Meriden fine-tunes rules for $5 million economic development fund



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MERIDEN — A plan to create a $5 million Commercial Space Upgrade Program to fill vacant buildings was referred to the City Council’s Economic Development Housing and Zoning Committee last week to answer questions about its implementation.

The referral from the City Council to the EDHZ Committee follows an ARPA Committee recommendation earlier this month to use $5 million in American Rescue Plan Act money to establish a funding source for landlords and tenants to bring vacant buildings up to code and make other “vanilla box” improvements. 

The grants would require property and business owners to match city funds. Applicants in the inner city district would be required to provide a 25% match. Meanwhile, proposals outside the inner city district would be required to provide a 50% match of funds.

The ARPA Steering Committee voted to recommend funding. But City Councilor Yvette Cortez, who chairs the steering committee, motioned to refer the application to the Economic Development, Housing and Zoning Committee.

Cortez said there have been questions and concerns about the commercial space program's implementation.

"We wanted to make sure that we have all of those details sorted out," Cortez said.

Other city councilors raised questions that included whether developers who already had city tax abatements would be eligible to apply, and which body would grant final approval.

As currently proposed, the Commercial Space Upgrade Program would be administered by the Meriden Economic Development Corp., a nonprofit agency comprised of business and city leaders to fuel economic development in the city’s transit-oriented district downtown.     

“We anticipate that MEDCO would be the administrating agent for this City ARPA program — supplying the staffing, financial and project analysis and other services to approve the specific transactions,” MEDCO President Thomas Welsh said in an email. “In this regard, if finance, engineering or other consulting professional assistance is needed MEDCO would provide that by contract for the program.” 

The setup would allow MEDCO to maintain the confidentiality of the business information provided for the applications and projects, Welsh continued. 

Democratic City Councilor Bruce Fontanella opposed allowing MEDCO to administer the program last week, saying applications should go before the City Council. 

“I’d like to know the process for people applying for his benefit,” Fontanella said at the June 21 City Council meeting. “What are the factors going to be in determining who qualifies? And I’m definitely against MEDCO (administrating the program).. Decision-making should be from the city. We’re responsible for that, not MEDCO.”

City Economic Development Director Joseph Feest explained the program is modeled after successful ones in other cities. For instance, Hartford turned over administration of a similar fund to its chamber of commerce, Feest said. The public will be aware of which company is receiving funding, but the company’s financial information is kept confidential.  

“People will know that business ABC will get money,” Feest said. “Except what they would be kicking in, you’re going to know how much they’re going to receive.”  

Allowing MEDCO to administer the plan prevents business owners from having to make presentations and disclose financial information during a public hearing before the EDHZ or other committees.

Feest said all the details have yet to be worked out and welcomed input from city councilors. 

“If you have questions give me time,” Feest said. “This is a group effort. A lot of my direction is what I know people want.” 

Eligibility

Fellow Democratic City Councilor Larue Graham questioned whether investors, landlords or tenants currently receiving an abatement, loan or other incentive program could take advantage of the funding. As it stands, no entity currently receiving city assistance is eligible.

However, if a party paid its manufacturing loan or ended a tax abatement agreement with the city, it can apply. The city has recently negotiated tax abatement agreements with the residential developer of 289 Pratt St. that would freeze the property assessment for two years upon the issuance of a certificate of occupancy for the property, which is currently a vacant lot, before gradually increasing the taxes collected on the property over the remaining six years of the agreement, bringing the tax assessment to 100% in the final year. The developers and property owners, 290 Pratt St. LLC, have proposed building a 92-unit apartment complex.

The abatement was negotiated by City Manager Timothy Coon and Feest. 

 The city also recently created an abatement for manufacturers that own two or more buildings but want to expand. The proposal would allow any manufacturing company that operates two or more facilities in the city and seeks to open another facility, also in the city, to be eligible for a real estate tax abatement toward the new location.

The abatement, under the proposal, would have an eight-year term. Each abatement would be based on a 25% real estate assessment of the property being considered. 

Colony Street

Under current rules, the developer at 24 Colony St. could not apply for a loan to fit out vacant commercial space on its first floor because it has an abatement agreement. However, a prospective tenant could apply, Feest said.   

The Colony Street Project, which encompasses five vacant buildings on Colony Street, has no agreement with the city, and is eligible to apply for Commercial Space Upgrade Program funds. Feest said they have not yet asked the city for an abatement or other assistance.

Under the Commercial  Space Upgrade Program, approvals would be divided between code upgrades and tenant improvement grants, up to $300,000 each, and other technical and financial assistance, Welsh said. 

If a tenant wishes to locate a business in one of the downtown properties that has code issues, the code upgrade grant — with a minimum 25% match if in the downtown area — would be available to the landlord to offset the code upgrade and a tenant improvement grant, with the same matching, would be available for the tenant improvements. If the site is outside the downtown area the match goes up to 50%, Welsh said.

‘You have to fund it’

Downtown landlord Ross Gulino, who sits on the city’s Planning Commission, attended a joint meeting of the EDHZ and Planning Commission a year ago, and suggested the funding pool. 

“I’ve been talking about this for 20 years,” Gulino said. “The city needs to get involved if that’s what you want downtown. You want to make it a bar and dining destination you have to fund it otherwise, it’s not going to happen. A smart businessman isn’t going to invest unless they know the city is behind them.”

Feest is asking for input before fine-tuning the initiative. The Economic Development Housing and Zoning Committee meets again on July 19. 

Reporter Mary Ellen Godin can be reached at mgodin@record-journal.com,



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