Council Passes Hotel Tax Abatement, but Project 'Potentially' in Jeopardy

The Town Council on Monday unanimously approved three tax abatements for businesses that are expected to open in South Windsor over the course of the next few years.

But even though they were approved, one abatement - for a hotel to be constructed at The Promenade Shops at Evergreen Walk - may have actually jeopardized whether the project moves forward.

Ohio-based Radius Hospitality approached the council in mid-September with a request for a 7-year, 100 percent tax abatement to construct a $12 million Cambria Suites Hotel.

Members of the council at the time balked at the request, stating that the council had never provided such a generous tax abatement.

At the meeting on Monday, the original motion brought forth by Councilor Dr. Saud Anwar sought an abatement with the following terms: a 100 percent abatement for the first three years, followed by an 80 percent abatement in year four, 70 percent in year five, 60 percent in year six and 50 percent in year seven.

The total estimated tax benefit of the 100 percent abatement request for Radius Hospitality, according to Town Manager Matthew Galligan, would have been about $1.04 million over the course of the seven years.

But under Anwar’s original motion, the town would have realized a gain of about $800,000 in building permit fees and taxes that Radius Hospitality would have paid the town, Galligan said.

Deputy Mayor Gary Bazzano moved to amend Anwar’s motion - which the council ultimately approved in a 5-4 vote - to have years two and three changed from a 100 percent abatement to 80 percent. The other years remained unchanged.

Town Councilor Ed Havens opposed the amendment, saying that while the requested abatement was favorable to the developer, the tough economic times called for the unusual arrangement.

After the amendment, the council approved the abatement unanimously.

According to Galligan, the additional revenue the town will realize in taxes is about $72,000 over the course of years two and three as a result of the amended motion.

That is if the hotel is constructed.

“Potentially,” was how Radius Hospitality President Scott Yaeger responded to the question as to whether the council’s changing the abatement jeopardized the project. “We’ll have to talk about it internally.”

The hotel project is expected to give a shot in the arm to the local economy by employing some 50 to 70 trade workers for the construction as well as 30 to 40 employees to staff it once it is opened.

In addition, the hotel is a key component to The Promenade Shops at Evergreen Walk development plan, which is also looking to have an apartment complex built nearby. The idea is to build the hotel and the apartments simultaneously to take advantage of the economies of scale, according to Galligan.

One humorous portion of an otherwise serious discussion came from Councilor Cary Prague, who noticed that the hotel had a pool.

"If you put in an air hockey table and an arcade..." Prague said before trailing off. Prague was alluding to an earlier discussion about a proposed rink/recreation complex/pool construction project also at Evergreen Walk that the town is looking into. The $10.5 million project has been a subject of intense debate among residents and Councilors for the better part of a month.

Two other abatements pass

The other two abatements approved by the council - one for American Eagle Credit Union, the other for LCB Senior Living LLC - were far less controversial.

LCB Senior Living, LLC will receive a 50 percent tax abatement for five years, for a total tax revenue benefit of $627,300.

The credit union will receive a three-year, 50 percent tax abatement for a total benefit of about $52,000.

Both of those abatements were in line with similar arrangements that were recently passed in the last year or two for a bank and a senior living facility.