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02/11/2020 07:49 AMTown officials are having preliminary discussions on a tax deferment incentive program that would temporarily freeze tax increases for specific types of projects to encourage developers to move to Guilford.
The program essentially asks the town to hold off from revaluing a property during a specific window of time—somewhere in the range of 2 and 10 years—in order to keep the same, consistent tax valuation for a developer, according to Economic Development Coordinator Brian McGlone.
The town would then incrementally bring the tax rate to be in line with the actual value of the property, hopefully as the owner begins generating revenue, McGlone.
The length of the window, as well as other specifics as far as how much value a developer would have to add to a property to qualify for the program, are still being discussed, Hoey said. Town Planner George Kral and McGlone are currently working on generating a more specific outline or proposal for the initiative, according to Hoey.
North Branford has already granted these deferments to a handful of projects with a five-year deferment window, according to McGlone, and Madison is in the process of implementing a similar program, potentially with a 10-year window.
The program can drive developments of all kinds, and depending on how it is structured, could appeal specifically to high-tech businesses, according to First Selectman Matt Hoey.
The drawback is that during that window of time, the town is not charging as much taxes as it technically could be.
Hoey pointed out that theoretically, having a developer paying less than it might without the program is still adding more to the town’s revenue than having no development at all.
“Those are called opportunity dollars,” Hoey said. “If you don’t offer a program, the developer doesn’t come in, that property is not being improved upon, so the taxes will remain flat. So you’re getting less than you might have gotten if you didn’t put a program like that in.”
Hoey said that North Haven used a program like this one to encourage e-commerce megagiant Amazon to build a warehouse there.
The town has the option to offer the tax deferment not only for real estate taxes but personal property taxes as well, Hoey said. This can be particularly enticing for cutting-edge technology and research businesses, which often use a significant investment in expensive machinery and equipment that can quickly raise their personal property tax bill, according to Hoey.
McGlone said this kind of program can be very important for developers and business owners, who not only are happy for what is essentially a type of tax break, but are also able to count on a consistency and predictability in their taxes.
“It encourages a developer to look at a property—there’s uncertainty in any development, but now if the developer knows…[they] have a couple of years here where [their] tax rate is going to stay flat...at least it’s giving [them] a chance to try to get the building fully populated, fully leased out,” he said.
Though the initiative is a Board of Selectmen program, Hoey said, and will have to be approved by the board, he said he will be working with the finance office and other town officials to hammer out the details of what the program will look like.