By Adam Swift
The city council narrowly approved the adoption of a Housing Development Incentive Zone to help accelerate the development of the Suffolk Downs project and to spur mixed-income housing development in the 40R Smart Growth district along Green Street and Shirley Avenue at last week’s meeting.
The council voted 6-5 to approve the zone, with several councillors who voted against it asking that it be placed back in subcommittee for further discussion due to concerns that it could impact tax revenue of the city in the face of trying to pay for the new high school project.
The Housing Development Incentive Plan, also known as HDIP, is a state tool that is available only for Gateway Cities and is a two-pronged tool, sDirector of Planning and Community Development Tom Skwierawski previously told the city council.
“The first is what’s called a local tax increment exemption, and this is on the value created for any newly developed housing project within one of the districts we are talking about here.”
As an example, Skwierawski said that if a parcel of land was worth $100 and a housing developer put in $900 worth of work to that property, the property would then be worth $1,000 and the increment would be the $900 worth of value that was created with that housing development.
“The first prong of this two-prong tool is a local option to give a 10 to 100 percent exemption on that new value created … from a period of five years to 20 years,” said Skwierawski. “Under this plan, any housing development within one of the … districts that is created would be eligible for coming to the council to have the council authorize such an agreement.”
Skwierawski said the second, more significant, component of the HDIP is a state tax credit of up to $2 million of up to 25 percent of the value of the housing development that is created.
“In order to be eligible for that state tax credit, the localities need to authorize a local tax agreement, which again, could be a five-year agreement for 10 percent of the increment created,” Skwierawski said. “Which is for all intents and purposes a marginal amount for what the development could actually bring in tax revenue.”
The biggest point of debate among the council last week was over the ability of the mayor to negotiate a tax break deal for the Suffolk Downs project, specifically the proposed 475-unit Portico high rise, as a way to speed up the development of that portion of the overall project.
Councillor-at-Large Michelle Kelley said she was concerned about the legality of the Suffolk Downs project being eligible for the tax incentive, since the city already approved the special permit.
“I don’t think that this is something we should be getting involved in at this point, especially not any kind of incentive where we’re not getting affordable housing,” said Kelley.
She also asked if a potential tax incentive would negatively impact the tax revenue the city will receive from the Suffolk Downs project.
Skwierawski said the city will get assurances at the state level as to whether the HDIP would necessitate the reopening of the special permit.
“If you were to authorize the mayor to negotiate an agreement after the state approves and we begin negotiations, we would bring the entire cabinet into this,” he said. “We understand there has been a lot of work to make sure we can afford this high school, (so) we would make sure we have the right people at the table to make sure there is not a negative impact on our financial outlook.”
Skwierawski said there would likely be a negative financial effect to the city if there was not a way to create a catalyst to more rapidly move forward the construction at Suffolk Downs, specifically the Portico building.
“It is a signature building that we believe and (developer) HYM believes will stimulate further development throughout the project,” said Skwierawski.
Ward 3 Councillor Anthony Cogliandro said he wanted to see the HDIP go back into subcommittee, adding he was concerned that creating new zones could create problems down the line.
“Why can’t we take a singular project and give a tax break to that project?” he asked. “Why do we have to create zoning?”
Skwierawski noted that the creation of the zones is necessary in order to be eligible for state money as a Gateway City through the program.
“There is a lot of money in the HDIP state program right now, and if we don’t take advantage of it for critical projects like Suffolk Downs … other Gateway Cities will take advantage of it,” he said.
Councillor-at-Large Anthony Zambuto said he wanted to leave the issue in subcommittee until the council could get a legal opinion on it, as well as a financial opinion from the city’s finance director about how it could affect paying for the high school project.
Ward 4 Councillor Paul Argenzio noted that what the council was voting on only allowed the mayor to enter into negotiations and that any agreement would have to come back to the council for final approval.
“I’m in favor of this because we still have a stopgap, we will still be able to stop and will have more information once negotiations are done,” Argenzio said.
Councillors Zambuto, Kelley, and Chris Giannino voted against approving the housing development incentive zones, while Cogliandro abstained.
