Montville ― Now that the Town Council voted down a real estate tax assessment agreement for a 72-unit Oxoboxo Lofts project, the developer must come up with a new plan.

The agreement with Massachusetts-based Dakota Partners would have locked in the property to a $4.4 million assessed value, a value determined by the town, with a 2% annual increase in the assessment for the next 10 years.

The 72-unit housing complex project at historic Faria Beede Mill is set to add 57 affordable housing units that the town needs to meet state requirements. Though the council and developer agreed on the assessed value of the property, the council could not pass the motion largely due to the inability to establish a hard start and end date for the tax assessment agreement.

The council said in a discussion prior to its March 13 vote that Dakota Partners’ Senior Development Director Eric Kuczarski would have to submit another tax assessment proposal before the $45 million development can move forward.

Kuczarski said Dakota was prepared to finalize the funding process for the project by May, which will no longer be the case.

“I hope (Kuczarski) comes back with another proposal that gives us the ending date that we’re looking for, and I don’t think there will be much of an issue after that,” Councilor Robert Yuchniuk said in his closing remarks, after Kuczarski left the meeting.

”I think it opens Pandora’s box for other developments,“ Chairman Tom McNally said.

McNally and other councilors believed the agreement could set a precedent for other developers in town to ask for similar agreements. Councilor Billy Caron said he has not once in his 18 years on the council said yes to such a tax agreement.

The decision comes a month after the council opted to postpone its decision until it could hear from the town’s Assessor Lucy Beit.

Beit explained at the March meeting that the assessed $4.4 million value is based on the completed project, not its current state.

Beit said, due to the proposed annual 2% increase, the property’s final assessed value would reach $5.3 million in the final year. The project, which Kuczarski said is 45% complete and can be completed by June 2024, is currently assessed at $1.7 million and is based on the percentage of the project completed.

Beit said that the town receives $30,000 in tax revenue from the project as it currently stands. Based upon the proposed assessment, the town would receive $82,000, with a final revenue amount of $100,000 in the tenth year.

This is the latest snag for the project that began in 2019. It was delayed in 2021 largely because Dakota Partners was awaiting a flood management certification, among other permits.

The delay caused the developer to request a five-year extension of the permits it obtained from the town's Wetlands and Watercourses Commission, set to expire Sept. 15, 2021, and the site plan approval from the Planning and Zoning Commission, set to expire on Oct. 19, 2021. Both extension were approved in 2021.

The project was originally expected to cost $35.5 million but Kuczarski said in February the figure has grown to $45 million due to the COVID-19 pandemic and “cost issues.” He said between $8 million and $9 million has already been spent, in part, on the reconstruction of the mill building.

McNally also opposed the 10-year duration of the deal. Mayor Ron McDaniel pointed to the affordable housing component as a difference maker and supported the duration of the deal.

The state requires municipalities must have 10% of its housing stock deemed affordable, though Land Use & Development Director Liz Burdick said the town currently has about 5% and needs roughly 660 units to reach that threshold.

Though Burdick said the town adopted its affordable housing plan just last year, there is legislation that would allow the state to dictate and require those towns that have not met the state’s goal to construct affordable housing units at their expense. So, she said, it would be beneficial for the town to incrementally achieve the goal and communicate to the state that efforts are being made to comply with the state's requirement.

As part of the deal, the land at 42 Pink Row will be recorded as affordable for the next 50 years.

“You want to show the state that you’re making attempts, an effort, to provide people with affordable housing,” Burdick told the council.

Kuczarski said Dakota Partners, would agree to starting the agreement when the certificate of occupancy is issued, though McDaniel and the council said that because the date is unknown, it would be best to lock in the date of the assessment. An agreement as to when the tax assessment agreement would start was not reached.

k.arnold@theday.com