JPMorgan Chase & Co. said yesterday it finalized a lease to move most of its local operations to the South Boston Waterfront, a deal it said was closed by $4 million worth of pending city and state tax breaks.
The company's fund-services group currently employs 725 people in the city and said it plans to hire at least 300 more in the next five years. Many will move by year-end from 73 Tremont St. to the 103,000 square feet of space it leased in the 99-year-old building at 451 D St. being renovated by the Beal Cos.
JPMorgan has said it looked at locations in the suburbs but was persuaded to stay in the city by the incentives that include a $2 million break on property taxes through 2022, which still requires approval from the Boston City Council, scheduled to discuss the matter this evening, and a $2 million state tax credit for building in an economically challenged area.
That description hardly applies anymore to the D Street building, across from the new Boston convention center, which has prompted questions on whether the tax breaks are appropriate at a time of tightening city budgets. Councilor-at-Large Stephen J. Murphy of Hyde Park said when the deal was disclosed he was concerned about the city negotiating tax breaks during a time of budgetary pressure.
But others have defended the deals negotiated by the administration of Mayor Thomas M. Menino, noting the trouble Beal has had in filling the building previously. Owner Robert Beal said just 30 percent of its space was occupied three years ago when he paid $41 million for the structure once known as the Fargo Building.
"This has been a building that has been vacant for many years," Menino said yesterday, noting many other cities are competing for financial services jobs. "We have to continue to be in the business of growth."
District Councilor Bill Linehan of South Boston, chairman of the council's economic development committee, said he favors the plan and doesn't expect much opposition since much of the residential development planned for the area hasn't panned out and JPMorgan's presence would attract others.
Clients of the JPMorgan unit mostly include mutual fund companies, an industry that continues to attract assets despite the downturn in other financial services sectors. The unit has $4.7 trillion under administration, up from $2.3 trillion at the end of 2005.
Daniel Kramer, head of the local JPMorgan unit, has said the firm considered moving to other states but decided to stay in Boston due to the quality of the local workforce.
"Boston is key to our success and offers a wealth of industry talent," he said in a statement yesterday. "Staying in the city is a win-win for our clients and our employees."
Ross Kerber can be reached at firstname.lastname@example.org.