OXFORD — Construction of a $15.4 million Hampton Inn appears to be back on track, after the town inked a deal with developers that shelters it from state and county taxes.

The deal will allow GIRI Group LLC, a Quincy, Mass.-based company, to retain some of the taxes generated through property development. The taxes will be placed in a separate account managed by the town.

The 15-year deal will see the town annually allocate 20 percent of the increased property taxes — $367,500 total — generated by the hotel development into a special account that can be used to reimburse GIRI Group LLC for expenditures on drainage, paving, landscaping and water and sewer projects.

It’s still unclear when groundbreaking will occur. Building plans have not yet been submitted to the Town Office.

Town officials and GIRI President Ashish Sangani have previously said the hotel project is tied to the town’s $24 million sewer project, which isn’t expected to be ready before next summer.

The tax-sheltering agreement is the second the town has struck for the project. In December 2013, the town signed a credit enhancement with Thurlow Family LLC, a group of local landowners with property around the casino. Thurlow Family LLC sold the 4.3-acre parcel to GIRI Group LLC shortly after signing its credit enhancement agreement. 

“The signee has changed because the property has been transferred away from Thurlow Family,” Town Manager Michael Chammings said. 

Although developers began earthwork shortly after the deal, no construction on the 90-room hotel has taken place, in part because of speculation the Legislature might approve additional casinos in the state, which would compete for revenue. 

“It’s time; we’ve got to get started on this,” Selectman Peter Laverdiere said.  

As of March 31, 2013, the property had an assessed value of $25,090, according to the agreement. Terms of the agreement require developers to add $2 million in property value by April 1, 2015, and $10 million by April 1, 2016.

Since the first deadline has already passed without development, GIRI Group LLC will pay $25,000 to the town, the property taxes it would pay on a property assessed at $2 million, Chammings said.

If the April 2016 deadline isn’t met, the town has no obligation to pay into the company’s development account, though the town has indicated a willingness to extend deadlines to work with the group. 

The sheltered revenue is protected from state and local taxes for the duration of the deal, and will be used to repay debt service on a $13.7 million loan selectmen approved in April to finance the sewer project.

“It’s great for us because the money goes to the debt service to pay down on the sewer loans. The hotel wouldn’t happen without a sewer, and the sewer wouldn’t happen without the (tax increment financing district),” Chammings said.

By state law, the hotel property’s taxable value will be sheltered from state and county taxes, affecting how much Oxford pays to the local school district.

“As the value goes up in the town, your revenue-sharing (from the state) goes down for schools, the county charges you more money and school charges you more. With a tax shelter, you save it all,” Chammings said.  

ccrosby@sunmediagroup.net

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