MassDevelopment — not the city of Boston — will own two of GE's buildings
June 9, 2016 : Boston Business Journal, by Catherine Carlock
Two of the three planned headquarters buildings for General Electric Co. (NYSE: GE) will be owned by the state, not the city of Boston as initially thought. Regardless, GE still won’t be paying rent.
MassDevelopment, the economic development arm of the commonwealth, will acquire the existing historic facilities at 5 Necco St. and 6 Necco Court in Boston’s Fort Point neighborhood and lease the facilities to GE, said Jay Ash, the state’s secretary of housing and economic development, in an interview with the Business Journal.
GE has agreed to acquire the two Necco buildings as part of a 2.5-acre waterfront parcel purchase from Procter & Gamble Co. (NYSE: PG) subsidiary Gillette, the longtime owner of the properties. GE will then sell the properties to MassDevelopment. Ash and Marty Jones, MassDevelopment’s CEO, did not release terms of the deal.
“What was becoming evident was the state was making the BRA, the city people, jump through some hoops that would be easier to jump through if it was a state agency involved,” Ash said. “The only difference is that, as lease negotiations continue on, MassDevelopment’s sitting across from GE as opposed to the BRA.”
City officials and GE CEO Jeff Immelt in early April said that the Boston Redevelopment Authority would own the three-building campus. As the Business Journal reported, that deal would allow GE to take advantage of a combined $145 million in city and state tax incentives offered to lure the company to Boston over competing cities such as Providence, Rhode Island and Atlanta.
John Barros, the city’s economic development chief, said the deal for MassDevelopment to own the properties came out of conversations where the state, city and GE had examined different tools to facilitate GE’s move to Boston.
“Having a state agency do this streamlines the process, because it’s big grant money,” Barros said. “It just makes sense.”
Ash and Jones said Thursday that the $120 million in state tax incentives would be used in MassDevelopment’s acquisition of the Necco buildings as well as to improve utilities at the site, create a public park and improve the existing Harborwalk. The two Necco buildings are long-vacant six-story brick-and-beam former Necco candy manufacturing buildings. Immelt has estimated that GE could spend upward of $100 million to renovate the Necco properties as well as build a third headquarters building on a 2.5-acre site fronting the Fort Point Channel.
Lease terms and acquisition prices are still being worked out, Ash and Jones said, but they said the purchase price of the two properties will not exceed the $120 million in state tax incentives offered to lure GE to Boston. What’s more, GE will not be expected to pay rent on the properties once buildout is complete. Rather, GE will be expected to cover operations and maintenance costs.
“The approach that we’re taking is no different than the approach that the BRA” would have taken, Ash said.
When asked if MassDevelopment or the state had considered whether GE would purchase the properties after the 20-year tax incentive period lapses, Ash chuckled.
“MassDevelopment owning a building in arguably the hottest area of development in the Northeast is a good question to have to wrestle with 20 years from now,” he said.
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