AMHERST — The developer of a proposed residential and commercial project in North Amherst is expected to be the first to seek property tax breaks in exchange for increasing the town’s supply of affordable housing.
Town Manager Paul Bockelman said this week that he anticipates Beacon Communities LLC of Boston will submit its request by Jan. 9, so that a review can begin by the Select Board under what is known as the affordable housing property tax incentive program.
This home-rule legislation was adopted by Town Meeting in spring 2015 and the state Legislature that fall, before being signed by Gov. Charlie Baker.
Under the program, the Select Board can enter into agreements for special tax assessments on properties that include housing that’s deemed affordable for low- and moderate-income tenants.
Relief comes by phasing in the higher taxes that would be collected from the increase in assessed property value over a period of up to 10 years. These incentives are limited to the difference between the net operating income a developer would receive from projects with and without affordable units.
The Beacon project, known as North Square at the Mill District, will consist of 130 apartments and 22,000 square feet of commercial space. It will offer 26 affordable units, about 20 percent of the overall number. Its comprehensive permit application is being reviewed by the Zoning Board of Appeals under the state’s Chapter 40B affordable housing law.
For a tenant making half the area’s average median income, for instance, the rent would be about $650 a month for a one-bedroom apartment, $770 for two bedrooms and $880 for three. Those figures compare to market rents as high as $2,000, $2,700 and $3,200.
Beacon Development Associate April Ognibene said the tax incentives have been discussed with town officials since last spring.
The need is driven, in part, by the state Department of Housing and Community Development, which requires this municipal financial contribution before Beacon can receive low-income housing tax credits, Ognibene said.
An Oct. 25 letter to the town from Beacon President Dara Kovel refers to this need:
“The town’s approval of real estate tax incentive request is critical for the financial feasibility of the project, and it will also fulfill DHCD’s requirement that the town make a substantial financial contribution to the project.”
In a narrative provided by Beacon, the requested tax bill for the affordable units is expected to be $500 per unit in the first three years, rising to $1,000 per unit in the next four years and $2,000 per unit in the final three years. Beginning in year 11, full residential taxes will be paid.
It has yet to be calculated how much each market-rent unit will pay yearly in property taxes, said David Burgess, the town’s principal assessor.
Ognibene said the current estimated tax revenue from the undeveloped 5.3-acre parcel is about $10,000 each year, while the North Square at The Mill District would generate upwards of $2.24 million during the real estate tax incentive period, and $17.8 million over the next 30 years.
The third Zoning Board hearing on the project is scheduled for Jan. 5. A decision on the project has to be made by mid February.
Meanwhile, the Planning Board this week sent a letter to ZBA Chairman Mark Parent stating that it supports the project because the site and site design are “generally appropriate,” but suggests that improvements be made, including reducing parking spaces, adding more plantings and reducing the height of the buildings.
Scott Merzbach can be reached at firstname.lastname@example.org.