Taxes on each of Boehringer’s expansions ramps up until it is completed — then taxes are cut significantly for seven years.
As a series of enormous construction projects at Boehringer Ingelheim winds down, tax revenue from the buildings is ramping up — for now.
Boehringer’s growth will provide close to $1 million in added revenue for the town in the next budget year. But much of that value will disappear from the tax rolls the following year — 2015-16 — under a tax abatement agreement that lasts seven years.
First Selectman Rudy Marconi recalled Assessor Al Garzi describing the steep rise and sudden fall of tax revenue as “some really great, bad news.”
Far and away the town’s biggest taxpayer, Boehringer is nearing the end of what town officials have described as a multi-year expansion worth $500 million in construction and new equipment, with $380 million in Ridgefield and another $120 million on the Danbury side of its Ridgebury research and manufacturing campus.
Since the expansion began in 2006, the pharmaceutical firm’s employment is up 26% and its tax assessment is close to $224 million on Ridgefield’s new October 2013 grand list — nearly as much as the combined assessments of all nine other property owners in the top 10 taxpayers.
“Boehringer Ingelheim is a great corporate partner for this community,” Mr. Marconi told the selectmen’s Feb. 19 meeting. “The economic development, the tax income, is quite positive for future years.”
Boehringer’s expansion is responsible for nearly half of the $81-million increase in the town’s tax base on the new grand list — and so, $1 million of the roughly $2 million in added revenue for next year’s 2014-15 budget.
But that revenue will decline sharply as abatements kick in and assessed value falls off town books by the hundreds of millions. Abatements are for 85% of each building’s assessed value, and each one lasts seven years — with the building taxed at 15% of assessed value during that time.
In a quirk, the buildings are taxed during construction, rising to near full value the last year before dropping 15% for seven years when construction is completed and the abatement starts. Some have already started.
Here’s a project-by-project look at the overall construction program, including the taxes each building pays at full assessed value, the lower amount of annual taxes under the seven-year 85% abatements, and the years abatements start and are due to end. (Dollar figures, provided by the assessor’s office, are rounded off.)
• Child Care Facility (day care for employees’ children), 18,329 square feet. Full tax bill $51,000 a year; abated to 15%, $9,000. Completed in 2007, abatement runs 2008-09 to 2015-16.
• Building 10 (research and development labs and offices), 99,786 square feet. Full tax bill $400,000, abated to $60,000. Completed 2009, abatement runs 2010-11 to 2017-18.
• Utility relocation project and site improvements for Building 10. Full tax bill: $94,500, abated to $14,500. Abatement runs 2010-11 to 2017-18 fiscal year.
• Building 8 (research and development labs and offices), 24,000 square feet. Two projects undertaken. First project — remodel level three, add level four, build shell of level five: annual taxes $79,000, abated to $12,000. Abatement runs 2013-14 to 2020-21. Second project — finish level five, later this year: full taxes $40,000, will abate to $6,000. Abatement runs 2015-16 to 2022-23.
• Pilot Plant Replacement Building (production of limited quantities of new drugs for testing), 64,800 square feet in Ridgefield, 6,500 square feet in Danbury. Full Ridgefield tax bill: $559,000, abated to $84,000. Abatement runs 2015-16 to 2022-23.
• Safety Assessment Building (state-of-the-art labs for non-clinical safety studies and research), 63,000 square feet. Full taxes $400,000 a year, will abate to $60,000. Abatement will run 2015-16 to 2022-23.
• Parking lot project. Full taxes: $6,200, abated to $900. Abatement runs 2014-15 to 2021-22 fiscal year.
When town officials worked with the company nearly a decade ago on the seven-year tax abatement agreement — and Town Meeting voters approved — the goal was to keep Boehringer and its expansion in Ridgefield.