City councilors praise Liberty Mutual expansion but tear into CEO; some residents object to tax break

Ramshackle Salvation Army building: To become sparkly new corporate headquarters?

Boston city councilors today generally backed a proposed city/state deal to grant Liberty Mutual 20 years' of tax breaks to build a new headquarters in the Back Bay, but said the insurer's CEO really should take his foot out of his mouth and stop comparing Boston to Venezuela (assuming the Herald quoted him accurately, which councilors Feeney and Linehan doubted). Residents, however, objected to giving a very profitable company money for building on a "blighted" property. The company itself said it has no plans to move out of Boston no matter what happens - but might not expand without the tax break.

The insurer - the only Fortune 100 company left in Boston - last year bought two unoccupied buildings and a parking lot at Columbus Avenue and Berkeley Street, with plans to spend $300 million to build a new corporate headquarters there.

Both the mayor and the state have said they would forego $16 million in taxes apiece over 20 years to make the deal happen. Ron Rakow, assessing commissioner, said the three parcels at the location only generate $40,000 a year in property-tax revenue now, in part because the Salvation Army is tax exempt. Even with the tax break, Rakow said the project would mean $50 million in new tax revenue over 20 years. Rakow said the city would not lay out any money up front for Liberty Mutual, but would instead discount its taxes over 20 years.

Michael Ross praised the insurer as a good corporate citizen, but blasted CEO Ted Kelly for his complaints about over-paid public employees and how the company has more success working in Venezuela than in Massachusetts. Ross said the comments are untrue, ignore the quality of life in Massachusetts and our highly educated workforce and are just "damaging to our brand, to our city and our state."

He added, "When a CEO says those types of things, it takes a lot for us to recover, especially when they're not true."

Libery Mutual Vice President Paul Mattera suggested Kelly was taken out of context because he was talking about longer-term issues, such as public pension reform.

"Boston has so many wonderful qualities and this commonwealth has so many wonderful qualities, we're not interested in, nor would we consider, moving away," he said. However, without the tax breaks, the company might not expand in Boston, either, he said.

"For $16 million (in tax breaks) for a corporation in excess of $25 billion (in revenue), you're saying this is a significant dealbreaker for you?" City Councilor Charles Yancey asked.

"The way you become successful is you watch every penny," Mattera said.

"If you watch your pennies, then you don't have to worry about your dollars," Councilor Maureen Feeney, agreed.

Nearby residents, however, objected to the proposed tax break. John Keith, who lives on Tremont Street, compared Mattera's comment about not building to Filene's Hole developer Steve Roth's comments about letting a property stay blighted to squeeze more tax incentives out of New York: "And the mayor doesn't like that, but he likes this," he said, adding "There is no blight in that neighborhood."

Larry DiCara, company lawyer (and former city councilor) said the buildings now on the parcel are, in fact, blighted because they're in terrible shape after years of disuse.

Maura Burke, a member of the Neighborhood Association of the Back Bay, asked how the city could give a large company a tax break when it's threatening to shut libraries and schools.

Steve Wintermeier of the Back Bay praised the company as a good neighbor, but told the council needs to consider: "Are we encouraging a project that might possible fail, despite the current financial health of Liberty Mutual?" He said Boston already has a glut of commercial office space and is concerned that adding still more space would wind up hurting residents because of the way it would further depress commercial values and force more of the tax burden onto homeowners.

Ned Flaherty said Liberty Mutual is already taking "tens of millions of dollars" in tax breaks on other nearby properties and giving it a break is unfair to other taxpayers. "The only jobs going to be added by Liberty Mutual are the ones they are going to add automatically because they have a business need."

Meg Mainzer-Cohen of the Back Bay Association, however, compared the tax break to coupons supermarkets hand out. In the end, they win, by drumming up new business - and in this case, the city wins, by ultimately bringing in more tax revenue.