Home 2007 March
Make an Investment in Human Capital

“An investment in knowledge,” Benjamin Franklin said, “pays the best interest.” 

In preschool classrooms across the region, our future workforce is in training.

Every day, thousands of children enrolled in quality education and care programs are developing the skills and tools they will need in order to succeed in school, the global workplace, and in life.

Studies have consistently shown that children who become early learners become better learners for life. Kids who experience all the benefits of early education get better grades, stay in school longer, and are more likely to go to college. They grow up to be better educated, more motivated, and more productive adults, which makes them better citizens of our community and better employees for the companies — your companies — that do business here.

The children currently in the care of organizations like Springfield Day Nursery will be the adults best suited to perform the most challenging jobs in years to come.

In conference rooms throughout the business community, public officials, strategists, and those responsible for economic development are talking about young children and early education. Why? Because they know the key to realizing business success and economic prosperity is through an early investment in human capital. The idea of early childhood education as an economic development strategy is gaining momentum as a number of influential business groups and companies, including MassMutual and Verizon, have stepped forward in support of new investments in early childhood education.

As the nature of our economy continues to shift to high-tech and biotech industries, better-educated and more highly skilled employees are needed. Preparing tomorrow’s workforce and positioning Massachusetts for future economic growth requires making substantial improvements in children’s early learning opportunities. If you want an advance look at the people who will comprise tomorrow’s workforce, pay a visit to an early childhood center.

But despite the growing volumes of research, statistics, and speeches on the economic and educational benefits of early childhood education, 6,000 Massachusetts children each day — 1,477 in Springfield — grow up without the preschool experience that will allow them to answer the school bell ready and able to learn.

We know all too well what happens when children enter kindergarten without the skills to learn — skills like listening, following directions, getting along with other children, knowing their letters, writing their names, and taking personal responsibility for their actions in the classroom. We know they fall behind their peers on day one and rarely, if ever, catch up. Imagine being five years old and already experiencing the defeating emotions of failure. And who will be to blame when that child someday joins a gang, grows up unemployable, and lives in poverty?

Right now in our community and across Massachusetts, there is a growing effort to spark and sustain economic development. Topping the list, which includes securing developable land for business, retaining graduates from our regional institutions of higher education, commuter rails, safe neighborhoods, and affordable housing, should be a quality public and private education system that includes preschool and all-day kindergarten.

Springfield’s renaissance does not rest solely in a balanced budget. It lies in the ability of forward-thinking adults who understand there is no future without prudent investments made today. When it comes to securing the workforce that will fuel our community’s health and well-being, quality, affordable, accessible early education and care for Springfield’s children is truly the little engine that could.

To learn about local initiatives supporting early education and care, including the George A. and Irene E. Davis Foundation’s Cherish Every Child and the Early Education for All Campaign, log ontowww.sdn.org

Joan Kagan is president and CEO of Springfield Day Nursery, the region’s largest non-profit provider of early education, care, and parenting support services.

Sections Supplements
Chicopee Electric Light Partners with HG&E to Offer Fiber Optic Internet Service
Jeffrey Cady

Jeffrey Cady, general manager of Chicopee Electric Light, said fiber-optic Internet access in Chicopee is expected to create a new revenue stream.

Through a unique collaboration, Chicopee Electric Light (CEL) and Holyoke Gas and Electric (HG&E) are now offering fiber optic Internet connections and network services to commercial and industrial customers in Chicopee.

Jeffrey Cady, general manager at CEL, explained that a 30-mile fiber-optic backbone was installed in 2001 in Chicopee, with the goal of linking the city’s municipal buildings, including the police and fire departments at the Public Safety Complex and the Health Department, for increased productivity and reliability.

“The purpose was to link our facilities together to improve efficiency, which we felt was important for the community overall,” said Cady. “At that time, we bought and installed additional fiber, with the idea that we could lease that extra cable to generate potential revenue.”

Fiber optic systems, where available, are often deemed superior to cable modem, T1, or DSL technology in that they provide a direct line connection from host servers to a customer’s site, with no sharing of data and no competition for bandwidth. The connection’s speed is often faster through fiber optic lines, and more cost effective than other fast, reliable connections such as T-3 lines.

Cady said the last of the city’s buildings and departments were linked through the new system last year (the last to go online was the town’s landfill), and CEL was able to turn its attention to the additional cabling and what could be done with it.

“We started talking about what to do with the surplus cabling and about putting a structure together at the end of last summer,” he said, “and our first customer went online in January.”

HG&E has served as an Internet service provider since 1997 through its telecommunications arm, HGE.net. It has constructed one of the most advanced self-healing fiber optic rings in the Commonwealth, extending from Holyoke into Chicopee and to downtown Springfield, at the Tower Square and Monarch Place office towers.

The network has a redundant design which guards against interruptions, and it has also passed several quality and confidentiality audits, meeting or exceeding the standards set forth by the FDIC and HIPAA, the Health Insurance Portability and Accountability Act.

Jim Lavelle, general manager of HG&E, said HGE.net’s fiber optic services are currently being used through a similar agreement in Westfield, and he’d like to see such services extend further into other area towns and cities in the coming years.

He added that the new partnership in Chicopee stems from existing alliances between the Holyoke utility company and Chicopee Electric Light, which creates a natural avenue for gradually adding new and developing services.

“It first came about primarily because of our longstanding utility relationship with Chicopee Electric,” he said, echoing Cady’s sentiment that the partnership made sense for both parties. “This was a logical extension of existing collaborative efforts, and an opportunity to take advantage of excess fiber.

“The drivers for such collaborations have always been to improve service and reduce price for customers,” added Lavelle, “and this new partnership falls right in line with those efforts.”

The initiative will not expend city dollars, but it is expected to generate between $150,000 and $300,000 in revenues for Chicopee.

Cady said that, essentially, Chicopee will be leveraging Holyoke’s existing expertise to benefit its own business customers through the agreement.

“It makes more sense,” he said. “Holyoke has very high reliability, and that will support the economic development aspect of fiber optic Internet networking services in Chicopee.”

Through the partnership, fiber optic customers with multiple locations in Chicopee will also be able to link to each other within the network area of Holyoke, Chicopee, and downtown Springfield, and outside of that network footprint, customers will have the option of linking to branch offices through other types of Internet connections (T1 or T1 copper lines) anywhere in the 413 area code.

In addition, a company may place servers at HGE.net’s central office location, to take advantage of its climate-controlled facility and back-up power generators, and can opt for dial-up services for remote employees as part of the total package.

Customers who choose to purchase a fiber optic Internet connection will be connected to the existing ring in Chicopee via a portion of cabling that has been leased to HG&E, which in turn will provide sales, marketing, customer service, and billing support directly to the customer through HGE.net.

Pricing starts at just under $200 a month, and services can include hosted E-mail service and disk storage space for hosting a company Web site.

Cady said CEL and HGE.net are now ramping up their marketing efforts to promote the service in Chicopee.

“We’re really trying to get as many customers as possible,” said Cady. “Another benefit of fiber optic is we can always expand the network, so there’s no cap on how many customers we can serve.”

Sections Supplements
The Local Commercial Real Estate Market is Defined by Stability

“How’s the market?”

That’s a question that area commercial real estate brokers are asked on an almost daily basis, sometimes several times a day. It’s a simple query, designed to gain insight into both the regional and national scenes — and often the answer comes in two parts, because sometimes, but not always, what’s happening on the larger stage doesn’t reflect what’s going on locally.

As for the Western Mass. market, my response is almost always, “good … stable … steady.” That’s because that’s what this market is like, with rare exceptions, and for reasons to be outlined here.

The ‘market’ is an amalgam of subsets that tend to function somewhat independently of one another. While they share very much in common, various factors impact some market segments differently than they do others. For example, the investment sales market is in lock step with interest rates, which in turn have little immediate effect on the office-leasing market.

When considered in the aggregate, the Western Mass. commercial market has a fairly solid history of stability. Over the past 15 years, since the disastrous market crash of the late ’80s and early ’90s (commercial real estate’s Ice Age), it has behaved somewhat like a missing link somewhere between a bear and a bull.

When the markets are hot in the New England region, conditions are pretty good here. And when the markets turn sluggish … it remains pretty good here. We enjoy an enviable insular equilibrium due to a combination of factors. These include our location, a comparatively attractive cost of living, the combined economic engines of MassMutual, Baystate Health, the region’s other major employers, and maybe the White Hut.

When dissected, the regional commercial real estate market component parts can be, and often are, in divergent conditions of health. The segments comprising the market include:

  • The sale of tenanted properties as investments, such as shopping centers; single- and multi-tenant office, warehouse and manufacturing buildings; and multi-family housing;
  • Office property leasing, which has subsets, including downtown and suburban areas, and their respective sub-markets of Class A, B, and C space;
  • The development markets, both public and private, such as the pending redevelopment of the former Basketball Hall of Fame and the new federal courthouse; and
  • The combination of retail leasing, warehouse and industrial leasing, and hotels and other hospitality properties, which play an important role as well.

This diversity within the realm of the commercial real estate market has a balancing effect on the sector as a whole, where the hot potato of risk is being continuously passed around.

While the real estate market is volatile like any commodity market, traditionally it is a lagging economic indicator. It’s like the last car in a multi-car fender bender. You can see the crash coming, but have no ability to avoid it. Therefore, while the commercial real estate sector may temporarily avoid the inevitable when the economy is in decline, the price it pays is often the heaviest.

The current overall stable and steady market is the result of the outstanding performance of some very hearty segments, others that are in economic cruise control, and lastly that portion on extended stay in the doldrums.

The investment sales market continues to be extremely robust. Due to the availability of investment opportunities with comparatively higher rates of return in the Western Mass. market, the area has experienced a surge of interest from investors outside of the market. The most notable examples are the sale/lease back of the Yankee Candle corporate headquarters in South Deerfield, the Potpourri Plaza office complex sale in Northampton, and the purchase of a large block of class B office properties in the Springfield central business district.

The most immediate factor that could calm this segment’s ferocity is a dwindling supply of investment property opportunities. For the time being, however, the push continues, and several pending transactions of significance will conclude in the next few months.

The vibrancy of the region’s hospitality sector is visible to everyone. Several new hotels have sprung up along I-91 recently. New hotels are planned for Northampton and Amherst. Judging by the always-packed parking lots at the Hilton Garden Inn and its neighbor, Uno Chicago Grill, business appears to be blistering.

Without question, the benchmark used most commonly to judge the overall condition of region’s commercial real estate market is the office component. Collectively the Class A office properties command the most attention because visually they dominate the landscape, symbolic of the region’s wealth and prosperity.

The office market is, and has been, controlled by two forces; one is the never-ending, musical-chair-like movement of office tenants from one building to another. While this has little beneficial impact upon market occupancy rates, it does create a nice ripple of new economic activity that beneficially impacts the building trades, the banking and legal communities, and a myriad of other enterprises, including, of course, real estate brokers.

The other compelling force is the absorption of vacant space by existing local companies expanding, new start-ups, and companies locating here for the first time. It’s the rare 100,000-square-foot lease that gets the media coverage, but it’s the small, 2,000-square-foot deals that are the foundation of the office market.

Overall, too much emphasis is placed on the office segment as a bellwether for the market in general. It just seems to get all the attention.

So, when asked, “how’s the market?” my answer will be, “solidly good, getting better, and always aspiring to be great.”

John Williamson is president of Williamson Commercial Properties; (413) 736-9400.

Academy of Music, WGBY Collaborate to Improve the Big Picture
Rus Peotter and Andrew Crystal

Rus Peotter, left, general manager of WGBY, and Andrew Crystal, president of the Academy of Music’s board of directors, say the new partnership between the two entities will improve fundraising, marketing, and community outreach efforts.

Rus Peotter says that, from a technical standpoint, it’s a “short-term investment.”

But the $50,000 loan from WGBY, the Springfield-based public television station he manages, to the financially challenged Academy of Music in Northampton is something he believes will bring long-term benefits to those cultural institutions — and the communities they serve.

The loan, made possible by an extension of the so-called ‘digital deadline’ — the date by which all analog stations must make the transition to digital broadcasting — from 2006 to 2009, thus freeing up some cash for WGBY, is the linchpin of an intriguing collaborative effort between the two non-profit entities.

In a nutshell, the academy gains some financial stability in the form of cash to pay down some debt at a time when the 800-seat theater has cut back on its schedule of movie showings and is struggling to meet fundraising goals. The station, meanwhile, gains some rent-free office space at the academy, some event space there for up to 10 uses per year, also rent-free, and, in the process, a bigger presence in a community that sits at the center of its coverage area and represents the station’s most supportive region per capita.

“Many people think of us as a Springfield station instead of a regional station,” said Peotter, “and this is an opportunity to get in front of a larger number of people.”

Beyond the visibility, however, the collaborative effort gives WGBY a chance to improve the long-term health of two cultural entities, he said, adding that he and others and at the station view this as an investment well worth whatever risk may be involved.

“Collaboration is really important for non-profits today, and it’s one of the primary reasons for this alliance,” he said. “It’s a move that we hope will allow two cultural organizations to enhance their core missions by bringing on more resources and by adding some horsepower.”

Andrew Crystal, vice president of O’Connell Development in Holyoke and chairman of the academy’s board, agrees.

“Our board thought very carefully on this decision, and it was approved to move forward with the goal of becoming a more community-based arts venue,” he said, adding that the partnership, unique among non-profit agencies, represents an imaginative effort to advance common goals.

This issue, BusinessWest looks at how it came together, and what it means in terms of the big picture.

Staging a Comeback

The agreement comes a month after the academy, opened in 1891, announced it would end regular showings of films, timing that prompted many to wonder if the landmark would be closing its doors to the public altogether due to financial constraints.

But Crystal said the move was made to help create a firmer financial future for the theater as what he called a “cultural hub,” and in turn to better brand the academy as such.

Programming is still relatively robust at the theater; in the coming weeks, for instance, the theater will host the Pioneer Valley Ballet’s rendition of Cinderella and the Pioneer Valley School for Performing Arts’ spring musical, Little Shop of Horrors.

Films with a foreign, art, or independent thrust will also continue, but on a less frequent basis, said Crystal, including showings of the acclaimed British documentary Young at Heart this month. The Jewish Film Festival has also been scheduled at the Academy this month, as well as the Northampton Independent Film Festival in November.

Still, Crystal added that financial pressures are in fact a reality as the academy moves forward. Fundraising has long been a struggle for the theater, which is governed largely by an 11-person board of directors who volunteer their time.

“It’s partly a manpower issue, and partly perception,” he said. “Our board includes the mayor of Northampton and the president of Smith College — these are obviously people who have many other things to think about. Plus, people still think of us as a movie theater, and it’s hard to translate why we need to raise money.”

Because of those issues, Crystal said the academy failed to reach its most recent fundraising goal, set forth in 2005, to generate about $200,000 in unearned income, or a third of its operating budget.

“We raised about half of that last year,” he said. “The norm for a non-profit arts venue is to have about 30% to 40% of its budget represented by unearned income, and we have never come close to that.”

He said neither he nor his fellow board members saw the academy’s fundraising woes as prohibitive to moving forward with new plans, but understood that it was a problem that required some outside assistance.

The contractually specific agreement that came about with WGBY is not common to the non-profit sector, and Peotter said it’s a model he hopes will be examined by similar outfits across the country, and possibly emulated.

“When a community’s arts and culture organizations have so much common ground, as do those in this region, they’re less inclined to collaborate,” he explained. “People go after the same pieces of pie because they don’t believe that pie can be grown — but it can.”

Next-stage Development

An 11-page description of the agreement details its many aspects, including the alliance’s mission to allow both entities to “provide each other with increased opportunities to carry out their respective goals and objectives … thereby enhancing the ability of WGBY and the academy to carry out their respective charitable activities.” The agreement will remain in effect for five years.

With fundraising such a large part of that philanthropic picture, Crystal said talks with WGBY began revolving around that topic, but soon expanded to include many other concerns.

“Increased, effective fundraising was the need that initially jumped out at us,” he said, noting that the academy would like to reach that elusive $200,000 mark and also increase its annual operating budget by as much. “But as we spoke, we began to see many other opportunities.”

To foster those developments, a number of cooperative measures were put into place through the partnership’s formal agreement, the biggest being that $50,000 loan.

It was this bullet point on which Peotter said he received the most questions from his 36-person board of directors. However, he explained that the funds were available due to the postponement of the digital deadline, which requires that all analog televisions and, subsequently, analog programming be phased out of use. The three-year extension left the station with an unexpected amount of previously earmarked funds held in short-term securities.

“That’s where most of the questions centered,” he said, “and the other question I heard often was, ‘why Northampton?’”

The answer can be found by looking at a map detailing the station’s coverage area, and in those demographic stats on donations to the station per capita, he explained, noting that agreement between the entities allows the station to host a greater number of live screenings or fundraising events of its own.

“As a public television station, we have access to a number of independent films that we often like to premiere prior to broadcast,” he said. “But beyond that, this is an opportunity for a greater number of face-to-face events in more places than we already do.”

The accord also stipulates that WGBY provide fundraising assistance to the academy, including help with the establishment of annual fundraising plans, to be drafted in conjunction with the academy’s newly formed fundraising committee.

The partners’ first foray into this area has already begun — a grant application from the Academy to the Massachusetts Cultural Council, which WGBY staff will assist in completing.

“That help will make for a more professionally prepared application,” Crystal said, “and in general I think it will strengthen our grant-writing capabilities.”
WGBY and the academy will also work to develop ‘co-branding’ opportunities, for the joint promotion of events and initiatives the two parties deem “consistent with their charitable purposes,” according to the formal agreement.

“The individual brands of both institutions are quite strong,” Crystal told BusinessWest.

“We each have a level of respect in the community,” he explained. “But through co-branding, fundraising, and promotion together, we can increase our visibility and the sense of goodwill we already generate separately.”

Waiting in the Wings?

As the partnership between the Academy of Music and WGBY moves forward, Peotter said he hopes to bring other cultural organizations on board — perhaps not to the same contractual degree, but in a way that creates a greater sense of community among like-minded groups and venues.

“That way, opportunities will continue to present themselves,” he said. “It’s always helpful to have non-profits look at challenges together, instead of as competitors.”

Jaclyn Stevenson can be reached at[email protected]


Dialed In

Listeners pledged a record-breaking $200,500 during the sixth annual WMAS Children’s Miracle Network Radiothon last month, surpassing last year’s total of $192,000. The money will support Baystate Children’s Hospital in Springfield. Event sponsors Health New England and Patriot Home Improvement matched $15,000 and $13,000 in donations, respectively. Other sponsors included Teddy Bear Pools & Spas and the Baystate Medical Center Auxiliary.

Tim Laporte of Carrabba’s Italian Grill in West Springfield flips pork chops outside on the grill; the restaurant provided food throughout the radiothon.

Hospital patient Adam Wiatrowski takes in the radiothon events with his parents, Amy and Rick Wiatrowski.

WMAS DJs Rob Anthony, far left, and Paul Cannon, far right, interview hospital patient Tatyana Berrios; her mother, Virgen Berrios; and Baystate’s Dr. Harold Hoar.


The following bankruptcy petitions were recently filed in U.S. Bankruptcy Court. Readers should confirm all information with the court.

Acevedo, Carmen D.
580 S. Summer St.
Holyoke, MA 01040
Chapter: 7
Filing Date: 02/04/07

Buchachiy, Stepan P.
44 Craig Drive, Apt. M3
West Springfield, MA 01089
Chapter: 7
Filing Date: 02/06/07

Chihai, Natalia
Monastyrev, Alexandre
P.O. Box 711
Becket, MA 01223
Chapter: 7
Filing Date: 02/02/07

Clifford, JodyLee M.
11 Irving St.
Easthampton, MA 01027
Chapter: 7
Filing Date: 02/05/07

Dejesus, Erick
55 Moxon St.
Indian Orchard, MA 01151
Chapter: 7
Filing Date: 02/01/07

Dickerson, Charlene
142 Dayton St.
Springfield, MA 01118
Chapter: 7
Filing Date: 02/01/07

Flores, Dennis
4 Liberty St., Apt. C
Easthampton, MA 01027
Chapter: 7
Filing Date: 01/31/07

Foley Investigations
Foley, Deborah J.
947 Burts Pit Road
Florence, MA 01062
Chapter: 7
Filing Date: 02/06/07

Kahara, Catherine N.
119 Ashley St., Apt. 2
Springfield, MA 01105
Chapter: 7
Filing Date: 02/05/07

Matz, Leonard
41 Belmont Ave.
Feeding Hills, MA 01030
Chapter: 13
Filing Date: 02/05/07

McAleer, Thomas J.
83 Gold St.
Springfield, MA 01107
Chapter: 13
Filing Date: 02/06/07

Murach, Jeffrey A.
194 Montgomery Ave. Ext.
Pittsfield, MA 01201
Chapter: 13
Filing Date: 02/01/07

Nguyen, Sa P.
52 Orlando St.
Springfield, MA 01108
Chapter: 7
Filing Date: 02/02/07

Ortiz, Ramona
65 Broadway St.
Chicopee, MA 01020
Chapter: 7
Filing Date: 01/31/07


Parkinson Joshua R.
Parkinson Residential Construction
7 Ranch Ave.
Easthampton, MA 01027
Chapter: 7
Filing Date: 02/06/07

Perman, Nancy A.
P.O. Box 493
Williamsburg, MA 01096
Chapter: 7
Filing Date: 02/05/07

Petcen, Kimberley J.
14 Oakdale Place
Easthampton, MA 01027
Chapter: 7
Filing Date: 02/05/07

Pinette, Nelson J.
Pinette, Ann M.
103 Division St.
Springfield, MA 01107
Chapter: 7
Filing Date: 02/05/07

Rodriguez, Angela
896 Saint James Ave.
Springfield, MA 01104
Chapter: 13
Filing Date: 02/02/07

Roman, Maria
688 High St., Apt. 2LB
Holyoke, MA 01040
Chapter: 7
Filing Date: 02/01/07

Santana, Miguel A.
39 Ainsworth St.
Springfield, MA 01108
Chapter: 13
Filing Date: 02/02/07

Scagliarini, William C.
Scagliarini, Linda A.
84 Federal Ave.
Agawam, MA 01001
Chapter: 7
Filing Date: 01/31/07

Smith, John F.
Smith, Marlene
8 Cedar Woods Glen
West Springfield, MA 01089
Chapter: 7
Filing Date: 02/01/07

Sullivan, Daniel P.
23 Drexel St.
Springfield, MA 01104
Chapter: 13
Filing Date: 01/31/07

Tierney, Bryan
110 River Road
Ware, MA 01082
Chapter: 7
Filing Date: 02/01/07

Townsley, Richard W.
350 Peckville Road
Shelburne Falls, MA 01370
Chapter: 7
Filing Date: 02/05/07

Vine, Michael Charles
Vine, Linda Josephine
111 Roosevelt Ave.
Chicopee, MA 01013
Chapter: 13
Filing Date: 02/06/07

Sections Supplements
The Growing Impact of the Alternative Minimum Tax

The alternative minimum tax, or AMT, is a separate system of tax that was originally enacted to prevent high-income taxpayers from avoiding income tax liability by claiming numerous deductions.

The AMT was initially introduced in 1969, after the secretary of Treasury reported that 155 people with adjusted gross income in excess of $200,000 (the equivalent of more than $1,000,000 today) had paid no federal income tax. To prevent taxpayers from taking unfair advantage of tax benefits, such as special deductions and allowances for certain kinds of income, the AMT is a separately calculated tax system that treats selected tax preferences and adjustments less favorably than the regular income tax does. Because the AMT is not indexed for inflation, it is affecting a growing number of taxpayers. In 1990, approximately 132,000 individuals paid the AMT; in 2000, approximately 1.3 million taxpayers paid it, and it is projected that approximately 17 million people will pay it in the year 2010.

The stated goal of the AMT was to make sure that everyone with significant income paid some federal income tax. It was enacted out of concern that certain high-income taxpayers either were or were perceived to be exploiting the system by taking numerous deductions and thereby avoiding income taxes. Although the AMT actually has a lower top rate than the regular income tax, it defines the term ‘taxable income’ far more broadly then the regular income tax by denying certain deductions, reducing other deductions, and limiting other steps used to reduce tax liability. The AMT tax rate is 26% for the first $175,000 of income minus permitted exemptions, and 28% for income in excess of that amount. The exemption is $45,000 for married couples filing a joint return, or $33,750 for single filer or head of household. This structure is designed to prevent the tax from impacting low-income taxpayers.

All taxpayers potentially affected by the AMT must file a special form (IRS Form 6251), even if it ultimately turns out after the calculations are done that the tax is not owed. In 1997, only about 20% of the 4.4 million taxpayers who filed the form actually had to pay AMT. If the AMT calculations result in a higher tax, the taxpayer must pay that higher amount, technically by paying the ordinary income tax, plus the difference between the AMT and that ordinary tax. This distinction matters because taxpayers subject to the AMT may be entitled to a credit, which can reduce their tax liability in future years.

Taxpayers take four steps to determine the AMT:

  1. Calculate regular income tax;
  2. Determine whether the AMT may apply;
  3. Complete IRS Form 6251 to recalculate taxable income using the AMT rules, thereby determining the ‘tentative AMT’; and
  4. Compare the regular income tax before credits with the tentative AMT and pay whichever is greater.

Generally, tax items that cause AMT liability include claiming too many exemptions or deductions, either in number or total dollar value, or claiming some of the most common deductions that are permitted under the ordinary tax system but not allowed under the AMT. Among the most common adjustments or preferences permitted under the regular income tax but disallowed under the AMT are the standard deduction, as well as deductions for state and local taxes, interest on second mortgages, medical expenses, miscellaneous itemized deductions such as unreimbursed employee expenses, tax-preparation fees, and investment expenses. The AMT also disallows the favorable tax treatment the regular income tax rules afford to various credits, long-term capital gains, incentive stock options, tax-exempt interest, and tax shelters.

As the foregoing suggests, there is no easy rule of thumb for avoiding the AMT. If a taxpayer’s regular income tax return contains too many of the deductions, exemptions, and preferentially treated items allowed under the income tax rule but disallowed under the AMT, the AMT will be triggered, and, generally speaking, each of those items will be disallowed or treated less favorably.

While the AMT has changed over the years, it is currently controversial, in large part because of its increasing impact on taxpayers. It is very complex, costly to comply with, and can have extreme consequences in terms of tax liability. Although the exemption has periodically been raised, the fact that it is not indexed for inflation means that the number of taxpayers it impacts will continue to grow. The Treasury Department estimates that in 2004 3.3 million taxpayers will be affected by the AMT, and that if the AMT is not changed, the number will grow to 16.2 million in 2005 and to 46.4 million in 2014. There are currently multiple bills pending before Congress to repeal or amend the AMT.

Brenda Doherty is an associate with Doherty, Wallace, Pillsbury & Murphy, concentrating in the area of general business and taxation; (413) 733-3111.

World Affairs Council Brings Global Issues to Light with a Local Focus
Cyd Melcher

Cyd Melcher, administrator for the Springfield-based World Affairs Council, said discussion of timely international subjects often leads to greater understanding and tolerance of various opinions.

Following 9/11, World Affairs Council Administrator Cyd Melcher said she was struck by how many people knew very little about the world, and how various parts of it perceive the United States.

“So many people were saying, ‘why do they hate us?’” she said of the terrorists who attacked the country. “I saw a major disconnect between what people saw and understood of the world, and what was really there.”

That realization led the World Affairs Council of Western Mass. (WAC), part of the largest international affairs non-profit in the country, to look more closely at its educational programming and how the organization could positively affect awareness of global issues among the local population.

In some ways, that’s a tall order, but it’s not a mission that is entirely foreign to the council. The WAC is one of 85 such councils across the country, and in fact was one of the first councils to form, in 1926.

Since that time, the council has provided educational opportunities for adults and students in various forms, geared toward a better understanding of the world at large.

But today, with international issues playing a role in everything from homeland security to gas prices, the WAC is redoubling its efforts in order to attract a wider, more diverse audience. Melcher said those efforts are more necessary than ever in today’s tenuous world.

“People are starved for well-informed conversation,” she said, “as well as for civil, interesting conversation. They read the headlines, and they have both the want and the need to talk about them.”

But beyond that, Melcher said conversations regarding the global economy, politics, religion, and other areas can become highly charged, and the WAC is also an outlet for conversation that includes and values differing opinions and perceptions.

“Sometimes people disagree, and disagree passionately, on an issue,” she said. “But what makes us different is that at one of our events, people are allowed to speak long enough that others hear how they feel, and begin to understand why.”

The Power to Speak

Ken Furst, president of the WAC board of directors and a principal of the Momentum Group in East Longmeadow, said there are a few programs in place within the WAC that achieve that goal, including an international visitors program, through which the council sponsors foreigners visiting the area, and facilitates meetings with various business and government officials, as well as residents of the region.

“These are State Department-sponsored guests who are here to get a better understanding of what America is all about,” said Furst, noting that while the WAC works with government-sponsored visitors and ambassadors regularly, the organization is not federally operated. “Some of these visitors want to see how local governments run, and some have more specific requests, like visiting rural schools.”

The largest programming aspect for the Western Mass. council, however, is bringing dynamic speakers and experts in various fields to the area, to offer insight into a wide array of global issues.

“We bring in speakers that are experts in international and world affairs, political and cultural issues, and topics that are timely and ongoing, such as what’s happening in Iraq and Iran, or Latin America,” said Furst. “It is an organization that promotes people-to-people diplomacy.”

In the past, speakers have included Q. Ketumile Masire, former president of Botswana, who led a program on developing sustainable leadership in Africa; Ambassador Phyllis Oakley, former assistant secretary of State, who addressed the topic of anti-Americanism; Ambassador Mark Hambley, former U.S. ambassador to Lebanon and Qatar, who spoke to the U.S. presence in Iraq; and Hugo Restall, editor of the Far Eastern Economic Review, who offered insight on the possibility of India overtaking China as the next superpower of the global economy.

Furst added that, as a non-partisan group, the WAC strives to book speakers who can report on many different aspects of major global issues, including foreign affairs, the environment, war, and education.

“We help promote understanding of what’s going on,” he said, echoing Melcher. “We’re not, for example, necessarily for or against the war in Iraq. The speakers may have a point of view, but we try to achieve a balance; we aren’t there to judge as much as inform.”

Speakers are put in front of the public through regular luncheons called Brown Bags, which began about two years ago and offer frequent low-cost, easily accessible seminars during the lunch hour in downtown Springfield; the WAC also hosts occasional dinners. A program called Classroom Conversations, which places speakers, including diplomats, military personnel, academics, and others in area schools, is one aspect of the WAC’s expert-led seminars that is gaining speed, Furst said.

“The students speakers address are usually high school students in the Springfield area, and our speakers have already talked to about 500 students this season,” he said, leading into another council objective that has been ramped up in recent years.

To capitalize on the growing interest among student populations in the WAC’s work, the council has expanded its academic programming to include a national offering, called Academic WorldQuest.

WorldQuest is an annual competitive quiz open to public high school students on both regional and national levels, which charges them with answering questions on current events, geography, and world leaders.

The WAC formed a school partnerships committee, chaired by member Daphne Hall, and opened the competition to Springfield high schools in 2004. This year, the winning team, from the High School of Science and Technology, has advanced to national-level competition, to be held in Washington, D.C. this month.

The council’s academic efforts haven’t gone unnoticed. Last month, the agency was presented with the 2006 Carol Marquis Award for School Excellence at the national conference of the World Affairs Councils of America in Washington, D.C. The award was given for outstanding growth and development of the Council’s educational system over the past year, and Furst said the honor added some significant weight to the council’s efforts.

“Because of our increased activity educating students, we were recognized for our educational programming, and recognized for the growth in the program,” he said. “It proved that we don’t have to be the biggest group to be noticed. We’re smaller than most councils, but we have a good group of people.”
Melcher added that the educational aspect of the WAC’s work has been the area of which she is most proud.

“It benefits both adults and students,” she said. “Students who are involved become more aware of the world on a deeper level, and I’m also impressed by how many adults change their opinions of high school students.”

The Opportunity to Listen

Moving forward, continued education — not only of students, but of the adult population — will remain a key objective for the council. To that end, the WAC will be zeroing on some key issues over the course of the year, such as the importance of global issues to common business practices, the ever-changing workplace, and the global economy.

That, Furst said, will also allow the council to take a closer look at the region’s business community, and how the council can better integrate itself therein.

“There’s a lot of information given out through the council regarding trade between us and foreign countries, and knowing and better understanding the countries they’re working with helps local businesses,” he said. “We’ve had meetings on the outsourcing of goods in the U.S., for instance, at which we looked at the pros and cons.

“People may not like to hear about the topic of outsourcing,” he continued, “and they might not like the fact that so many goods are being made in China. But that’s not going to help us. Understanding why, however, will. That allows us an opportunity to make that knowledge work to our advantage.”

Furst said the council would also like to better promote its unique networking opportunities, which include international contacts and resources both locally and abroad, available for members’ use.

“We have access to diplomats, non-governmental organizations, libraries, and other sources,” said Furst, “and we can also refer to our database, which includes academics, world travelers, exporters, former Peace Corps volunteers, language experts, and native-born citizens of a number of countries.”

To create stronger relationships with local businesses, Furst said the council hopes to promote membership at an employee level among various companies in the area, and also boost the WAC’s number of event sponsors.

Currently, about 35 businesses and organizations are involved with the council on various sponsorship levels, ranging from benefactors to patrons to basic members. Those outfits include colleges, banks, advocacy groups, foundations, and both public and private companies of varying sizes and industries.

The Need to be Heard

Even with such a wide gamut of services and members, however, Furst said the council still struggles with recognition in the area, of both its name and mission.

With a board that is entirely volunteer-based except for Melcher, the WAC’s sole paid employee, translating its mission can be a challenge, and outside of some specific circles, Furst said, there are still many businesses and individuals in the area still unaware of the World Affairs Council or why it might be relevant to their businesses or daily lives.

“We use all means we can to get better-known, but sometimes we think we are the most well-kept secret in the area,” he said. “What’s important is that we always have our mission in the forefront of our minds — to keep the population better informed on what’s going on in world affairs, so they get a better understanding of the world as it gets flatter and smaller.”

Melcher said that flattening of the world is the result of all politics indeed becoming local, along with business trends, environmental concerns, and societal issues.
But flattened as it may be, the world is still a very big place. Melcher said the act of conversation, as simple as it sounds, opens many doors that lead to more awareness and intuitiveness of complex issues that are relevant worldwide — and through knowledge comes understanding.

“If we’re asked what the best result of the World Affairs Council is, I’d have to say it’s people taking a greater interest in the world around them,” she said. “If someone gets into the habit of reading the New York Times a few days a week to stay current … I’m happy with that.”

Jaclyn Stevenson can be reached at[email protected]

Sections Supplements
New Alliance Bank Makes Its Presence Known
Peyton Patterson

New Alliance Bank chairman, president, and CEO Peyton Patterson

New Alliance Bank staged an elaborate ceremony last month to unveil its name and logo at the headquarters of the former Westbank, the institution it purchased last fall to effectively make its entry into the Western Mass. market. Long before the new signs went up, however, the New Haven-based giant, now with 88 branches and $8 billion in assets, was letting people know it had arrived.

Peyton Patterson says the phrase ‘community bank’ is not exactly a technical term within the financial services sector.

In other words, there are no strict guidelines, in her mind, that delineate which institutions may use that qualifier — at least from the standpoint of size, geography, and whether the bank is publicly traded, although many believe there are such parameters. Instead, ‘community bank’ is more of a look or a feel, rather than a benchmark for assets, deposits, or territorial reach, she explained.

“I think customers ultimately decide if something is a community bank … they feel that way when they sense a warmth and attitude from the company,” said Patterson, chairman, president, and CEO of New Haven-based NewAlliance Bank, an institution she believes is well-worthy of that term. This, despite the fact that it now does business in two states, Connecticut and Massachusetts, has 88 branches and plans to add to that total, and boasts more than $8 billion in assets, making it the sixth-largest bank currently doing business in Western Mass.

And it is this community-bank feel, as she called it, from an institution with regional bank size and commercial loan limits — a business model summed up in one of the bank’s marketing slogans: “capital ideas, human values” — that should enable NewAlliance to thrive in the Greater Springfield market.

And by thrive, she meant both retention of Westbank customers — 90% is considered the industry average for such transitions, but she projects a much higher number in this case — and what would constitute new business, or overall growth in market share.

The bank staged an elaborate ceremony to unveil new signage at the former Westbank headquarters building on Park Street in West Springfield late last month, but the bank was making its presence known long before the tarp was pulled back by Patterson and the city’s mayor, Edward Gibson. Indeed, by then, it had already added the Basketball Hall of Fame as a new client, and was deep into an aggressive push for new commercial and consumer business.

NewAlliance, comprised of six community banks, has the people and wherewithal to make a significant impact, said Patterson, noting that the team includes several long-time Westbank employees and some newcomers to the local market. And it will have significant resources with which to work; NewAlliance is roughly 10 times the size, assets-wise, of the former Westbank, and could have exponentially more lending capacity as well.

This potent combination should serve NewAlliance well in a market that is seeing limited residential and commercial growth and is, by almost any measuring stick, overbanked. And it will likely facilitate further growth in the market, be it organic in nature or through further acquisitions, she said.

“We will likely be pretty aggressive in this market,” said Patterson, “and most likely continue to grow in Massachusetts and add scale here.”

In this issue, BusinessWest looks at the new bank on the block and what its leadership team has in mind for the Western Mass. market.

Transition Game

Patterson said that there is no such thing as a ‘typical’ bank conversion, or transition, such as the one from Westbank to NewAlliance.

Each one is different, somewhat challenging, and certainly a learning experience, she said, as a group of employees adapts to a different culture and a customer base adjusts to a new name and roster of products. ‘Seamless’ is the word banks always use to describe these processes, she continued, but a transition is never really that.

Making the seams as innocuous as possible is the more realistic goal, she said, adding that early signs show that this is being accomplished with this transition.

There are some quantitative measures for gauging a conversion, she said, starting with the numbers at the bottom of customers’ statements. If they are what they should be, then the bank is off to a positive start. Then there are the retention numbers, usually calculated several months after the switch is thrown.

But there is a qualitative measure as well, said Patterson, using the term “comfort zone” to describe what she wants to create between her bank and the Western Mass. community. It starts with employees, she said, many of whom had never heard of NewAlliance before last fall.

“You want employees, especially those on the front lines, to have a comfort level, a feeling that these are the kind of people they want to work for,” she explained, “so they can feel good about recommending us to their customers, who are very often their neighbors.”

Patterson has had considerable experience in coordinating transitions. Indeed, the Westbank conversion is the sixth she’s orchestrated since coming to NewAlliance, then called New Haven Savings Bank, as president in 2002 and, two years later, successfully completing the largest bank IPO conversion in U.S. history. Those are some of the accomplishments that have helped put her on the top-10 list for banking CEOs nationwide, as ranked by U.S. Banker magazine, and positioned her at number 2 in that publication’s compilation of the nation’s “25 Most Powerful Women in Banking.”

Her ascension to that status has been nearly 25 years in the making, a banking career that has taken her from Philadelphia to New York to New Haven. A Political Science major in college, Patterson went to work for a law firm upon graduation, but two years in that environment and work on a huge anti-trust case convinced her that she didn’t want to be a lawyer. She shifted gears and went into banking, and never left.

After earning an MBA at George Washington University, she went to work for Corestate Financial Corp. in Philadelphia, rising to the position of vice president of Marketing and Product Management. She was recruited to Chemical Bank in New York, eventually ascending to senior vice president and business manager of the Consumer Asset Group. In late 1995, she went to Chase Manhattan Bank as senior vice president and director of the National Financial Services Group, before moving on to Dime Bank Corporation, where she served as executive vice president and general manager of Consumer Financial Services, solidifying her reputation as a change agent.

While she flourished at Dime Bank, with responsibilities including management of 200 branches, Telebank, ATM, and online banking programs, she eventually concluded that she wanted something different — a community bank to manage and take places.

Those were the instructions she left with a headhunter, and he found her such an opportunity at New Haven Savings, a mutual bank. “I thought that I had accumulated a lot of big-bank experience, and was a true believer in the community-bank model,” she explained. “I felt that, given the experience I had, I could do something and do it well.”

After setting a new record for a bank IPO ($1.5 billion), Patterson and the team at New Haven Savings went about leveraging that capital. The institution purchased the Savings Bank of Manchester and Tolland Bank, and merged them with New Haven Savings (going from $2 billion in assets to $6 billion in the process) to create NewAlliance Bank. This was a name, said Patterson, that bank officials believed they could take wherever they desired to go because it did not connote a city, region, or state.

Eventually, they would take it to Western Mass. (more on that later), but not before first acquiring two more banks based in the Constitution State — Trust Company of Connecticut in July 2005, and Cornerstone Bank in January 2006 — giving NewAlliance more than $7 billion in total assets.

Patterson described NewAlliance’s push into Western Mass. as a natural extension, because the bank was already doing business in several communities near the border, including Enfield. After a chance meeting with then-Westbank President Donald Chase several years ago, talks between the two institutions ensued and eventually led to acquisition discussions.

Westbank appeared a good fit, she explained, because it operated a few branches in Connecticut’s Windham County, near the Rhode Island line; had 11 branches clustered in the Springfield area, many near the Connecticut border; and shared a culture similar to NewAlliance’s.

Westbank, Patterson explained, would help NewAlliance better and more completely serve the Hartford-Springfield region, called the Knowledge Corridor in economic development circles, which she considers to be one market.

“We saw, with the growth we were experiencing in the Hartford market, that not only did a number of customers bank with us on the commercial side in this marketplace (Western Mass.), but we viewed the Springfield-Hartford market as one region,” she said. “We wanted something with a branch presence so that we could not only serve the lending needs of clients, but be able to serve the needs of people on the deposit side as well.”

Balancing Act

The ‘sameness’ in corporate culture, as she called it, should help contribute to an almost-seamless transition, an attrition rate far below the 10% industry average, and effective pursuit of market share.

The first step with all three assignments is achievement of that aforementioned comfort level with the institution, she explained, adding that this will be accomplished through work on several fronts with a variety of constituencies, including employees, customers, the area’s business community, and the public at large.

Many introductions were made at a ‘customer appreciation event,” staged at the Log Cabin Banquet and Meeting House late last fall. Usually, such a gathering might attract 50 to 100 people, said Patterson, but this one lured more than 300.

The effort to achieve a comfort level has taken other forms as well, including marketing initiatives that include something called a “friendly faces campaign,” ads showing many long-term lenders and personal bankers that are designed to show that little has changed other than the name on the building. Meanwhile, the NewAlliance Foundation, one of the largest of its kind in the country with more than $6 million, has awarded checks to several area groups as a way to show the bank’s commitment to the Western Mass. community of which it is now a part.

The second stage in this effort involved the new signage, completion of employee training, and a hand-holding process that included both employees and customers, Patterson said, adding that stage three, which is still ongoing, is the work to show the bank’s current and prospective customers “what’s better” about this institution.

“That’s because the competition has already started its work,” she explained. “The most vulnerable time for any bank is when another bank takes it over, because the competition starts saying, ‘you don’t want to go with them; you want to stay with us because we’re local.’

“That’s part of the game, the competitive process,” she continued, adding that NewAlliance is monitoring other banks’ ads to see what they are saying and doing.

It’s a healthy process … we just have to prove we’re better.”

And this brings her back to that discussion about what constitutes a community bank.

Patterson told BusinessWest that NewAlliance has shown in other markets that it can effectively compete with smaller community banks, such as the ones that populate the Western Mass. area, because it thinks and acts as they do, and also with the regional institutions, because of its size and lending capacity.

“There were many doors that Westbank’s lending officers couldn’t knock on, but now they can do that, and we’re already knocking on those doors,” she explained, adding that one of them was the Hall of Fame’s. “That’s not a transaction that Westbank could have done.”

Part of the growth strategy involves what she called “building share of wallet.” By this, she means broadening relationships — and providing more services — with customers on both the commercial and consumer sides of the ledger.

“We’re pretty aggressive,” she said of NewAlliance’s general approach to business. “We have a very productive sales force with a big appetite for growth.”

Net Results

When Patterson was a student at tiny Kenyon College in Gambier, Ohio, she successfully orchestrated the formation of a women’s basketball team — and then played on it as a center/forward.

She summoned some of those skills at a recent event at the Basketball Hall of Fame, at which she played a game with area youngsters and some professional players to raise money for charity.

It was all part of creating that comfort zone, she explained, adding that she believes NewAlliance is scoring points with customers and the community on a number of levels.

And that bodes well for the newest addition to the region’s banking landscape — by all accounts.

George O’Brien can be reached at[email protected]


Take in a public hearing on tax-rate classification in any local city with a split rate, and you will likely hear some long-time resident rise out of his or her chair and say, “raise the taxes for businesses … they can afford it.” Or something to that effect.

This is an attitude that also seems to prevail among many local office holders — who often have only the local chamber of commerce to offer a differing opinion and thousands of voting homeowners filling their ears — not to mention many in the Statehouse. They won’t use that language, or anything approximating it, but their actions often convey that basic belief.

This is part of the reason why ‘Taxachusetts’ came to be part of the lexicon, and we fear there may be good reason to start hearing it again after many years in which it didn’t apply as much as it has historically. It’s not one big thing that is causing alarm bells to start ringing, but lots of little things that, together, could add up to something big and troublesome.

The latest was Gov. Deval Patrick’s proposed changes that would ultimately raise the income tax burden paid by businesses by some $500 million a year. He calls it “closing loopholes,” but it amounts to a tax hike. The bottom line is that, if these proposals become reality, businesses will have additional expenses, and they will have to recover them through higher prices, smaller raises and reduced benefits for employees, or other steps.

That is the basic math, and it really can’t be argued.

But there’s more to this than adding a few cents to the cost of a loaf of bread or a microchip, increases that most consumers won’t notice and certainly won’t attribute to a governor closing tax loopholes. Indeed, if the small additions to the cost of doing business in this state keep coming, then eventually, companies will start going — to other states that have a more realistic take on how much businesses can afford.

Patrick’s initial response to early criticism of his tax proposals from the Greater Boston Chamber of Commerce is to say that it is a minor increase in the overall corporate income tax burden, 4% by his administration’s estimates. He’s right, but he’s missing the larger point — that this hike comes on top of a larger loophole-closing tax-burden increase implemented by a Romney administration that, by and large, did little if anything to improve the business climate in this state, and, in fact, made it worse.

During his tenure, companies doing business in the Bay State were visited by increases in unemployment insurance levies and a new health care insurance program that will add tens of millions of dollars in additional burden for the business community. Add up all these small paper cuts, and it could amount to a fairly substantial wound, one that might give business owners thinking about coming to Massachusetts or expanding here some good reasons not to.

Like Romney before him, Patrick is faced with a difficult budget situation and choices to make about how to address it. And Romney, like most politicians, to be fair, veered away from the hard choices and chose those that were easier and more politically correct — like closing tax loopholes for businesses that, as everyone knows, can afford it.

But, also like Romney, Patrick was swept into office on the wings of rhetoric to the effect that he would strive to make the Commonwealth a more attractive place in which to do business, something that needs to be done in a state where job growth has been anemic, at best, since those robust times before 9/11.

A small increase in the income tax burden, by itself, is not a huge deal, but, when put in the context of other steps taken lately, it is another sign that the pendulum is swinging in the wrong direction.

Like that homeowner at the tax classification public hearing, the governor and all those on Beacon Hill should understand that there are limits to what businesses can afford — and this state simply cannot afford to ignore that.