The Board of Selectmen has “strongly recommended” the town grant startup firm, Advanced Fusion Systems, the ability to improve its new facility with no increase in tax assessment for the next five years.

If approved by the Board of Finance and Legislative Council, the high-tech manufacturing company will still pay taxes but it will be fixed for five years at the current assessment of $5.9 million during which time the company will be growing its business and test facility at 11 Edmond Road.

AFS Chief Executive Officer William Joyce, who has lived in town for more than three decades, as well as members of the town Economic Development Commission appeared before the selectmen during a Monday meeting to talk about the proposed tax abatement.

The business incentive is expected to allow the firm, which at the moment only has four full-time employees and an independent contractor, to develop its business in the field of power electronics and within five years, hire possibly 200 employees. The company bought property at 11 Edmond Road and secured land use approvals last year.

The expectation the town would grant that abatement combined with a state incentive that waives sales tax for project and equipment costs to manufacturing companies were among the reasons the company selected Newtown for its headquarters, officials said.

“Those were attractive reasons on top of the fact that the CEO lives here,” Rob Powell, the firm’s treasurer said of Joyce.

In five years, if the firm is still in operation, its property assessment would be increased to reflect all of the improvements made to the site. Based on current construction plans, the estimated assessment in five years would increase to $10.5 million.

Based on calculations presented by Economic Development Director Liz Stocker, the town will still receive $721,855 in property taxes over five years if the assessment is kept at 2010 Grand List values, but will lose out in an estimated $336,055 if the abatement is granted.

However, the building had sat vacant since Pitney Bowes moved out of the area, and since AFS purchased the property, the town already has collected a total of $142,179 in taxes.

The town also has received revenue in the form of building permits totaling nearly $87,000. In addition, if project construction were to proceed to a so-called Phase II, the town could expect to receive an additional $169,000 in building permit revenue, officials said.

While the town is likely to see benefits down the road, Joyce told the selectmen that there was no guarantee the firm would be in business in the long term.

“The odds are 75-percent that startups don’t make it,” Joyce said. “There is some risk here…I can’t sit here and tell you we’re going to be here 10 years down the path. I think we are.”

The company has raised $25 million in equity capital with plans to raise another $15 million, followed by possible bank funding of $20 million or so, Powell said.

The company expects revenues to be $1.7 million in the first year but estimates its net earnings to be negative $7.5 million. However, by the third year, AFS seeks to be profitable, according to figures the company provided the town, projecting its revenues at $75 million and net earnings at $11 million.

The company said the plan is to create about 200 advanced manufacturing jobs within five years with the average salary being around $100,000 due to the specialized knowledge required of the automation expected at the site.

“The kind of people who manage those know software,” Joyce said. “There’s a lot of technology rather than heavy lifting.”

Editor's note: For more information on the niche market products Advanced Fusion Systems will be working on, see AFS Has Hi-Tech Plans for Site