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February 13, 2024

Working group pitches reforms, including financial mitigation option, to state’s historic property redevelopment review process

Contributed David Kooris, president of business improvement district Stamford Downtown.
By Skyler Frazer

The working group tasked with reviewing the state’s role in approving tax credits and grants for the redevelopment of historic properties is recommending the adoption of financial mitigation and appeals processes when disagreements occur between state officials and municipalities or developers working to revitalize older parcels in the state.

The working group has sent its recommendations to the General Assembly’s Commerce Committee, which will craft a bill based on that work, according to state Sen. Joan Hartley (D-Waterbury), who co-chairs the committee. 

HBJ Photo | Skyler Frazer
Members of the state legislature’s Commerce Committee in 2024.

The working group was created by the state legislature in 2023 in response to complaints by some developers and municipal officials who say the decision-making process by the State Historic Preservation Office (SHPO) is sometimes too burdensome and unpredictable and can significantly delay or even block economic development projects.

SHPO administers a range of federal and state programs that identify, register and protect historic buildings. It also oversees the state’s historic rehabilitation tax credit program, a crucial funding source used by developers and municipalities to finance property redevelopments.

The program offers a 25% tax credit on qualified rehab expenditures. A federal historic rehabilitation tax credit is also available.

Last year, a proposed bill in the legislature would have given developers and/or municipalities the ability to appeal decisions made by SHPO to the state Department of Economic and Community Development (DECD), which would act as a third-party mediator.

However, the bill faced opposition from SHPO and numerous historic preservation advocates, and didn’t get legislative support.

The recommendations by the working group would essentially allow developers to pay money to an approved third-party conservation entity, such as a local preservation group or historical society, to make up for the “loss of a historical resource.” 

If SHPO deems a redevelopment project would result in the loss of a historic asset, like the demolition of a building the agency would prefer not be torn down, the developer could pay up to 15% of the state funding they are set to receive for a project to mitigate the disagreement.

The payment would be capped at $750,000, according to the working group’s recommendations.

Working group member David Kooris, president of business improvement district Stamford Downtown, gave an example of how the mitigation process could function.

A developer, he said, may want to take down two of the five buildings in a historic multi-building complex because trying to redevelop them would add “millions of dollars to the project,” Kooris said. Conversely, SHPO may want to preserve those buildings. 

“Then SHPO would say, ‘in exchange for that loss of the resource, we're going to get a mitigation payment,’” Kooris said. 

Kooris said the developer and SHPO would discuss and negotiate a mitigation payment, and determine whether it’s worth going that route. 

“I don't think that there's really a science to exactly (how much a mitigation payment) should be, but knowing that it should be high enough to incentivize negotiation with SHPO, but low enough that it's actually a viable path for a developer without compromising the overall fiscal likelihood of the project,” Kooris said.

If there’s a disagreement on whether a project would result in the loss of a historic resource, the working group suggests creating an appeals process involving the state agency sponsoring the project.

“If I'm a developer and I received a grant from the Department of Housing, and that is the only state entity or federal entity that I received a grant for, and I disagree with SHPO that the building that I'm going to build is going to result in a loss of a resource, I would have to convince the Commissioner of the Department of Housing … to challenge the determination that there's a loss of a resource that requires mitigation,” Kooris said. 

A challenge by a developer or municipality would need to be made within 15 days of a SHPO decision, Kooris said, and the corresponding state agency, like the Department of Housing or Department of Economic and Community Development, would need to respond within 30 days, Kooris said. 
 

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