CT Blue

Today’s Mystic River Press (no link available) reports that sentiment in the Groton Town Council appears to favor giving a tax break to encourage Groton Hospitality, LLC to build a hotel in town. The fact that the hotel is about 99% complete, sans tax break, apparently had an effect on the Council, which is thinking of abating only a year’s worth of taxes, rather than the three years requested.

I wrote the following to Mick O’Beirne, who was vocally against the tax break, and figured it could do double duty as a blog post about this absurd giveaway.

I was stunned to read in the Mystic River Press that the majority sentiment in the Council appears to favor granting a tax break to Groton Hospitality, LLC.

A strong argument can be made that it is bad public policy for municipalities to grant such tax breaks. Corporations often play one municipality off against the other, seeking ever more generous breaks as “incentives” to attract them to a given location. As often as not, they leave as soon as they have taken full advantage of the economic benefits they have wrested from the community.

Whatever the merits of such tax breaks may be in the abstract, they do not appear to apply to hotels. Hotels are built in particular locations because the developer believes that they will benefit from building in that particular location. They cannot be outsourced. If a developer wants to build a hotel in Mystic then it must build in Mystic. Groton is not in competition with other towns for such development. They are sited because of their locations, and it is unlikely that any particular developer would go elsewhere if denied a tax break.

Whatever the merits of giving such tax breaks to hotels may be in the abstract, they do not appear to apply to hotels that have already been constructed. It appears unlikely that Groton Hospitality, LLC will refuse to complete this hotel if it is denied a tax break. If I remember correctly, the Marriot tax break was justified because the developer claimed that it would use the money saved in taxes to build a grander hotel, which would yield greater tax benefits down the road. This argument, specious as it probably was, cannot apply to a hotel that is nearly complete.

Above and beyond the absurdity of giving someone an incentive to do something they have already done, there are issues of fairness raised by this proposal. This tax break will unfairly benefit Groton Hospitality vis a vis its competitors in Groton, many of whom have been in town for years, and most of whom have never asked for a dime of taxpayer’s money. This precedent having been set, however, how will the Council justify denying a tax break to a corporation that has fully completed construction but simply “forgot” to apply for a tax break before the last brick was laid?

Each time the Council grants such tax breaks, it shifts the burden of taxation from those benefitted to the rest of us. I have never complained about paying taxes, nor have I complained about my own assessment. But I do resent being asked to pay more via a higher mill rate in order to give an unfair advantage to a company that lacked the brains, foresight or gall to extort my money from the town in a timely fashion.

I note from the Mystic River Times that Mark Oefinger posed a question regarding the Mystic Marriot: “And it’s the third largest taxpayer in town. We went ahead and gave them a tax incentive. Would they have gone ahead with the project without it? We’ll never know”. We will never know, though I suspect they would have fought like hell had we tried to stop them. We do, however, know whether Groton Hospitality, LLC would have gone ahead without an incentive, because it did. It would be irresponsible if the Council gave it a tax break at this juncture, since there is no rational argument that can be made that the Town will realize any return for its investment.

I would appreciate it if you would share my thoughts with the entire Council.

My missive is somewhat misleading in one respect. According to the article, the precedent for giving abatements to projects after completion has, in fact, already been set. The Council actually did give an abatement to a completed project. One wonders how far back they’d be willing to go. Maybe every hotel and Inn in town should come knocking. On a more personal level, my wife and I have been thinking about doing some home improvements. Maybe the Council would abate our taxes to incentivize us.