Hartford Business Journal

HARTFORDBUSINESS.COM | MAY 29, 2023 25 FOCUS: MUNICIPAL ECONOMIC DEVELOPMENT because the infrastructure costs were prohibitive for developers, and taxpayers weren't in favor of bonding for the work. Creative TIF financing New Britain Mayor Erin Stewart said her city established downtown TIF districts in 2017, "as a way to finance projects that would otherwise require bonding." TIF districts often target devel- opments in areas that are blighted or underutilized, and establish "the funds and the creativity to get proj- ects done," Stewart said. Developer Dan Czyzewski built a 44-unit luxury apartment, mixed-use space in New Britain at 222 Main St. He used a $250,000 TIF revolving loan to offset some of the fit-out and equipment costs for The Assembly Room, a ground-floor industrial dining hall that has several restaurant tenants. That allowed the developer to then work on building the residential floors above. "It was a privately funded project but we used the TIF to attract the retail tenants," Czyzewski said. It's "the signature project" for his company, Exclusive Development, and a showpiece in the center of New Britain, he added. The property is now generating more in taxes due to its increased value, and the city is able to capture that money to put toward other proj- ects in the district. Czyzewski said TIF programs make a project more attractive to developers. "It helps offset development costs, and you're getting a more favorable partner with a shared interest in an economic development project over a traditional loan from a financial institution," Czyzewski said. In addition to the revolving loan program with low interest and flex- ible terms, New Britain TIF options include a lease rebate program intended to stimulate new tenants, and a code correction program for older buildings. "We have a lot of older buildings citywide that are not up to code, and people come in with a vision, but the capital to start doesn't cover code work," Stewart said. "The code correction program makes buildings safe and benefits the businesses and the property owners," by getting a beneficial project started. Gaining in popularity Windsor Economic Development Director Patrick McMahon served on the panel that created the 2015 revised TIF law when he was pres- ident of the Connecticut Economic Development Association. He also helped write the master plan for TIF districts in Windsor and Old Saybrook. TIF is still a relatively new concept for some towns, but as more municipalities use them "and see the benefits, there's a track record, and I anticipate more communities will go forward with them," McMahon said. Developer Avner Krohn has many properties in his portfolio, but his first venture into TIF deals was with The Brit, a $20-million-plus, 107-unit apart- ment building with 6,400 square feet of commercial space in New Britain. He used a TIF option where the city issued a low-interest loan, which was then paid off with part of a state grant he won for the project. Krohn is working on another development in New Britain where TIF will provide matching funds to a state grant. Municipalities have to be creative to support new apartment develop- ment amid the challenging economic conditions brought on by higher interest rates and supply chain issues, Krohn said. "Today more than ever before, it's got to be a mix of different municipal tools that have to come into play in order to make housing projects affordable," he said Little risk, much reward Attorney Michael J. Andreana, of law firm Pullman & Comley, sat on the panel that created the 2015 revised TIF law and still consults on establishing TIF districts throughout Connecticut. He said TIF legislation prior to 2015 was underutilized and a cumbersome undertaking that many towns and developers weren't interested in going through. The new act allows for a faster and more custom TIF district establishment. Andreana said there was more risk for municipalities under the previous TIF legislation, issuing bonds up front for large-scale projects that might not be repaid if the project failed or doesn't live up to its projected economic impact. Another argument against TIF deals is that governments shouldn't be supporting private development projects using new tax money, "but the argument back is that these proj- ects (and the new revenue) wouldn't happen without these incentives," Andreana said. "Now that we have successful examples, towns are more interested in looking at TIFs," Andreana said. "It's more in the mainstream now, but it took some courage for the first few to jump into it and for people to see it being successful," he said. Patrick McMahon Michael J. Andreana GO TO >> WWW.HARTFORDBUSINESS.COM/HBJ-EVENTS/FAMILY-BUSINESS-AWARDS REGISTER TODAY! JUNE 15TH | 5-8 FARMINGTON GARDENS JOIN US IN HONORING SOME INCREDIBLE FAMILY BUSINESSES! PRESENTING SPONSOR: PRESENTED BY BERKSHIREBANK MAJOR SPONSORS: 3 GO TO >> WWW.HARTFORDBUSINESS.COM/HBJ-EVENTS/FAMILY-BUSINESS-AWARDS REGISTER TODAY! JUNE 15TH | 5-8 FARMINGTON GARDENS JOIN US IN HONORING SOME INCREDIBLE FAMILY BUSINESSES! PRESENTING SPONSOR: PRESENTED BY BERKSHIREBANK MAJOR SPONSORS: 3 GO TO >> WWW.HARTFORDBUSINESS.COM/HBJ-EVENTS/FAMILY-BUSINESS-AWARDS REGISTER TODAY! JUNE 15TH | 5-8 FARMINGTON GARDENS JOIN US IN HONORING SOME INCREDIBLE FAMILY BUSINESSES! PRESENTING SPONSOR: PRESENTED BY BERKSHIREBANK MAJOR SPONSORS: 3

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