Mayor Bill Scanlon Monday night vetoed the city council's adoption of a 10-year tax break to residential developers in downtown Beverly.
The city council had voted unanimously in November to adopt the Massachusetts Tax Increment Financing Program (TIF), in which communities can allow residential developers to pay taxes on only half of the value added to a property through redevelopment for a period of up to 20 years in a certain zone in the city.
The Beverly City Council authorized a 70 percent tax break through the first five years, and a 30 percent break over the next five years for residential development in a zone encompassing a rough area extending from Bow Street in the north to Edwards Street in the south, and from River Street in the west to Cabot Street in the east.
The program, brought to the council's attention by Beverly Main Streets, but met with skepticism by downtown residents, is aimed at creating more residences in the downtown area, with the hope that more people living downtown will lead to more commercial development. Those in favor say an influx of people and foot traffic will help sustain current and future businesses.
But Scanlon took issue with the automatic 70 percent, saying in a letter to the city council that it "relinquishes the city's right to negotiate with prospective developers."
Scanlon said in his letter that he would be in favor of a lesser fixed number, and adding language to the ordinance that would allow up to a 70 percent break. His reasoning is partly based on one of the stipulations of the program, which states that at least 25 percent of residential units in a TIF development must be priced as affordable housing.
Scanlon says in his letter that the affordability requirement "translates into less revenue per unit on one out of every four units to be received by the developer, clearly a disincentive." He believes the 40 percent fixed break that he suggested back in October would offset that revenue loss.
Scanlon points to what the town of Easton has done with the TIF program, ensuring that developers use high-quality materials in return for a more generous tax break, as a good model for Beverly to follow. Easton and Quincy are the only two communities to have already adopted the program.
"Each of us knows that not all projects are created equal," Scanlon wrote to the council. "It is essential that the city has leverage in discussions with developers...it would be a disservice to the city and to all those citizens and developers who do not share in any tax break to award more favorable terms than necessary to a particular developer.
"On top of these concerns, the development in the designated TIF area will be dense and our willingness to grant a maximum tax break must be tempered by analysis of our available resources, be they school, fire, police, or other."
The city council can take up the ordinance again after a 10-day holding period, at which time councilors can vote to override the veto. The council would need a two-thirds vote (six votes in favor) to do so.
"The legislation which you adopt will likely be in place for years and have impact on our city for decades," Scanlon wrote. "Please do not take action to tie the hands of the executive branch recognizing that all projects are not created equal and that the capacity of the city's resources to properly accommodate a given development will change with time."
Ryan Mooney can be reached at email@example.com. Follow him on Twitter @mooney_ryan.