Taunton OKs giant tax break for apartment complex and waives affordable unit mandate. Why?

TAUNTON — The Taunton City Council approved a $2.5 million real estate tax break over 10 years for the developer of a massive rental unit complex.

The developer, Alliance Residential Co., is constructing four buildings containing 275 market rate one and two-bedroom apartments total on a 43-acre site at 1141 County St.

The proposed development is located on prime real estate next to the MBTA South Coast Rail station currently under construction.

The tax break comes against the backdrop of a payment in the other direction, from the developer to the city. Last year, the developer agreed to pay Taunton $1.6 million into the city's Affordable Housing Trust, as a fee for waiving the requirement that 10% of the units be designated as affordable.

Here's how it all unfolded.

Why a tax break for market rate units?

The tax break is in the form of a tax increment exemption (TIE) agreement, which excludes a portion of real estate taxes for an agreed-upon time. In this case, 10 years, with estimated savings for the developer totaling $2.5 million.

The TIE agreement is part of the city’s Housing Development Incentive Program , a state program only for Gateway Cities, like Taunton, intended to encourage housing developments and stimulate community growth.

“It’s another tool in the toolbox” for Taunton, said Patrick Dello Russo, the city’s CFO, at the March 19 City Council meeting.

He said TIE agreements help make the city marketable with developers concerned about “pencil-thin margins” for profit. Jay Pateakos, managing director of Taunton’s Office of Economic and Community Development, also supported the TIE.

“Construction costs are so astronomical right now. There’s not much market-rate housing coming to the city. They need incentives now more than ever,” he told the Council.

'A village environment' Shops, apartments can be built near a new Taunton station

Benefits to the city

Dello Russo told the City Council on March 19 the rental unit development will yield $8.8 million in new revenue to the city over 10 years — even with the giant tax break. Dello Russo broke down this total amount as follows:

• Estimated property taxes over 10 Years — $3,900,000
• Estimated excise taxes over 10 years — $900,000
• Estimated new retail and commercial growth — $800,000
• Affordable Housing contribution from Alliance Residential — $1,600,000
• Estimated permit and connection (water, sewer, etc.) fees — $1,600,000

How much will monthly rents be?

Alliance has previously projected rents will be $2,500 a month for one-bedroom units and $3,000 for two-bedroom.

The plan Giant apartment complex coming near Taunton train station. When and how much is the rent?

Not everyone on board for tax break

City Councilor Barry Sanders was the lone dissenting vote against the TIE agreement, which was approved 8-1. He accused Alliance Residential of buying its way out of the requirements of the city ordinance that mandates 10% of units be affordable. Sanders pointed out Alliance is giving $1.6 million now so it can get $2.5 million back over 10 years.

"Part of the reason the law was created was for struggling people to live near the rails," said Sanders, adding he is against giving incentives to developers who will already make lots of money from the project.

Council and mayoral support for project

But City Councilor David Pottier said the city already has several affordable housing projects underway.

“We are building affordable stock all over the city.  We don’t have incentives for market rate in Taunton," he said.

City Councilor Phillip Duarte agreed with Sanders, philosophically, but considered incentives like TIE “a necessary evil.”

“Do I want to subsidize large multinational corporations who will charge high rents?  No, I don’t,” said Duarte.  “But the alternative is these sites will just go undeveloped” and “no one wins.”

Mayor Shaunna O’ Connell called the benefits offered “an economic driver” and “incentives for developers that are needed at this time.”

Why was affordable-units requirement waived?

Last summer , the project was nearly derailed when the Zoning Board of Appeals initially balked at a request from the developer to be exempted from the requirement 10% of the units be. At the time, Alliance was offering to pay $600,000. It wasn't until Alliance upped the offer to $1.6 million that the ZBA approved the exception.

The 10% affordable is one of the requirements in the city's transit-oriented development district , a zoning designation meant to encourage multi-family housing and assorted retail and commercial entities within close proximity of the new MBTA rail station.

But Alliance’s New England Branch Managing Director Michael Boujoulian told the ZBA back on July 27, 2023, the project needed the exemption because it was "on life support” due to multiple factors, including: inflation, rising interest rates and a site rife with restrictions and irregularities.

Two-thirds of the land is wetlands, meaning only 14 acres are developable, he said. Boujoulian said Alliance wouldn’t have even considered the site if it weren’t for both the rail station and nearby Route 24 ramp.

“The train station is the wind in this project’s sails,” he said.

Boujoulian told the ZBA the real market around the rail station is "emerging families and professionals," so all the units should be market-rate. And Pateakos agreed, pointing out that all new rental developments being constructed near the MBTA rail stations in New Bedford and Fall River are market-rate.

But ZBA Chair Dennis Ackerman pushed back, saying the purpose of the ordinance was to “provide a range of housing options for different income levels at different stages of life.”

Ackerman, called the $600,000 offer from Alliance “a drop in the bucket” compared to the money the developer will make on the project. But at a subsequent ZBA hearing on Aug. 24, Alliance begrudgingly agreed to the $1.6 million figure and the ZBA approved unanimously to waive the affordable housing requirement.

ZBA member John Joyce said at the time it would have been a shame for the city to lose the project.

“This is the type of housing people will look for when they transplant here from other communities. They want convenient access to the train,” Joyce said.

When will construction start?

Alliance Residential did not respond to inquiries from The Gazette.

But Dello Russo told the City Council it is “a shovel-ready project.”

And the presentations given to the Planning Board and Zoning Board list a potential groundbreaking this July, with construction taking as long as two years.

This article originally appeared on The Taunton Daily Gazette: Taunton OKs giant tax break for apartment complex and waives affordable unit mandate. Why?