Sensible tax break
S ometimes providing a big, fat tax break is nothing more than corporate welfare, a bribe to win a competition in attracting a business or development. And sometimes it is the result of sensible win-win negotiations.
The tax abatement being sought by the developers of a proposed upscale apartment complex on Howard Street in New London appears to fall squarely into the latter scenario — everybody wins.
Here is the situation. The proposed location for the 203-unit building, part of the Fort Trumbull Development area, has long sat vacant and producing minimal property tax revenue. It is polluted, with a history that included heavy industrial uses and time as a landfill.
RJ Development + Advisors LLC have told city officials that the math doesn’t work if they have to pay the estimated $4 million to clean up the property, plus the cost of construction, plus the taxes they would owe on the improved property. The rents could not be set high enough to support that level of financing, meaning a bank wouldn’t be interested.
The negotiated solution is to abate the taxes, providing the financial breathing room to remediate the pollution.
The abatements would stretch over 20 years, saving the developer about $4.4 million
It would be nice if federal or state dollars were available to clean up the brownfield, but those dollars are getting tighter and the competition is stiff.
during that time. The deal starts with an 80% abatement the first year after project completion, dropping to 40% years three through 20. Even at that, the property would be providing far more revenue than the empty, polluted lot.
Additionally, the continued addition of housing in proximity to the downtown — another apartment complex at the corner of Howard and Bank streets is well underway — should serve as a catalyst to a commercial revival, bringing more tax dollars.
It would be nice if federal or state dollars were available to clean up the brownfield, but those dollars are getting tighter and the competition is stiff. New London could wait a long time for such a grant to show up, by which time the opportunity may have long passed.
The City Council is expected to vote on the abatement plan later this month. Unless something surfaces that we’re missing, the council should give its OK.