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New London - The City Council has granted about 10 years of tax breaks to the developers who want to build 80 to 104 units of housing on 6.5 acres in Fort Trumbull.
River Bank Construction will receive the tax breaks on its proposed Village on the Thames, a complex of two-story, wood-frame units connected by garages to be built on four parcels in Fort Trumbull.
The tax breaks were granted under the City and Town Development Act. In 2009, voters narrowly approved the city's participation in the state program, which provides distressed municipalities with broad powers to try to attract new development, including tax breaks, the issuance of notes and bonds, delegating powers to development agencies and earmarking capital reserve funds.
The River Bank proposal was discussed at a City Council committee meeting earlier this month and passed 5-0. On Monday the full council unanimously approved the resolution without comment.
Under the agreement, during the construction phase of the project, River Bank will pay $1,000 a year in real estate taxes for each unit approved by the Planning & Zoning Commission, up to a maximum of $100,000 a year. The planning commission has yet to approve any plans.
Once the units are occupied, River Bank will be exempt from paying 95 percent of the taxes on rental properties for the first five years. The sixth year, the exemption goes down to 50 percent, and it drops to 25 percent the seventh year.
If any of the units are sold, the exemption will be 70 percent of the taxes for the first year, 60 percent for the second year, 50 percent for the third year, 40 percent for the fourth year and 30 percent for the fifth year.
Ned Hammond, the city's economic development coordinator, said when the project is completed in 2023, the city could collect more than $2.3 million in taxes, despite the abatements. If there were no abatements, the taxes would be about $2.9 million, he said.
The city has granted tax abatements to two other residential developments over the past few years, Harbour Towers and Shaw's Landing, both on Bank Street.
The housing units at Fort Trumbull were originally going to be condominiums, but because of the economy and the soft housing market, River Bank has said the units will be rentals and sold to individuals when the economy improves.
Michael Joplin, president of the New London Development Corp., which is overseeing the project for the city, said the units will be built to condominium specifications and will be recorded on the land records as condominiums.
The 90-acre Fort Trumbull development area has been an ongoing issue in the city for more than 10 years. The NLDC presented a plan in 2000 that the city approved that in essence leveled nearly all the buildings in Fort Trumbull to make way for new construction. Several property owners fought the eminent domain taking of their land all the way to the U.S. Supreme Court, where eventually justices ruled in favor of the city.
The River Bank project will be the first new construction on the site since 2000.
Irwin Stillman of River Bank Construction said the company's intent is to sell the units as condominiums. He expects the two-bedroom units, which make up 70 percent of the project, to sell for $300,000 to $375,000.