Worcester Hit Polar Park Development With Noncompliance Letter

WORCESTER, MA — The developers behind a major Polar Park-adjacent residential project failed to report workforce data to the city for several months, resulting in a warning that the project was in violation of an agreement governing tax breaks, documents show.

The South of Madison, or SOMA, development broke ground over the summer, but did not report hiring data in October, November or December. Chief Development Officer Peter Dunn said Worcester sent the contractor, Milford-based Plumb House, a noncompliance letter in December after it failed to submit the reports.

City officials were still trying to get the reports by mid-January, internal emails show. Part of the delay was due to Plumb House having to hire a person to keep track of hiring statistics, the emails said.

Sarah Badway, a manager at Plumb House, declined to comment about the figures, deferring to the developer, Boston-based Madison Properties LLC. A representative did not respond to a request for comment.

Development projects in Worcester that get tax breaks — called either TIFs or TIEs — are subject to a city policy that sets hiring goals for construction workers. When Plumb House did send the reports to city officials, data showed the project was below goals for all demographic groups.

As of the end of December, the SOMA project was 17.4 percent toward its goal of hiring 38 percent workers of color, 7.8 percent toward a goal of hiring 50 percent Worcester residents and 1.8 percent toward a goal of hiring 10 percent women, according to the reports.

New Targets Coming

The Worcester Community-Labor Coalition began pushing for a TIF policy with wage and workforce targets in 2016. After a 2019 study about workforce disparities in Worcester, the city updated the policy with new hiring targets.

Dunn said the city in January started a new workforce study with the UMass Donahue Institute. The city expects to complete the study in June, which will lead to another update of hiring targets in the TIF policy.

Construction projects have trouble hitting the hiring targets for a variety of reasons, Dunn said. One reason is the labor market in the Worcester area. And in some cases, general contractors will choose subcontractors that may not be near the city, hurting the local hiring goal.

With the SOMA project, Dunn said the city wants to see a meaningful effort toward the hiring goals, even if the project doesn't ultimately hit them all.

"It's really about demonstrating those meaningful efforts to get there," Dunn said.

Many Worcester developments have fallen short of construction hiring goals.

The new Table Talk headquarters, the Chatham Lofts and a project renovating the Elwood Adams building were all below hiring goals for women and Worcester residents, according to a report submitted March 1 to city council. On the other hand, Elwood Adams and the Chatham Lofts both exceeded targets for hiring 10 percent workers of color.

No recently completed project has met or exceeded every hiring target. Polar Park fell short on a goal of hiring 25 percent Worcester residents, and a goal of hiring 7 percent women. The YWCA renovation was the only one to exceed hiring quotas for Worcester residents — although that project used Worcester County residents instead of solely city residents. The YWCA project, managed by Jody Staruk of Milford-based Consigli Construction, had the highest number of women hired of any recently completed project: 9 percent women workers against a 10 percent goal.

(The quasi-governmental Worcester Redevelopment Authority built Polar Park, so the project was not subject to the TIF policy. The WRA used state Division of Capital Asset Management and Maintenance standards for the project instead.)

District 1 Councilor Sean Rose, who helps oversee tax incentives as chair of the Economic Development Committee, said Worcester has one of the most aggressive TIF policies in the state. The high targets combined with fluctuations in the local labor pool can be barriers to reaching goals, he said.

"We want to make sure there are opportunities for people even if there are hiccups as the process evolves," Rose said. "These are goals we hope everybody will strive for."

Tax Break Not Assured

SOMA — a seven-story, 228-unit building — is one piece of the Ballpark District, a multi-building development whose future property tax revenues will pay back the $160 million Worcester borrowed to build Polar Park. Other buildings planned for the site include a hotel, life sciences building, an office building and a second residential building, all by Madison Properties.

Once construction on SOMA is complete, the project's tax incentive plan will kick in. Madison Properties is up for a 15 percent property tax bill discount over the first five years, 20 percent in the second five years and a 25 percent exemption until the plan's expiration in 2037.

It's possible, although unlikely, the city would revoke the tax incentive plan if the construction portion doesn't follow the TIF policy. The project is also subject to reporting and compliance standards for the entire life of the tax incentive plan. In 2020, the insurance company Unum appeared to be in jeopardy of losing a TIF for its downtown office building after allowing its workers to go fully remote, removing 400 employees from the building. That TIF has stayed in place, with Unum agreeing to help fill the building.

"It's not just one-tiered approach in evaluating if a project has been successful or not," Dunn said. "You could be doing fairly well in one or two of the goals. We have to try to look at the whole project."

At a groundbreaking in July, Madison Properties representatives said the building would take between 18 and 24 months to complete. The development received a $57 million financing package led by Rockland Trust in February, but Dunn said the latest he's heard is a completion date sometime in 2023, leaving nine months or longer for improvements in hiring targets.