In my March column, I detailed my vision for a vibrant Town Center and Suffield’s fiscal independence through commercial development, necessitating moving the Town Highway Garage. Now we’re knee deep in spring, and what better time to get into the weeds of the relocation?
On 5/15/19, the Board of Selectmen approved development of the Town-owned Ffyler Place parcel and relocation of Suffield’s garage to 1160 South Street. While optimistic about the possible Wicks location – particularly the new, state-of-the-art building and improving the blighted 159 property – the $3.4M price concerned me. 1160 South provides a more central location, in an existing building, at a more modest $2.4M. This option takes advantage of key financial tools that are invaluable in securing a favorable proposal.
The $2.4M, 29,920 square foot building provides more office space than Wicks (20,503 total sq. ft.) and offers swing space for employee offices during Town Hall renovations (potential $137,000 in 230C Mountain Road and 61 Ffyler Place rental savings while returning $19,481 to the tax rolls). Even after permanently relocating the Town Engineer, Highway and Public Works Departments, the space includes an additional 6,080 square feet that could produce rental income or address other space needs. The building sits on a narrow 1.97 acre lot adjacent to a Town parcel that will be partially annexed to locate a new salt shed included in the $2.4M.
1160 South requires renovation and site work to accommodate the garage. The $2.4M includes adding an elevator and bathroom redos to meet ADA requirements, overhead garage doors, paving, hookups for water and sewer, moving expenses and other improvements.
Purchase terms include:
1) “Land Swap”
Trade Town’s 3.5 acres at Ffyler Place for the 1.97 acres at 1160 South Street. The developer assumes the Town’s Ffyler environmental remediation work and costs estimated in January 2019 at $727,000. The 2019 appraised value of the Town land is $229,000 plus building and improvements amounting to $807,200. The 2019 appraised value of 1160 South Street land is $295,500 with building and improvements amounting to $1,375,900. The Town’s Ffyler parcel appraised in 2014 at $440,000, but presumed the land free from environmental hazards. Internal Revenue Code Section 1031 “Like-kind” Exchange allows for the developer to defer paying capital gains taxes until future sale of the acquired property. There is no impact on the tax-exempt Town.
2) Tax Increment Financing (TIF) and Credit Enhancement Agreement (CEA)
Suffield adopted this innovative policy at its 6/20/17 Town Meeting. TIF uses new/incremental property tax revenue generated from development, within a designated District, to fund associated projects without raising taxes or diverting existing funds. The Town established October 2016 as the baseline appraised values for affected properties in the Town Center TIF District. Taxes generated from these baseline values still go into the Town’s General Fund. Tax revenue above baseline values are TIF designated. The CEA, the contract negotiated with the developer, may return up to 50% of these TIF generated taxes to the developer as consideration for assuming Ffyler environmental remediation liability subject to a cap and a term limit of 15 years.
3) Commitment to Build
Developer guarantees building 45 high-end apartments/condominiums on Ffyler, to create desirable density/foot traffic, subject to Town Center Village District regulations.
Next steps: consideration by Board of Finance and Town Meeting.