A Cromwell commercial realty investor planning to takeover a state-owned skyscraper in Hartford has won a tax abatement deal from the city that will save him $2.1 million over a decade.
Hartford’s city council on Monday unanimously approved the tax assessment fixing agreement with William Coons III and his Spartan Tower LLC unit, which is buying the abandoned, 15-story office tower at 25 Sigourney St. for $1 million in cash. The acquisition, expected to close by year-end, was contingent on the tax abatement being approved.
One major benefit from the 627,401-square-foot tower’s pending sale is that it would resort to private hands, thus returning it to the city’s taxable-property rolls. Most municipal-owned real estate in Connecticut is exempt from property taxes.
As of the 2019 grand list, the city assessed the value of the property at $18.9 million. The property is projected to generate $1.4 million in annual taxes for the city.
The state has owned the tower, overlooking I-84, since 1994, and fully vacated the site two years ago because of mold and poor indoor air quality.
According to the abatement agreement, the property will yield a property tax commencing in the 2019 grand list (from July 2020 to Jan. 2021) of $180,000 in the first four years; $210,000 in years five to seven; and $250,000 in years eight to 10.
The approved abatement generates an additional $200,000 in tax savings for Coons, who plans to rehabilitate or demolish the adjacent four-story parking garage at a cost of about $7.5 million, compared to the initial resolution considered by the council in recent months.
The revised deal also marries Coons to a so-called Community Benefits Agreement that guarantees he will complete $2.3 million in capital improvements within the first five years of closing, and spend at least $2.7 million on acquisition, “soft costs” and other capital improvements during that period.
It also requires Coons to ensure that 30 percent of construction hours on the redevelopment are performed by city residents, and that 15 percent of job hours are performed by minority and women-owned businesses. Coons is also required to pay $7,500 to support the recruitment of local, minority- and women-owned businesses to do work on the redevelopment.
Coons is also expected to provide between 5,000 to 6,000 square square feet of free or reduced-cost office space to Hartford-based small businesses. If Coons is unable to provide free or discounted space before Jan. 1, 2022 and after the building is half occupied, he will establish a Parkville/Frog Hollow Small Business Development Fund and contribute $25,000 annually during the last eight years of the abatement period.
A summary of the deal says Spartan is in negotiations with nearby Hartford health insurer Aetna to lease the parking lot at the rear of the building, although the developer is still weighing whether to restore or raze the on-site parking garage.
After the acquisition is complete, the developer expects to initially spend $2.3 million for repairs to the exterior of the building, lobby areas and plumbing and mechanical systems. The timeline for repairs will depend on lease commitments, market absorption and necessity, city records show.
Coons has said the tower may need about $30 million in renovations over several years.
“The developer has a vision of creating a campus like atmosphere with the building and establishing better connections with the property and Pope Park,” a summary for the deal states. “Both the developer and city agree that the availability of parking in and around the complex will be an attractive amenity for potential tenants, as well as the buildings close proximity to I-84 and the revitalization efforts that are taking place in Parkville.”
In Aug. 2018, the state Department of Administrative Services (DAS), which oversees the purchase, sale and maintenance of state taxpayer-owned assets, said it was offering the building “as is” and that the sale proceeds would be put into the state’s General Fund.
The tower debuted in 1984 to house commercial tenants such as Xerox Corp.’s regional copier-office equipment sales and customer-service teams.
