ITEM PHOTO BY OWEN O’ROURKE
23 Central Ave. in Lynn is undergoing repairs.
By THOMAS GRILLO
LYNN — City officials have made a deal with a developer to keep all the apartments in a downtown flatiron building market rate in exchange for tax relief.
MG2 Group, the company that is transforming the former Security Trust Co. office building on Central Avenue into 49 apartments, has applied for tax incentives from the state’s Housing Development Incentive Program (HDIP). The Quincy-based firm bought the eight-story property in 2014 for $2 million.
Under the terms of the deal that still needs approval from the city council, the mayor and the Department of Housing and Community Development, the developer promises to keep all the units at the higher-priced market rate. In return, the MG2 receives up to $2 million in tax credits.
“It helps with the overall development costs,” said Joseph Donovan, MG2 vice president. “It reduces the local real estate taxes and provides a state tax credit based on qualified substantial rehab expenses.”
HDIP provides Gateway Cities — midsize urban centers, such as Lynn, that anchor regional economies but face unrealized potential — with a development tool to rehabilitate or build multi-unit market rate housing. The incentive allows builders to make the economics of a project work without affordable housing subsidies.
When the building opens next spring, studios will average $1,450, one-bedrooms will be priced at $1,650 and the 1,100-square-foot two-bedroom units will be listed at $1,900.
The $13.5 million project has already received $1.5 million in tax credits from the Massachusetts Historical Commission and is eligible for another $775,000 in the next round, according to a spokesman for the commission.
Over the next decade, the project is expected to generate $2.3 million in local real estate taxes. The 10-year tax credit term allows forgiveness of 25 percent of real estate taxes for the first five years and 10 percent for the last five years for a total of about $310,500 or $31,000 annually.
James Cowdell, executive director of Lynn Economic Development and Industrial Corp., said the tax credit is key to revitalizing the downtown.
“It’s to bring people with disposable income to live and spend money in the downtown,” he said.
State Rep. Brendan Crighton (D-Lynn) who championed HDIP on Beacon Hill, said it’s an essential tool in a developer’s toolbox to bring upscale housing to urban centers.
In addition to the luxury dwellings, the first floor will feature a pizzeria and a cafe.
Pie and Pint will offer two dozen craft beers and pizza with seating for 105 people. A coffee shop, called The Brew, will feature high-end coffee and free wifi. They will join other high-end eateries in the downtown including Rossetti’s Restaurant, D’Amici’s Bakery and the Blue Ox.
“We’ve already seen the changes over the last eight years with people living in the downtown and very successful restaurants,” Cowdell said. “We want to continue down that path.”
Thomas Grillo can be reached at [email protected].