Fort Trumbull apartment developer seeks millions in city tax breaks

New London ― A development firm is seeking assurances it will receive nearly $6.5 million in tax breaks over 20 years before it will commit to constructing 500 new apartment units on sections of the Fort Trumbull peninsula that have been off the city tax rolls for more than two decades.

Representatives of RJ Development + Advisors, LLC, on Monday presented members of the City Council’s Economic Development Committee with a proposed fixed tax agreement they said is needed to help defray unexpected site preparation costs on the two parcels slated for the the apartments.

Attorney William Sweeney, representing RJ Development, said without the agreement, which is set to be discussed by the full council on Sept. 16, the proposed construction projects “will halt, will not move forward.”

The Renaissance City Development Association, the city’s development arm, brokered an agreement in 2023 that includes selling the two city-owned parcels, totaling 6.28 acres, to RJ Development for $500,000.

The agreement contained terms that required the development company, which built The Beam, a 203-unit apartment complex on Howard Street, to obtain state and local permits for the construction of a pair of apartment buildings, each containing approximately 250 units, on land located on Nameaug and Walbach streets.

But since that development agreement was signed, new costs have cropped up, including those related to meeting state flood plain requirements, site clean-up and sub-surface issues, Sweeney said.

Sweeney said a previous agreement with the state Department of Energy and Environmental Protection requires the site to meet 500-year flood plain thresholds, which will mean building the complexes on raised steel and concrete podiums.

He said more environmental testing is also needed on the land, which is suspected to contain the remnants of filled-in basements, rocky ledge and other construction obstacles.

Sweeney estimated it will cost roughly $13 million to address those issues – money the developer can’t put up without it being partially offset by the proposed fixed tax schedule.

Under the proposed agreement, the city would forgive 80% of the complex’s assessed real estate taxes in the first year after a certificate of occupancy is granted. Sixty percent of year two taxes would be forgiven, as would 40 percent of taxes for years three through 20, for a total of $6.4 million in tax forgiveness. It is the same agreement the city made with RJ Development for the Beam project.

The schedule estimates the city would by the end of the 20 years still have received $18 million in tax revenue from the two properties at Fort Trumbull, while helping offset about half of the developer’s pre-construction costs.

Sweeney noted the two properties, located within walking distance of Electric Boat, have been vacant and not generating property taxes for “literally a generation.”

Sweeney said his clients also hope to avail themselves of federal opportunity zone financing.

Councilor Akil Peck questioned if a different firm might be interested in developing the parcels without any such tax agreement. Felix Reyes, the city’s director of planning and economic development, said any developer would face the same cost obstacles RJ Development is facing.

Sweeney said the planned apartments, as per a previously signed development agreement with the city, will be rented at market rate and not deemed “affordable.”

If the council approves the tax agreement, which has already been vetted by the city’s law firm, construction of the Nameaug Street complex on the northern tip of the peninsula would begin early next year, Reyes said on Tuesday.

j.penney@theday.com