State Street Corp. to get tax break for waterfront building

By Casey Ross, Globe Staff

Boston officials will give State Street Corp. $11.5 million in tax cuts to construct a new office building on the South Boston waterfront, part of the citys effort to transform the once shabby industrial neighborhood into a thriving district of new homes, businesses, and retail stores.

The tax deal announced today will help finance construction of an 11-story office building for State Street at the Channel Center complex off A Street. The $11.5 million tax break, which still needs approval from the Boston Redevelopment Authority, will be spread over 15 years.

Among the citys largest financial services employers, State Street is the latest of several companies to win a tax break for new offices on the waterfront. Vertex Pharmaceuticals Inc. received more $21.8 million in city and state tax incentives for a pair of large office buildings nearby at Fan Pier.

Such tax deals are often controversial, as the companies receiving them are often profitable. 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 government filings.

But city officials say the tax breaks are necessary to spur investment in the neighborhood. In 2008, investment bank JP Morgan Chase & Co. received a $4 million break to move to the waterfront.

The tax concessions for State Street will reduce its tax bill by about 20 percent, but the company will still pay $43.4 million in new taxes over the 15-year period and create 1,200 construction jobs.

State Street Bank & Trust Co is Bostons seventh largest employer and keeping this economic giant in the city not only ensures that we are retaining jobs, but is a key to attracting new jobs and creating an economically successful and vibrant city, Boston Mayor Thomas M. Menino said in a statement.

State Street could not be reached immediately for comment. The company has thousands of employees in Boston and already occupies some of its most prominent commercial buildings.

Channel Centers developer, Commonwealth Ventures, filed detailed plans for the office building last month, but State Street was not formally revealed as the tenant until today. The project will also include construction of a parking garage and public parks next to the new building. Commonwealth has also signed on a new development partner, Area Property Partners of New York, for the project.

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State Street Corp. to get tax break for waterfront building