Michael Hoban

Long considered a forgotten mill city on the Merrimack River, Lowell has been clawing its way back to economic relevance over the past several years. The city received a major boost in its ongoing efforts to transform its base from manufacturing to innovation when web-based workforce management services company Kronos decided to relocate its global headquarters there. By committing its future to Lowell – and absorbing a half-million square feet of existing office space – Kronos has demonstrated how the Massachusetts innovation economy can spread beyond traditional tech centers like Boston, Cambridge and Burlington.

“It was a coup for the city of Lowell, but it took a total team effort from the beginning to the end,” said David Nangle, state representative from Lowell and a key player in the move.

The deal was especially noteworthy for several reasons. First, Kronos was founded in Lowell. Second, it resulted from a collaborative effort involving the private sector, the state and local governments, and educational institutions. Third, it stands to benefit the employees of the company while also impacting the city.

Working with the state’s Economic Assistance Coordinating Council, Kronos received an $8 million state tax credit and $4.9 million in tax increment (TIF) financing from the city of Lowell to assist with its move from nearby Chelmsford. Kronos promised to create 400 new jobs by 2022. The company already made 200 hires prior to its Sept. 15 move-in date.

Kronos selected for its new home a once prominent, but long overlooked, site called Crosspoint, which was constructed for Wang Laboratories in the early 1980s. Kronos took over nearly half of the three-building, 1.2 million-square-foot campus. Before the Kronos move, Crosspoint’s occupancy rate was around 60 percent. Now it is over 95 percent.

A New Innovation Hub

The move to Lowell allows Kronos to tap into a deep labor pool, stimulated by UMass Lowell and Middlesex Community College, which have invested heavily in educating the 21st century workforce. The company said it was important to be removed from the state’s mature tech markets so it wouldn’t be competing for the same tech talent.

For Lowell, securing Kronos as a long-term employer and tenant will also attract new homebuyers that will further strengthen the community and local economy. The city created another incentive for Kronos employees, developing a program with the nonprofit Lowell Development & Financial Corporation that incentivizes employees buying their first Lowell home – regardless of income – to encourage them to move there.

There is also some built-in protection for the city in the event the situation should change. The city may cancel the agreement and recoup the savings earned through the TIF if objectives are not met. Lowell’s Economic Development Director Allison Lamey expects the agreement will result in $2.9 million in new taxes over the next 12 years.

There are always those critics who question the true economic benefits of using tax incentives to lure new businesses to town. But in the case of Kronos and Lowell, this may truly be a win-win.

“One, you’re attracting 2,000 jobs to the city of Lowell, and those people will help out our economy with their purchasing power; and second, just by having Kronos locate in one section of Crosspoint makes the rest of the building that much more valuable,” Lowell City Manager Kevin Murphy said in a recent interview. “And the tax revenue for the rest of the building serves as an offset to the tax incentive plan that we offered Kronos.”

Kronos makes its money focusing on the workforce. With its move to Lowell, Kronos has taken a broader view of what it means to be a tech giant in a state of tech giants. Yes, it can offer a competitive pay package at a company that is growing globally with revenue over $1.2 billion. But it can also deliver a more affordable lifestyle for its workers, in a community that sees itself as an innovation hub all its own.

Michael Hoban is a writer for ULI Boston/New England.