New Haven Independent

Posted by: robn | July 26, 2007 8:53 AM

Its interesting that a competing developer gave testimony which, "commended the Becker proposal and said they just couldn't find a way to make the numbers work."

Maybe other competing developers couldn't make the numbers work becuase at the time of the competition, they were paying $6M for a then required parking garage, they were NOT getting tax abatement, they were NOT getting building permit fee reductions, and they were NOT getting city and state assistance to build subsidized housing units.

Has anyone actually checked city hall's assertion that none of the other developers had ready financing?

Posted by: Esbe | July 26, 2007 11:19 AM

Robn -- I think the real point here is the "dog that didn't bark." No competing developer has stood up and said "hey, give me half that deal and I will build it!" Such a statement would have politically killed the project, and probably won it for that competitor. Obviously, at that price, they don't want it either. Check the link that Paul posted: all of their original proposals called for really massive subsidies.

In the C.A.White proposal, which I liked better than B&B, they made clear the cost of the city's demands. For example, if the city agreed to waive certain wage demands, they would pay $3,000,000 more for the land. B & B agreed to those wage demands (and much more), but in return didn't pay anything for the property.

This isn't a "giveaway" to developers. It just is really expensive to meet all the city's goals. There is too little support and patience for talking about real trade-offs -- what would we give up to generate more revenue? Personally, I would give up the low income housing at that exact location -- it is cheaper and better to provide it in nearby neighborhoods.

Posted by: Gary Doyens | July 26, 2007 11:24 AM

I do like this project..but it is larded up with welfare for the well heeled. Millions from our local government, millions from state tax coffers which is us again. It's not necessary when base fees and revenue to the pension fund and the developer is robust - 7% to pension fund; $6 plus million to Becker. In addition, they both share in the back end of this development. They don't need the welfare and we can't afford it when we're running deficts, have escalating taxes and chasing down citizens of New Haven for every quarter they have.

And finally..those on the NH BOA who think this project is going to lower our taxes better think again and be honest. This project will no more lower our taxes than I'm Santa Claus. Lowering taxes is a direct function of spending - failure to curb spending, new programs and to think outside of the box on fixed pensions and benefits among other things will only lead to higher taxes.

The city does not and has not lived within its means in years - we are suffering under a 145% increase in taxation across the last 10 years, much of that in the last few years alone. In fact, the city has been operating in a deficit for the last couple of years, only balancing the books by preposting the next year's tax revenue to the previous year's expenses. It's not right and cannot continue. At some point, the NH BOA and the DeStefano machine or their replacements must get spending under control.

I know....and when pigs can fly...

Posted by: charlie | July 26, 2007 11:39 AM

Great work. This project should be fast-tracked by everyone in the City. Also, the penalties for any kind of delay should be much cheaper. If B+B stalls on this or tries to go through some kind of loophole, the City should retake the land and start the process over again. Otherwise, here's to a 31-story tower that will totally revitalize Downtown by 2009!

Posted by: WEBbloger 1 | July 26, 2007 12:06 PM

Another effort using the backs of the poor to entice rich white folks to move into the city.

"Build it, and maybe they will come".

Same ole tired sells pitch too...
"Only new housing Development in the last forty years". More jobs, taxes, spending power.
Remember the Grandiose Oak street development a little more than 40 yrs. ago, ironically that is now a 2 mile stretch of parking lot subsidized by New Haven tax payers

Posted by: Keith Krolak | July 26, 2007 12:23 PM

Dear Mellisa Bailey:

Thank you for the informative article. I want to call your attention to an error in your report - I spoke at last night's hearing as a member of the development team of Studio ABK Architects - Greenfield Partners Developers (not "Studio SBK" as reported as a swaying force in Alderman Sergio Rodriguez's support of the Becker & Becker project). I also would like to clarify that the point I was trying to make was the developer part of our team backed out of the project before we submitted our RFP because they simply could not make the financing attractive enough from an investment point of view. Our firm is involved in design projects similar in size to Shartenberg at various locations in Fairfield County as well as in other cities around the world. What we unfortunately hear continuously from developers is that New Haven is extremely difficult for large scale projects because the return on on investment is so small in comparison to other urban locations in Connecticut.

Becker and Becker has put forth a very intriquing proposal. It works because it is an innovative blend of project financing, program density, and reasonable incentives on the part of the City of New Haven. Without a certain degree of promotion, developers will continue to shun New Haven for the financially safer waters of Fairfield County. What ultimately matters for the future of growth and intelligent developement in New Haven are two things: the resultant numbers that this project will generate in terms of tax and retail dollars and jobs for its citizens, and the quality of project itself. I was recommending that the Board of Aldermen, the City of New Haven, and the citizens of New Haven embrace this project. Rather than quibble about land sale issues and developer incentives, focus instead on making sure that the Design and Development team of Becker and Becker delivers the high level of project quality that has been promised and that the City of New Haven with its remarkably rich architectural heritage deserves.

Posted by: meetoo | July 26, 2007 1:04 PM

I think that is to late for any of the other bidders to stand up and say anything. The choose was made. I am sure that the other bidders did have the backing, maybe not union but in other forms. They may not have been Union Labor but they would of used local companies, local workers, that may not have that same opportunity now that B&B are at the helm. I think at this point it is just a matter of working with what we got and getting the thing built. Not to mention filling the property.
That ca white company has a good rep of caring for there properties and using local companies. They also take the time out to make sure that the companies they rent to will have a positive effect on there surrounding communities. A true New Haven company. I to think that the bid that they were in on was much more beneficial to New Haven and the style it self would of added to the beauty of this city. I also remember looking at one of the other bids (I forget which one I think it was the one that Newman was in on??) that stood out like the ca white one.
And I give them credit for giving testimony on behalf of B&B. It will not help New Haven by stalling this project?? We need it built now we need the revenue (this project is going to bring in revenue right??).

but robn
I think your right, would the other bids have been thought of if they had previous knowledge to the fact that the land would of cost a dollar, that they would of only need 300 parking spaces, permit fee reductions, and state assistance to build subsidized housing units. We will never know. Not to mention that some of the bids were not a few million cheaper but .....80 million cheaper.

Posted by: robn | July 26, 2007 1:12 PM

ESBE,

I looked at one of NHI's postings regarding the Shartenberg lot. It looks like a document prepared by the city.

http://www.newhavenindependent.org/archives/upload/2007/07/Shartenberg%20comparisons.pdf

I see that for about 50% of the submissions, there is no information listed whatsoever. (I find it highly unlikely that 50% of the submissions had no detailed information and simply asked the city to give away the lot.)

Of the half with some listed information, it does appear that most wanted the city to either subsidize or purchase the parking structure. Only one included further state subsidies.

So although you're coreect that the parking garage is a relatively "massive" subsidy, B+B appears to be the only competitor given the opportunity to actually reduce the size of the parking requirement, to get a tax abatement, to get housing subsidies...over $30 million dollars of subsidies further than the parking subsidy.

As far as the "dog that didn't bark", its unlikely that the other developers will raise a stink. If they did they would make enemies at city hall and would be subject to vindictive retribution, barring them from further developement opportunites in the city. Its up to citizens to bark becuase in the end, its our bone being taken away.

Posted by: charlie | July 26, 2007 1:24 PM

Gary, by your philosophy, the area should either just continue to sit as a parking lot or you should walk over and build the thing yourself. Do you believe that people with massive expertise and money to risk are just going to start creating 32 story towers that will completely revitalize downtown.... out of the goodness of their hearts?

Posted by: Esbe | July 26, 2007 4:19 PM

Robn -- first of all, most of the "$30 million" in subsidies were openly available to any developer. In particular, $20-some million is from a well-known federal program that any of them could have applied for. The low-income housing component isn't a subsidy from the city, it is a subsidy to the city.

Also, the city did start negotiations with more than one developer, asking them what kind of subsidies and so forth they would need. It is clear that everyone was going to ask for help.

Finally, re-read the post from Mr. Krolak above:

What we unfortunately hear continuously from developers is that New Haven is extremely difficult for large scale projects because the return on on investment is so small in comparison to other urban locations in Connecticut.

One hopes that this will change over time.

Posted by: Gary Doyens | July 26, 2007 4:42 PM

Charlie: This project will not "totally redevelop downtown." Perhaps you don't live here -- but downtown is well on its way to being redeveloped already, much of it without city help or welfare for the well heeled.

And you trivialize my main contention -- this development did not require city give aways. We did it because we always do it. We still think small and that we must subsidize development. We don't. In fact, Kelly Murphy's own qoutes in the NY Times last weekend, said developers are responding to New Haven and calling her, returning her calls.

And finally, no developer does anything out of the "goodness of their heart." Becker and the pension fund will make tens of millions of dollars in net profit with our without our handouts.

The question is whether they would have done it anyway with no subsidies -- we will never know that because City Hall started out with hat in hand believing as it always does that taxpayers should foot the bill for everything even as they make no effort whatsoever to trim spending. They can't even kill the electric bus/fake trolley knowing right now, they are losing the very revenue stream that has paid the bulk of its operating cost. Plans are now being hatched to pass the full weight of that white elephant over to the taxpayers, again.

Two other clarifying points:
1. The idea that any DeStefano Alders changed their minds as a result of the testimony of competing developers is laughable and dishonest. It was never in doubt.

2. The list of benefits for the "public good" outweighed taxpayers pain -- lol -- that's an excuse that's older than the DeStefano Administration and it's been painstakingly used and reused as the rationale for everything from massive tax increases, to ID cards, to a coliseum for which we're still paying, to school construction that has ballooned out of control.

In this deal, we started weak, ended weak and it will be years and years before this deal yields positive results and contributes positive cash to fund the city's appetite for bigger, more pervasive, ever more expensive government.

Posted by: charlie | July 26, 2007 4:43 PM

"Remember the Grandiose Oak street development a little more than 40 yrs. ago, ironically that is now a 2 mile stretch of parking lot subsidized by New Haven tax payers"

Not quite. It was owned by the State of Connecticut which wanted to build a highway until a year or two ago, and now is home to $200 million construction projects such as two buildings for the new Yale-New Haven Cancer Center, the Pfizer Research Center, and plans for future office, retail and housing that will greatly benefit the surrounding neighborhood and provide hundreds of jobs.

It's OK to complain, but when you do, have some basis in fact.

Posted by: nfjanette | July 26, 2007 5:14 PM

As far as the "dog that didn't bark", its unlikely that the other developers will raise a stink. If they did they would make enemies at city hall and would be subject to vindictive retribution, barring them from further developement opportunites in the city. Its up to citizens to bark becuase in the end, its our bone being taken away.

This is exactly what seems to have occurred with the school rebuilding program. Those who don't learn history are doomed to repeat it. This deal stunk from day one.

Posted by: robn | July 26, 2007 5:40 PM

Esbe,

I must admit... I wasn't aware that the city negotiated with several of the developers because the decision appeared to have been made so quickly. What I am aware of though, is that its extraordinary to narrow the field to ONE bofore crucial monetary details of a transaction are done. Thats the whole point of a competition.

Don't get me wrong..I have no problem if the city spends a little money to make a little money (now subsidies for future taxes). Whether New Haveners are getting a bonus or are getting shortchanged by $6 million, $10 million, or 30 million really isn't the point. The point is that the process wasn't transparent and the decsison making was unstrategic. Thats not what democracy is about and its not what a free market is about.

Maybe the difficulty New Haven has with courting developers has nothing to do with Mr. Krolaac's supposition about profitability...maybe its much simpler.... maybe the reason is that the playing field isn't level and therefore, developers chances are capricious...having nothing to do with the merits of their proposals.

Posted by: WEBbloger 1 | July 26, 2007 7:34 PM

Sorry Charlie, but the planners of the Oak Steet Re-development did not envision the yale New Haven Cancer Center being part of their plans in the 1950's. The land belongs to the city of New haven and they are now asking the state for $$$ to re-develop the re-development. Besides which, you should be taking exception with the original story written by Mellisa Bailey, and not presenting arugment with the postings. Who do you think you are, a public defender!!

Posted by: Your Tax Dollars at Work | July 26, 2007 8:55 PM

``We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,'' CEO Angelo Mozilo of Countrywide Financial, the largest mortgage lender in the U.S. said of the housing slump during a three-hour conference call with investors yesterday.

There's a real estate recession going on. It's just beginning. If it's like most real estate downturns, there is the distinct possibility it will last 5-maybe 10 - maybe more years.

We taxpayers are all investors in the B&B project. The political skids have been greased for these favored developers. Consequently, lots of city, state and federal dolars are going to be invested here even though we might be better off if our governments invested in like -- mass transit or healthcare (pillars of would-be Governor DeStefano's recent platform).

So we should wish the Beckers luck and hope their project is a tremendous success. If it's not we all lose!

Posted by: Gary Doyens | July 27, 2007 6:33 AM

lol Charlie...yes, please get your facts straight. The Yale Cancer Center is a $450 million project that is being built on property the hospital already owned. It is also going to build a parking garage on the property you reference which will be wrapped with some sort of mixed use if some of the players in this article will act in good faith and with some level of competence. While I don't know for sure the construction value of the parking garage or the Pfizer research building, I seriously doubt the combined value will reach $200 million. Becker's estimate for a garage for 175 cars only costs $7 million. I will also point out that the Yale Cancer Center is paying all of its building permit fees and is getting no subsidy on its construction project on city owned land. They are providing huge and growing construction payroll and have been for months now, and in addition will be permanently hiring even more people.

Posted by: Joe | July 27, 2007 6:40 AM

Two (or three) quick responses to Gary:

1) Considering all the fuss you've made about taxes, this project should be a no-brainer. The city subsidies have little effect on the current budget (no loss of in-hand tax revenue selling the property, no loss of in-hand building fees, thus only the street improvements COST $$).

2) State and Federal subsidies for the project have ZERO impact on New Haven tax-payers. We get significantly more back from the Fed and State than we pay out, considering we're one of the poorest cities in the nation. So every dollar of outside support is a NET GAIN for New Haven. Again - if your main concern is city coffers, these subsidies are a big win.

It seems like you're in the process of shifting from "Tax-Crusader" to "Perennial City Hall Hater." I will simply say that in one of those roles you can end up a hero - whereas in the other you often just end up ineffectual and irrelevant.

Posted by: charlie | July 27, 2007 9:28 AM

Gary, unfortunately you're not including all of the buildings in your analysis. If you were, your point might be valid, but seeing as it is not... no further comment is needed.

Posted by: Our Town | July 27, 2007 11:43 AM

By the way, Pfizer paid $1.00 for their parcel, another giveaway to the rich and powerful.