Guilford Selectmen Consider First Draft of EDC Tax Incentive Proposal Encourage Development
The Board of Selectmen (BOS) broadly discussed a more detailed and revised version of an incentive plan that would provide a deferral and tiered phasing-in of taxes for certain types of developments, something that has been enacted in several neighboring towns and been discussed in Guilford a number of times over the last few years.
A draft of the new policy put forward by the Economic Development Commission (EDC) in cooperation with First Selectman Matt Hoey would apply to both commercial and residential developers who increase a property’s value in the 30 to 40 percentage range, allowing them to fully defer the increased tax assessment for one year and then have the rest phased in over the ensuing five years.
The EDC used the example of a property assessed at $1 million that is projected to increase in value to $2 million once a development is completed. Under the new program, the developer would pay taxes only on the original $1 million in the first year, with 20 percent increases for each subsequent year until reaching the full $2 million in year six.
Actually codifying this new policy will require a further BOS resolution preceded by a public hearing, and Hoey and members of the EDC were clear that many of the details are not set in stone with legal reviews and other discussions to follow. Each project approved under the plan would likely have to receive town meeting approval under state statute.
Madison, Clinton, North Branford, Durham, North Haven, and a handful of other towns around the state have run similar programs, with North Haven crediting the program at least in part for motivating Amazon to construct a fulfillment center there.
Guilford’s former economic development coordinator Brian McGlone, who retired this year, previously discussed the program with Guilford’s neighbors with the expectation that aligning these programs could provide a regional benefit, especially if specific stipulations line up.
The program will “not be shelling out cash,” EDC member Amy Earl told the BOS, but instead allows a developer to see a gradual increase in its tax burden—though the developer would pay less taxes overall under the program before eventually and permanently paying the full amount.
Hoey and the BOS were clear there would be significant further discussion before solidifying a plan, including whether residential or workforce housing should be explicitly included in the program, whether it should be available to “big corporations,” or what other stipulations can be written into the program.
“Overall it’s obviously to incentivize a developer to come to Guilford as opposed to going to a surrounding town, or to do a larger project than they would have done before, to increase the timeline,” Earl said.
Though Earl said there were concerns that “projects that would have happened anyway” might take advantage of the program, resulting in the town losing out on tax revenue temporarily, the idea is that the program will spark new development on properties that otherwise would remain stagnant in their contributions to the Grand List.
“I am personally concerned about corporations taking advantage,” Earl said. “Other committee members were very concerned about incentivizing residential, and then having the cost for schools [go] up...so it needs to be carefully looked up.”
As currently proposed, the project can apply to any residential development as long as it includes five total units, whether that is five single-family homes or a five-unit condo complex.
Selectman Charles Havrda said that in the past, residents have opposed these types of programs as they imagine an influx of big box stores or a flood of new, higher-density housing complexes.
But he added that these types of developments are maybe not as likely as people fear, while adding that he thought “times have changed” as far as people’s attitudes toward development in town.
“We don’t have that much property, especially zoned in commercial at this point in time, that would lend itself to any development, never mind large projects,” Havrda said.
“People have to understand this is not bringing in another shopping center,” he added.
The incentive in the policy as it is written is not transferable; a developer who starts a project cannot transfer the incentive if the project is sold to another developer.
Another stipulation that is being considered is job creation, which is something Madison has written into its version of the plan. Guilford’s draft suggests requiring a development add between 8 and 12 full-time jobs to qualify for the program, with Madison currently requiring 10.
Again, how that is defined—whether those positions must still exist in a certain number of years or how the town might “claw back” taxes if a developer reneges on promises—has yet to be decided.
Hoey said one possibility is the “first crack” at the program might only include commercial developments, with the possibility of revising it in the next few years.
Earl said Hoey brought the idea of having affordable or workforce housing included in the program, which is not included in other towns’ versions. Hoey emphasized that lowering the initial land acquisition burden for an affordable housing developer could go far in supporting these projects.
An affordable housing community currently being developed on the so-called Woodruff property near the train station will eventually provide a tax revenue increase, according to Hoey. Though that project is being built on land that was essentially gifted by the town, Hoey said that the tax incentive program could conceivably decrease hurdles for developers to acquire other properties, and create more revenue opportunities for Guilford on undeveloped or underdeveloped land.