State council offers $6.1 million incentive for MTX to choose Waterbury
July 31, 2021 | By Lisa Scagliotti
The Vermont Economic Progress Council oversees economic development programs within the state Agency of Commerce & Community Development located at the National Life complex in Montpelier. Photo by Lisa Scagliotti
A state panel that oversees a valuable economic development incentive program threw its unanimous support this week behind a $6.1 million multi-year award for a national information technology company should it choose to locate its new Northeastern regional office in Waterbury.
The Vermont Economic Progress Council met on Thursday to review an application from MTX Group for an award under the Vermont Employment Growth Incentive program, referred to as VEGI in development circles.
Based in Frisco, Texas, MTX is a fast-growing tech firm with a deep list of government clients across the U.S. – including the state of Vermont. It specializes in setting up data information systems and networks and has been in high demand during the COVID-19 pandemic creating systems for example with public health applications such as contact tracing and vaccination tracking.
MTX was the vendor to work with the state of Vermont in early 2020 to upgrade the online system for the Vermont Department of Labor to manage unemployment insurance claims at the start of the pandemic.
With clients from coast to coast, MTX is looking to open regional offices in multiple locations in the coming months, according to Lindsey Ransdell, vice president for workforce, economic and community development for the company. Ransdell attended Thursday’s meeting of the state council.
MTX is considering three other Northeast locations for a regional office in addition to Waterbury: Albany, N.Y., Providence, R.I., and Manchester-Concord, N.H., Ransdell said. Company officials are looking to decide on the location within the next couple of weeks. “We should know in August so we could start hiring as of September 1,” she said.
The eight-member council reviewed the MTX request in executive session. Its discussions with applicants are done out of public view to protect proprietary information contained in applications. When the group returned to public session, it voted unanimously on two motions that laid out the preliminary terms of the state VEGI award MTX could expect.
It granted initial authorization of VEGI incentives up to $5,152,189. Next, under a provision that allows the council to consider the area where a company is proposing to locate its project, it approved up to $1 million more for the award, bringing the total to $6,152,189.
The figures are arrived at under a formula regulators use to calculate both the financial benefits a project will bring to the state in payroll and taxes while balancing that against anticipated costs that might include added demands on local services and infrastructure. The result of that calculation in the case of MTX was an estimate that new revenue generated by the company locating its regional office in Waterbury would exceed costs to the state by $6,538,106.
In reviewing the application, the council considers several key criteria including that the host community welcomes the project; that the project conforms to town and regional plans; and that the state inventive would not give the company “an unfair competitive advantage over other Vermont businesses in the same or similar line of business.”
One key qualifier the council looks to verify in a proposal is what members refer to as the “but for” condition. The approval sums that up this way: “As certified in their application and during testimony before the Council, company officers have provided compelling information and arguments that but for this incentive the proposed economic activity would not occur in Vermont, or would occur in a significantly different and less desirable manner.”
Satisfied that the MTX application meets these standards, the council approved its award.
Megan Sullivan, executive director of the Vermont Economic Progress Council, explained that the benefits from the VEGI program are not state grants. Funding is paid out to companies annually over a nine-year period. State regulators review the company’s performance regarding payroll, jobs, and capital investments to check whether it meets or exceeds the projections it laid out in applying to the program. If it falls short, it does not receive funding, she said.
Following Thursday’s meeting, Waterbury Municipal Manager Bill Shepeluk was pleased to hear that the council approved the incentive package for MTX given the opportunity it presents should the company choose Waterbury. “While I understand MTX is considering other locations, I am hopeful the vote by the Council to support their application for an incentive grant will incentivize the company to choose Waterbury as the place to invest in for their future,” Shepeluk said. “We’d love to welcome them to our community.”
The additional $1 million added to the package was possible because the state considers Waterbury to be a labor market area where unemployment and wages could be factored into the equation. MTX is considering former Keurig Dr. Pepper space at the Pilgrim Park commercial complex in downtown Waterbury for an office that would start with 100 jobs and grow to 250 within five years, Ransdell said. Overall, the workforce for this location would consist of about 235 technically trained employees and about 15 administrative positions.
The VEGI incentive program specifically aims to support new or existing companies that will create new, full-time, permanent Vermont jobs. Ransdell said that the positions in the regional offices MTX is looking to open will all be “new to MTX.” Current company employees across the country would be able to apply to relocate to Vermont, Ransdell said, and the company would also look to hire “as many Vermont residents as possible.”
Jamie Stewart, executive director of the Central Vermont Economic Development Corporation, is a regional representative to the progress council and he attended Thursday’s meeting to consider the MTX application. He said his organization would look to facilitate the hiring process by working with the Vermont Department of Labor, Vermont Technical College, the University of Vermont and other state colleges, Norwich University and other higher-education institutions.
Ransdell said MTX could incorporate some students into its Vermont workforce as interns or apprentices, but those positions would not count toward the hiring goals in its application to the state. Recent graduates, however, would be recruited as well as other professionals with the skills MTX is seeking who may look to switch jobs mid-career, she said. The company will need IT professionals as well as project managers, data and business analysts, and individuals with general business backgrounds whom MTX can train.
The VEGI award approved for MTX this week is at the preliminary stage. Should MTX choose Waterbury to move ahead with its project, it has until the end of 2021 to refine its projections and its application to the state program. The council will sign off on the final application at that time and the award amount could be adjusted somewhat based on updated figures.
The total is not likely to increase significantly, however, as it already appears to be one of the largest awards to date approved through the VEGI program.
Following the vote on Thursday, council Chair John Davis turned to Ransdell and offered congratulations, adding that the award was “pushing the limits” for what the state could offer from the program.
Sullivan explained that the council has an annual cap on awards it can make under the VEGI program. “The program is capped by the governing statute as to how much the Council can approve in any given year, overall and in the Labor Market Area enhancement,” Sullivan explained. “This approval of MTX Group puts the Council very close to those caps.”
The council is working with a $15 million cap for initial applications this year and a $1.5 million cap for enhancements to initial applications, she said. Another $10 million is available for final applications and another $1 million for enhancements on final applications, Sullivan added.
Occasionally a company that receives approval changes course and doesn’t proceed with a project, so it rescinds an offer, and those dollars can be reallocated, Sullivan said. With five months left in the year, Sullivan said she didn’t know how many other applications the council might receive and whether it would allocate its full amount for 2021.