Developer Seeks $11M Tax Break In Worcester For Building That Includes Affordable Units

WORCESTER, MA — The developer behind one of the largest apartment projects proposed in Worcester will seek a tax break worth over $11 million, but is also promising to include affordable units in the building.

The developer GoVenture Capital Group has received approval to build 364 units along Franklin Street where a complex of mostly empty warehouse buildings now stand. Ten percent of the total units would be set at prices affordable for local residents who earn 60 percent or less of the area median income (AMI), according to a memo sent to city council this week.

In turn, the developer would get a 15-year Tax Increment Exemption (TIE) plan, which would allow the company to forgo paying 70 percent of property taxes on average each year over the life of the plan.

The block-sized development would mean the removal of several large, mostly vacant warehouses between Arctic and Plastic streets — close to where the former cold storage warehouse that burned in 1999 once stood. The new development would increase the value of the block from about $4.2 million to over $68 million, according to Worcester Chief Development Officer Peter Dunn.

With the TIE plan in place, the developer would pay an estimated $6.2 million in property taxes over 15 years. Without the plan, the property taxes would be about $17.5 million over 15 years.

TIE and similar Tax Increment Financing (TIF) plans have been offered to multiple developments across Worcester in recent years, including new downtown hotels, the new Table Talk headquarters in Main South and developments near Polar Park.

"Without the requested tax relief, the development struggles to meet economic thresholds necessary to attract debt and equity investors required to fund the cost to construct the development," GoVenture Capital Group wrote in a letter to city officials.

The remaining units in the GoVenture Capital Group building not set aside as affordable would rent at market rates, meaning whatever price the developer believes the rental market can bear. Market-rate units would cost $1,900 for studios, up to $2,200 for one-bedrooms and $2,350 for two-bedroom units, according to the developer.

The development will not be subject to Worcesters still-in-the-works inclusionary zoning ordinance. If approved, the ordinance will require almost every new development in Worcester to include a share of affordable units.

The developer plans to break ground on the project as soon as this spring with completion sometime in 2025, according to documents sent to city council.