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Student housing project approved in Worcester

The Worcester City Council approved tax-relief for a $32.7 million housing project for college students. A large part of the agreement with the developer was over handling of exempted real estate taxes and receipt of various state tax credits.

Rather than being provided an 80 percent real estate tax exemption over a 10-year period, the developer agreed to a 70 percent tax exemption over the 10-year period. Also, if the developer receives more in state historic tax credits than anticipated, the city will have returned to them 75 percent of the excess amount.

According to the chairman of the council's Economic Development Committee, agreement modifications sought were to prevent the developer from realizing a financial windfall at the expense of city taxpayers. He also points out that the developer is taking a "huge risk" in taking on such a project and describes the project as being a "brand-new type." The developer is planning on renovating an eight story 100-year-old industrial building and converting it to an 82 unit housing project.

When conducted correctly, such commercial real estate developments can be a win-win for developers, cities or municipalities and individuals that will make use of the project. The return on the investment for developers is often great. The city receives the benefit of having older buildings refurbished and possibly seeing a neighborhood improved. Finally, such a development offers residents new housing opportunities.

However, because of the amount of investment, all parties want to see such a project conducted correctly. Experienced real estate attorneys having provided services for similar projects can steer developers away from mistakes that have sunk other development projects.

Source: Telegram.com, "Worcester approves revised tax deal for student housing in Osgood Bradley building," Nick Kotsopoulos, March 17, 2015

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