News Articles

Ayer OKs tax break for defense contractor

By Jack Minch
December 12, 2007


 AYER -- Special Town Meeting last night unanimously approved a 20-year tax-break agreement with one of the nation's biggest defense contractors as an incentive to move into an empty building at 24 Nemco Way.

The state Economic Assistance Coordinating Council must now approve its end of the agreement, which includes a 5 percent tax credit for the company's depreciable, tangible assets and a 10 percent tax deduction for costs related to renovating the building.

The town's sliding-scale tax increment financing agreement, or TIF, gives L-3 Communications an 85 percent break on property taxes in the first year and a 5 percent break in each of the last six years.

It's an overall 40 percent tax break, based on the increased value of the building, but the town will still get nearly $750,000 more than what it expected to get before L-3 Communications agreed to move in, said Christopher Ryan, the town's planning and development director.

New York-based L-3 Communications plans to move its Concord-based L-3 Communications.

ESSCO Inc. and Auburn-based Wolf Coach Inc. divisions into the 216,000-square-foot building after a $3 million renovation that's expected to be done around June.

ESSCO makes radomes that are protective domes to surround radar or antenna systems. Wolf Coach makes mobile telecommunications vehicles for public-safety departments.

The two divisions will operate under the L-3 Communications name and bring 235 existing jobs to town, plus create another 30, said Thomas Casale, president of Wolf Coach. The jobs include skilled and technical labor, as well as management.

L-3 needs the TIF to remain competitive with manufacturers in other areas of the country such as the Midwest and Florida, where labor costs are lower, Casale said.

"So finding the right building, finding the right town, finding the right rent per square foot and finding the right TIF was key to doing the entire economic deal for us," he said.

L-3 expects to select a contractor for the building renovations in January and hopes the town issues a certificate of occupancy in July, said Richard Hitchcock, vice president of operations for Wolf Coach.

The company produces $5 million to $10 million of product value a month, so it will have to move and be back up and running quickly, he said.

"As soon as we get a certificate of occupancy and can actually occupy and work in the building, we'll be in immediately thereafter," Hitchcock said. "We're talking a seven- to 10-day period where we pack up everything in our place, move it all over in trucks, set it all up and try to get back in business."

The TIF agreement ensures the town increased tax revenue but also establishes a building block to attract other business, said Board of Selectmen Chairman Gary Luca.

"It's a good proposal for the town, the area, the state," he said. "It shows that Ayer is open for business."

The Economic Assistance Coordinating Council is expected to vote on its tax credits and tax deductions Dec. 27, said Lynn Tokarczyk, a consultant for L-3.