NORWALK, Conn. — Up to $15 million in tax incentives are being contemplated as part of a new Norwalk Innovation District.
“An Innovation District is a defined geographic area within a city where research, technology, and creative businesses and institutions are clustered. The area offers amenities and an atmosphere that encourages open ideas and shared resources,” the Norwalk Redevelopment Agency states in its recently drafted Innovation District brochure.
Incentives, which would be funded by the city and the state, would be issued in three areas:
- District Commercial Preservation Incentive
- Skilled Job Creation Tax Credit
- B Corporation Tax Incentive
“One of the things that we heard back from this committee was that we didn’t want to have a blanket incentive program, we want it tied to some level of job creation,” Redevelopment Agency Executive Director Tim Sheehan said to the Common Council Planning Committee on Feb. 2. “The jobs were basically the driver on this.”
The agency has recommended a 20-year special property valuation for district historic structures that are rehabilitated, in the preservation incentive that is the first bullet point, so that property owners would not see their property taxes increase because they fixed up the property.
“As the District gains momentum as a place of strategic innovation it will be important to bring new life into many of the District’s historic structures and ensure that they continue to positively influence the District’s sense of place, distinctness and architectural relevance,” the brochure states.
Such rehabilitations will have to be preapproved, the brochure states.
Businesses that create five or more new jobs in the district, with salaries of more than $50,000, would be eligible for tax credits equal to 2 percent of those wages, for up to five years and up to $5,000, the brochure states.
“We looked at best practices and other programs that worked,” Sheehan said on Feb. 2.
A B Corporation “is basically the type of business that you want to attract to this area,” Sheehan said, calling them “good for the environment” and “good to the community.”
“This incentive allows all new, sustainable businesses committed to creating jobs in the District to fully exempt their tax obligations for their real estate for the first five years,” the brochure states. The business must maintain “two non-related employees” with 60 percent of their time in the district, with the incentive capped at not more than 10,000 square feet.
Starbucks is an example of a B Corp, Sheehan said.
Council member Doug Hempstead (R-District D) pushed for definitive explanations, asking for a return on investment for new developments.
“If you took Riverview, which is a completely empty office building, and somebody basically brought in a development concept that went into that building and filled it, or even took a floor of that building, they would end up having an incentive associated with that. It’s not necessarily tied to new development,” Sheehan said.
Hempstead brought up Norden Park as an area that was “never supposed to have housing,” that was thought of as an industrial area way back when.
While John Kydes (D-District C) said he didn’t see anything wrong with adapting to the times, Hempstead said, “It depends because once you give something up you never get the chance to use it again for what you want in the future. I think we need more jobs in the city of Norwalk.”
“It’s more than just jobs, though,” Sheehan said. “Quite frankly, you’ve got an area that – some areas of this district are advancing. But other areas, as we have gone through the data and everything else, are sinking. You have to have something that creates a reason for the investment to be there. Quite frankly, I don’t think you can say we are going to cherry pick and say, ‘well, if you are an office development then we are going to give you a huge incentive but if you are a contributing development that is creating activity, well then we have nothing for you.’”
The draft proposal will be reviewed by the Board of Estimate and Taxation (BET) and Redevelopment Agency Commissioners, Sheehan said at Thursday’s Planning Committee meeting.
BET approval is not needed but the Redevelopment Agency is seeking input on structuring the incentives, he explained.
Norwalk Hospital, King Industries and other District anchors are excited about the potential an Innovation District could unlock, Sheehan said.
Hempstead had come into the Redevelopment office and the wording of the incentives had been revised because it could have been perceived that existing “lesser contributing uses” could take advantage of the incentives, Sheehan said.
“This is clearly meant for businesses that are coming in,” Sheehan said.
Hempstead asked if Waypointe would be eligible if it were coming in today as a new project.
The overall project would be, but not the individual restaurants and stores on the ground floor, Sheehan explained.
The hope is to process a worthy application within 60 days, and the application committee “would be on call,” Sheehan said.
“I don’t think there will be a lot of activity,” he said. “Six to eight a year would be a lot.”
“This isn’t something that is going to be transformative in three years. I think we should have the expectation that this is going to take time to grow, and for the district to mature is going to come over an extended period in time,” Sheehan said.
Tom Livingston (D-District E) asked about “the $15 million cap” for the five year period, and Sheehan said it’s not a cap, “more understanding what the plan and incentives would be.”
Sheehan said, “I am not 100 percent confident, I am probably more on the other side, being confident that we are not going to reach the full $15 million over five years.”