Worcester YWCA's Unique TIF Request Heads To City Council

WORCESTER, MA — The Worcester City Council on Feb. 25 will begin discussions on the city's newest tax-increment financing (TIF) deal. This time it's for the under-renovation YWCA building along Salem Street.

But the YWCA's TIF request is a little unusual compared to other projects in the city.

TIF deals typically go to for-profit companies that are building things like hotels or pie factories. TIFs help companies save money on property taxes while they spend big on construction and hiring.

The YWCA of Central Massachusetts broke ground on a $26 million renovation of its mid-century building on Jan. 9. The YWCA needs a federal historic tax credit to pay for the project, but those credits aren't available to nonprofits.

In late 2019, the YWCA transferred ownership of its building to a for-profit LLC so it could get the federal tax credits. But when the renovation is done in late 2020, the organization's Salem Street building will be worth about $20 million, according to city documents.

The YWCA can't afford to pay property taxes on such a valuable building, so it needs a TIF from the city. Officials are proposing an eight-year TIF, saving the YWCA about $5.9 million in property taxes over that period.

The LLC will be on the hook for some property taxes during the eight years the TIF is in the place. The assessed value of the building will be about $703,000 in 2021, and will increase by an estimated $20,000 each year until the TIF ends. Over eight years, the YWCA's LLC will pay about $215,000 in property taxes. After the TIF period is over, the nonprofit YWCA will resume ownership and the building will come off the tax rolls.

The renovation will result in 146 jobs staying at the YWCA, and the creation of up to five new full-time jobs that pay about $34,000 per year, according to city documents. The YWCA also signed a Community Benefits Agreement, which sets minimum requirements for hiring women and people of color. The YWCA has also agreed to hire an all-union workforce for the project.

The YWCA of Central Massachusetts was founded in 1885, and was originally housed in a building at 352 Main St. The Salem Street facility was built in 1960 and was last renovated in 1991. The renovation should be complete December, and the building will remain mostly open during the work.

The YWCA TIF will be before the City Council Economic Development Committee on Feb. 25 at 5 p.m.