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September 13, 2023

Worcester City Council votes to decertify Unum building tax break

A modern office building with a sign that reads UNUM Photo | CHRISTINE PETERSON Health insurer Unum has vacated the Unum Building, even though it holds the lease. The tower has since been rebranded as One Mercantile.

The Worcester City Council voted unanimously to decertify the 15-year property tax break extended to the Unum Group due to its failure to maintain the required levels of employment related to  the office tower at 1 Mercantile St. in Worcester.

District 1 City Councilor Sean Rose, the chair of the Economic Development Committee, recommended at Tuesday’s City Council meeting the motion to decertify the tax increment financing deal be voted on immediately and not be sent to committee.

The decertification must next be approved by the Massachusetts Office of Business Development and Economic Assistance Coordinating Council.

“Obviously this is something we don’t like to see,” said District 2 City Councilor Candy Mero-Carlson at the meeting prior to the vote. “This is an example of that this City Council and this administration certainly does not take these TIFs lightly.”

The value of the Unum property in fiscal year 2023 is $25,368,900 and the fiscal year 2023 commercial tax rate is $31.26. According to the TIF tax payment schedule, Unum was only required to pay $39,005 in taxes in 2023, instead of the $793,032 it would if it paid the full commercial tax rate. With the TIF scheduled to end in 2028, decertification would potentially mean millions in added tax revenues for the City over the remainder of the deal.

The TIF was originally offered as an incentive for Unum to relocate and retain 600 jobs at the new building at 1 Mercantile St., which was originally called the Unum Building. But in 2020, Unum announced that it was leaving the office building and switching to a work-from-home model. The most recent report for the period ending on June 30, showed that the company employs 331 Massachusetts employees, of which 65 are Worcester residents, according to a letter from Worcester Chief Development Officer Peter Dunn to the council. In that letter, Dunn recommended to the council that the TIF be decertified.

Following Dunn’s recommendation but before the City Council’s vote on Tuesday, a statement Unum emailed to WBJ seemed to indicate the Tennessee-based insurance company was working to keep the TIF in place.

"Unum has been a proud member of the Worcester community for a long time and plans to continue our role as a leader in the community. We believe we are in compliance with the agreement and hope to engage in a productive discussion with the city and relevant State agencies to resolve the matter,” the statement read.

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