NAUGATUCK — Businesses have a new reason to come to and grow in Naugatuck.
The Board of Mayor and Burgesses approved the new Commercial Tax Abatement Ordinance during a Nov. 1 special meeting.
“It provides us the opportunity to provide tax incentives to companies outside the traditional Enterprise Zone,” Mayor Robert Mezzo said.
Mezzo explained that the Enterprise Zone courts more traditional manufacturers and machinery shops.
Mezzo said that the borough’s hands were currently tied when it comes to giving incentives to companies outside the Enterprise Zone, or companies who did not meet the requirements for other tax incentives.
“This gives us another tool to attempt to level the playing field in terms of trying to attract businesses to either relocate here or expand existing business within our borders,” Mezzo said.
The ordinance would provide tax incentives for companies either moving to or expanding in the borough.
The proposed ordinance has three levels of tax abatements.
Businesses investing between $25,000 and $499,999 would get a maximum of 50 percent of their taxes forgiven the first year after they are issued a certificate of occupancy, followed by 25 percent abatements for the next two years.
Those investing between $500,000 and $3 million would get a full abatement the first year and a 50 percent abatement the next year.
Those investing more than $3 million would get a full abatement the first year and then abatement percentage would decrease by 20 each year.
Mezzo explained that this was only for companies who either bought property to build on or companies who are expanding. If a company buys a vacant lot, but does not build, it would not be eligible for this incentive.
In fact, to be eligible for the incentives, according to the ordinance, a company must begin construction within 12 months and complete construction with 24 months.
The ordinance also stipulates that a company must remain within the borough for 10 years. If any company leaves the borough before the 10 year anniversary of the agreement, the company must repay all abated taxes with interest.
Mezzo explained that the agreement is not 100 percent protected, as state laws allocate how much a business can be held liable for if they are dissolved.
Any business that is considering this abatement must first fill out an application with the Naugatuck Economic Development Corporation.
“Once applied, the NEDC will screen the applications to make sure all the paperwork is in order and that the proposed investment and use is consistent with the borough’s plan and economic vision for Naugatuck,” Mezzo said.
He explained that, if the NEDC makes a favorable recommendation, the board will draft an agreement.
“So the NEDC, as it should be, screens the applications, makes a recommendation to this board, but the borough of Naugatuck can not be bound without your approval, as with any agreement,” Mezzo told board members.