Healey's husband returns tax break
Issue clouded possible '06 run
The asset management firm headed by Lieutenant Governor Kerry Healey's husband is returning $1.2 million in economic development tax credits it received from the state for locating in Beverly's Prides Crossing section, one of the state's wealthiest neighborhoods.
The decision represented a major reversal for Sean M. Healey and his company,
But with Kerry Healey preparing a run for governor, the tax break had become a focus of attention from Democrats and the media. Democrats said privately that they are likely to raise the issue in the campaign, especially if she uses her husband's personal wealth to finance the run.
In a letter to the state's revenue commissioner yesterday, Sean Healey did not mention Kerry Healey's campaign, but said his company risked damaging its reputation over the tax break.
''Our decision to cease participation in the program results from a desire to avoid becoming the focus of controversy over public policy issues involving the awarding and administration of tax credits to businesses in the Commonwealth," Sean Healey wrote in a letter delivered yesterday to Revenue Commissioner Alan LeBovidge. Healey pointed out that the company had met its obligations for job creation and investments in the property.
''AMG's involvement in the controversy is a distraction to our business and risks impugning our corporate image and reputation," Healey wrote.
Sean Healey insisted that AMG, a publicly held financial firm, met the requirements and guidelines when it was awarded the tax credit in March 2001, nearly two years before his wife became lieutenant governor. Inspector General Gregory Sullivan, however, has criticized the tax program, saying that in many cases the credits were ''handed out as favors" to firms, including AMG.
AMG's decision to drop out of the program and amend its tax returns for the past four years may serve to defuse the issue for Kerry Healey, whom the Republican Party establishment is looking to back as its gubernatorial nominee if Governor Mitt Romney decides not to run for reelection in 2006. Her political aides have indicated that her campaign will be financed in good part by the $13 million in AMG stock options that her husband recently cashed out. Before exercising the options, Sean Healey owned $81.9 million in AMG stock on April 1.
Ray Howell, a spokesman for AMG, said yesterday that the company would not comment beyond the letter from Sean Healey. The firm, which was founded in 1993, has $155 billion under management and generates $200 million in annual cash flow.
The lieutenant governor, who declined earlier this month to criticize the use of the tax break by her husband's firm, issued a statement yesterday that showed no change in her position and did not reveal any concern about the controversial issue.
''While the Economic Development Incentive Program was created prior to this administration, we do support using tax incentives as a vital tool for maintaining and attracting jobs to Massachusetts," Healey said. ''That being said, it is at each company's discretion whether or not to participate in tax incentive programs. Affiliated Managers Group, a publicly traded company, has decided to no longer participate in this particular program."
The issue flared in September when the Globe reported that LeBovidge and his staff submitted a report a year ago highly critical of the development incentive program and the type of credit given AMG, but then abruptly withdrew the report after controversy within the economic development office over its conclusions. Lebovidge then rewrote the document to eliminate its criticisms.
Last month, the Globe reported that e-mails in Revenue Department files show that the agency's staff faced constant scrutiny from Romney's secretary of economic development, Ranch Kimball, and his staff, who at various points sought to review the report and other communications that the agency sent to the Legislature.
The e-mails show that the Revenue Department withdrew its initial report under pressure from Kimball's office. There is no evidence that the lieutenant governor or the governor interfered in the matter. Healey has said that neither she nor anyone else in the governor's office had spoken to the Revenue Department or Economic Development Office about the issue.
AMG has close Republican ties. Besides Sean Healey, its chief financial officer and executive vice president is Darrell W. Crate, Governor Mitt Romney's handpicked chairman of the state Republican Party in 2003 and a close adviser to the governor. William F. Weld, the former governor who created the tax incentive program in 1993, sat on AMG's board from 1998 to 2004.
Sullivan, the state inspector general, had charged in a January 2004 report that the tax incentive programs has been seriously abused and cited the AMG case. He called on the Department of Revenue to retrieve the $1.2 million tax break to the company.
''AMG was one of several companies abusing an economic development program with the permission of state officials, and we are glad they did the right thing and more than $1 million is going back to the taxpayers," he said yesterday.
Sullivan has been particularly critical of the fact that tax credit could not have been considered a lure to AMG to locate because it was given in March 2001, nearly a year after the company bought the 88 acres parcel in Prides Crossing, and its headquarters was well under construction.
The property, located 1.6 miles from the Healeys' oceanfront home, was once the estate owned by conservative newspaper publisher William Loeb. The Loeb mansion had burned to the ground in the 1980s.
The law creating the Economic Development Incentive Program also states that it is designed to develop blighted areas that cannot be developed by the ''ordinary operations of private enterprise."
In fact, a major house building company had been seeking to develop the land without any tax incentives, but city officials, reacting to strong neighborhood opposition, were trying to block the plan. AMG had initially told town officials it would not seek local or state tax breaks. 