EB-Pfizer Deal Benefits Many
June 23, 2010
Ideally, Pfizer Inc. would not have abandoned its office complex in New London when the tax breaks ended. After 10 years of paying a property tax based on just 20 percent of its assessment, Pfizer faced a full assessment in 2011 - generating about $5.6 million in tax revenues, up from the $3 million in tax revenues and state subsidies its property now brings to New London.
But Pfizer is leaving, consolidating offices at its Groton campus. Given that, it was great to learn that Electric Boat will buy the property, as had been rumored for months. Having the large waterfront complex, with space for 2,200 workers, up and operating is far preferable than it sitting vacant.
In this economy, filling vacant office space is a challenge. Pfizer, EB, local and state officials deserve credit for working out a deal so quickly. Pfizer recognized a changed market in lowering its asking price. State and local officials reached into their incentive toolbox to sweeten the deal. EB, meanwhile, again showed its commitment to southeastern Connecticut.
For the next five years, EB will enjoy the same 80 percent abatement on real and personal property taxes that enticed Pfizer to build in the first place. In the best-case scenario, the revenues generated for the city by the research-and-development buildings will stay the same. Connecticut is also providing a $15 million grant to EB, and other incentives are possible.
The result is a benefit to all parties. The state gets a major corporation to expand in Connecticut, New London keeps and likely expands jobs in the city and EB gets a deal that works for its shareholders.
True, tax revenues could potentially decline if EB was successful in fighting for a lower assessed value on the property. The submarine builder will reportedly pay as little as $52 million to buy it. Pfizer's total holdings in the city are now valued at $309 million by the assessor's office. But New London Tax Assessor Barbara Perry can make a good case that the city assessed the 24-acre waterfront property correctly, despite the bargain selling price.
Even with the 80 percent abatement, Pfizer was New London's top taxpayer, sending $1.3 million into city coffers. Connecticut provided New London about $1.7 million annually to cover a portion of the "enterprise zone" tax break. When the deal is settled, EB will become the biggest taxpayer. Along with the jobs created and the spin-off economic benefit, that is an outcome to celebrate.