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In order to help the developer of the Indian River Landing project with its startup costs, the Town Council approved a tax abatement anticipated to be worth approximately $1.8 million for the project on May 6.
Indian River Landing is the new, mixed-use development planned for the former Morgan School property. When built, the project will consist of retail, a hotel, restaurants, and a large grocery store in addition to a public park. The project was approved by the town’s Planning & Zoning Commission in March with an anticipated opening date in fall 2021. The developer of the project is Greylock Property Group.
Plans for the project filed in the town’s land use office in February call for nine buildings to be built on the 37-acre property. The plans depict restaurant spaces, retail spaces, a 55,150-square-foot grocer, and a 14,021-square-foot hotel with 100 rooms.
While no stores for the property have officially been named by the developer, a letter to the Town Council members from Town Manager Karl Kilduff mentions that Big Y is the anchor tenant and plans to hire 25 full-time and 125 part-time employees. A separate email from Economic Development Commission (EDC) member Hank Teskey, mentions Starbucks.
The Harbor News/Zip06.com reached out to Starbucks and Greylock Property Group for comment; neither had responded at press time. Big Y confirmed that it will rent an approximately 55,000 square foot store in the development.
The development is proposed to be built in two phases with phase one being completed by the end of 2021 and phase two by the end of 2022. The council approved a five-year abatement for real estate taxes for each phase, starting at zero percent in year one, 20 percent in year two, 40 percent in year three, 60 percent in year four, 80 percent in year five, and finally 100 percent the last year.
Phase one’s abatement begins in the 2022 tax year and phase two’s in 2023. Assuming everything goes according to plan, the first full year of taxes would be 2028.
According to a town memo, at a 32.25 mill rate, the development is anticipated to generate $903,000 in annual property taxes for the town. Based on that figure and discounting the first year of each phase of the abatement plan (during which that part of the project would not reach full value), the value of the abatement to the developer in the third, fourth, and fifth years is approximately $1.8 million.
The council approved the abatement by a vote of five members in favor to one against. Councilor Mark Richards voted against the motion, in part because he felt the abatement could be seen as unfair to current developments that didn’t receive an abatement. Richards also said he was worried the town didn’t negotiate the abatement prices, but just gave the developers what it asked for.
“I really don’t think this is good policy,” said Richards.
Councilor Carol Walter said she understood Richards’ points, but she also recalled earlier proposals for the property that were not as attractive in her view.
“If we don’t provide incentives to these developers, who is going to come back if they walk away? No one,” said Walter.
Town Council Chair Chris Aniskovich noted that the sale of the property has not officially closed, and that there is a chance the developer could walk away if the abatement isn’t granted.
Aniskovich told the Harbor News that “this is something that has been in the works for a while.”
Last fall the town’s Board of Selectmen with help from the EDC passed an official tax policy that allowed the town to enter into agreements like the one it did with Greylock.
“EDC’s role in Clinton’s incentive process is to review requests and provide a recommendation to the Town Council,” EDC Chair John Allen said.
The EDC must judge an abatement request on whether providing assistance to the developer is of a benefit to the town.
“In this case we determined it was overwhelmingly so. It is vital, especially now, that folks interested in investing in our great town know that Clinton understands the issues facing developers and will work with them to ensure that both they and the town succeed. This first such application should serve as a signal to just that,” Allen said.
The EDC recommended that the Town Council pass the abatement with Greylock at a meeting on April 17.
“Based upon our conversation, it seemed we felt we needed to be open to give concessions,” Aniskovich said.
Right now, the property is still owned by the town. Aniskovich said that the town would still be able to collect the sale price when the deal is closed and start to collect taxes on the land.
Aniskovich said that working with the developer on the abatement is a win for both sides.
“It gives them the ability to reduce the costs as they begin construction on the project,” Aniskovich said.
By allowing the developer to attract tenants to lease, Aniskovich said it helps ensure the development that the town and its people are so invested in is completed as planned. By cooperating with developers, Aniskovich said it signals to other developers that the town is business friendly.
“You want that perception that you are willing to help. It keeps us moving in the right direction, which is important for this project,” Aniskovich said.
The abatement isn’t the only economic relief the council gave to the old Morgan School developer. On April 15, the Town Council voted to give a reduction in land use fees to Greylock due to a stipulation that prohibits the town from profiting off the fees.
There is a formula in the town regulations and ordinances for calculating land use fees based on the square footage of a property. However, those fees are limited so that the town doesn’t make an undue profit off of the application. The town can only recoup administrative costs including the cost of noticing meetings, creating documents, and related activities.
The motion the council unanimously passed at that meeting was to lower the fees to match the actual costs to the town as it reviews and processes the application.
The old high school property is nearly 37 acres and due to the substantial changes planned for the property, the land use fees would have been nearly $30,000, far more than the administrative costs associated with the application. Had the town tried to charge the full amount, its likely the town would then be sued because the state statute allows towns to only charge developers “a reasonable amount” for the application process.
Prior to the COVID-19 outbreak the plan was for the developer to break ground on the project in the late summer. It remains to be seen if the pandemic will affect that date.