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07/07/2020 12:00 AMAn update to a policy allowing tax deferments for certain types of developments in town is likely to go before the Board of Selectmen (BOS) in the near future, according to Economic Development Committee (EDC) Chair Ryan Duques, though any individual developers will still need approval from a town meeting to benefit from the policy.
The program, similar versions of which have been adopted by a handful of other nearby towns including Guilford and North Haven, allows a property owner or developer to spread out tax increases due to new buildings or improvements as long as they contribute at least $250,000 to the Grand List.
Originally, the deferment floor was set at $175,000, and also allowed applications for developers that created 10 full-time jobs in Madison.
The idea is the policy will attract potential developers by offering surety and smoothness to tax increases, according to Duques. No developer sought to use that previous version since its adoption by the town in 2018.
E-commerce giant Amazon took advantage of North Haven’s version of the deferral program to open a large fulfillment center there last summer. The development was anticipated to bring 1,800 jobs to the town, according to North Haven officials.
For example, if a business in town has a property assessed at $400,000, pays property tax on that amount ($11,340 at the 28.35 mill rate), and is now planning to improve its facility and increase its headcount so that the facility is now assessed at $800,000, the corresponding tax increase of that improvement (an additional $11,340) would be due from the business in that first year. However, if the business applied for this program, that new property tax could be phased in over a period of five years, giving the business time to acclimate after the improvements.
The updated policy sets specific monetary levels for each of those deferral periods, with only developments or improvements that add $8 million or more to the grand list qualifying for a 10-year deferral.
There are actually two developers waiting to take advantage of the policy, according to Duques. Those individual approvals must be authorized at a town meeting, however, which means that there might be some delay due to the pandemic.
First Selectman Peggy Lyons said in May that it was possible the town might be able to start holding town meetings this summer, though more recently she has said that it will be up to the governor to lift restrictions on in-person town meetings that were set by executive order.
Duques said a delay in approving the policy won’t affect the two current applicants, even though their developments are “underway,” but that approving the policy itself will be helpful because the town will be able to engage with potential developers or current property owners right away.
Editor's note: An earlier version of this story incorrectly stated that deferral program conferred no actual tax break.