Hartford Business Journal

24 HARTFORDBUSINESS.COM | MAY 29, 2023 FOCUS: Municipal Economic Development Developer Dan Czyzewski built a 44-unit luxury apartment, mixed-use space in New Britain (shown in background) using a $250,000 tax increment financing revolving loan to offset some of the project costs. HBJ PHOTO | STEVE LASCHEVER Economic Stimulus After 2015 law revision, more CT municipalities use tax increment financing to spur new development By Hanna Snyder Gambini hgambini@hartfordbusiness.com A new version of an old economic development tool — tax increment financing — is gaining traction among municipal leaders and developers who say it carries little risk and great reward, with several Greater Hartford projects serving as proof of its potential. Tax increment financing, commonly referred to as TIF, is a development finance tool that uses new or incre- mental tax revenue generated by a completed project to repay the costs incurred to fund it. TIF is not a new concept — it's been around for nearly 30 years — but a 2015 state law made it more accessible, with project oversight and fund allocation now in the hands of local municipalities. Prior to 2015, cities and towns needed special state legislation to establish TIF districts and programs. TIF was often used to repay bonds issued to finance large-scale developments, notably Steelpointe Harbor in Bridgeport and Harbor Point in Stamford. Now under local control, TIF is used in a variety of ways and often on a smaller scale. Each TIF district — and the finan- cial terms under which project money is given, paid back or reimbursed — is unique. Municipalities are using TIF options like credit enhancement agreements, low-interest or forgivable loans, and funds for land acquisition, brownfield remediation, infrastructure or initial project development. Towns typically establish a TIF account funded with incremental tax revenue from a development, which is then used to reimburse developers or fund new projects. Windsor Locks was the first municipality to use the post-2015 TIF law for the $62-million redevel- opment of the historic Montgomery Mill industrial property into a 160-unit apartment complex. The town established the TIF district in 2015, and crafted a 10-year credit enhancement agreement with Boston-based developer Beacon Communities, which completed the project in 2020. The deal allows Beacon to get back nearly $83,000 a year for 10 years from incremental tax revenue generated by the development — more than $800,000 in total. The property in 2015, before the redevelopment, was generating around $10,000 a year in taxes. This year, the apartments will generate $284,000 in property tax revenue. The town now takes in about $200,000 a year from that incremental tax revenue, which is used to support other projects in the TIF district. First Selectman Paul Harrington said the TIF deal helped get the Montgomery Mill project rolling, and is now helping the town fund other developments in the downtown district that would otherwise never get off the ground. Since 2015, TIF districts have also spurred developments in Bloomfield, Windsor, Bristol, New Britain, Enfield and Cheshire. Deal safeguards In 2019, Cheshire created a TIF district in its north end encompassing more than 600 acres. Within that area are a number of parcels and projects — including the 100-acre mixed-use Stonebridge Crossing development. The massive project includes plans for hundreds of apartments and townhomes, retail plazas, restau- rants, a grocery store, hotel and senior living facility. The town entered into a TIF credit enhancement agreement with prop- erty owners and developers Tri-Star Development and Miller, Napolitano and Wolff to install infrastructure for the property, such as water and sewer lines, roadways and sidewalks. In return, the town will reimburse the developers up to $7 million of that cost through future tax revenue generated by the development. Part of the agreement states devel- opers have to increase the property value by $50 million, $15 million of which must be in commercial devel- opment. That part was a safeguard added to ensure the development wouldn't be all residential, town officials said. A 2021 feasibility study by Goman+York Property Advisors estimated the project will add $167.8 million in market value, yielding about $3.9 million in annual prop- erty taxes. Cheshire Economic Development Director Andrew Martelli said development of that previously-vacant area would not have happened without the TIF deal Andrew Martelli

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