Hartford Business Journal

www.HartfordBusiness.com • July 22, 2019 • Hartford Business Journal 19 SPECIAL REPORT: CITIES PROJECT director of New Haven's Office of Busi- ness Development. "I think the use of the program has coincided with the influx of invest- ment [into New Haven] generally," Fontana said. Fontana said property owners and investors seem to like the certainty the program offers. There are no pub- lic hearings or political votes to sweat over. Developers just have to meet the program's requirements to qualify. New Haven's other major develop- ment incentive, Fontana said, is the En- terprise Zone Assessment Deferral Pro- gram, which is targeted at distressed municipalities. It's limited to a certain area and certain types of businesses, but it comes with similar property- tax benefits, as well as a credit on the state's corporate business tax. As of May, New Haven had 110 prop- erties enjoying tax breaks from both programs, with a combined taxable assessed value of $41.5 million. But as their exemptions expire, their assessed values will rise by an estimated $182.7 million by 2020, according to Alex Pullen, act- ing city assessor. A major portion of that anticipated growth is attrib- uted to 100 Col- lege St., an office high-rise that until recently head- quartered Alexion Pharmaceuticals. That 14-story, 513,000-square- foot tower, which cost $100 million to build, enrolled in the Enterprise Zone program and was completed in 2016. Its 10-year Enterprise Zone tax phase- in began last year. Fontana said incentives can be effec- tive in stimulating growth but should only serve as a "final piece of a conver- sation." "There's no amount of money a com- munity can offer someone to come to a place they're not interested in devel- oping or investing in," he said. He said he is also well aware of criti- cisms of tax incentives and that it's unde- niable that some may receive an incen- tive who would have invested anyway. "But we've made other projects feasible that otherwise weren't before," he said. Windsor, Bloomfield make economic hay with incentives When developers or prospective em- ployers approach his town with an ap- peal for property-tax relief to finance a building or open doors, Windsor Town Planning Director Jim Burke is ready to respond. After all, with property taxes as its dominant local revenue source, Windsor jealously guards it as well as its standing policy that at least 40 percent of its rev- enue come from commercial taxpayers, the rest residential, Burke said. "Our objective with our policies,'' he said, "is we're trying to keep a high portion of our grand list in com- mercial proper- ties. We want to have a diverse economy here … to attract people with high skills and those with moderate skills.'' From 2006 to present, Windsor, with its 32.96 mill rate, has approved nine property-tax abatement applica- tions for developers of manufacturing and Class A office spaces, or any project involving $60 million or more of invest- ment, Burke said. Prior to that, the town had granted none — a lapse that resulted in several development proposals that ultimately rooted in neighboring communities, Burke said. He declined to identify them. At one point, Windsor offered limited funding to developers to lay drainage, roads, utility lines and other pre-project infrastructure. That was replaced, Burke said, with the town's present tax-abatement regimen. One of the town's largest develop- ments in the last decade was the building of a $175 million distribu- tion-warehouse occupied by Walgreens phar- macy. Windsor awarded it a seven-year prop- erty abatement that expired in 2017. Windsor has done shorter, three-, four- and five-year abatements for others, Burke said. The Walgreens facility, which employs hundreds and supplies some 275 Wal- greens stores in New England and New York, also received $5 million in state assistance. The town is careful, he said, to verify that awardees live up to their abatement terms. Tax-break benefi- ciaries provide the town with two sets of data, to track compliance, such as timely permit filings and on-site inspections. Award recipi- ents who leave or close shop before the abatement expires, Burke said, must repay all of what they would have owed the town in property taxes without it. Bloomfield's experience Windsor's next-town neighbor, Bloomfield, too, has found success with limited offerings of tax incentives, pri- marily to encourage existing commer- cial taxpayers to invest in the town. Jose Giner, the town's planning and economic-development director, says Bloomfield, which currently has a 37.52 mill rate, in the past has granted proper- ty-tax abatements benefiting Geissler's Market, Kaman Corp., Pepperidge Farms, HomeGoods, Trader Joe's, Derringer-Ney and Niagara Bottling, among others. Its newest applicant, health insurer Cigna Corp., recently won tentative town approval for a tax abatement tied to its planned $90 million renovation of the historic Wilde office building. The abatement runs for up to nine years — four years beyond Bloomfield's standard five-year abatement — and would save Cigna $2.7 million over that time period. The town, however, would receive over $8 million in additional property-tax revenue during the abatement period, atop Cigna's annual $2.4 million real-and- personal-property tax levy. The town also stands to draw from permit fees related to the renovation totaling around $800,000, Giner said. It's a delicate balancing act, Giner said of his town's obligation to resi- dents to collect all fees and property- tax revenue to which they are entitled to pave roads, upgrade facilities, pay down debt, and provide cultural-edu- cation programming to residents. Yet, ongoing competition between Hartford and its suburbs for revenue- generating property development and job creation pressures Bloomfield to act to at least retain what it has. "People say we're giving up money,'' Giner said. "But we don't have that money yet." Property-tax discounts and other incentives, he added, are unlikely to disappear soon, among urban and suburban communities. "Nobody likes to do them,'' Giner said. "But the reality is you're in com- petition. As long as we have property taxes as a primary source of revenue, we're going to have them.'' place to invest in properties." "A good deal is where both sides compromise and get something and that's the case with the city and Shel- bourne," he added. Mayor Luke Bronin said abatements aim to maximize tax revenue and help the city blunt boom-and-bust cycles that have stunted commercial real estate values in the city for decades. "What's happened for a long time is that you've had properties that have begun to fail because of the tax burden they have," Bronin said. "They then go into foreclosure, get purchased out of foreclosure and the new owners buy away tenants" from other buildings by offering below-market rents, which "they can do because they purchased the buildings cheap. Then you have other buildings that suffer and face that same cycle. Our goal is to try to preserve stability in the commercial market so we can begin getting values up in a more consistent way." Here are terms of the tax-lowering deal between the city and Shelbourne: • 100 Pearl St.: The city fixed, until its next revaluation, the blue-hued skyscraper's assessed value at just over $15 million. As a result, the building's property tax bill for the 2017 grand list year was lowered to $1.1 million from an estimated $1.8 million, city records show. • 20 Church (Stilts Building): Fixed assessed value at $19.9 million; for the 2017 grand list, the building's property tax bill was lowered to $1.5 million from an estimated $2.3 million, city records show. • 36-70 Talcott St.: Shelbourne agreed to pay the city $3.1 million in back taxes on the parking- garage property known as One Talcott Plaza, in the process as- suming ownership from parking magnate Alan Lazowski. Overall, Shelbourne agreed to invest $10 million over five years to purchase and fully renovate the garage. In return, the city agreed to reset the value for the 36-70 Talcott St. parking properties as of the Oct. 1, 2016, and Oct. 1, 2017, grand lists at zero, mean- ing no tax on the properties for those periods. However, both parties agreed to an assessed valuation of $1.44 million for the 2018, 2019 and 2020 grand lists. • 30 Talcott St. office building: The city reset its tax assessments for its 2016 and 2017 grand lists at zero. The city also fixed the building's value at $42,805 — half its 2016 assessment — for 2018 through 2020, city files show. Walgreens got a tax break for its $175 million distribution center in Windsor. Bloomfield Planning and Economic-Development Director Jose Giner said tax-break deals are necessary these days. Alex Pullen, Acting City Assessor, New Haven PHOTO | HBJ FILE PHOTO | CONTRIBUTED

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