City Hires Outside Counsel to Sue State after Exelon Prevails in TIF Case

By Seth Daniel

Following a December ruling from the state’s Economic Assistance Coordinating Council (EACC) that did not go Everett’s way on the Exelon Tax Incremental Financing (TIF) agreement case, the City has now hired outside counsel to try to strip the energy giant of its tax break through the court system.

The City has hired Mintz Levin and former Gov. Bill Weld to represent them in the case against Gov. Charlie Baker’s Housing Cabinet, and the EACC which lies within that organization.

Weld did not immediately return phone calls from the Independent for comment, but the crux of the case lies in the fact that Exelon’s property is worth far more than estimated in 2000 when the TIF was granted.

The company that previously owned the facility before Exelon was installing three new gas turbines to generate electricity. They estimated it would add around $600 million in new value. However, they ended up adding $1.3 billion in new value. The City said for so many years the agreement was crafted on faulty numbers, and thus used that rationale to strip the agreement from Exelon last year.

In February 2017, the Council voted to strip the company of the TIF, requesting the EACC to look into the matter.

The EACC did just that, and on Dec. 13, they ruled in favor of Exelon.

Mark Rodgers of Exelon said they were pleased with the ruling.

“The EACC performed a thorough and diligent review of the matter and issued a legally and factually sound decision,” he said. “We are confident the court will uphold EACC determination that Exelon Generation is in full compliance with its TIF agreement with the City of Everett.”

He said Mystic Generating Station has paid Everett approximately $300 million since the start of the TIF in 2000. Exelon Generation’s annual tax payment of $15 million represents approximately 15 percent of the City of Everett’s total tax levy and nearly 60 percent of the tax levy from industrial taxpayers.

“Exelon Generation has a good relationship with the City of Everett, and we look forward to continuing to work together as a responsible business member of this community,” he concluded.

The EACC decision found pretty much in favor of the generating company and its predecessor, Sithe. The decision stated that the company in a TIF must have deviated so substantially that it risks the economic benefit of the project.

That, the EACC concluded, did not happen.

“We do not find that there was a material misrepresentation or variance from Sithe’s certified project application,” read the decision. “For the same reasons, we do not find any deviation from the TIF plan that is so substantial that it constitutes a material misrepresentation to the EACC that jeopardizes the realization of significant economic benefits that provided part of the basis for the EACC’s original approval of the TIF plan.”

In short, they agreed that Exelon has been following the agreement.

As part of the decision, Everett has 30 days to dispute the finding in a court of law.

With the hiring of Mintz Levin, they have exercised that option.

The City referred all requests for comment to Mintz Levin due to it being ongoing litigation.

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