For MassMutual, a big tax break for a short move

By Tim Logan | Feb 24, 2018

ENFIELD, Conn. — Take a right out of the driveway of MassMutual’s tucked-away campus, drive past Steve’s Boston Seafood and Angie’s State Line Liquor, and through the first stoplight. You’ll come to a green sign that reads “Welcome to Massachusetts.”

It’s a short trip down a tired Connecticut street of takeout joints and gas stations, but it will help the insurance giant reap $46 million in tax breaks from Massachusetts. That’s how much the Baker administration is offering MassMutual to add about 2,200 jobs in the state over the next four years, with 1,500 of them moving from Enfield to the company’s headquarters in Springfield — just 10 miles away.

The influx of jobs will provide a boost to one of Massachusetts’ poorest cities — a place where the unemployment rate is twice that of Boston — and cement the presence of a Fortune 100 company whose name is synonymous with Springfield. But, critics note, the move will create an equally large hole in Enfield. In the end, the cumulative effect on the economic region — which spans the state line — might not amount to much.

“Companies playing this war between the states is a really old trick,” said Greg LeRoy, executive director of Good Jobs First, a Washington, D.C.-based group that tracks corporate subsidies.

“States wink and nod and call these jobs new even though they’re not. And they award the companies big tax breaks.”

The $46 million package for MassMutual is huge for a state that has historically been tight-fisted with corporate subsidies.

Massachusetts agreed to invest $120 million in General Electric’s Fort Point campus to help bring the company’s headquarters to Boston from Connecticut, but that money is for real estate — which a state agency will own should GE ever leave. MassMutual’s tax credits — which will allow the company to write down its tax bill for five years — is twice as generous as the next largest award ever handed out under this particular program, and the largest state subsidy ever awarded to a company in Western Massachusetts.

To receive the credits, MassMutual must create 2,000 jobs in Massachusetts over the next few years. In addition to the expansion in Springfield, it plans to build a $240 million tower in Boston’s Seaport District, and bring about 500 jobs to Massachusetts from offices in other states. A spokeswoman for the state’s economic development agency said the Baker administration “looks forward to the positive impact of adding 2,000 well-paying jobs to the Massachusetts economy.”

Out west, the Connecticut River Valley towns of Enfield and Springfield are intertwined, despite the state line separating them. Massachusetts license plates are easy to spot in Enfield’s bustling shopping centers. Connecticut residents zip north on Interstate 91 to jobs in Springfield, while Springfield residents drive south to fly out of Bradley International Airport in Windsor Locks, Conn.

And when Enfield offered up a fading mall in its long-shot bid for Amazon’s second headquarters, economic development groups in Springfield endorsed the plan, despite the Baker administration’s aggressive pitch for Massachusetts.

“Our economy here is just as much north-south along I-91 as it is east-west from here to Boston,” said Rick Sullivan, president of the Western Massachusetts Economic Development Council, who noted that many MassMutual employees in Enfield live in Massachusetts.

“That’s the reality.”

Indeed, for that reason, Enfield Town Manager Bryan Chodkowski doesn’t sound all that worried about losing his town’s biggest employer. He’s lived through far worse blows, like when greeting card company Hallmark closed a distribution facility three years ago and shipped the jobs to the Midwest.

“Ten miles away to Springfield, Mass., is not 1,000 miles away to Springfield, Illinois,” he said. “Those people will still be part of the local economy.”

Which is not to say the loss won’t sting. MassMutual is Enfield’s largest taxpayer, with its complex assessed at $47 million. About one-fourth of that amount is tied to business property, which will likely move with the workers to Springfield. The rest is the value of the insurer’s 66-acre campus, which Chodkowski expects the company will either lease to someone else or sell.

“Maybe this facility represents a corporate headquarters for a new user,” he said.

Meanwhile, the move will further establish the insurer’s presence in Springfield, where it was founded in 1851. The company’s name adorns a hockey arena and one of downtown’s tallest buildings.

MassMutual plans to invest $50 million in its vast gated campus on the city’s east side, and transfer jobs there not just from Enfield, but also from offices in North Carolina, New Jersey, Pennsylvania, and Tennessee. By 2021, the company expects to employ 4,500 people in Springfield, up from about 3,150 today.

The concentration of workers and investment is a vote of confidence in Springfield, said Mayor Domenic Sarno. MassMutual has long funded education and economic development programs in the city, he said, and jumped in to help pay for redevelopment efforts after the 2011 tornadoes that wrecked blocks and left hundreds of residents homeless. Just days after MassMutual announced its expansion, Sarno was on the phone again with chief executive Roger Crandall to thank him for another $1 million donation to the city’s schools.

“They’re really an outstanding corporate citizen,” Sarno said.

“They’ve always been a stalwart for us.”

Sarno said he never had the sense that MassMutual might be looking to leave town, though he’d hear occasional “rumors and innuendo” of other states trying to poach the company. While Springfield itself isn’t giving MassMutual any tax breaks, the state incentives, both Sarno and Sullivan said, send the message that Western Massachusetts is a good place to do business.

“These companies can be anywhere. They don’t have to be in Massachusetts,” Sullivan said. “If we are going to keep the companies and jobs that we have, we need to be competitive.”
Some critics, though, wonder if doling out so much money in tax breaks is the wisest way to compete.

“There are better ways to invest in Springfield,” said Noah Berger, president of the Massachusetts Budget and Policy Center. “Maybe put that money into things like education or transportation that make it a more attractive place to do business.”

The state also could do more to track the effectiveness of the many tax credit programs it has, said state Senator Sonia Chang-Diaz.

Business tax credits have their place, she said, but too often they’re little more than a giveaway to companies that would have grown here anyway.

“Any business leader will tell you, you don’t make a business location decision on incentives,” the Boston Democrat said. “They’re like a cherry on top, not your fundamental reason.”

For MassMutual, the tax breaks were “one of a number of factors” in its decision to expand in Massachusetts, said spokesman Jim Lacey. In an e-mail, he also cited the state’s highly skilled workforce, robust local economies, transportation access, and diversity of both urban and suburban communities. He also said that the Springfield and Enfield facilities were each only about 60 percent full, so combining “two sub-optimized facilities less than 10 miles apart just makes sense.”

Lacey said the company did study other places for possible expansion, though it’s not clear if Connecticut was under consideration. Lacey would only say the company was “familiar with” Connecticut. A spokesman for the Connecticut Department of Economic and Community Development declined to comment on whether state officials had been negotiating with the company. Chodkowski, Enfield’s town manager, said he didn’t hear anything from MassMutual until the morning he was told it would be leaving town.

“They haven’t even reached out to say sorry for not letting us know,” he said.

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