New London – City Council has approved a 20-year tax break for apartment complex developers who would occupy a long-vacant lot at 174 Bank Street.
The agreement to pay in lieu of taxes, unanimously approved Monday, is provided to New York-based Vessel Technologies, a company that has pitched the idea of a state-of-the-art, energy-efficient and partially prefabricated five-story building with up to 30 units in the heart of downtown .
The agreement provides for an estimated 25.1% rebate on city tax payments over 20 years.
Under the current tax rate, the estimated taxes for the $4.5 million project over the 20 years would be $2.09 million because it is in a corporate zone.
However, with the tax deal, Vessel saves about $525,000 and pays a total of $1.56 million over 20 years.
Attorney William Sweeney, representing Vessel, when asked by Councilman John Satti, noted that the vacant lot the building would sit on now generates only $5,500 a year in taxes, or $110,000 over 20 years.
The agreement, Sweeney said, would give the city “$1.5 million more than if we did nothing.”
Vessel purchased the site in February for $225,000 and plans to start construction before the end of the year. The property is located next to the Salvation Army Family Store.
Under the terms of the agreement, Vessel would pay a 20-year “fixed assessment agreement” with tax payments starting at $5,440 in years one and two, $30,000 in year three, $55,000 in year four and $76,000 in year five. The seventh year payment of $76,000 would increase by 2.5% per year each year.
“That’s a lot more than the $1.5 million we’re going to pay the city over the next 20 years. It’s really about repopulating downtown with people with disposable incomes (and) hopefully a lot of those empty storefronts will be filled with those basic businesses that everyone downtown is looking for,” Sweeney said. “We need housing at all socio-economic levels.”
While Vessel anticipates the Bank Street project will be its first in Connecticut, it has proposed similar developments in communities such as New Haven, Stratford, Rocky Hill and Glastonbury. It has completed a project in Trenton, NJ
In New London, the building would be erected on a tract of land deemed derelict and financially unviable due to its small footprint and location in a floodplain. As a result, the building will be elevated and provide parking underneath.
The city’s planning and zoning commission approved changes to zoning codes in January that allow all-residential building downtown, which was previously not allowed. The original permit was for a 20-unit building, but a later amendment now allows for up to 30 bedrooms.
Josh Levy, executive vice president of Vessel Technologies, said that because of the flexibility of the construction process, the mix of one- and two-bedroom apartments can be modified as needed without changing the building’s footprint.
Vessel’s construction system makes it easier to develop “leftover” or “difficult-to-develop” sites and speeds up the construction process, Levy said.
Rents are expected to start at $1,400, which developers say is below the market price for new units, and will target 18-34 year olds with an income level of 80% of the region’s median income.
Levy said the project is in the permitting process and he hopes to see groundbreaking next month.
