Proposed Tax Increment Financing (TIF):

To support redevelopment of a portion of 1600 Osgood Street into an Amazon e-commerce warehouse and distribution facility

Summary

After months of discussions, Town of North Andover officials have agreed in principle, to both a Tax Increment Financing (TIF) Agreement and Community Partnership Agreement with Amazon.com Services LLC (Amazon) and Hillwood Enterprises, LP (future property owner at 1450 Osgood Street). A TIF is an economic development tool that enables a municipality to grant property tax exemptions on a property's increase in value as a result of a major private investment. In this case, the major private investment is the redevelopment of 110 acres of property at what is currently 1600 Osgood Street (Osgood Landing) into a five (5) story, approximately 3,800,000 square foot Amazon e-commerce storage, warehouse, and distribution facility.

The TIF will need to be approved at Town Meeting by majority vote, as well as by the Commonwealth's Economic Assistance Coordinating Council (EACC). Town Meeting is scheduled for June 16, 2020.

Relevant Documents (click for all documents):

What is a TIF?

TIF stands for Tax Increment Financing. It is an economic development tool authorized by M.G.L.c. 40, §59 and its implementing regulations 402 CMR 2.00. Under this legislation, property owners may be granted property tax exemptions of up to 100% of a tax increment.

An increment is the increase in property value due to investments made by the property owner, such as building a new building or rehabilitating an older building on a given property. Example: A property's assessed value is $500,000. After improvements are made to the property and/or new buildings are built on the property, it is assessed for $1,000,000. In this case, the increment would be $500,000.

A municipality may enter into a TIF Agreement with a landowner for a maximum term of 20 years*. A city or town must initiate a TIF by a vote of its governing body approving the TIF Agreement.

*Note, the Town proposes to enter into a TIF Agreement with Amazon for a term of 10 years. This will help finance the cost of construction, after which time, Amazon will pay 100% of the taxes owed on the increased assessed value of the property resulting from the construction.




Source: Massachusetts Office of Business Development

How Will North Andover Benefit?

The Tax Increment Financing Agreement will enable the Amazon project to move forward, which as a result, will mean the following primary benefits for North Andover:

1.) Net New Taxes

The Town will receive a projected $18,200,131 in NET new taxes over the 10 year term of the TIF Agreement.

In the ten years following the conclusion of the TIF term, the Town will receive a projected $45,500,328, making for a total of approximately $63.7 million in projected net new property taxes over a period of 20 years (Amazon will enter into a 20 year lease on the property).

Personal property (furniture, fixtures, equipment, etc.) is estimated to generate an additional $21,309,500 over the 20 year period.

TOTAL: $85 million projected in new revenue over 20 years

These figures do not include the base amount of taxes that the Town currently receives from the property (approximately $29,000 per year), nor does it include fees that the company will pay for permitting of construction.

2.) Jobs

This project will result in the creation of a minimum of 1,500 full-time equivalent jobs (not including temporary construction jobs as the facility is built). Amazon has agreed to work with the Merrimack Valley Workforce Board to hire local/regional workers and to host hiring events aimed at veterans.

3.) Community Benefits

Amazon and Hillwood will also make a significant financial investment in North Andover, broken out as follows:

  • Approximately $400,000,000 in total construction costs (including soft costs)

  • Approximately $350,000,000 in costs to lease the property over a 20 year period

  • $2,300,0000 contribution to sewer extension project along Rt. 125, to be paid prior to Town starting work on this project

    • This represents 1/3 of the total project cost

  • $90,000 for a post-project traffic calming study, to be done 90 days prior to full occupancy

  • $3,000,000 in funding for STEM programming for North Andover Public Schools; $300,000 paid annually over 10 years

  • $100,000 for technology upgrades for the Stevens Memorial Library and Youth and Recreation Services, to be paid upon receiving occupancy permit

  • $700,000 to establish a tree planting program; $175,000 annual payment for four (4) years

  • $100,000 for procurement of furniture and technology for the new North Andover Senior Community Center

  • $100,000 for procurement of traffic mitigation equipment

  • Approximately $263,700 for the Fire Department to procure necessary equipment; $100,000 to be paid at issuance of a building permit and the balance to be paid prior to issuance of a certificate of occupancy

  • Amazon will hold annual hiring events geared toward veterans

4.) Other Residual Benefits

The extension of sewer service along Route 125 as described in the third bullet above in particular, will most likely increase the value of parcels of land along this stretch of road, which in the short term will mean additional tax revenue for the Town, and in the long term may lead to future redevelopment opportunities that will bring about even more tax revenue and job opportunities. The arrival of Amazon itself could attract other companies to the area that would have strong synergistic benefits to locating close to this facility.

Project Details

Click here for project plan set

Click here for Order of Conditions issued by Conservation Commission

This project proposes to subdivide the property at 1600 Osgood St (Osgood Landing) and to redevelop a newly formed 110.35 acre parcel (resulting from the aforementioned subdivision) into a five (5) story, approximately 3,835,500 square feet of gross floor area, Amazon e-commerce storage, warehouse, and distribution facility. Included in the proposed scope of the project are upgrades to parking, access, utilities, stormwater management, lighting, landscaping, and other associated improvements.

An application for Site Plan Review, Parking, Building Height, and Floor Area Ratio (FAR) Special Permits is currently being reviewed by the Planning Board. It is anticipated that a decision may be rendered by the Planning Board on May 20, 2020. The Board has hired outside consultants to thoroughly peer review stormwater management plans, civil engineering plans, sewer design, water design, and the submitted traffic report.

On February 5, 2020 the Town's Conservation Commission approved an Order of Conditions for the project.





TIF Terms

Click here for draft TIF Agreement

Length (Term):

10 years (exemptions will begin the first fiscal year after the Town has issued a certificate of occupancy for the project)

Exemption Schedule:

Fiscal years 1 and 2: 80%

Fiscal years 3 and 4: 70%

Fiscal years 5 and 6: 60%

Fiscal years 7 and 8: 50%

Fiscal years 9 and 10: 40%

Types of Taxes to be Exempted:

Property taxes pertaining to the value of land and buildings (no personal property taxes will be exempted)

Projected Savings to Amazon over 10 Year Term of TIF:

$27,300,197

Projected Net New Taxes for Town:

The Town will receive a projected $18,200,131 in NET new taxes over the 10 year term of the TIF Agreement.

In the ten years following the conclusion of the TIF term, the Town will receive a projected $45,500,328, making for a total of approximately $63.7 million in projected net new property taxes over a period of 20 years (Amazon will enter into a 20 year lease on the property).

Personal property (furniture, fixtures, equipment, etc.) is estimated to generate an additional $21,309,500 over the 20 year period.

TOTAL: $85 million projected in new revenue over 20 years

These figures do not include the base amount of taxes that the Town currently receives from the property (approximately $29,000 per year), nor does it include fees that the company will pay for permitting of construction.

Jobs to be Created as a Result of Project:

1,500 + temporary construction jobs. This and additional benefits as a result of the project are outlined "How Will North Andover Benefit?" section of this page.

Putting it in Perspective

Starting in 2015, Amazon invested approximately $54 million in a 1 million square foot sortable fulfillment center constructed by a third-party developer in the SouthCoast Life Science & Technology Park located in Fall River and Freetown, MA. The center became operational in late 2016 and promised to create 500 net-new full-time jobs in the Commonwealth.

The City of Fall River supported the project with a 15-year Tax Increment Financing and Personal Property Tax Exemption Agreement valued at $7,808,850. The Town of Freetown is supporting the project with a 15-year Tax Increment Financing and Personal Property Tax Exemption Agreement valued at $3,830,425. The EACC approved $2,250,000 in Enhanced Expansion Project Credits as well as $1,000,000 in Job Creation Project Credits for a total of $3,250,000 in EDIP Investment Tax Credits. – Approved in March of 2015




Amazon fulfillment center in Fall River, MA