GREENFIELD — Absent a clawback provision allowing the city to recoup money lost, Greenfield is out $60,000 after over-extending an agreement that offers new development projects a discount on real estate taxes for a period of years.

Finance Director Diana Schindler explained that the incorrect calculations for the tax increment financing (TIF) agreement were discovered in fiscal year 2022 and corrected in FY23. The 10-year agreement with the Ford and Toyota dealership at 1 Main St. would have been extended through FY26 had it not been withdrawn recently to recoup roughly $57,000 in tax revenue.

“In conversations with the owner, we determined that if we could terminate or withdraw the TIF now, we’d be able to recoup some of that money,” Schindler said. “[The owner] is in agreement with that.”

TIF agreements are among the tax incentive processes available to business owners through the Economic Development Incentive Program, a state program designed to “foster job creation and stimulate business growth,” according to the Massachusetts Office of Business Development. Entrepreneurs can receive temporary discounts on real estate taxes from new development projects. In the case of the Ford and Toyota dealerships, they completed a $7.4 million project in 2016. The new, 33,000-square-foot building includes two state-of-the-art showrooms.

After a lengthy discussion at a City Council meeting this month, during which several councilors expressed concern for the mismanagement of city finances, councilors voted to terminate the TIF agreement with Ford and Toyota, allowing the city to recoup roughly $57,000 that would have been lost otherwise. According to letters exchanged between the city and the company, the latter of which was signed by manager Damon Cartelli, this was a “mutual agreement” between parties.

Schindler emphasized that the company paid the amount it was billed; the city, however, did not bill the company correctly. The company has, to date, upheld its end of the bargain, in terms of job creation and retention, she added. According to the 2022 Economic Development Incentive Program Annual Report, the company has 71 full-time employees, 35 of whom live in Greenfield. Three were hired in the 2022 calendar year.

Cartelli did not return requests for comment.

“I find myself, once again, sitting here and thinking, how much money are we wasting?” At-Large Councilor Christine Forgey said to councilors at their meeting last week. “How much money are we throwing away because people aren’t instructed to do their jobs or are not knowledgeable in how to do their jobs? It’s a shame that taxpayers have to put up with this. … It’s not a well-run ship; it’s not a well-run process. I’m not placing blame on anybody, I’m just saying this is a tragedy that money gets wasted like this.”

Responding to questions from councilors, Schindler noted there was no mechanism for recapturing all of the money lost without creating a legal issue.

“They legally don’t have to let us out of the TIF, but they’re willing to let us do that,” she said.

The City Council conversation last week prompted a renewed interest among councilors in revising, or creating anew, a policy that would allow the city to “claw back” lost money. On Monday, the TIF committee met to continue their discussions on developing one.

“It sounds like clawback isn’t out of the question,” said Mayor Roxann Wedegartner, one of three voting members on the committee, which includes at-large councilors Philip Elmer and Forgey. “We would need to explore the legal standpoint and process standpoint — what are the circumstances under which we would claw back?”

During the TIF committee meeting, there were questions from the public about how this may relate to the former Lunt Silversmiths property on Federal Street, which is owned by the city but leased to 401 Liberty St. LLC with the option to purchase. If bought, there may be a special tax assessment.

Residents at the meeting were curious as to whether environmental cleanup could be tied to the obligations expected of the owner to receive any tax benefits. Resident Susan Worgaftik questioned how progress on environmental cleanup could be reported.

“It’s more toward economic development,” Schindler responded. “I’ve never seen any special tax assessment like that. From the financial special tax assessment perspective, that’s totally separate from the cleanup and when that’s completed.”

In particular, Schindler advised city officials against agreeing to too many 20-year agreements, at least one of which remains on the books.

“Twenty years is really an exception,” she said. “I think the challenge with the 20-year is the opportunity for market conditions to change within that 20 years, which has happened in a couple of cases we’re experiencing right now.”

Ultimately, no decisions with respect to the policy were made, as officials are hopeful to include the Community and Economic Development director in the conversation when one is hired. The committee next plans to meet Aug. 28.

According to Forgey, it’s not the city’s intention to be “heavy-handed” with business in developing this policy.

“It’s prevention,” Forgey said. “We’re not interested in being heavy-handed with businesses or anything like that, but we also don’t want to see any of the things that have happened with these TIFs over the years.”

Reporter Mary Byrne can be reached at mbyrne@recorder.com or 413-930-4429. Twitter: @MaryEByrne.

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