Tax Break Approved For Subway Car Factory
A Chinese company will receive a sizable tax break for building a $95 million subway car factory in Springfield, Massachusetts and creating at least 150 permanent jobs. The Springfield City Council unanimously approved the deal after the company pledged its “best efforts” to fill most of the jobs locally.
CRRC USA Rail Corp., a Chinese government-owned company that is the world’s largest maker of high speed passenger rail cars, will save about $10 million over a 10-year period in property taxes on the large factory it is going build on a 40-acre site on Springfield’s east side.
The deal approved by the city council at a special meeting Tuesday night is a property tax exemption known as Tax Increment Financing (TIF). Over the 10-year term of the agreement, the company is obligated to pay $27.4 million in property taxes, while saving just under $10 million, according to Richard Allen, chairman of the city’s Board of Assessors.
" Everyone wins with this approval," said Allen. " The city becomes the North American hub for a major international operation and we receive at least 150 permanent jobs and at least 100 construction jobs."
The TIF agreement that was recommended by Mayor Domenic Sarno was amended by the council to require the company to use “best efforts” to fill 50 percent of the factory jobs with Springfield city residents and 90 percent from the greater Springfield area.
Area union leaders and dozens of members of a local carpenters’ union, many wearing bright lime green T-shirts, packed the council chambers and applauded when the tax deal passed.
Fiore Grassetti, president of the Pioneer Valley AFL-CIO, said the economic benefits of the subway car factory far exceed the amount of the tax break.
" This company is helping to rebuild this city," said Grassetti. " They had a lot of choices and are coming to a city with one of the highest commercial property tax rates."
CRRC has signed a project labor agreement that requires union contractors to build the factory. The factory workers will also be able to unionize, according to Dan D’Alma , president of the Pioneer Valley Building Trades Council.
" This is bringing back the middle class," he said. " These jobs inside the factory will pay wages anywhere from $60,000-$100,000."
A vote on the TIF agreement at a regularly scheduled council meeting earlier this month was delayed when a procedural rule was invoked. At that earlier meeting, several councilors complained the agreement, which had been in negotiations for almost two years, had been presented to the council only an hour before the start of the meeting.
A council committee held a hearing on the TIF last week.
CRRC spokesperson Lydia Rivera said the council approval of the TIF means the project can now move forward.
" We are concerned with due diligence and are happy this happened the way it did," she said. " We are really excited that CRRC can now begin to construct the facility and bring jobs to Springfield."
CRRC, previously known as CNR-MA, was awarded a $566 million contract late last year to build new subway cars for the MBTA. The contract requires the final assembly to occur in Massachusetts. It also requires that 15 percent of the permanent jobs at the railcar assembly plant go to women and minorities.
The 221,000 square foot railcar assembly facility, which will include a test track, is being built on a site where a Westinghouse manufacturing facility once employed thousands of people until it shut down in the 1970s.