BERLIN — Town officials are dusting off a rarely used policy and recruiting members to a shorthanded committee that is required to review tax stabilization requests like the one just received from the developer of the senior housing project planned on property owned by the Berlin Mall.
Brad Dousevicz, of Dousevicz Inc., has asked the town to approve a five-year tax stabilization agreement for Spruce Place, the 98-unit “enhanced senior living facility” he has proposed to construct on a 2.15-acre parcel that is now part of the 65-acre mall property.
According to a pending application for a state land use permit, Dousevicz plans to subdivide the lot where he plans to build a four-story building as part of an estimated $2.5 million project.
That far exceeds the $200,000 investment threshold called for in Berlin’s tax stabilization policy and should yield a project that boosts the assessed value of the property by $1 million — the figure needed to qualify for a five-year stabilization agreement.
If the town approves such an agreement, the increase in assessed value due to the completed Spruce Place project would be phased in over five years for municipal tax purposes. The specialized senior housing complex would be taxed on 10% of the value of the improvements in the first year of the agreement. That figure would increase to 20% in the second year, 40% in the third year, 60% in the fourth year and 80% in the fifth and final year of the agreement.
In the sixth year, Spruce Place would be taxed based on the full assessed value of the facility, which is expected to include a mix of independent and assisted living units for seniors, as well as a specialized “memory care unit” for those suffering from various forms of dementia.
Though $2.5 million was the estimate used to calculate the $18,600 Act 250 application fee, Dousevicz has told town officials it could cost closer to $10 million in his stabilization request. He has also indicated the amount invested will far exceed 25% of the tax assessed or fair market value of the property prior to construction.
That 25% figure is required to qualify for stabilization. Town Administrator Dana Hadley said he suspects Dousevicz is referring to the yet-to-be-calculated value of the undeveloped property and not the much larger mall property, which is currently assessed at $14.3 million.
Though not a requirement, the Spruce Place project, which is expected to create a minimum of 30 full- and part-time jobs, checks a box that is evaluated as part of a review that will be conducted by the town’s economic development committee.
That committee, which is currently down to one member, is required by policy to make a recommendation to the Select Board.
According to Hadley, the only member still sitting on the committee is Selectman Jeremy Hansen.
Hadley said he plans to ask Jamie Stewart, executive director of Central Vermont Economic Development, to consider serving on the committee. He hoped to recruit members from other town departments before bringing a list of names for the Select Board to appoint.
Once the committee is repopulated, the process contemplated by the tax stabilization policy can begin.
That policy hasn’t been used since 2015, when the Select 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 because state permits for the project have not yet been obtained and construction isn’t expected to begin until next year.
The tax stabilization policy hasn’t been used successfully since 2014, when the Select Board approved the now-expiring five-year stabilization agreement for the 21,000-square-foot operations center 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 only paying municipal property taxes on about $3.9 million under the stabilization agreement that is now in its last 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. It was initially 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.