Development incentives may help bring three, 12-unit apartment buildings to New London.
The Finance and Personnel Committee unanimously approved a recommendation to the city council that the city of New London provide development incentives and authorize the city administrator to draft a development agreement for the proposed three, 12-unit apartment buildings behind Walgreens. The issue went before the city council at it Jan. 14 meeting.
City Administrator Kent Hager informed members of the Finance and Personnel Committee in a Jan. 3 memo that he has been meeting with a representative of a developer who is exploring the possibility of building the apartment buildings on that property. The city of New London owns land along the Rasmussen Canal, which adjoins the property being considered for the apartment buildings.
Hager also explained in the memo that when the original property development took place for Walgreens and O’Reilly Auto Parts, the city suggested the developer also put in water and sewer laterals sufficient enough to service the entire property.
“This was not done and now it impedes development of the balance of the property,” Hager said in the memo.
Jeff Bodoh, director of Public Works, gave Hager an estimate of $26,000 to extend the water lines, and $30,000 to extend sewer lines, for a total cost of $56,000.
The developer considering building the apartment buildings has asked the city for assistance with these costs.
In the memo, Hager explained that the taxable value for this development is approximately $2.1 million and the city’s tax rate is 7.8249 mills, which results in an annual city property tax of about $16,400. This tax payment would result in a payback of the $56,000 in just over three years.
Hager acknowledged in the memo that the original development of the property was “short-sighted” when the utilities were not put in.
“Unfortunately, if the city does not stand in with an incentive to provide these utility costs, it is unlikely that anyone will ever find it economical to develop the balance of this property,” Hager stated in the memo.
When the issue went before the Finance and Personnel Committee, Committee Member Mike Barrington said he didn’t have a problem with providing incentives as long as the city wasn’t setting a precedent of paying these costs for developers.
Mayor Gary Henke said when it comes to development, a payback period of five years or less is advantageous.
“We’ve done it before with other developments. We’ve done worse deals,” Henke said. “Just to get that number of people concentrated in one area is a pretty good payback.
Before the vote Hager told the committee that he’d get a development agreement for the committee and council to approve before anything was finalized, but he needed authority to offer incentives to the developer.