The Worcester City Council on Tuesday advanced a controversial plan to give an apartment project a local property tax break. The proposal will now go before a City Council subcommittee for further discussion.
The council had postponed a vote on the issue for two weeks as residents and local labor activists raised concerns about the tax break. Critics have said the developer of the project — the Washington-based Menkiti Group — doesn’t deserve the tax exemption because it previously violated local development regulations by using a subcontractor that the state found had committed wage theft.
During the meeting Tuesday, Councilor Khrystian King said the two-week delay gave him time to speak with the Menkiti Group and relay his concerns about giving the company the tax break. He said the conversation left him comfortable with voting to move the proposal forward.
“We want responsible developers that make sure that their contractors are on a consistent basis being responsible themselves,” King said. “The most welcoming way that we can present ourselves as an elected body is to be consistent, to be transparent with our expectations.”
Worcester often gives tax exemptions to developers. It’s a way for the city to incentivize housing development and revitalize old buildings amid a shortage of affordable apartments that’s caused rents to spike.
The city is considering a tax exemption for a new project that would convert underutilized office space in a downtown building into 48 apartments. The Menkiti Group asked for the tax break in order to make the project more affordable. The developer also needs the exemption to unlock additional tax credits as part of the state’s Housing Development Incentive Program.
But in recent weeks, dozens of residents have protested the proposal and called on councilors to reject it. They’ve noted that Worcester has a responsible development ordinance stipulating that in order for a local developer to receive a tax break, it must meet the city’s goals for hiring local contractors and minority- and women-owned businesses.
The Menkiti Group violated that ordinance for another Worcester project when it used a drywall company that the state Attorney General’s office previously cited for wage theft. Worcester fined Menkiti $5,000 for the violation.
During the public comment period of the meeting Tuesday, Steve Hart said giving Menkiti another tax break would set a bad precedent.
“They’re asking for a handout,” Hart said. “Any developer is gonna come in and want that same deal. That’s gonna be business as usual for this city.”
Menkiti Group CEO and founder Bo Menkiti told GBH News that as a Black-owned firm, the company takes Worcester’s responsible development ordinance seriously. He added that without the tax exemption, he’ll have to shelve the housing project because he won’t be able to afford construction costs.
“It’s not like Menkiti Group’s just getting tax breaks that make us wealthy,” Menkiti said. “We’re trying to bring the resources to bear to deliver important housing and community resources in Worcester.”
According to city estimates, the tax exemption would save the Menkiti Group $613,211. The developer is seeking other state and federal tax credits for the $27 million project.
Although King joined other councilors in voting to send the tax break to the City Council’s economic development subcommittee for further vetting, he’s unsure whether he’ll support the proposal when it comes back before City Council for a final vote.
Rob Billotta, who was the only councilor to vote against sending the plan to the subcommittee, said he wants the city to use the tax break as leverage to push for more accountability.
“I know we want to spur development downtown and we are doing that through tax breaks. And obviously, that’s a great tool that we have,” Billotta said. “I think it also provides us some leverage too to make sure that developers are honoring the responsible development ordinance.”
