LOCAL Voices
Dean calls for support of TIF for Georgetown development
[Jan. 5, 2009] A Town Meeting of great importance is to be held this Tues., Jan 6, 7:30 pm at the Community Center.
The question before the Town Meeting will be whether the Town should participate with the Georgetown Land Development Company (GLDC), in obtaining a loan from the State's Brownfield Redevelopment Authority (CBRA) for a small part of the "infrastructure" costs at the former Gilbert and Bennett site.
I want to tell you why I will be speaking and voting in favor of this measure, and why it is important for the town to take this step. I urge you to come to the meeting - and to spread the word about the importance of this vote.
In listening to what people are saying around town, I've heard some misinformation that may deter people from wholeheartedly supporting this proposal. Here are the facts as I understand them - and the key reasons for supporting the proposal. All of this will receive a greater depth of discussion at the Town Meeting:
The Mechanics of the Proposal:
1. Despite the talk of risk to the town, the proposed lender and risk-taker is not the town. It is the Connecticut Brownfields Redevelopment Authority, a semi-public entity, funded by the issuance of bonds, created by the state of Connecticut for the express purpose of helping move brownfields sites into productive development. The state created this agency - and this lending program - precisely because it is so difficult to develop brownfield sites.
2. The key difficulty in developing Brownfield sites is not simply the technical problem of resolving environmental problems - challenging as this may be. A second and possibly a greater problem is that the money and time necessary for this environmental work must be expended before revenue-generating investments can occur. Bridging across this long period of preliminary work requires a lot of money, typically obtained through debt instruments. GLDC had been prepared for this, but the recent collapse of our nation's credit markets has made this task infinitely more difficult. Thus they have come to the Town as a partner in approaching the CBRA, with a view toward the benefits that will accrue both to them (in a successful project) and to us (in enormously increased tax revenues from the former Gilbert and Bennett property).
3. The mechanism for the state loan is called Tax Increment Financing (TIF), in which a portion of the future increased tax revenues from the property are pledged to the repayment of the loan. The CBRA is a patient lender, and will wait for repayment until that increased value actually occurs (although interest will accrue from the date of disbursement). Thus the Town of Redding will carry an obligation - the obligation to repay the loan - but repayment will come from new money - the incremental tax collections that would be unlikely to be available without successful development of the site. Thus a TIF loan represents a "bootstrap" development process in the best sense of that word, for both the developer and for the town.
4. The TIF proposal relates only to the residential portion of the GLDC project. Future increased tax revenues on the commercial parts of the project will not be encumbered in any way.
5. The amount being requested is a tiny portion of the overall development cost on the Gilbert and Bennett property, and represents a small fraction even of the "infrastructure" investment that is the loan's targeted purpose. The loan will fund some of the special costs of building roads and services on an environmentally challenging site. GLDC has said that they can obtain the larger portion of the infrastructure investment from private sources.
6. Redding has had a successful working partnership with GLDC up to now, but up to now this has been a strictly platonic relationship. The town has incurred no outlay to date in facilitating development on a site that will shape, for better or worse, the future of the town. Even the tax lien from the site's former owner, which was sold by the town to GLDC and which positioned them to gain control of the property, was sold at full face value. We have been fortunate to strike a relationship with a developer that has not proposed any "at risk" investment while delivering a finished project that has been tailored to the town's needs.
Overview of the Development Process:
1. The TIF proposal is aimed, as noted above, at financing a small and specialized part of the site infrastructure. The overall task of building this infrastructure - the roads, utilities, drainage, etc. - is the next step in preparing the site for development. This work is "shovel ready", having been fully engineered and having survived a daunting process of local, state, and Federal approvals.
2. Completion of the site infrastructure is a key step, both for GLDC and for the Town of Redding. For the developer, completion of the site preparation means that the profitable part of the project finally can begin. For the town, the roads and utilities "lock in" the site master plan, which has up to now existed only on paper.
3. For Redding, the Master Plan of this project is a key achievement and something that we must work to protect. The Master Plan is a detailed envisioning of the future of Georgetown, and by extension the future of Redding. The inclusion of a mixture of residential, commercial, and institutional uses is at the core of this plan, as is the treatment of the site as a walkable, transit-oriented community following the principles of Smart Growth. As the project is completed the old factory fences will come down and the fabric of streets, houses, commercial buildings, a train station, and open space will merge into the overall fabric of Georgetown. What had been a single factory parcel will become approximately 120 separate land parcels. This is not the norm. A more "normal" development plan would contain two or three "superblock" building sites with very little public environment.
4. From serving on the Georgetown Master Plan Committee, which initiated the current process of development by locating Steve Soler as a buyer for the town's tax lien, I know that the Gilbert and Bennett site was evaluated by most developers as strictly a housing site. And yet, many people in Redding had a desire to see a minimal number of new housing units. Moreover, the town urgently needed (and still needs) a commercial tax base to fully structure a proper financial underpinning for the community.
5. Given these conflicting goals, the Master Plan Committee set a requirement that the developer hire the internationally known planning firm Duany Plater Zyberk to conduct an extensive on-site Charrette-based master planning effort. This Charrette process resulted in a master plan that was based upon listening to the community. It resolved the conflicting goals and laid out a vision for a future-oriented mixed-use village center for Georgetown.
Why the TIF Proposal is important:
1. By using the TIF to help assure the completion of the site infrastructure, we can "lock in" the Master Plan and assure that Redding will have a rational tax base and a future for Georgetown as a walkable, transit-oriented mixed-use town center. But much more importantly, we need a "locked-in" Master Plan to assure that Georgetown does not simply become the site of a huge family-oriented condominium project that will be a negative rather than a positive influence on the town's tax base. This is the more conventional fate for a site like this, and would be a disaster for the town of Redding.
2. The typical development process for large redevelopment sites in Connecticut in recent years has been dominated by the use of the "Affordable Housing Land Use Appeals Act", which gives a developer the right to ignore local zoning if 30% of the new dwellings meet certain affordability standards (the other 70% of dwellings are unregulated). This has led to some very large projects, many of them in the state's most affluent areas, and if GLDC were to lose control of the site one of these developers would almost certainly be the successor. If an exploitative developer, answerable to no one, were to take over the site, we might see an expansion of the number of dwellings by 50% or even 100%,
3. These housing developers were not interested in the Gilbert and Bennett site twenty years ago, but now, with GLDC having resolved the environmental issues, the site is suddenly much more attractive. Redevelopment as a housing site under "affordable housing" rules would leave Redding with no significant commercial tax base, and possibly with the need to build expensive new school facilities.
4. In contrast, there is an affordable housing component in the GLDC master plan, but the number of units is manageable and has been designed to address an identified need within the community. To build the affordable housing component, GLDC has brought in Jonathan Rose Associates, an internationally-renowned firm that specializes in affordable, sustainable, green, and new urbanist housing and community development.
5. Whatever anyone may think, positively or negatively, of GLDC, the risk of seeing them supplanted by an exploitative housing developer who can do as they choose with the town's future is the main reason to work vigorously to assure implementation of the existing Master Plan. This concern has been implicit in the entire relationship between the Town and GLDC, and now, at the jumping-off point for physical construction of the project, is not the right time for the Town of Redding to change its attitude toward the project.
Summary and Conclusion:
1. The TIF proposal does represent an obligation, but not a risky obligation, for the town of Redding. It calls upon the town to repay a state loan in the future, at the time when new money from increased tax revenues becomes available. This obligation represents only a small part of Redding's anticipated future tax revenues from the GLDC project, and will be used to finance a small but important part of the site development costs.
2. The reason to support this proposal is to "lock in" the Master Plan by moving out of the design stage and into physical implementation of the site infrastructure. This should aid in avoiding the possibility of GLDC being supplanted by a larger housing developer who will take advantage of state affordable-housing statutes to ignore local zoning regulations. If this occurred, the town would lose its opportunity to have a walkable, transit-oriented village center but much more importantly the town's tax base might be permanently left in ruins.
I hope that this represents a helpful overview about the TIF proposal. I note that the Planning Commission and the Board of Selectmen have unanimously supported this proposal. The Board of Finance also voted in support of the proposal. I urge you to support it also.
Regards,
Rob Dean
Redding
RELATED LINK:
Connecticut Brownfield Redevelopment Authority