City Council - Finance Committee

CITY OF EASTHAMPTON OFFICE OF THE CITY COUNCIL Easthampton Municipal Building 50 Payson Ave., Ste. 100 Easthampton, Massachusetts 01027-2260 Telephone #: (413) 529-1460 11/30/2020 MINUTES FINANCE Meeting 11/30/2020 Attendees: FINANCE Committee Members: Councilor Dan Rist, Chair Councilor Peg Conniff Councilor Homar Gomez Other Attendees: Nicole LaChapelle, Mayor Jeff Bagg, City Planner Mike Michon, One Ferry Street Developer Jeff Daley, West Mass Development Jane Mantolesky, Attorney for Mike Michon, developer Jennifer Gallant, City Treasurer Erica Flood, City Council Tom Peake, City Council Val Bernier, City Auditor (arrived at 5:25pm) Meeting called to order at 5:00pm. The meeting was videotaped. Minutes from 11/23/20 meeting were approved 3-0. (Motion Gomez/Second Conniff) Mayor Communication: None New Business 1. MGL 121A Project Alternative Tax • Application for approval of a project under MGL C 121A which is being proposed by One Industrial Lofts, LLC. • Under MGL 121A :  Massachusetts General Laws Chapter 121A and Massachusetts Regulations 760 CMR 25.00 authorize the creation of single-purpose, project-specific, private Urban Renewal Corporations for undertaking residential, commercial, civic, recreational, historic or industrial projects in areas which are considered to be decadent, substan- dard or blighted open space. The statute and regulations authorize the exemption of 121A developments from real and personal property taxes, betterments and special assessments. They set forth procedures for negotiating an alternative tax payment on these developments and allow private developers to exercise the power of eminent domain to assemble development sites in specified circumstances. By allowing tax exemptions, 121A agreements are used to encourage development in areas with high property tax rates or in areas that are minimally marketable as loca- tions for private investments. The ability of a municipality to offer what is essentially a tax break, and accept a substitute reduced tax, provides the municipality with at least some tax revenue on property that would otherwise have been undeveloped. At the same time, 121A agreements provide certainty to developers in the amount of tax- es they will pay for the duration of the agreement. A 121A agreement must serve a public purpose. Although, the most frequent applica- tion of c.121A has been in the construction of housing for low and moderate income families, the opportunity exists to use this tool for economic development. • Discussion: • Review of project • Schedule of payments: review of spreadsheet showing the annual payments to be expected from One Industrial Lofts, LLC from 2021 to 2045. Total payments will be $4.95M. Payments will be received in 2 ways - 1 payment will be made by de- veloper Michon to DOR as excise taxes and will then be sent to City. 1 payment will be made directly to the City annually for a total of $4.95M over the term of the agreement. • Review the portion of the agreement regarding Workforce Housing. Are the num- bers included in the agreement fixed? Mr. Michon explained that the numbers would remain the same for Workforce Housing but the mix of Condos v. rental units may shift a bit. These are market rate rental units and are separate from Workforce housing units. • Under existing contract, if the contractor is unable to provide 50 workforce hous- ing, the contract defaults. The contracts are meant to be fluid and there is the abil- ity for either party to renegotiate if unplanned events happen (i.e. pandemic). • Regarding numbers related to workforce housing and condominiums under section 16 - the 50 workforce housing units will be apartments. The language of condo- miniums is necessary to meet specific requirements for this effort. According to statute if you elect to have Condominiums, then no less than 25% of your rentals must be affordable.  • Discussion around the meaning of workforce housing and affordable housing. Af- fordable housing is the term for any income limited housing. WFH = is a term that has specific income limits. 80% of Easthampton income to qualify for work- force housing. What is the breakdown of low income housing? Developer is not able to put in low income housing unless there is a subsidy from state which is not forthcoming. These WFH units will be below market rate and require developer to pay utilities. If developer was to provide low income housing, Mass Housing would take over financing of the project but their interest rate is double what the developer can get from HUD. • Concern expressed around lack of more affordable housing in this development. • Planning Board will provide their recommendation by the date of the City Council Public Hearing on 12/16/2020. Motion that Finance Committee make a recommendation to the full council to approve the “Application for approval of a project under MGL C 121A which is being proposed by One Industrial Lofts, LLC.” Motion: Councilor Conniff, Seconded by Councilor Gomez. Passed 3-0. 6:45 pm - Motion to adjourn by Councilor Conniff, Second Councilor Gomez 3-0 NEXT MEETING: 12/9/2020 at 5:00pm