News Articles

Norfolk Business Eyes Expansion, Seeks Tax Break To Build for It


Elite Food Company Hopes To Add Five Jobs in New Building in Shire Park If Deal Goes Through


By Matt McDonald, The Norfolk Boomerang
November 12, 2006


Selectmen expect to consider a proposal next week from a Norfolk company seeking a tax break to help build a new office building in town.

If approved by Town Meeting and the state, it would be the first time Norfolk has participated in a state program designed to spur economic development in targeted areas through decreases in local property taxes and state corporate taxes.

Elite Food Company, which rents about 4,000 square feet in the Country Crossings commercial building at 148 Main Street in Norfolk Center, has a plan to build an approximately 10,000-square-foot building in Shire Park, an industrial park on Route 1A in Norfolk near the Wrentham town line, said Paul Keating, the company’s president and founder.

To help finance the project, the company is applying to participate in the state’s Tax Increment Financing program.

Details of the proposal weren’t available this past week. But under state law the local property tax break could be as little as 1 percent or as much as 100 percent, and could last from anywhere from five to 20 years, depending on what town and company officials agree on.

But aside from the property-tax break, companies that participate in the program also qualify for something many consider more valuable: a 5 percent state tax credit, which companies can use to lessen state corporate taxes.

Lynn Tokarczyk, a government incentives consultant for Elite Food Company, noted that the property-tax break from a Tax Increment Financing agreement, or TIF, as it is known, doesn’t affect tax revenues of a commercial property in its current state. Instead, it applies to the added value of the property stemming from the development of it. So while the property tax revenue to the town from the new construction is less than it would be without the tax break, it’s more than it would be without the new development.

“The beauty about TIFs is the town doesn’t lose a dime, because it doesn’t affect the current tax base,” said Tokarczyk, president of Business Development Strategies Inc., of Medway.

Elite Food Company is a sales, marketing, and distribution company that purchases food and other grocery products from manufacturers and sells it to military bases.

Among the 40 or so manufacturers the company buy groceries from are Ken’s Foods, of Marlborough; Seastar Seafoods, of Marlborough; and Blount Sea Foods, of Fall River. The company stores the products in warehouses.

Military personnel and their families are able to buy the products at their commissary or exchange on base, with at least a 30 percent discount, Keating said.

Keating purchased a 1.3-acre lot in Shire Park last year. Constructing a new building there would allow him to expand his business while keeping it relatively close to where it is now.

Keating noted that of the 15 people who work full-time at the company’s headquarters in Norfolk, four live in town and others live in relatively nearby towns, including Bellingham and Mansfield.

Keating said he plans to expand somewhere in the area, but would like to stay in town.

“We could be located anywhere in the country with our offices, where we serve the military globally. It just so happens that we’ve set up shop in Norfolk, and our preference is to stay in or as close to Norfolk as possible,” Keating said.

In addition to its employees in Norfolk, Elite Food Company has seven other employees who work in regional manager offices spread out through the country, handling sales. Those offices are in Washington D.C.; Virginia Beach, Virginia; Louisville, Kentucky; San Antonio, Texas; and Sacramento, California.

Keating said he expects the new building in Norfolk would allow him to hire five additional employees whose average annual salary would likely be between $50,000 and $60,000.

At 15 full-time employees, Elite Food Company is probably one of the town’s largest private employers, but has maintained a low profile: some town officials didn’t even know of its existence before they were approached about the Tax Increment Financing proposal earlier this month.

The company has grown rapidly since Keating founded it in June 2000, doing more than $28 million in sales to the federal government in 2005, according to an analysis of defense contracts on a web site run by OMB Watch, a government watchdog organization.

Keating said his company is one of the top 40 vendors of the Defense Commissary Agency, a federal entity that according to its web site “operates a worldwide chain of commissaries providing groceries to military personnel, retirees and their families in a safe and secure shopping environment.”

The web site continues: “Authorized patrons purchase items at cost plus a 5-percent surcharge, which covers the costs of building new commissaries and modernizing existing ones. Shoppers save an average of 30 percent or more on their purchases compared to commercial prices — savings worth more than $2,700 annually for a family of four.”

Keating and his wife, Lisa Keating, a former member of the town’s Zoning Board of Appeals, live in Norfolk with their four children. They moved to town in 1993.

In an interview this week, he said his family and business are active in town affairs. He has sponsored youth softball and youth baseball teams and has also made contributions to the Santa Foundation, a nonprofit organization in Franklin that helps families in need in the area around Christmastime.

He said he and his wife adopted a Norfolk couple in need after the husband was injured in a car accident.

To go forward, a Tax Increment Financing agreement would need approval from selectmen and then Town Meeting.

The company’s consultant said talks so far have been encouraging.

“The town has been great to work with so far. They’ve really demonstrated that they’re pro-business,” Tokarczyk said.

Town officials contacted this week seemed interested in learning more about the Elite Food Company proposal, but were unwilling to commit either way without knowing the details.

Selectman Jim Lehan, board chairman, said he likes the idea in theory.

“In principle, this could be an attractive thing,” Lehan said. “You don’t want to give away tax revenue, but in the same vein you want to encourage businesses to come into town.”

Lehan said the fact that Keating, the company’s founder and president, lives in Norfolk is a plus.

“Personally, I kind of like the idea of home-grown businesses — a business that’s been in Norfolk, run by people who live in Norfolk. This is the kind of business we should be helping,” Lehan said.

Selectman Ramesh Advani said in an interview that he wants to take a close look at a financial analysis to see how the town might benefit from such a deal.

“There should be some advantages to the town, in terms of employment or commercial development that brings in tax revenues,” Advani said. “… I would be very supportive of anything that brings jobs to Norfolk or increases commercial development in the long term. Otherwise, what’s in it for us?”

Town Administrator Jack Hathaway noted that in theory the town could reap the benefit of commercial expansion while giving up only a modest decrease in property tax revenues for the project, but that the details will likely determine the town’s response.

“I think we’ll have to look at their proposal and see how much of a break they’re looking for,” Hathaway said.

If selectmen approve an agreement, it could go to annual Town Meeting in May.

Keating said that if all goes well the project at Shire Park could be completed by early 2008.