ANDOVER — A large office building at 800 Federal St. has sat vacant for seven years.
But Schneider Electric, an international energy management company, is eyeing the property to consolidate several of its area operations. The move would increase the town's commercial tax base and bring an estimated 600 jobs to town, according to town planners.
The Paris-based company has area locations in North Andover, Billerica and Andover.
"This area has been identified as a research and development hub for us going in the future," said Matthew Volpe, regional facility manager for Schneider. "We are looking to consolidate a lot of our groups together for the synergy that it offers us as a group."
To help make the move possible, the town is working with the company to develop a Tax Increment Financing (TIF) agreement.
The agreement would give Schneider Electric a temporary property tax break on a planned $27 million expansion and improvement project. The company hopes to add 67,000 square feet to the existing 160,000 square foot building.
The improvements would increase the property value from $8 million to $20 million, therefore increasing the building's annual property tax from $184,000 to about $470,000, according to Planning Director Paul Materazzo.
According to the state Executive Office of Housing and Economic Development website, TIF agreements allow "municipalities to provide flexible targeted incentives to stimulate job-creating development."
Under a TIF agreement, a property owner receives a tax exemption only on "a percentage of the value added through new construction or significant improvement," according to the website.
That percentage can be set between 5 and 100 percent. The duration of the TIF agreement must be between five and 20 years.
Town Meeting approval is required for the town to enter such a deal. Article 34 at this year's meeting asks residents to allow selectmen to enter into the agreement with Schneider Electric.
Both the Board of Selectmen and the Finance Committee have unanimously voted to recommend approval of the article, according to selectmen Chairman Brian Major.
Major said the town will still bring in at least the current $184,000 in taxes of the property during the duration of the agreement.
"This is such a phenomenal opportunity for Andover," Major said. "It would allow the town to increase its tax base and bring an additional 600 to 700 jobs."
Town officials are looking at deals that range between five and 10 years. Major said both selectmen and Finance Committee favor a five-year deal.
Major said the town will "share the benefit" with Schneider Electric if Town Meeting approves the deal.
"Andover will give up $1.2 million in the incentive package but overall we will gain $1.6 million in tax revenue in the next 10 years," Major said.
In the short term, the town will benefit from the construction permit fees and an increase in personal property taxes, Major said.
Materazzo said the planning division has been in talks with Schneider Electric officials about the deal for the past year. He said bringing in such a "top-notch" company might draw other businesses to town.
"Where I sit in planning, I see this as a great opportunity to help recruit a business to town, to backfill an underutilized facility, to bring jobs, to bring new taxes," Materazzo said during a meeting on the agreement last week.
Other benefits include the possible increase of hotel and meal taxes, Materazzo said.
• • •
Follow Jonathan Phelps on Twitter under the screen name JPhelps_ET. To comment on stories and see what others are saying, log on to eagletribune.com.