Updated, 11:17 p.m. July 17: PDF added.
NORWALK, Conn. – Buildings are going up, others are planned, but if you look at the big picture development has been stagnant, Common Council Planning Committee Chairman John Kydes (D-District C) said.
“There’s so much left on the table and I don’t see anyone stepping up to do anything at this point,” Kydes said in June, expressing a willingness to discuss a possible Enterprise Zone, which would offer tax incentives to developers.
“There is a project attempting to try to advance… The equity investor is saying return is insufficient,” Redevelopment Agency Executive Director Tim Sheehan said on June 12, after being asked by Council member Tom Livingston (D-District E) what need was being addressed by considering tax incentives.
While Sheehan didn’t identify the developer was seeking tax breaks, here’s a spoiler alert: it appears that Paxton Kinol of Belpointe Capital is seeking tax incentives to move ahead with the Waypointe South Block.
The Planning Committee moved ahead last week with considering tax incentives, forming a three-member sub-committee to study the idea and, if it develops a concept it wants to advance, bring it back to the full committee.
“I think the process is a more engaged process than having something brought to you and debating that,” Redevelopment Agency Executive Director Tim Sheehan said on July 6.
Council members on June 12 queried Economic Development Director Elizabeth Stocker about her concept for a Wall Street/West Avenue Enterprise Zone, outlined in a memo offering guidelines“for discussion and approval.”
Incentives would be discretionary, with each agreement approved by the Council, Stocker’s memo said. A minimum investment of $15 million would be required and there might be a cap of $82 million.
Improvements would include at least one of the following uses:
- Mixed use, provided a minimum of 25 percent of the project is commercial use
- Structured multilevel parking, in connection with a mass transit system
- Information technology
- Recreation facilities
- Transportation facilities
The increased assessment would be fixed for up to seven years, with a phased in formula, with the options negotiated with the developer.
- First year, the increase would be 100 percent deferred
- Second year, the increase would be 100 percent deferred
- Third year, the increase would be 50 percent deferred
- Fourth year, the increase would be 40 percent deferred
- Fifth year, the increase would be 30 percent deferred
- Sixth year, the increase would be 20 percent deferred
- Seventh year, the increase would be 10 percent deferred
Stocker’s memo suggested that incentives only be considered for properties on:
- West Avenue from the intersection with Connecticut Avenue, north to and including Belden Avenue
- Wall Street from Belden Avenue to the former South Smith Street
- Cross Street
- North Avenue
- Main Street between Wall Street and North Avenue
Some Council members expressed an interest in case-by-case incentives and others objected to possible favoritism.
“I get a little nervous,” said Council member Rich Bonenfant (R-At Large), who is not a Committee member. “…I hate to see 10 years down the road, when none of the current players are here, that those that donate to political campaigns are going to get the inside track on getting what they want, and they’re going to get a more favorable deal than somebody else. I don’t want to see people betting on racehorses with their money as developers and candidates making promises to developers, ‘I’ll take care of you in that zone when you are done.’ It’s going to get ugly in the future.”
“I hear what you’re saying,” Kydes said, going on to describe the pockets of development but the stagnation overall.
“I don’t disagree with Mr. Bonenfant,” Council member Doug Hempstead (R-At Large) said. “…We don’t want to see favoritism.”
Hempstead’s main quarrel with the concept was a “cart before the horse” issue, as the Council recently authorized a grant application to fund a Transit Oriented Design study for East Avenue and the Wall Street area, with a particular focus on a possible Wall Street train station.
“Why are we thinking about this before the TOD report comes in that is supposed to tell you what you want?” Hempstead said.
Investors want a 6 percent return and they’re not getting it now because the housing market is flooded, Hempstead said.
“We are kowtowing to people who are making a profit, they’re just not making enough profit and we are taking away more of what we need in the first place, which is tax revenue. We just passed a few of these…Why not wait for TOD plan?” he asked.
Livingston said he agreed, and asked about the reasoning behind the list Stocker had prepared.
“Should we wait for a plan? I don’t know if that’s the answer but from this, I can’t tell, I have no basis for knowing these are things I should support,” Livingston said.
“That’s what’s statutorily allowed in terms of the uses,” Stocker said.
Sheehan explained that the specifics were up to the Council.
A 100 percent deferral of the tax increase “is a crazy place to start,” Council member Shannon O’Toole Giandurco (R-District D) said, asking, “Doesn’t negotiating by project open us up to all kinds of liability?”
Major developments already get handled on a case-by-case basis with incentives handled in public through a Land Disposition Agreement (LDA) process, Sheehan said.
“It can be case by case where there is specific need for project to come to fruition,” Stocker said later.
Hempstead said he’d like to know if there were other possibilities, like incubators, that could work in a zone rather than restaurants and apartments, and a TOD study might offer suggestions.
“Right now, Norwalk is exciting to developers,” Council President John Igneri (D-District E) said. “If we continue to wait, in three years things may change. You can put all the incentives you want in there, they may not want to come in to the area. Incentives now, when there’s interest in developing those areas, we should do that.”
The Committee on July 6 talked briefly on the topic, with Sheehan saying it will take a lot of time to advance the idea. Narrowing it down to a few Council members would move it along, he said.
“Quite frankly, I think what was brought to you was something that was from a staff level was fully formulated and you weren’t given an opportunity to have input into that and ultimately have structuring that you might be supportive of,” Sheehan said. “… This can be somewhat time intensive.”
On Sunday, Mayor Harry Rilling said some developers expect tax incentives because other communities do it.
“Other cities do it,” Rilling said. “There’s a state statute that allows us to do certain tax abatements but we want to make sure we do it fairly and squarely so that we don’t give preferential treatment to anybody, that if it meets certain criteria then we’ll consider it for tax abatement.”
Sheehan on June 12 mentioned a “project attempting to try in advance” where the “equity investor is saying return is insufficient.”
He didn’t say who that was, but Hempstead mentioned a developer who spoke recently in favor of The SoNo Collection.
Kinol, developer of the Waypointe project, spoke at the recent public hearings about the mall, promising that his South Block was about to start construction.
“It would need some level of subsidy so return is adequate to what the market is looking for,” Sheehan said, at the June 12 meeting. “That is a fundamental problem with a lot of projects. We have looked at what has advanced north of 95 is great but we can clearly see there are pockets that need to have additional development come into them and it’s just not an automatic that some of these mixed-use projects are willing to be able to sustain themselves economically in terms of the equity partners coming in and saying, ‘Yes, the returns are there.’ Without the equity partners coming in there is no project.”
Kinol mentioned this to the Zoning Commission last week.
“We need some help on taxes, we are working with the city right now,” Kinol said. “But if that happened, we do have an investor lined up to start in October. This is why we are pushing to get approval … and start in October. You will see in the next two weeks the building start to come down.”
On Sunday, Mayor Harry Rilling said it was a little premature to say what Kinol is looking for.
“He’s indicated he would need some assistance of some sort with the Loehman’s Plaza area,” Rilling said. “I wouldn’t want to get into specifics because I don’t think he’s articulated exactly what he needs but he would certainly be open to having something. Everything is under consideration, so that is what the committee is doing. They’re looking at what is the best way that we incentivize people to develop the areas of Norwalk that we feel are ripe for development but people need some sort of tax assistance, or some skin in the game from the community.”
“This initiative by the Planning Committee wasn’t the result of any developers request,” Kydes said in a Sunday email. “We want to explore our options and hopefully spark development in areas that are currently producing very little tax revenue for the city.”
Resistance continues; Bonenfant, in a Sunday email, said:
“I’m not in favor of city sponsored Enterprise Zones, especially for residential units. The explosion of apartments, traffic congestion, and high taxes are frequent issues which come up in conversations with constituents. An Enterprise Zone is a permanent financial advantage that stays with the land. Future development expansions or rebuilding from scratch would qualify for another seven years of subsidies on those changes. Meanwhile school populations increase, public safety services are needed and wastewater treatment challenges could affect our beaches and shellfish industries.
“They are asking the rest of us taxpayers to pay our share and theirs too of what it cost to run a city.”