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Selectmen Recommend Tax Incentive to Lure Keurig to Town

April 24, 2012

By Richard Hosford

Keurig representatives speak at the Board of Selectmen meeting. Front is John Heller, vice president of financing and behind him is Lynn Tokarczyk, President of Business Development Strategies, Inc. Credit Richard Hosford

The Burlington Board of Selectmen voted 5-0 Monday night to recommend that Town Meeting approve a Tax Increment Financing agreement with the K-Cup makers.

The proposed plan for the Keurig Company to relocate its headquarters from Reading to Burlington advanced another step at last night's Board of Selectmen meeting.

The board voted 5-0 to recommend to Town Meeting that the body approve a Tax Increment Finance (TIF) agreement with the company. The board also voted to recommend that Town Meeting designate a development district and submit the agreement to the State Economic Assistance Coordinating Council, the agency that oversees these arrangements.

A TIF agreement is a tax-alleviation incentive that a municipality can give to a business to sweeten a deal to have it locate in town. Click here for a story with a lengthy discussion of TIF agreements.

The full details of the TIF agreement will be released to the public later this week, Town Administrator Robert Mercier told Patch. Keurig's management must first agree to the negotiations before the details are made public. However, at the meeting Mercier did say that the deal right now is for 15 years and includes a maximum 40 percent tax break. The tax incentive under negotiation, he said, starts off high and by the end of the 15 years is at about 5 percent per year.

Mercier said TIF's were a good way to attract businesses the town would like to have within its borders but should be used sparingly.

"The TIF is a tool in our pocket we use occasionally to attract businesses like Keurig," he said. "We don't hand them out but they can be useful. Right now we have two TIF agreements in town, with Sun Microsystems and Oracle, and I think most towns in the area would love to have those two."

Keurig also made it clear that it had chosen a possible site in Burlington. As last reported there were two possibilities but at this time Keurig is focusing on 63 South Avenue, the old iRobot building owned by the Gutierrez Company.

John Heller, vice president of finance for Keurig, was at the meeting with Lynn Tokarczyk, President of Business Development Strategies, Inc. to discuss the possible move. Both spoke to the benefits Keurig would bring to the Burlington community.

First, Heller said the company is looking to stay in Massachusetts.

"Keurig has been headquartered in Massachusetts for 10 years and we're interested in maintaining a base here," he said. "The town of Burlington has a very attractive setting for us. The town has great amenities and is a place that will attract well educated employees. Keurig is a technology company and we hire many degree-holding professionals; engineers, marketing professional, financial experts and accountants and they will be attracted to Burlington. We are also going to be hiring hundreds of new employees as we go on and we'd love to have Burlington residents work for Keurig."

Tokarczyk added that Keurig would be moving 368 permanent full time jobs and over 150 contract employees with the headquarters move if the deal is finalized. The company is also looking to hire up to 400 new employees in the next few years as the business expands. She said these employees will spend their money locally, giving a boost to the Burlington economy.

Also, Heller said that if a plan is reached, Keurig would invest $100 million into the site with the Gutierrez Company and invest in $20 million of personal property at the location. Though Keurig is planning to lease rather than to buy, the agreement would be for a minimum of 15 years.

Members of the board spoke with enthusiasm about the potential Keurig move to town.

Chair Ralph Patuto (made chair earlier in the meeting) said he thought the deal would be a boon to the town.

"This is what we're looking for in Burlington," he said. "Keurig is a great corporate name and would be great in Burlington. I'm looking for to Keurig coming in and I want other towns to know that Burlington landed Keurig. We have vacant spaces we'd like to see other companies come in and occupy and that would help."

Following the meeting Heller and Tokarczyk told reporters that Keurig has not made any final decisions, either with the town or a lease agreement with Gutierrez. If all goes as both sides want and Town Meeting and the state approve the TIF agreement, Tokarczyk said a decision could be made by mid-summer.