🔒In COVID-19 era, Berlin gets aggressive with abatement strategy

From where Berlin Economic Development Director Chris Edge sits, now, more than ever is a time for municipalities to be aggressive about attracting new private-sector investment.

For brick-and-mortar developers, whose projects are crucial to many local tax bases, COVID-19 has created uncertainty over future demand for new retail and apartment properties. The pandemic has also dampened Connecticut’s revenue outlook, which could have significant impacts on town budgets in the years ahead.

With all that in mind, Berlin officials in July approved an expansion of the town’s property tax abatement program, which will allow for larger incentives over a longer timeline.

Berlin will now entertain 10-year abatements for projects that cost at least $12.5 million. Previously, it allowed abatements of up to seven years for projects of $7 million or more, as well as a lesser array of incentives for smaller projects.

The town has already OK’d the first abatement under the new policy, a 10-year deal worth $1.2 million in property tax savings for a mixed-use development called Turnpike Ridge.

The project combines 35,000 square feet of retail space and 72 luxury apartments in three separate buildings, which will be located along the heavily trafficked Berlin Turnpike near Deming Road, across the highway from the Home Depot-anchored Brickyard Plaza.

One 17,000-square-foot retail building that’s already built at the site (and is therefore excluded from the recent abatement deal) is almost fully leased, showing demand for the project, despite a challenging economy.

The developer is Executive Auto Group CEO John Orsini, who built an Acura dealership next door in 2017.

“It is the most aggressive package that we’ve done by far,” Edge said of the abatement deal for Turnpike Ridge, a project that could cost upwards of $15 million.

Orsini has numerous business and development interests, so Edge said the abatement aimed to ensure Turnpike Ridge remained an attractive option.

“He has the opportunity to do different projects in different places. We wanted him to move forward on Turnpike Ridge in Berlin,” Edge said.

Though the abatement means Berlin is giving up more than $1 million in potential property tax revenue over a decade, Edge said the town should still receive just over $3 million from the project over that period, and a total of $8 million over 20 years.

“When you look at the entire thing, are there downsides? No question,” Edge said. “But once it’s built we’re going to get revenue, there’s going to be construction, people are going to come in and eat, and then long term we’ve got a nice high-end development.”

Berlin’s new abatement tier could also apply to a handful of other significant development sites in the town, should their owners wish to invest enough money in a project, Edge said.

“That’s a pretty heavy-duty investment,” he said of the $12.5 million minimum requirement. “This puts us in a nice position for larger investments like this.”

[Read more: HBJ examines developments in CT towns, cities]

Edge has backed several abatement program expansions in recent years, before anyone had ever heard the term “COVID-19.”

“Developers have 169 different choices, and that’s just in Connecticut,” he said of the state’s many cities and towns. “Then you’ve got Massachusetts and other states as well.”

The pandemic has created more urgency among local officials to attract deals wherever possible, given the uncertainty caused by the pandemic, which has surged in multiple other states of late and could potentially return to Connecticut and wreak more havoc on its economy.

“This was a pre-COVID discussion, but COVID helped it along, is the best way to put it,” Edge said of Berlin’s expanded abatement structure.

He remains hopeful that the pandemic will turn out OK. When it does, Berlin will have some brand new retail and apartment inventory waiting. The apartments are sorely needed, he said, and would be the first new market-rate, non-age-restricted rentals to be built in many years.

It will mean more options for people who work at large local companies, such as Eversource and Assa Abloy, and could also translate to more Millennial homeowners in Berlin in the future, should they put down roots here, he added.

Construction on the three-story apartment buildings is slated to begin this fall, according to Helene Cavalieri of Berkshire Hathaway HomeServices New England Properties, who is the leasing broker on both pieces of the Turnpike Ridge development.

Cavalieri said she couldn’t yet disclose monthly rental rates, since some design tweaks are still possible, but the apartments are expected to all contain two bedrooms and two full bathrooms, with each unit totaling around 1,240 square feet.

Signs of demand

Turnpike Ridge will have two separate retail buildings: the first 17,000-square-foot property was built in 2017 and is nearly leased up; a neighboring 18,000-square-foot structure will be the next phase of development.

Tenants already moved in and operating in the first property include Envy Salon, Sapphire Nails and Spa, and Fresh Monkee, which makes shakes and smoothies.

Meanwhile, a restaurant called Burger Boss, which has a State House Square outpost in downtown Hartford that’s been closed due to the pandemic, is set to open a second location later this year at the first Turnpike Ridge building. A kickboxing gym called Sudor Taino Group Fitness and a restaurant called Pho Bar are also coming, Cavalieri said.

The pending second retail building has drawn one confirmed tenant so far — Smoothie King. Berlin will be the fifth Connecticut location for the Texas-based chain.

Cavalieri views the leasing activity as a good sign for the future, particularly as Connecticut eateries and salons were hit hard by shutdown orders during the pandemic.

“They were very anxious to get back up and running,” she said of retail businesses. “I think they’re doing OK, given the circumstances.”

”Slowly but surely people are coming back, and they’re taking every precaution that needs to be taken,” she added.

Town Profile: Berlin