But in Fairfield, Connecticut, high-end shopowners and restaurateurs said they were worried about a loss of business after GE, the town’s largest property taxpayer, moves out.
The maker of products ranging from jet engines to high-tech medical devices said on Wednesday it would be moving 800 headquarters staffers out of Fairfield, over two years beginning this summer, in a blow to the wealthy town.
Its new home will be Boston’s fast-growing Seaport District. Once filled with parking lots and aging warehouse buildings not far from where Bulger killed his rivals, the neighborhood is now a hive of construction.
Tech startups including car-sharing company Zipcar Inc and software company LogMeIn have already moved into the area, across the Fort Point Channel from the city’s financial district that is home to fund giants including Fidelity Investments and State Street Corp.
“We’re talking about an area that was once just parking lots. GE is going to have an opportunity to reshape Boston in a really positive way,” said John Gallaugher, an associate professor at Boston College’s Carroll School of Management.
GE began mulling leaving its headquarters of four decades in suburban Fairfield, about 60 miles (100 km) northeast of New York City, last year. Officials cited high taxes as a main concern. The company looked at cities including New York, Atlanta and Providence, Rhode Island, according to media reports.
“General Electric‘s choice to move to Boston is the result of the city’s willingness and excitement to work creatively and collaboratively,” said Boston Mayor Martin Walsh on Wednesday.
Together the state and city offered up to $145 million in financial incentives including property tax breaks to help seal the deal, officials said.
After decades of seeing some of its biggest corporate residents bought up by out-of-state companies, such as the former Fleet Bank, now owned by Bank of America Corp and Gillette’s purchase by Procter & Gamble Co, Boston business leaders said they were glad to see one of the world’s largest companies move its headquarters in.
“This could be a harbinger for the future with other blue chip companies taking a hard look at moving here,” said John Fish, chief executive officer of Suffolk Construction Company, New England’s largest building company.
‘HIT IN THE GUT’
GE has long been the largest company located in Fairfield County, home to some 945,000 people, which stands out as wealthy even in one of the more affluent U.S. states, according to U.S. Census data.
Median income in the county stands at about $82,283, above the state median of $69,461, and the median owner-occupied home was worth about $432,100 last year, more than double the $176,600 nationwide median.
The company currently pays $1.6 million in annual property taxes to the town, said Fairfield First Selectman Mike Tetreau, the town’s top elected official. If GE sells its campus, with an assessed value of $74.7 million, the new owner would be responsible for the same bill unless it is a charitable entity.
“Where it’s less quantifiable is all the other areas – the volunteer hours from GE employees, the shopping they do in Fairfield, the dining out,” said Tetreau. “That’s harder to quantify but has a real impact.”
Small business owners in Fairfield expressed concern.
“This move by GE will change Fairfield dramatically. I don’t know how the town will recover,” said Michael Sussman, 58, part of the family that owns Fairfield Center Jewelers.
A block away, Patrick Tennaro, owner of the Old Post Tavern, said he was shocked at the move, but not surprised.
“The taxes are far too high,” said Tennaro, 40. “For the town of Fairfield, this is a disaster.”
GE’s move could have a wider effect if it inspires other large companies to move out of Connecticut, experts said.
“This is a real hit in the gut for Connecticut,” said Don Gibson, dean of the Dolan School of Business at Fairfield University.
Connecticut Governor Dannel Malloy, whose office had been aggressively lobbying GE to stay, admitted disappointment, though he noted some GE units will remain behind.
“We are disappointed, and we know that many in Connecticut share that frustration,” Malloy said, a day after basking in the national spotlight when he was invited to sit next to First Lady Michelle Obama at the State of the Union address.
The loss should drive Connecticut officials to rethink the state’s tax rates, which are by and large above those of its neighbors, residents and experts said.
“This is bad for Malloy and it doesn’t reflect well on the state,” said Richard Grossman, a professor of economics at Connecticut’s Wesleyan University. “They have to have a tax environment that is at least as good as Massachusetts.” (Additional reporting by Svea Herbst-Bayliss in Boston and Megan Davies and Ed Krudy in New York; Editing by Andrew Hay)