BERLIN — The planned construction of a 98-unit senior housing project on property owned by the Berlin Mall cleared a key hurdle Thursday when the Select Board approved a five-year tax stabilization agreement requested by the developer of Spruce Place.
It wasn’t unanimous. The shorthanded board voted, 3-1, to approve the tax break requested by Brad Dousevicz
Selectman Jeremy Hansen cast the dissenting vote despite conceding the Spruce Place project proposed by Dousevicz was clearly eligible for a five-year stabilization agreement under an occasionally used policy approved by voters in 2011.
“The application certainly checks all the boxes,” Hansen said, noting that was also the conclusion of the town’s recently reformed economic development council.
Hansen, who served on that five-member committee, said its threshold finding didn’t preclude the board from denying the request. The policy, he said, gives the board that discretion to determine whether it is in the town’s best interest to enter into stabilization agreements with developers such as Dousevicz.
“I just don’t agree that we ought to say ‘yes’ to everything that comes across our desk,” he said.
Hansen said he was supportive of Dousevicz’ plan to invest $10 million in the construction of a new, four-story building that would include a mix of independent and assisted living for seniors, as well as a specialized “memory care” component. However, he said he wasn’t convinced the project wouldn’t be built even without a local agreement that would phase in the municipal tax increase associated with the development over five years instead of one.
Under the terms of the agreement approved by the board, the project would be taxed for municipal purposes based on 10% of its new assessed value in its first year of operation. That figure would increase to 20% the following year, 40% the year after that, 60% in the agreement’s fourth year, and 80% in its fifth, and final, year.
The agreement is structured so the project would pay municipal taxes based on 100% of its assessed value six years after it opened.
According to Hansen’s calculations Dousevicz would be saving roughly $160,000 over the life of the agreement — money the town would otherwise be entitled to collect to.
“I’m not convinced that forgoing 160,000 in tax revenue is a wise use of taxpayer money,” he said.
Others, including former board member Ture Nelson, who was tapped as chairman of the economic development council, and Planning Commission Chairwoman Karla Nuissl, provided a different perspective.
Nelson noted that even with the discount, Spruce Place would generate significant new property taxes over the duration of the agreement, while Nuissl worried other development that has been rumored might be discouraged if the stabilization of the incentive were denied.
Jaime Stewart, executive director of the Central Vermont Economic Development Corporation, agreed.
Stewart, who was recruited to serve on the local economic development council that reviewed the Spruce Place request, said denying an application that met all of the criteria wouldn’t be wise.
“That will change the perception of how developers will look at doing development here,” he said.
Stewart said there is no requirement that tax stabilization only be offered to projects that wouldn’t be built otherwise, and he wouldn’t recommend making that change.
Nelson said the board had never denied a stabilization request that met all the requirements of the policy and argued it shouldn’t start with Spruce Place.
“I think it’s a good project for the town,” he said, noting it was consistent with the town’s 2008 economic development plan.
Hansen suggested the decade-old plan, and perhaps the policy, should be reviewed — if only because he questioned the wisdom of offering financial incentives to attract development in an area that is already “an attractive place to build.”
Selectman Justin Lawrence said he didn’t object to reviewing the plan or the policy, but said he saw no reason to turn down a qualifying request that will grow the town’s Grand List and create new jobs.
Lawrence was joined by board member Florence Smith and Chairman Brad Towne in voting in favor of approving Dousevicz’ request.
The Spruce Place application is the first the town has received in more than four years.
In 2015, Nelson recalled, an earlier board denied the mall’s belated request to stabilize taxes for a 55,000-square-foot Kohl’s department store that was already under construction at the time.
Spruce Place doesn’t have that problem. Though local permits are in hand, its request for a state land-use permit hasn’t yet been approved and construction isn’t expected to begin until next year.
The tax stabilization policy hasn’t been used successfully since 2014, when Nelson recalled the Select Board approved the now-expiring five-year stabilization agreement for the 21,000-square-foot operations center that Northfield Savings Bank built at the corner of Paine Turnpike North and Stewart Road. Now assessed at more than $4.6 million, Northfield Savings Bank is paying municipal property taxes on about $3.9 million under the stabilization agreement that is in its final year.
The policy has only been used two other times since it was approved by voters in 2011.
The Select Board approved the now-lapsed five-year agreement that helped entice Vermont Mutual Insurance Group to expand from Montpelier to Berlin seven years ago. Since July 1, 2017, Vermont Mutual has been paying municipal taxes based on the full value — now nearly $1.5 million — of its office building on Industrial Lane.
The only other request for tax stabilization was tied to the mall and involved the expansion of Walmart. Nelson said the application was approved by the Select Board six years ago, but later aborted after it was determined the 18,700-square-foot addition needed to accommodate Walmart’s expansion plan wouldn’t significantly increase the mall’s assessed value.