City Council votes to approve Sofia TIF agreement following delays

By Neil Zolot

By a vote of 8 to 3, the City Council approved a 14-year Tax Increment Financing (TIF) agreement with developers Fulcrum Global Investors, now using the name The Sofia 380 Second Street Limited Liability Company, for a planned 620 unit/21-story mixed-use building on the site of a long unused structure that once housed an auto-find company, a Brazilian church and a lift truck service, at their meeting Monday, June 9. “I’m glad it passed,” Mayor Carlo DeMaria said after the meeting. “This is important and will set the tone for Second Street.”

“It’s a positive thing,” Ward 1 Councillor Wayne Matewsky, in whose Ward the site is located, added.

The TIF was a subject of discussion at Council meetings on May 19 and 27. Developers made concessions at each, including paying $2 million directly into the City of Everett’s Affordable Housing Trust Fund, making provisions for local High School students to participate in job fairs and apprenticeship programs, establishing a Tenants Improvements Package loan program for businesses and, responding to a request from Councillor-at-Large Katy Rogers, to not use the word “luxury” in advertisements and descriptions of the building, which she feels has been overused and is elitist.

At those meetings and on June 9, many union members from building trades showed up to voice support for the project, which will have 100% union employees in construction, with preference for Everett residents.

A sticking point was the provision to waive the $3.5 million building permit fee, brought up by Ward 5 Councillor Robert Van Campen. Fulcrum Founder and CEO Scott Brown countered that in addition to the $2 million, Fulcrum will pay for a $3.4 million environmental cleanup on the site and pay for peer reviews for the project. “Money is being redirected,” he said, but Director of Community Planning and Development Matt Lattanzi interjected, “It is a waiver.”

Van Campen, who is said to be planning to run for mayor in this year’s election, brought it up again on June 9, but no changes were made to the provision.

Other concessions were made, the most prominent of which is an annual contribution of $1,224,000 to a Good Neighbor Fund, initially including $300,000 to buy a new ambulance; $250,000 for community organizations to teach English literacy and job preparedness; $180,000 for a police command post/command response vehicle; $140,000 for a sub-fund to assist the elderly in paying real estate taxes; $100,000 each for the School Department and for a Disability Accessible van by the Council on Aging; $60,000 for the police to help purchase digital sign boards; $36,000 for the police for purchasing computers and printers for cruisers, a subject that came up a discussion of the budget with Police Chief Paul Strong on June 2; $30,000 for the police to help purchase public call boxes on bike paths and in high-risk areas; $18,000 for the police to help purchase license plate readers and $10,000 for the police to help fund the 911 disability/elder database.

These items are in a separate document from the TIF. Lattanzi and City Solicitor Colleen Mejia explained that a TIF can’t include provisions to distribute funds and including that or even acknowledgement of a separate document to do so could endanger the legality of the TIF, although it includes a provision that “any costs associated with the creation and/or operation of the Good Neighbor Fund shall be paid out of the Fund itself.” A provision was also added that it be established within 90 days of the Mayor signing the TIF on behalf of the City.

“It’s illegal to transfer tax money, so they’re making a donation,” Council President Stephanie Martins acknowledged.

Her motion to eliminate the names of agencies and organizations that might get money to teach English literacy and job preparedness, suggested by Lattanzi, was approved to allow flexibility in distributing the funds. Another amendment was made to require provisions of the TIF and Good Neighbor Fund be applied to any new owners should Fulcrum sell the property and building.

The $1,224,000 is being deducted from the previously planned $2 million annual payment from Fulcrum to an Affordable Housing Trust Fund. “It’s a reallocation,” Lattanzi explained. “There was no way to allocate more funds. The only way was to transfer funds.”

$2 million minus $1,224,000 is $776,000, but Fulcrum will pay only $620,000 to the Affordable Housing Trust and keep the leftover $156,000.

Everett being Everett, debate was contentious and disorganized at times. There were motions to table the matter — until the details were worked out and incorporated into a document — until later in the meeting, the next regular Council meeting or a special meeting, but the changes were made and approved on the spot. City Clerk Sergio Cornelio admitted he lost track of who was proposing what during the deliberations. “Time is of the essence,” Brown advised.

Councillors at-Large Guerline Alcy Jabouin, Michael Marchese and Stephanie Smith, as usual, voted against the approval. Smith, still unclear on the concept, said she didn’t want to vote on an incomplete agreement and give a developer a tax break in light of needs in the School Department and problems with traffic and trash in the city.

“I have a sinking feeling this is not the right way to do this,” Van Campen added, although he later voted in favor after the amendments were ironed out.

“Are we going to have another three-hour discussion and have it not pass?” Rogers asked rhetorically.

“If it’s done wrong, it’ll come back and we’ll have to discuss the whole thing again,” Councillor at-Large John Hanlon added. “I’d rather not.”

The matter came up for a vote after Matewsky spoke up. “Let’s get it over with,” he said vigorously.

He also asked what was wrong with the word “luxury” being used in the description of The Sofia. Rogers countered, “The developers already agreed not to use it, so why go back on it.”

Afterwards, Mejia said the changes will be incorporated into an agreement for DeMaria to sign. That will be reviewed by the Economic Assistance Coordinating Council in the state Executive Office of Economic Development. Lattanzi added that any changes will be grammatical in nature.

380 Second Street is in an area known as the Commercial Triangle Economic Development District, between Revere Beach Parkway/Route 19 and the Mystic River, bordered by Lower Broadway to the west. A motion by Matewsky to have it renamed “to something more appealable to the neighborhood” was referred to the City Office of Planning and Community Development for consideration.

Other business

In other business, a motion to appoint John Russolillo as Director of Human Resources was referred to the Legislative Affairs Subcommittee, where all new appointments are reviewed before full Council action. A motion by Martins and Rogers requesting the federal Immigration and Customs Enforcement (ICE) agency to not use municipal parking lots, including school and police areas, which was also a subject of a recent discussion with Police Chief Paul Strong, was sent to the Police Department for consideration.

Statement below offered by Mayor DeMaria on The Sofia TIF Agreement approved by the City Council:

“I have been working with the proponents of The Sofia since 2022 as part of my commitment to bring diverse projects to Everett to help generate new revenue and replace run down properties with cleaner projects that represent better and higher uses of parcels in our community. I filed with the City Council a proposed Tax Increment Financing (TIF) agreement for the project that I believed was reasonable based on an independent third-party verifying on behalf of the city that this type of agreement was appropriate given the overall financials of the project.

The TIF I submitted to the Council would have the owners of the property pay on average over the course of the 14 years of the agreement, over $600,000 per year in taxes, which is an 800% increase over the $67,000 a year that the previous blighted industrial use of the property generated. After the TIF expires, the owner will pay over $3M a year in taxes. This is a significant increase in tax revenue to the city in both the short and the long term. I also negotiated that all the work on the project would be completely done by union labor, which will create 1,342 jobs with a commitment secured from the unions that Everett union members will receive preference for those spots.  The property owner also will pay for and complete a full-scale reconstruction of Garden Street Extension at a cost to them of approximately $3,000,000.

The agreement I presented to the City Council would increase revenue, use private funds to clean up the former industrial site and make infrastructure improvements to the area, and create jobs for Everett residents. With those benefits already presented to them, it’s not clear why the Council President felt the need to save the developer an additional $156,000 in project costs by diverting what otherwise would be tax revenue for the city into a fund that she specifically is trying to control.  That language would require funds to be diverted into a special fund rather than be available for the most pressing needs of the city. The language is concerning because it creates the opportunity for the Council President to spend revenue without the checks and balances that are required under municipal finance laws. Additionally, it’s not clear why the Council would think that reducing linkage fees that are specifically dedicated to addressing our affordable housing crisis should be diverted to projects that could be paid for by outside grants and established revolving funds.”