Bidding war continues

Six companies looking for state aid in return for staying or expanding in Massachusetts were awarded nearly $27 million in tax credits today. Liberty Mutual Group, the state’s lone Fortune 100 company, received 84 percent of the credits in connection with a headquarters expansion in Boston.

Liberty says it plans to spend close to $350 million building a new headquarters in the Back Bay and has promised to add 600 jobs over the next 20 years. The company will receive a $16 million break on its property taxes over the next 20 years from the city of Boston and another $22.5 million in investment tax credits from the state.

The awards were made by an obscure state board called the Economic Assistance Coordinating Council. Several community activists complained to council members about the Liberty package, saying the company was highly profitable and could easily afford to build a headquarters without any state or municipal subsidies. The activists also said it was irresponsible for state and city officials to be doling out tax credits at a time when their budgets and the services they provide are being slashed.

Council members listened politely, but in the end voted, with little or no debate, to support all of the recommendations of the Patrick administration. In a depressed economy, there was no enthusiasm for doing anything that might spur a company to shut down or move jobs out of the state. Officials from some companies indicated they had been offered incentives by other states.

Paul Mattera, a senior vice president at Liberty, the world’s sixth largest property and casualty insurer, said the company had a number of options on where to expand. “We will be adding jobs,” he said. “The question is: Where will those jobs go?”

Mattera said Liberty could have expanded far more cheaply at half a dozen company locations around the country. For example, he said, there would have been no extra cost to add jobs at a Liberty facility in Dover, New Hampshire, where space is plentiful.

But Mattera said the company is committed to Boston and merely wanted state and local officials to help make the expansion here less costly. “We know at the end of the day it’s costing us more to put 600 people in Boston,” he said. A company spokesman later said the firm was pleased with the council’s decision.

Liberty’s new headquarters will be built on the site of the former Salvation Army building at the corner of Berkeley Street and Columbus Avenue and the Benjamin Franklin Smith building next door. Both buildings were purchased by Liberty last year. Liberty’s current headquarters is located on Berkeley Street. It currently employs 2,577 people in Boston and 1,578 elsewhere across Massachusetts.

Eight companies sought investment tax credits from the state, and seven received them. In addition to Liberty, the other recipients included the Coca-Cola Co., which received $774,000 for an expansion in Northampton, and Eclinical Works, a high-flying privately held electronic medical records company, which received $1.2 million for an expansion in Westborough. The other recipients were New England Sheets of Devens ($707,000), Lightolier of Fall River ($1.15 million), Titeflex of Springfield ($281,900), and Pioneer Valley Energy Center of Westfield ($320,000). Mainstream Global of Lawrence was not awarded any tax credits.

The awards were the first since the process for awarding the tax credits was revamped. Previously, the state was required to give any company that received a property tax break from its host community a 5 percent investment tax credit. A recent series in the Boston Globe reported that many awards in the past were made to projects that created few jobs or fewer jobs than promised. (See “Jobs Program Lost Its Way — and Tax Money” and “Rich Towns Get ‘Distressed’ Status.”)

Under changes proposed by the Patrick administration, the automatic award of a tax credit was eliminated. Instead, state officials can now award tax credits worth 0 to 10 percent of the project’s cost based on the project’s job creation potential and other considerations.

Editor’s note: Liberty Mutual is a lead sponsor of MassINC, the publisher of CommonWealth magazine. Paul Mattera is a member of the MassINC board of directors.