Paul Bass photo
Demolition workers at site of planned new Elm Street hotel.
Alders unanimously approved updating and extending the city’s tax assessment deferral program for another five years — with a late change that provides a more generous tax break to builders who commit to developing affordable housing.
The Board of Alders took that vote Monday night during its regular full board meeting in the Aldermanic Chambers on the second floor of City Hall.
The local legislators unanimously approved the adoption of an amended version of the city’s tax assessment deferral program that was nearly identical to the one that received a favorable recommendation from the Finance Committee in October.
That program, which was first implemented in 1975 and last amended in 1981, seeks to incentivize investment and construction in the Elm City by phasing in how much developers and other property owners have to pay in taxes over the course of several years for properties they seek to improve by at least 35 percent of their current assessed value.
East Rock Alder Charles Decker.
The one significant change was introduced by East Rock Alder Charles Decker.
The new program maintains an overall accelerated tax assessment phase-in rate that is 5 percent faster than the previous program’s, thereby allowing the city to collect more taxes sooner on eligible projects.
Decker’s amendment, however, restored the older, slightly slower phase-in rate for developers who commit to setting aside at least 10 percent of new apartments at rents affordable to tenants making 60 percent or less of the regional area median income (AMI). Those apartments must be restricted at affordable rates for at least 20 years, and they must be evenly distributed throughout the project, and not segregated onto just one floor.
That means that developers and other property owners who set aside a portion of new construction at affordable rents will be subject to an annual assessment phase-in schedule of 20 percent of the new assessed value, then 40 percent, then 60 percent, then 80 percent, then 100 percent, while all other project will receive the new phase-in schedule of 25 percent, 45 percent, 65 percent, 85 percent, and 100 percent.
The 5 percent increase from the latter will be put into a dedicated municipal affordable housing fund, which will be spent according to the recommendations of the newly-created Affordable Housing Commission.
“New Haven’s crisis of affordable housing requires a multi-faceted approach,” Decker said. “Setting aside money in an affordable housing fund is important and necessary. However, we must create incentives for private property owners to construct new affordable housing as well. This item as amended provides such an incentive.”
He said that this amendment creates an “either-or” proposition for developers and other property owners. “If they want the tax deferral, either they pay into a fund for affordable housing or they build affordable housing themselves.”
That 10 percent affordable set-aside is the same “inclusionary zoning” number included in the proposed commercial corridor rezoning initiative, and is also the same number that some private landlords are already committing to for existing planned large residential projects.
Monday night’s full board meeting.
Downtown Alder Abby Roth also testified in support of the amended program.
Based on city staff’s comments during the Finance Committee public hearing on the matter, she said, “it’s impossible to know what would happen without the deferral program.” However, city staff did present that cities without such a program often see developers negotiating one-off deals for tax breaks, leading to an inefficient and uneven development incentive structure.
“I think it’s critical that the Affordable Housing Commission be established soon,” she continued, “and come up with proposals that this board can then approve for how the funds collected from this program are used.”
She also underscored that the amended program, just like the previous program, doesn’t just apply to high-dollar investors and developers. It applies to any private homeowners planning on undertaking major renovations to their property. In fact, landlords with residences smaller than five units who want to take advantage of the deferral program will be able to do so under the previous system’s more generous phase-in structure.