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MADISON — The Board of Finance gave preliminary approval on Wednesday to two developers who would become the first beneficiaries of the town’s Tax Incentive Program.
The program was developed in 2018 as a way to encourage new businesses to come to the town, according to First Selectwoman Peggy Lyons.
Lyons said at the Board of Finance meeting that the Board of Selectman had received these applications before COVID, but had not been able to move forward because they could not hold a Town Meeting.
Developers who are approved will receive a temporary deferral on taxes accrued from the increase in value added to the property. In order to receive the incentives, a project has to either contribute an additional $175,000 to the town’s Grand List in assessed real estate value, or it must create at least 10 full-time positions in the town, according to the policy.
The two developers who submitted applications presented their projects at a Board of Selectmen on June 28.
One of the projects, located at 175 Fort Path Road, includes a 12,000 square foot building that is currently under construction, along with another 15,000 square foot building and an additional 3-4,000 square foot space. According to Dave Milano, the head of Milano Development, the space will primarily be used as commercial space for small businesses. Milano said that he started construction on the project in the expectation that he would be eligible for the incentive.
At the June meeting, Lyons said that the additional space for small businesses would be an asset for the town.
“Everybody wants to have their business here, but they have a hard time finding space to run their business in Madison,” said Lyons.
The other project, located at 110 Bradley Road, consists of a 30-unit rental apartment building. Jerry Davis said that his company, Davis Realty, had owned the property since 2009, but that a combination of a change in septic laws and the advent of the tax incentive program made it possible for his company to move forward with construction.
Davis estimated that the property, which is currently worth $460,000, would increase to about $4 million in value once the project is completed.
According to the Board of Finance, the project at 175 Fort Path Road will be eligible for a 5-year tax deferral, and the project at 110 Bradley Road is eligible for a 7-year tax deferral. The developers will have the option of paying a set percentage of the taxes for the duration of the deferral or gradually increasing the percentage of taxes they pay each year.
Refining criteria
At a Board of Selectmen meeting on Monday, the board decided to work with the town’s Economic Development Commission to refine the criteria in the policy for future applications.
Kari Olson, the town attorney, said that the policy as written creates an appearance that any developer who could meet the monetary requirements would be accepted, without consideration of the type of development.
“There is no alert to a developer coming to Madison to say, ‘Here’s all the things we’re going to think about,” she said. “So it’s not just about are you investing enough dollars, it’s also going to be about — what are you proposing, where are you proposing it, what is the likely economic benefit long-term, et cetera et cetera et cetera.”
Olson suggested that this might set a problematic precedent if the board decided to exclude some projects and include others based on additional criteria. She brought up in particular the case of multi-family housing.
“One of the things that was raised to me was the question of – do we really want to give tax incentives to multi-family housing if what we’re really focused on is economic growth?” she said.
Lyons initially suggested that they place a moratorium on further applications until they were able to develop the policy. Ultimately, however, the Board decided against it. Lyons said at the Board of Finance meeting that they did not have any applications pending at the time besides the two being voted on.
“I want to be sure that we’re just mindful of what we’re trying to achieve with the policy,” said Lyons.
There will be a Town Meeting on September 27 at 6:30 p.m. to vote on the Bradley Road and Fort Path Road projects.