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COMMENWEALTH LABS
In City Council April 28, 2016
RESOLUTION
WHEREAS, Commonwealth Diagnostics International, Inc. (hereinafter "CDI") wishes to
purchase and redevelop the building located at One Holyoke Square, Salem, MA, known
as Assessor's Parcel ID 25-0574 into a corporate headquarters with life sciences
manufacturing and office space; and
WHEREAS, the City of Salem (hereafter "CITY") is willing to grant tax concessions in
return for a guarantee of the purchase One Holyoke Square in Salem, and redeveloping
it into a +/- 52,000 sq. ft. corporate headquarters with life sciences manufacturing and
office space, and the creation of employment opportunities for local workers; .
NOW, THEREFORE, BE IT RESOLVED that the Salem City Council hereby
• Endorses the use of Tax Increment Financing as a tool to encourage economic
development at One Holyoke Square, and;
• provides for a tax exemption at One Holyoke Square for a period of five (5) years,
beginning the first full fiscal tax year after Certificate of Occupancy is issued for
the new building at One Holyoke Square in Salem in accordance with the
schedule below:
Term Exemption %
1 100%
2 80%
3 60%
4 40%
5 20%
Said exemption being in accordance with M.G.L. Chapter 23A, Section3E, Chapter 40,
Section 59, Section 5.
BE IT FURTHER RESOLVED that the Mayor is hereby authorized; on behalf of the City, to
enter into a Tax Increment Financing Agreement, a copy of which is attached hereto,
with Commonwealth Diagnostics International, Inc.
In City Council April 28, 2016
Referred to the Committee on Administration and Finance co-posted with Committee of
the Whole
In City Council May 12, 2016
Adopted by a roll call vote of 9 yeas, 2 nay, 1 absent
Approved by the Mayor on May 16, 2016 �� p Q XX_. �1—
ATTEST: CHERYL AV LAPOINTE
CITY CLERK
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City of Salem
b Yea and Nay Vote of City Council
Upon the Question of
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Yea Nay, Pres. Absent
Date 757'h 2016
Ste hen Dibble
David W.Eppley
Heather E. Famico 3
Thomas H. Furey
Beth Gerard 1/
Stephen P,Lovely '
Robert K.McCarthy
Elaine F.Milo 1
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Jerry L.R an $
Arthur C Sar en4 III
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Josh H.'Tunel` "
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City of Salem
Yea and Nay Vote of City Council
Upon the Question of
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Date S/� . 2616
Stephen Dibble u
David W. Eppley L
Heather E. Famico-
Thomas H. Furey
Beth Gerard
Ste hen P.Lovely
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Robert K Mcearth
Elaine F.Milo
Jerry L.Ryan
Arthur C. Sar'ent,
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CCITY CLERK
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CYN OF SALEM, MASSACHUSETTS
Kimberley Driscoll
Mayor
April 28, 2016
Salem City Council
Salem City Hall
93 Washington Street
Salem, MA 01970
Ladies and Gentlemen of the Council:
I am writing to request that you authorize tax increment financing for Commonwealth
Diagnostics International, Inc. (CDI), which is purchasing the former Holyoke Mutual Fire
Insurance Company building located at One Holyoke Square in Salem. Tax Increment
Financing(TIF)is an economic development tool used to create jobs and encourage business
expansion. With a TIF, the City grants property tax exemptions of up to 100 percent of the
increased property value, or increment, due to investment in the property for a specific period
of time. In this case, it is proposed that the TIF be for a period of five(5)years.
CDI is an unaffiliated spin-off of Commonwealth Laboratories, Inc., which is known
for the breakthrough technology IBSchek, a blood test designed to help physicians quickly and
reliably diagnose irritable bowel syndrome (IBS). In June, 2015, Valeant Pharmaceuticals
International, Inc. acquired Commonwealth Labs' business rights in the United States and
Canada. Commonwealth Labs' remaining portfolio is now offered outside of the United
States and Canada by CDL
CDI plans to purchase the +/- 54,000 square foot Holyoke Mutual Facility at One
Holyoke Square for $3.9M, and to invest an additional $1.2M in renovations, representing a
$5.1M total investment. The building will become CDI's corporate headquarters with both
life sciences manufacturing and office space.
Today, CDI has approximately 50 full-time employees in Salem. The company plans
to increase that by between 20 and 50 employees over the next three years and reasonably
expects to create a total of 100 new full-time jobs within five years of operations.
F.
The Assessor estimates that the anticipated investment in the building will increase the
property value by $800,000. The TIF, over five years, would provide a tax exemption of a
projected $70,920 on this incremental assessed value according to the following schedule:
Exempted
Incremental Property Estimated Estimated Total
Term Year Exemption Assessed Taxes on Property Base Tax Annual
Value Increased Taxes Bill Taxes Paid
Value
1 100% 0 $23,640.00 $0.00 $121,276.16 $121,276.16
2 80% $160,000 $18,912.00 $4,728.00 $121,276.16 $126,004.16
3 60% $320,000 $14,184.00 $9,456.00 $121,276.16 $130,732.16
4 40% $480,000 $9,456.00 $14,184.00 $121,276.16 $135,460.16
5 20% $640,000 $4,728.00 $18,912.00 $121,276.16 $140,188.16
6 0% $800,000 $0.00 $23,640.00 $121,276.16 $144,916.16
Total $70,920.00 $70,920.00 1 $727,656.96 1 $798,576.96
The TIF would begin during g the first fiscal year after the project i
s completed. CDI
would continue to pay property taxes at 100% of the full base value of the property
throughout the life of the TIF.
CDI's planned investment will do much to strengthen and broaden Salem's economy
by providing well-paying life sciences jobs and increasing the city's downtown workforce
population. The building improvements will also provide additional tax revenue to the City.
For these reasons I ask that you support this proposed TIF and authorize the execution of .
the enclosed TIF agreement.
Sincerelbui
0(
Kimberley Driscoll
Mayor
City of Salem
RESOLUTION
WHEREAS, Commonwealth Diagnostics International, Inc. (hereinafter "CDI") wishes to
purchase and redevelop the building located at One Holyoke Square, Salem, MA, known
as Assessor's Parcel ID 25-0574 into a corporate headquarters with life sciences
manufacturing and office space; and
WHEREAS, the City of Salem (hereafter "CITY") is willing to grant tax concessions in
return for a guarantee of the purchase One Holyoke Square in Salem, and redeveloping
it into a +/- 52,000 sq. ft. corporate headquarters with life sciences manufacturing and
office space, and the creation of employment opportunities for local workers;
NOW, THEREFORE, BE IT RESOLVED that the Salem City Council hereby
• Endorses the use of Tax Increment Financing as a tool to encourage economic
development at One Holyoke Square,.and;
• provides for a tax exemption at One Holyoke Square for a period of five (5) years,
beginning the first full fiscal tax year after Certificate of Occupancy is issued for
the new building at One Holyoke Square in Salem in accordance with the
schedule below:
Term Exemption %
1 100%
2 80%
3 60%
4 40%
5 20%
Said exemption being in accordance with M.G.L. Chapter 23A, Section3E, Chapter 40,
Section 59, Section 5.
BE IT FURTHER RESOLVED that the Mayor is hereby authorized, on behalf of the City, to
enter into a Tax Increment Financing Agreement, a copy of which is attached hereto,
with Commonwealth Diagnostics International, Inc.
F
TAX INCREMENT FINANCING AGREEMENT
CITY OF SALEM,MASSACHUSETTS
and
COMMONWEALTH DIAGNOSTICS INTERNATIONAL, INC.
This agreement is made this day of , 2016 by and between the CITY OF SALEM,a municipal
corporation duly organized under the laws of the Commonwealth of Massachusetts,having a principal place of business at
City Hall, 93 Washington Street, Salem,Massachusetts, 01970, acting through the Mayor Kimberley Driscoll (hereinafter
called"the CITY") and Commonwealth Diagnostics International, Inc., a Massachusetts corporation with a principal place
of business at 39 Norman Street, Salem,MA 01970(hereinafter called"the COMPANY"). The base year for this
Agreement will be FY2016. The exemptions associated with this Agreement will take effect upon the COMPANY's
receipt of a permanent certificate of occupancy for improvements made to the BUILDING. For exact location of site,
refer to Attachment"Exhibit A."
WHEREAS, the COMPANY wishes to acquire and redevelop the+/- 54,000 square foot former Holyoke Mutual Fire
Insurance Company building at One Holyoke Square in Salem; and
WHEREAS, the CITY is willing to grant tax concession in return for guarantee of the purchase and redevelopment of the
+/-54,000 square feet office building into a new corporate headquarters for the COMPANY and the creation of
employment opportunities for local workers; and
WHEREAS, the Salem City Council resolved on 2016,to allow the use of Tax Increment Financing as a
tool to encourage economic development at One Holyoke Square in Salem; and
NOW, THEREFORE, in consideration of the mutual promises contained herein,the parties do mutually agree as follows:
A. THE COMPANY'S OBLIGATIONS
1. The COMPANY shall purchase and renovate a+/- 54,000 sq. ft.building at One Holyoke Square in Salem(herein
after"the BUILDING"). The BUILDING is identified as Salem Assessor's Parcel ID 25-0574. For an exact
location of the BUILDING,refer to Attachment, "EXHIBIT A."
2. During the life of the Agreement,if the COMPANY decides to sell the BUILDING or the business or to
otherwise transfer control of the BUILDING or business and/or operations thereof,the COMPANY shall give the
CITY at least three months written notice of said sale or transfer. Said notice shall be given by certified mail,
return receipt requested,to the Mayor, City Hall, 93 Washington Street, Salem,Massachusetts, 01970.
B. THE CITY'S OBLIGATIONS
1. The CITY shall grant a tax increment financing exemption to the COMPANY in accordance with Massachusetts
General Laws, Chapter 23A, Section 3E, Chapter 40, Section 59, and Chapter 59, Section 5. Said exemption shall
be granted on the improvements to the BUILDING. Said exemption shall be valid for a period of Five(5)years,
beginning with the first fiscal year that the COMPANY receives a permanent certificate of occupancy for the
improvements made to the BUILDING. For the purposes of this AGREEMENT,the base value of the TIF will be
the FY2016 assessed value of the BUILDING. The FY2016 assessed value of the BUILDING at One Holyoke
Square is $3,582,000. During each year of this Agreement, the COMPANY will pay taxes based on the portion of
the value of the BUILDING which is not exempt under this Agreement.
2. The exemption schedule on the value of the BUILDING works as follows: for each of the Five(5)years of this
AGREEMENT, the COMPANY will pay taxes on a percentage of the value of the BUILDING and be granted an
exemption of a percentage of the full value of the BUILDING. In Year six (6),the COMPANY will pay taxes on
the full value of the BUILDING.
YEAR EXEMPTION
Year 1 100%
Year 2 80%
Year 3 60%
Year 4 40%
Year 5 20%
C. OTHER CONSIDERATIONS
1. This Tax Increment Financing Agreement shall be binding on all subsequent owners of the property. The CITY
reserves the right to review and negotiate the Tax Increment Financing Agreement if the business activity ceases
to be fully operational during the life of the Tax Increment Financing Agreement.
2. If the COMPANY decides to expand the BUILDING at any time during the life of the Tax Increment Financing
Agreement, the CITY and the COMPANY may renegotiate the Tax Increment Financing Agreement to exempt
all or part of the expansion from property taxes. The exact amount of that exemption will be determined at the
time of the expansion.
Executed as sealed instrument on the day and year first above written.
CITY OF SALEM COMMONWEALTH DIAGNOSTICS INTERNATIONAL, INC.
Kimberley Driscoll,Mayor Brian Strasnick,President&Chief Executive Officer
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EXHIBIT A
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Unofficial Property Record Card http.'fsalem.patriotproperties,com'RecordCard.asp
Unofficial Property Record Card - Salem, MA
General Property Data
Parcel ID 25-0574-0 Account Number '
Prior Parce11O —
Property Omer HOLYOKE MUTUAL FIRE UIS CO Property Location 1 HOLYOKE SQUARE
Property Use Office
Melling Address 1 HOLYOKE SQUARE Most Recern Sale Date 111/1900 -
Legal Reference 2995.306
City SALEM Grantor
Melling State MA ZIP 01970 Sale Price 0
Parcell Ming 86 Land Area 0.766 ewes
Current Property Assessment
Xtra Features
Card 1 Value Building Value 977,900 Value 11500 Land%Blue 609,900 Total Value 1;489,300
Total Parcel Xtra Features
Value Building Value 3,682,000 !Blue 12,200 Land Value 509,900 Total Value 4,104,100
Building Description
Building Style Office Foundation Type Concrete Flooring Type Carpet
sof Living Units 1 From Type Steel Basement Floor NIA
Year Built 1935 Roof Structure Flat Heating Type Steam
Building Grade Good Roof Cover Tar+Grevel Heating Fuel Oil
Building Condition Average Siding Brick Air Conditioning 1001%
Finished Area(SF)18348 interior Mile Plaster #of Bens Garages 0
Number Room 0 9 of Bedrooms 0 9 of Full Baths 0
if of 314 Baths 0 #of 112 Baths 6 #of Other Fixtures i ,
Legal Description
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ljnofficial ProperR'Record Card httpJ;Salem.patriotproperties.coni'RecordCard.asp
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4
TAX INCREMENT FINANCING AGREEMENT
CITY OF SALEM,MASSACHUSETTS
and
COMMONWEALTH DIAGNOSTICS INTERNATIONAL, INC.
This agreement is made this day of Suwe, 2016 by and between the CITY OF SALEM,a municipal
corporation duly organized under the laws of the Commonwealth of Massachusetts,having a principal place of business at
City Hall, 93 Washington Street, Salem,Massachusetts, 01970, acting through the Mayor Kimberley Driscoll(hereinafter
called"the CITY")and Commonwealth Diagnostics International, Inc.,a Massachusetts corporation with a principal place
of business at 39 Norman Street, Salem,MA 01970(hereinafter called "the COMPANY"). The base year for this
Agreement will be FY2016. The exemptions associated with this Agreement will take effect upon the COMPANY's
receipt of a permanent certificate of occupancy for improvements made to the BUILDING. For exact location of site,
refer to Attachment"Exhibit A."
WHEREAS,the COMPANY wishes to acquire and redevelop the+/- 54,000 square foot former Holyoke Mutual Fire
Insurance Company building at One Holyoke Square in Salem; and 4
WHEREAS, the CITY is willing to grant tax concession in return for guarantee of the purchase and redevelopment of the
+/-54,000 square feet office building into a new corporate headquarters for the COMPANY and the creation of
employment opportunities for local workers; and
WHEREAS,the Salem City Council resolved on May 1,2016,to allow the use of Tax Increment Financing as a
tool to encourage economic development at One Holyoke Square in Salem; and
NOW, THEREFORE, in consideration of the mutual promises contained herein,the parties do mutually agree as follows:
A. T14E COMPANY'S OBLIGATIONS
1. The COMPANY shall purchase and renovate a+/- 54,000 sq. ft.building at One Holyoke Square in Salem(herein
after"the BUILDING"). The BUILDING is identified as Salem Assessor's Parcel ID 25-0574. For an exact
location of the BUILDING, refer to Attachment, "EXHIBIT A."
2. During the life of the Agreement, if the COMPANY decides to sell the BUILDING or the business or to
otherwise transfer control of the BUILDING or business and/or operations thereof,the COMPANY shall give the
CITY at least three months written notice of said sale or transfer. Said notice shall be given by certified mail,
return receipt requested,to the Mayor, City Hall, 93 Washington Street, Salem,Massachusetts, 01970.
B. THE CITY'S OBLIGATIONS
{
1. The CITY shall grant a tax increment financing exemption to the COMPANY in accordance with Massachusetts
General Laws,Chapter 23A, Section 3E, Chapter 40, Section 59, and Chapter 59, Section 5. Said exemption shall
be granted on the improvements to the BUILDING. Said exemption shall be valid for a period of Five(5)years,
beginning with the first fiscal year that the COMPANY receives a permanent certificate of occupancy for the
improvements made to the BUILDING. For the purposes of this AGREEMENT,the base value of the TIF will be
the FY2016 assessed value of the BUILDING. The FY2016 assessed value of the BUILDING at One Holyoke
Square is $3,582,000. During each year of this Agreement,the COMPANY will pay taxes based on the portion of
the value of the BUILDING which is not exempt under this Agreement.
2. The exemption schedule on the value of the BUILDING works as follows: for each of the Five(5)years of this
AGREEMENT, the COMPANY will pay taxes on a percentage of the value of the BUILDING and be granted an
exemption of a percentage of the full value of the BUILDING. In Year six (6),the COMPANY will pay taxes on
the full value of the BUILDING.
YEAR EXEMPTION
Year 1 100%
Year 2 80%
Year 3 60%
Year 4 40%
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Year 5 20%
C. OTHER CONSIDERATIONS
1. This Tax Increment Financing Agreement shall be binding on all subsequent owners of the property. The CITY
reserves the right to review and negotiate the Tax Increment Financing Agreement if the business activity ceases
to be fully operational during the life of the Tax Increment Financing Agreement.
2. If the COMPANY decides to expand the BUILDING at any time during the life of the Tax Increment Financing
Agreement, the CITY and the COMPANY may renegotiate the Tax Increment Financing Agreement to exempt
all or part of the expansion from property taxes. The exact amount of that exemption will be determined at the
time of the expansion.
Executed as sealed instrument on the day and year fust above written.
CITY OF SALEM CO MMO EALTH DIAGNOSTICS INTERNATIONAL, INC.
Kimberley Driscoll, Mayor Brian Strasni GHAt ear MA►lJ
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Unofficial Property Record Card - Salem, MA
General Property Data
Parcel ID 2546740 Account Number
Prior ParceIIO — `
Property Ovmer HOLYOKE MUTUAL FIRE INS CO Property Location 1 HOLYOKE SQUARE 1
Property Use Office
Mailing Address 1 HOLYOKE SQUARE Most Recent Sale Date 11111900
Legal Reference 4895-306
City SALEM Grantor _
Mailing State MA ap 01970 Sale Price 0
ParcelZoning 86 Land Area 0.766 acres
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Current Property Assessment
Xtra Features
Card 1 Value Building Value 977,900 Wlue 1,500 Land Value 609,000 Total Wlue 1,409,300
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Total Parcel Xtra Features
%blue Building Value 3,592,000 Woe 12,200 Land Wlue 509,900 Total Value 4,104,100 i
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Building Description
Building Style Office Foundation Type Concrete Flooring Type Carpet }
#of Living Units 1 Frame Type Steel Basement Floor NIA
Year Built 1935 Roof Structure Flat Heating Type Steam
Building Grade Good Roof Cover Tar•Gravel Heating Fuel Oil
Building Condition Average Siding Brick Alr Conditioning 1001/6 e
Finished Area(SF)18348 Interior Walls Plaster #of Sent Garages 0
Number Room 0 #of Bedrooms 0 #of Full Baths 0
#of 314 Baths 0 #of 112 Baths 6 #of Other Fixtures 1
Legal Description
Unofficial Property Record Card http://salem.patriotproperties.com/RecordCard.asp
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�, - Alireza Sepehr,M.D.,Laboratory Director
Commonweal 1 39 Norman Street,Salem,MA 01970
Diagnostics
International
INC
January 16, 2016
Kim Driscoll, Mayor
City of Salem
Salem City Hall
93 Washington Street
Salem, MA 01970
RE: Commonwealth Diagnostics International, Inc.'s Participation in the Economic Development Incentive Program
and Job Creation Tax Incentive Program
Dear Mayor Driscoll:
Thank you for taking the time to sit down with me in December to hear more about our plans on Norman Street and to
provide a general overview of the Massachusetts Economic Development Incentive Program.
As we discussed,Commonwealth Diagnostics International, Inc. ("CDI")is considering the purchase and redevelopment
of the former Holyoke Mutual Fire Insurance Company("Holyoke Mutual")facility on Norman Street. Following
property acquisition,company stakeholders would transform the property into a company headquarters comprised of
manufacturing and office space.
On background,CDI is an unaffiliated spin-off of Commonwealth Laboratories,Inc. ("Commonwealth Labs").
Commonwealth Labs,until recently owned and operated by me,is known for the breakthrough technology IBSchek,a
blood test designed to help physicians quickly and reliably diagnose irritable bowel syndrome(185). in June,2015,
Valeant Pharmaceuticals International, Inc. ("Valeant")acquired Commonwealth Labs'business rights in the United
States and Canada. Commonwealth Labs' remaining diagnostics portfolio is now offered outside of the United States
and Canada by CDI.
Today,CDI has approximately 50 full-time employees in Salem-and we are growing. As noted above,we are
considering the purchase and redevelopment of the 54,000 square foot Holyoke Mutual facility on Norman Street,
Salem. Should we move forward with the acquisition,we would invest more than$5M in the acquisition and renovation
of the property into a corporate headquarters with both life sciences manufacturing and office space. Finally,CDI would
reasonably expect to create 100 new full-time jobs in our next five years of operations.
This project would mark CDI's largest investment to date. As a result,we are pursuing partnerships at the municipal and
state levels to offset some of these costs. Specifically,we are now interested in engaging you,the Salem City Council,
and the Massachusetts Office of Business Development(MORD) In discussions regarding project participation in the
Massachusetts Economic Development Incentive Program(EDIP). Components of the EDIP Program include a company
commitment to new Massachusetts jobs and private Investment, municipal Tax Increment Financing(TIF)and the
Commonwealth's EDIP Investment Tax Credit.
Office 888.258.5966 - Fax 888.258.5973
e-mail:customerservice@commonwealthdx.com - www.CommonwealthDX.com
r ,
In addition to project participation in the EDIP Program,CDI plans to also engage the Massachusetts Life Sciences Center
in discussions regarding the MLSC's Job Creation Tax Incentive Program (JCiIP).
We look forward to discussing our expansion plans and specific job creation and investment projections with you and
the Salem City Council at your earliest convenience. Our advisor Bobby Matthews will be in touch with you shortly, but
please don't hesitate to call me or Bobby(at 617-967-6283)if you have any immediate questions.
Sincerely,
Brian Strasnick, PhD,1D
Commonwealth Diagnostics International,Inc.
Cc: Andrew Shapiro, Director of Economic Development,City of Salem
Maria Distefano, Northeast Regional Director, MOBD
Bradley Rosenblum,Chief Financial and Administrative Officer, MLSC
Travis McCready, President and CEO, MLSC
Robert Coughlin, President and CEO, Massachusetts Biotechnology Council
Bobby Matthews,Tax Incentives Consultants, LLC