Montville holds off on tax assessment decision for Oxoboxo Lofts project

— In an effort to gather more information from the town’s tax assessor, the Town Council decided last week to postpone its decision to amend the real estate tax assessment agreement for the $45 million Oxoboxo Lofts apartment project.

At the Feb. 13 meeting, Councilor Lenny Bunnell Sr. asked if the project depends on the agreement being approved.

“I can’t say that this is a do or die item,” Dakota Partners Senior Development Director Eric Kuczarski said. “I can say there’s a lot of hurdles for me between now and the final closing of the project.”

The project at historic Faria Beede Mill calls for a 72-unit housing complex, 57 of which would be deemed affordable.

Councilor Billy Caron said while he is in favor of the project, he has never in his 18 years on the council said yes to a tax agreement such as this, but added that he will take a second look with the rest of the council.

“It’s just hard for some of us because there are so many other projects that will come forward that will probably try to follow in the same footsteps as you,” Caron told Kuczarski.

Kuczarski explained that Dakota Partners is currently in the process of finalizing a loan with its lenders and investors, but one of the primary concerns about the project is the stability of its operating costs, which includes the annual real estate tax payments.

“We want to bring this to fruition, but the bank is not going to close until we can convince them that there’s a comfortable operating budgwet and that’s really the fight that we’re taking on right now,” Kuczarski said.

He added that the funding for the project is “100% secured,” and that the dilemma now is getting through the closing process.

Kuczarski said Dakota Partners worked with Tax Assessor Lucy Beit to assess the 42 Pink Row property. The developer assessed the property at $3 million but Beit and the town came to a $4.4 million figure, which would generate an annual tax bill of $82,266 with a 26.71 tax rate.

Dakota Partners requested to lock in the $4.4 million appraised value with a 2% annual increase in the assessment for the next 10 years. Kuczarski said that locking in those figures would finalize the operating costs.

He said this would allow Dakota Partners to move onto the “hundred other things that we’re trying to address” to get the investors and lenders to close.

The Day previously reported that Dakota Partners, a Massachusetts-based company, is working with loans from the state Department of Housing, Bank of America and Boston Private Bank to fund the project. The developer is also funding the project with state tax credits and a Bank of America tax credit equity.

The project was originally expected to cost $35.5 million but Kuczarski said last week the figure has grown to $45 million due to the COVID-19 pandemic and “cost issues.” He added that between $8 million and $9 million has already been spent, in part, on the reconstruction of the mill building.

The project began in 2019, but has since faced a number of pauses and delays. It was delayed in 2021 largely because Dakota Partners was awaiting a flood management certification, among other permits.

The delay caused the developer to request a five-year extension of the permits it obtained from the town’s Wetlands and Watercourses Commission, set to expire Sept. 15, 2021, and the site plan approval from the Planning and Zoning Commission, set to expire on Oct. 19, 2021. Both were approved.

Kuczarski said if the closing process goes as planned, construction could start in April and be completed in a year.

“We’ve been working long and hard to get this project closed,” Kuczarski said.

Councilor Tim May questioned if the appraisal was for the property in its current condition, or after the project was completed and occupied. Without Beit in attendance, he didn’t get an answer.

May’s comments and desire to get more information from Beit led the council to postpone its decision.

“It is a project that the town would like to see finished,” town Land Use Director Liz Burdick said.