Image courtesy of BioMed Realty
Somerville City Councilors approved a 10-year tax break designed to lure an Andover medtech company to BioMed Realty’s Assembly Innovation Park.
Somerville Mayor Katjana Ballantyne said the offer is necessary for Somerville to compete with other potential locations under consideration by TransMedics Inc., which specializes in organ transplant technology.
“We are bucking market trends at a time when we need it most. Commercial real estate interest for large office buildings has slowed significantly,” Ballantyne said.
Somerville’s lab vacancy rate soared following completion of major developments in Assembly Square and East Somerville. The urban ring, including Somerville and portions of Boston and other inner suburbs, now has a 55 percent vacancy rate.
BioMed Realty broke ground on the first phase of the Assembly Innovation Park project on Middlesex Avenue in 2022: a 12-story, 495,000 square-foot office-lab building.
TransMedics’ “HQ 2.0” project would include office space for its administrative team, vivariums and lab space, R&D and manufacturing, a conference center and flight simulator for its jet fleet, according to a presentation submitted to the Somerville City Council last week.
“Somerville has three or four vacant lab spaces, soon to be one fewer hopefully. In the long term, this is going to be a huge deal for Somerville and draw other labs into the region,” Ward 1 City Councilor Matthew McLaughlin said.
The agreement estimates TransMedics’ investment to build out the core and shell at $200 million, equating to a $41 million tax bill for TransMedics without a TIF agreement. The TIF reduces the tax bill to $23.3 million over 10 years.
The agreement also includes $2.275 million reduction in building permit fees.
The TIF includes a clawback provision if TransMedics fails to meet its goal of creating 900 jobs in Somerville, Director of Economic Development Rachel Nadkarni said.
TransMedics also has offered to donate $200,000 to the city’s public schools, fire department and police department.
In July, TransMedics Group reported second-quarter revenues of $157.4 million, a 38 percent increase from the previous year. The company provides transplant services that enable organs to remain alive during transportation, expanding the potential donor pool.
Mayoral candidate and City Councilor Willie Burnley Jr. asked executives to comment on a 2023 class action lawsuit against the company.
The lawsuit, filed in U.S. District Court in Boston, claims that executives made false and misleading statements and overbilled customers.
“Is there any worry about any external existential threats for the company moving forward?” Burnley asked.
“I think you’ve seen what typically publicly listed companies face. There is nothing special that affects TransMedics in that case,” Chief Financial Officer Gerardo Hernandez responded. “The future, as we see it, is bright.”
