to ask that these same recipients of tax breaks pay these workers a livable wage of $15 per hour."

The problem, though, with the city telling TIF recipients they have to pay its employees a minimum of $15 per hour is that it doesn't pay some of its own employees such an hourly rate.

According to the city's salary ordinances, a number of entry-level and clerical positions in the municipal government have pay rates that are less than $15 per hour, with some starting as low as $11.17 per hour.

Hard for the city to talk the talk when it comes to $15 per hour if it doesn't walk the walk itself.

In another area, the city has agreed to have TIF applicants make available to Worcester residents 100 percent of the new jobs resulting from the expansion. New wording has also been added to the TIF policy that further sets a goal that 10 percent of the jobs be filled by people of color, 5 percent by women and 15 percent by low- and moderate-income people.

But the Worcester branch of the NAACP believes the city needs to do much better.

"With over a third of Worcester's population being people of color and women being the majority of our population, we found these goals unacceptable," Leonard P. Cooper of the Worcester NAACP chapter wrote in a letter to the City Council.

Instead, he said the NAACP is supporting the Worcester Community-Labor Coalition's recommendations for 50 percent women, 33 percent people of color and 35 percent low-income residents when it comes to filling new jobs resulting from TIFs.

"We understand that the (city) administration has communicated to representatives of the WCLC that the new diversity officer would look at and adjust these numbers in the future," Mr. Cooper wrote. "However, we feel that such changes should be voted into the TIF proposal when it is voted on."

He added that his group believes there should be a waiver that applicants can apply for if not able to reach those stated objectives.

So, it's going to be interesting to see what direction the council's Economic Development Committee, and eventually the entire City Council, will take on this matter.

There are those who feel that TIFs are important to the future economic development of Worcester, while others feel any economic development needs to be equated to community development for all.

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