Berlin Council Delays Vote On Major Development's Tax Breaks

BERLIN, CT — The Berlin Town Council at its last meeting postponed a decision on a proposed seven-year tax abatement for a commercial development at 680 Four Rod Road, doing so after council members raised questions about how the incentive would apply once individual units are sold.

The proposal would provide a tax abatement for JSJ Berlin Development LLC, which is constructing nine buildings totaling approximately 74,000 square feet with space for up to 54 contractor units.

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The project, in essence, will be like a condominium complex, but instead of residential units, the spaces will be for commercial business uses.

The Berlin Economic Development Commission previously approved the request as consistent with the town's tax abatement policy.

However, Berlin Town Manager Ryan Curley told the council the project differs from previous abatements because the developer plans to sell the units after construction.

Curley said the abatement was approved at the $3 million level rather than the developer's requested $14 million because there is no guarantee the entire project will be completed.

The proposal prompted comments from residents during the public participation portion of the meeting.

George Millerd of Orchard Road urged the council to reject the request, arguing that tax abatements are intended to encourage new development, not projects already under construction.

Millerd also questioned whether the incentive would benefit Berlin after the units are sold, expressing concerns about increased wear on Four Rod Road from contractor traffic and the administrative burden of managing abatements for multiple owners.

He suggested limiting the tax benefit to units owned by the developer during construction, with the abatement ending once a unit is sold.

John Gagas, principal owner of JSJ Berlin Development, disputed Millerd's characterization of the project.

Gagas said the company began working with former Berlin Economic Development Director Chris Edge on the tax abatement more than two years earlier and incorporated the incentive into the project's financial planning from the outset.

He added that the company expects to sell the units within about three years and said the tax abatement is not transferable to future owners.

Rhonda Romas, who lives across from the development on Four Rod Road, told the council she has attended meetings related to the project and does not believe the proposed incentive benefits the town.

During the council's discussion, Berlin Corporation Counsel Jeffrey Donofrio said tax abatements are intended to encourage developers to invest in a community, creating additional tax revenue over time.

"In this case, the original developer is making an investment in building these units, but the future individual unit owners who did not make that investment would possibly be receiving that benefit," Donofrio said.

Berlin Tax Assessor Joe Ferraro explained that the development could be assessed based on its status as of Oct. 1, allowing the developer to receive an abatement initially.

Once an individual unit is sold, the developer's abatement would end, although the purchaser could receive a limited benefit for the remainder of that tax year.

Berlin Mayor Mark Kaczynski said Berlin's tax abatement program has been successful, but described the proposal as more complicated than previous requests.

He said the situation could create future policy issues and warranted additional review before the council made a decision.

Ferraro offered to provide council members with a more detailed explanation of how the assessment and abatement process would work for the development.

Curley recommended postponing the matter until the council's first meeting in September to allow additional review.

The council took no action on the proposed tax abatement, and the item is expected to return later this year.

For the minutes of the June 16 Berlin Town Council meeting, click on this link.