State Street latest to get tax break on waterfront property

Boston officials plan to give State Street Corp. $11.5 million in tax cuts to construct an office building on the South Boston Waterfront, the latest deal by the city to help transform the once-shabby industrial district.

The proposal, announced Monday, would help finance construction of an 11-story building at the Channel Center complex off of A Street. The tax break, which needs approval from the Boston Redevelopment Authority, would be spread over 15 years.

The project would be a major boost for the complex and for the wider area, which would be expected to benefit from thousands of new employees dining at its restaurants and patronizing other businesses.

Development activity is beginning to increase on the waterfront, with both office and residential builders moving forward with large-scale projects as the economy recovers - some without help from the city.

State Street, one of the citys largest financial services employers, has been negotiating the tax break for several months.

The new building, at 1 Channel Center, would cost about $225 million and contain about 525,000 square feet of space. It is scheduled to be completed by February 2014. The BRA will consider whether to approve the tax break at a meeting next month.

State Street is the latest of several large companies to win a tax break for new offices on the waterfront, where Boston officials are trying to create a so-called Innovation District with new businesses, retail stores, and residences.

Vertex Pharmaceuticals Inc. received more than $21.8 million in city and state tax incentives for a pair of large office buildings under construction at Fan Pier. In prior years, JP Morgan Chase & Co. and Manulife have also been given favorable tax treatment.

Such deals are often controversial, because they are typically given to large, profitable companies. State Street, for example, reported net income of $1.92 billion in 2011 and paid its chief executive, Joseph Hooley, total compensation of $16 million, according to documents filed with regulators.

Moreover, State Street was not proposing to build elsewhere if Boston did not provide the tax break, according to city officials. And development in the Innovation District appears to be moving forward in its own right.

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State Street latest to get tax break on waterfront property