The official narrative and the real story
Readers might feel that this should be a time for me to take a victory lap. The GE Boston deal that I criticized from the moment it was made public in January 2016 has crashed to Earth a bit over three years later. The now-failing multinational has pulled the plug on its much-hyped and publicly funded world headquarters campus on Fort Point Channel. No new jobs—executive or otherwise—are likely to be created in its much-reduced Boston presence. The major local news media that cheered on the project have fallen silent. Mission accomplished for my colleagues and me at the Boston Institute for Nonprofit Journalism and DigBoston, right?
But there’s nothing to celebrate. The public is still largely in the dark about an accord that may yet cost Boston and Massachusetts millions by the time the dust settles. The government and corporate officials that cut the deal are thus far being allowed to walk away from the near-disaster unscathed. And GE itself is still being treated with kid gloves by most observers.
So at this juncture, it’s worth comparing the official narrative of the GE Boston deal to as much of the actual story as I’ve been able to discern to date over the course of a dozen heavily researched columns. Before moving on to suggest some political reforms to stop such a pact from ever being tried again by local pols and their cheapskate capitalist bedfellows.
Naturally, the official account pushed by GE and its allies in government and media is the simpler of the two. And it goes like this: Once upon a time, a megacorp called General Electric got tired of having its world headquarters in boring suburban Connecticut and decided to move the facility to somewhere super hip and awesome. In 2015, it put the word out about its plans to select government leaders and was gratified to find that Mass Gov. Charlie Baker and Boston Mayor Marty Walsh were willing to offer it an extremely generous package of incentives to move to our “city upon a hill.”
After months of hush-hush negotiations [like little kids at a pajama party, you see], the company agreed to build a new HQ in Boston and create 800 jobs there in exchange for $120 million from the state and $25 million from the city. An appropriate plot of land was identified in the Fort Point neighborhood and GE pledged to build an awesomely groovy complex on it—with a corporate logo that would be visible from space! And, like, a helipad! Everyone that mattered agreed that this was a most excellent use of public money, and all was well and right with the world. The project was on track for completion by 2019, new jobs were on the way, billions of dollars were expected to flow into the Greater Boston economy, and the governor and mayor were lauded as heroes.
Sadly, GE had business troubles soon after the deal and started selling off major divisions to stay afloat. It went through a couple of changes in leadership, and gradually downsized its plans for Boston. Finally, this month, the ever-thoughtful and munificent concern announced that it would not be building its new tower and would sell the Fort Point property—that it had bought in tandem with the Commonwealth in a totally normal way that’s done all the time—using the proceeds from the sale to reimburse state government. And leasing back the two old NECCO buildings on the site that the state had refurbished for its use from whichever developer ended up buying it. Only 250 jobs would end up in Boston, but the city and state would be none the worse for wear since the original jobs creation contract would be scrapped, and there would still be a significant GE presence in the area. Plus, bonus (!), the company would still keep its promise to donate $50 million to Boston Public Schools, community health programs, and “diversity training programs.”
Aw, isn’t that nice? Because fairy tales usually are. But here’s what we know of the real story. In June 2015, the state of Connecticut passed a temporary tax slated to raise $700 million from major corporations like GE to help improve a variety of useful social programs with an emphasis on public transportation. GE’s famously anti-tax leadership immediately decided to move out of the state to any locale that would dump huge amounts of public lucre on it—and wouldn’t mind its screwing the people of Connecticut by pulling up stakes. Very soon after that, Gov. Baker and Mayor Walsh made it known that they were just the kind of politicians willing to do anything it took to get more big companies to move to Boston.
The aforementioned secret negotiations took place, despite the fact that such a hidden process was profoundly undemocratic and of questionable legality. However, it was not so secret a process that government and corporate officials couldn’t prepare the PR ground hereabouts by dropping early hints to their special friends in the press.
And so it was that on Dec 11, 2015, Boston Globe columnist Shirley Leung wrote one of the most disgusting pieces in the history of the Hub news industry**—literally begging then-GE CEO Jeff Immelt to screw Connecticut and come to Massachusetts where our “fiscally conservative” governor would never trouble him with anything so gauche as taxation in the public interest. One of the first of a series of boosterish articles from Leung, some of her more pliant co-workers, and the Globe editorial board, that completely abandoned journalistic integrity in favor of cheerleading for a corporation that had quite literally laid waste to large swathes of the Bay State over the previous half century. Destroying tens of thousands of good, largely unionized jobs in cities like Pittsfield, Lynn, and Fitchburg while turning the northwest corner of the Commonwealth into an ecological disaster area. And later helping set off the subprime mortgage scandal that destroyed the lives of thousands of Mass homeowners and then the lives of tens of thousands more during the Great Recession that ensued in 2008. Also defrauding Mass communities for millions in a municipal bond fraud conspiracy in the same period.
When the deal was first announced, the incentive package of $120 million from the state and $25 million from the city was only discussed in broad strokes. A few days hence, when the five-page agreement between the parties was published in the Globe, it turned out that the city had also committed to spend $100 million to repair the old Northern Ave bridge to improve traffic to the GE site and the state had committed $25 million for improvements to “streets, transit, bikeways, and water transportation service” around the proposed headquarters. For a potential total of $270 million in government funds. A figure that the project’s many boosters now seem content to forget. To be lavished on one of the biggest tax scofflaws in the world. GE being a company that actually paid negative federal income tax—that is, got big refunds—some years.
There were a few small protest actions against the GE Boston deal in this period by a coalition of left activists. But nothing on the order of the popular movement that had shut down the city and state attempt to bring the Olympics to Boston the previous year—much to the chagrin of the Boston Globe. Which had also flacked for that attempted exercise in corporate welfare. This time the coalition of the willing—comprised of all the major institutions of the regional ruling class from local and state government to that same “newspaper of record”—worked overtime to forestall any attempt to shut down GE’s plans. By quite literally acting in concert with the company’s PR department. And it worked like a charm.
By the time the Fort Point land deal went through later in 2016, the protest campaign had mostly evaporated. And the more or less final terms of the GE site purchase gradually became clear. Byzantine though they were. GE and MassDevelopment—“the Commonwealth’s economic development and finance authority,” according to its website—jointly bought a 2.7-acre (although other figures were initially reported) plot from Procter & Gamble. Part of the consumer goods giant’s manufacturing center for its once-independent Gillette brand. According to the Boston Globe, GE paid $25.6 million for what would become the site of its new 12-story building, and MassDevelopment paid $57.4 million for the roughly one acre of the plot that had the two former NECCO buildings on it. Overall about $90 million of the state’s promised $120 million was to go into MassDevelopment’s purchase and refurbishing of the two buildings—which GE was to be allowed to occupy for 20 years rent free. About $30 million of that state aid would go to improvements around the headquarters site. And another $5 million was tacked onto the state contribution ($125 million overall) to cover the cost of the deal itself.
The $25 million in city money was to come in the form of tax breaks between 2019 and 2037 through a Payment in Lieu of Taxes (PiLoT) contract with GE in exchange for the creation of 800 jobs at its new headquarters. Which I then proved was in fact as few as 400 jobs—since other reporters and observers apparently couldn’t be bothered to actually read the fairly short PiLoT terms. Not much of a “deal” at all upon taking a careful look behind the spin. City and state government colluded with a major multinational that didn’t need public money of any kind to bring 200 executive level jobs from its former Connecticut headquarters plus maybe another 200-600 more high-level jobs—most of which would absolutely not go to the Mass working class that desperately needed them. But instead to highly educated people from all over the world that GE recruited to join its leadership team.
Fast forward to several days ago, and the deal has disintegrated. As GE’s fortunes fell over the past two years, the company ultimately decided to put a spike in the idea of the grand Boston headquarters campus and call off the city PiLoT contract before it starts. In recent weeks, company and state officials have agreed to jointly sell the entire Fort Point site to a commercial developer. Since real estate prices in the neighborhood have risen sharply in part due to the much-ballyhooed scheme, it’s expected that GE will easily make enough to pay back the $87.4 million it has cost the state (via a $90 million Citizens Bank revolving loan) to buy and refurbish the NECCO buildings. And GE and the state will split any profits over that 50-50. Which will possibly be large enough for the company to make back the money it spent on the rest of the former P&G plot.
As part of the revised deal, GE is expected to negotiate a 10-year lease on the NECCO buildings from its future owner. Meaning that it only plans to have a headquarters in Boston for half the time it had previously committed to. And only 250 employees will work in the buildings. Oh, but GE will keep its promise to donate $50 million to the BPS, community health, and diversity programs. Which sounds impressive until you read my column on a similar move by Vertex, and realize that the lumbering behemoth is only promising to basically take $10 million a year for five years out of its marketing budget and “donate” it. Thus generating more local brand loyalty than any ad campaign could ever get them.
In Part II of this column: how Mass residents can stop this kind of deal from ever happening again.
**March 6, 2019 Editor’s Note: The link to the article by the Boston Globe‘s Shirley Leung referenced above led to an active page when this column was first posted on February 28, 2019. But in the week since this column was published the Globe appears to have taken the page down. A version of the article still exists behind a paywall on a different page on the Globe site. But rather than force DigBoston readers to pay for the privilege of reading it, we just found the piece live on the Internet Archive’s Wayback Machine, and now post its link here in the public interest: