City Council tables developer’s TIF agreement despite overwhelming positives

Business as usual for naysayers Smith, Pietrantonio and Van Campen

By Neil Zolot

A proposed Tax Increment Finance (TIF) agreement for an apartment building project at 380 Second St., known as The Sofia, will not increase taxes on residents, Planning and Community Development Director Matt Lattanzi said at a Special Meeting of the City Council on Monday, May 19, in reference to a misconception Councillor-at-Large Stephanie Smith and Ward 6 Councillor Peter Pietrantonio had that taxpayers would have to compensate the City for the difference between the maximum assessed value of the property and the lower tax amount being paid under the TIF. “Its value is based on the payment,” Lattanzi said. “If we reduce the tax burden by an amount, the assessed value is based on that amount,” referring to a text message he received from Chief Financial Officer Eric Demas during the meeting. It read, “Nobody loses or has to make it up. The value is based on the tax rate.”

“No one will be losing out,” Mayor Carlo DeMaria added. “No one will have to make up the amount.”

This did not fully satisfy the entire Council, except Ward 3 Councillor Anthony DiPierro. “Taxpayers don’t lose what they haven’t received,” he said, but the other members voted to table the matter until their next meeting (Tuesday, May 27) pending official verification and a document that includes changes to the project being made by developers Fulcrum Global Investors, not Fulton as previously reported in error.

DiPierro also feels there is a misconception that the City is subsidizing The Sofia. “Are you receiving funds?” he asked CEO Scott Brown of Fulcrum.

“We’re not receiving a dime,” Brown answered. “The TIF is a deferral.”

It will last 14 years. The current tentative estimate is that the project will add $332,000 in annual tax revenue during the TIF and $2.1 million after it expires.

A number of changes have been made to the proposed 620-unit/21-story mixed-use building, currently the site of a long-unused building near a furniture company and a scrap metal company, based on concerns raised at the May 12 meeting. “We took those under consideration,” Brown reported.

The changes include increasing the number of affordable units from 31 to 42 — now comprised of 33 units for veterans under the Veterans Affairs Supportive Housing (VASH) program — which will be priced at 30% of the Area Median Income (AMI); three other units at 60% of the AMI and five other units at 80% of the AMI. VASH units are available for veterans from other communities in addition to Everett; affordable housing being in the deed restricted to maintain affordable units in perpetuity and an increase in linkage fees for the Affordable Housing Funds from $1 million to $2 million, while maintaining priority for Everett residents and businesses to occupy commercial space.

The project is also estimated to create 1,342 union jobs during construction and 52 permanent site-operation jobs, which Brown said were the most in the history of Everett.

In discussion, DiPierro, along with fellow City Councillors Guerline Alcy Jabouin and Katy Rogers, said priority should be given to Everett veterans or ones with roots in Everett.

Brown and John Brainard, also of Fulcrum, also outlined plans for on-site parking, with spaces being leased separately from apartments; electric vehicle charging stations; bicycle parking areas; a ride-sharing program; and widening the street to facilitate the planned Silver Line bus service, all of which are designed to minimize traffic and encourage people to use public transportation, an overriding theme of “Smart Growth” planning over the last decade.

How affordable affordable housing units are — or having the means to live in the building’s market-rate units — is still an open question. The Sofia will include an indoor gym, an outdoor pickleball court, an outdoor sky lounge, work from home space (i.e., shared office space) and other amenities, with rents currently planned at $2,300 per month for a studio apartment, $2,700 per month for a one-bedroom apartment and over $3,000 for larger ones. In addition, Everett is in an AMI cohort that includes similar communities like Malden and Medford, but dissimilar ones like Lexington, Newton, North Reading and Winchester. The income levels in those affluent communities skew affordability under the AMI above the means of many residents.

Although wrong on the particulars of taxes and assessments related to the TIF, Smith’s concern was based on “residents paying for something they’ll never use.”

Earlier she said to Brown, “I like all the concessions you made. Long term, it’s the right thing to do. I don’t know how many residents will reap the benefits of this. This is a tough vote based on what’s happening in the city.”

She also expressed concern that the units may be hard to rent. “Will Everett be stuck with an empty building?” she asked.

“We appreciate the potential financial benefits this will bring to the city’s coffers, but the rank-and-file members of this community are tired of having the Boston area housing crisis being solved on their backs,” Ward 5 Councillor Robert Van Campen added, citing facts that Everett has had more housing being built than any other community east of Route 495.

He also noted Fulcrum was the first developer to request a TIF. “A TIF is an economic tool used to drive priorities for economic development so a project can get built and stabilized,” Brown reacted. “It’s deferred taxes.”

He also said if the TIF request fails “all this would go away and, if taken on by another developer, it’d likely be a smaller project generating less tax revenue and affordable housing. Aspects of The Sofia are better than any other development that could be put on the land. If we don’t get it, it won’t be us. Turning down a TIF would turn down affordable housing and union jobs. Not a lot of other developers are rushing to provide affordable housing.”

He also warned “we’re under the gun time-wise. The building is vacant because we want it to be, but the demand for warehouse space is very strong. We get calls every week.” Signs for an auto-find company, a Brazilian church and a lift truck service are still on the building.

He also cited economic statistics about falling economic trends necessitating the need for the TIF, which he said have been confirmed by an independent consultant hired by the City, CRE Asset Advisors. When called to testify, Managing Partner Christian Reenstierna and Consultant Judy Pelletier of CRE didn’t dispute that.

A number of union employees in construction trades spoke in favor of the project in Public Participation at the beginning of the meeting, including Everett residents Anthony Hin, Joshua Mendoza, Joaquin Rivas, Christopher Shields and Joseph Trulio. “We’re finally seeing work done on Second Street to make it safer,” Trulio said. “It’s phenomenal to see affordable housing. A lot of us can’t afford to live in Everett.”

Complete Streets program

Before the meeting the Ways and Means Subcommittee recommended favorable action on a proposal to borrow $3 million for street improvements and participation in the Complete Streets program, which also covers crosswalks and sidewalks, an agenda item May 12. The members wanted to know the streets subject to work, which include Estes, Grover and Miller Streets and Meadowview Road, which are located between Wehner Park and Whittier Drive and the Malden line; $2 million is for street improvements; $1 million is for Complete Streets. City Engineer Eric Swanson said work should begin in June and run into November. Streets under which water mains need work will be done at another time in conjunction with the Water Department. “In an area with water main needs, there may be cross service,” he said.