BY ANDREAS YILMA
REPUBLICAN-AMERICAN
NAUGATUCK — At a special March 21 meeting, following the closure of the hearing, the Board of Mayor and Burgesses approved the establishment of a Tax Increment Financing District Master Plan and the Revitalized Rubber Corridor Tax Increment Financing District.
The contiguous district stretches as far north as Meadow Court and Church Street, as far east as Carroll Street, as far south as Elm Street and as far west as Neumann Street.
Under state law, a municipality is authorized to set up a TIF district, which has to be contiguous, to capture new revenue on construction projects after the grand list. New revenue after the Oct. 1 grand list can be captured and set aside and used to pay any bonding that is done for any projects within the TIF district, Mayor N. Warren “Pete” Hess said.
“The districts are for underutilized and unutilized areas with deteriorating conditions that are ripe for redevelopment,” Hess said. “So in essence, what we’re doing is we’re taking land in Naugatuck that was abandoned by Uniroyal Chemical and other manufacturing sites and creating a district to redevelop and rehabilitate those areas.”
Hess said some of the properties in the new district are only there to make the whole district contiguous.
Some other notable areas for development in the district include the vacant land of Parcel B where the transit oriented project will include new housing, retail and the new proposed train station, the Naugatuck Event Center, vacant land on Breen Field and the Rubber Avenue corridor.
The value of all the property within the TIF district must account for less than 10% of the total grand list.
As of October 2022, the total assessed value for all the land in the district is $61.1 million. The entire grand list value is $2.04 billion, which means the TIF district is about 3% of the grand list, Hess said.
“Most of the funding for all of these projects is coming from private developers. There’s also federal money that we’re using,” Hess said. “There’s state money that we’re using and if we so choose, we can use TIF revenue on the projects.”
Hess said the borough board is expected to choose members in April for a TIF Committee which will already include himself, Naugatuck Economic Development Corporation President Ronald J. Pugliese, one NEDC member, borough assessor Shelby Jackson, controller Allyson Bruce, one business member, two burgesses and one finance board member.
There are several reasons why a TIF district would be established. For instance, in can be created to increase and diversify the tax base in revenues, increase employment, enhance housing opportunities, support economically diverse long term stable employment opportunities and to enhance the infrastructure, Hess said.
Seventy-five percent of revenue that’s generated from new construction or new development within the TIF district will be set aside to make sure the borough always has enough money to pay for any bonding and 25% will go directly to the general fund. On an annual basis, the TIF Committee will work together to make sure that the district is working and once the bonding is paid for the year, any remaining funds will go back to the general fund,
“So the purpose of this, very simply stated, is to use new revenues to pay for any bonding or improvements that we do within the district before we return the rest of the money to the general fund,” Hess said.
Hess recommended some of the funds go to the general fund, as well as some to the five-year capital plan and some into a reserve account for borough development projects.
The Planning Commission has already given a favorable report for the district.
“There isn’t much to pay in the first several years of the bond,” Hess said. “So we’ll capture revenue and the management committee will meet in the beginning, quite a bit, until this is totally under control, to make sure that there’s always enough money to pay the bonding.”
Hess said this will be something that has to be examined annually and managed properly.
The borough will basically have five years to make sure that it creates enough new revenue to pay the bonding in year five. So three years from now, if the borough is lagging behind, borough officials would look at budgeting just-in case money if there’s a shortfall.
