Originally published in the Hartford Business Journal: LINK. Rendering by Martin Architectural. By Joseph Villanova, Journal Inquirer
Developers of the former Showcase Cinema property in East Hartford discussed their plans to build as many as 420 upscale apartments at the Silver Lane site during a recent special meeting of the Town Council, saying they also plan to seek a nearly three-decade tax abatement on the project.
The Town Council in September voted 6-3 along party lines to authorize the mayor to execute a purchase and sale agreement of $1 for the property, a process that could take up to 18 months.
New Britain developer Jasko Development and Zelman Real Estate have proposed an “amenity rich” rental housing project of 360 or more market-rate apartments with a number of facilities for tenant use.
Mike Goman, principal of economic development firm Goman & York, said at Thursday’s special meeting that current planning suggests that they may ultimately build about 420 units.
A presentation shown at the meeting lists amenities that include a pool, dog park, club rooms, a community bar, conference and “work from home” rooms, fitness centers, and bicycles for tenant use. Plans have not been finalized, and neither a site plan nor the development agreement have been completed or approved.
Goman said the town has contributed $16.2 million to the project, with $3 million in borrowing from the town, and the rest from state grants.
About $6 million has been spent on cleanup and acquisition of the site. The $10.2 million will be used “to help catalyze the project and help the developer make this project make sense,” Goman said, adding that developers would also infuse about $81 million in private funding into the project.
Goman said that, in turn, the town would receive about $1 million in permitting fees and annual net property taxes, starting at $625,000 per year. That’s in addition to an expected $15 million in revenue to the town from the new residents’ disposable income.
Development Director Eileen Buckheit said Monday afternoon that the developer is proposing including the property into the town’s Enterprise Zone, a state program that could allow a 27-year tax abatement for the new owners.
“It was put into place for distressed municipalities to provide additional incentives for development in their communities,” Buckheit said.
Buckheit said the “tax stabilization” would allow the town to fix the taxes collected from the proposed units at $2,100 each, increasing annually at 2%. At 360 units, the minimum proposed amount, the town would initially receive $750,000 in annual property taxes from the development.
Goman said at the meeting Thursday that without the abatement, taxes owed per unit would be $5,500 — or at least $1.98 million to the town annually based on 360 units — which would either make building costs unsustainable or rental rates noncompetitive.
“That would put this project at an insurmountable economic disadvantage,” Goman said.
Buckheit said Monday that the fixed taxes both help increase confidence for the developer’s lenders and ensure future tenants will have a steady rent.
“If someone signs a lease, they can count on that annual increase and not something unexpected,” Buckheit said.
Buckheit said the town council would likely vote Tuesday night to expand the boundaries of the Enterprise Zone in order to incorporate the Showcase Cinema property, parts of Silver Lane, and portions of the Rentschler air field that’s being developed into a manufacturing and warehouse distribution site by National Development.
Vice Chairman Don Bell said at the meeting Thursday that the project won’t fix East Hartford’s economic problems, but it’s an important piece in the town’s investment into a community that has “struggled for a very long time.”
“This isn’t a panacea,” Bell said, adding that “in a vacuum I’d have a lot more concerns about this project, but I know that it happens in the context of not just trying to revitalize Silver Lane, but also Founder’s Plaza.”
Councilman Travis Simpson said at the meeting Thursday that as the town moves into budget season, it needs to evaluate why such a tax agreement is necessary, and look at what policy changes could drive private sector development without heavy lifting from the town.
“The fact that we cannot tax at the normal, fair market rate, and have this be a viable business should tell us something about our taxes at the fair market rate,” Simpson said.
Simpson also said he’d like the developer to ensure the area would be walkable for tenants, with proper access to public transport.