New Haven Independent

posted by: Curious on August 31, 2012  2:25pm

This is disgusting: “Holmes, who represents East Rock, said her constituents do not support special relief for 360 State.”

East Rock was just begging the rest of New Haven to bail them out when they got their revaluations.  Now they’re against this kind of thing?  How bent.

posted by: RevKev on August 31, 2012  2:40pm

“Dealing with this in court feels adversarial, and we would like to continue with the collaborative spirit that has made this project such a success so far.”

It would be nice if we knew something about “collaboration” in this city. But that doesn’t happen in our top-down model of government.

Right now it looks like it’s only safe for one outside developer to build in New Haven.

posted by: bert on August 31, 2012  3:12pm

Hatcher and Hausladen have it right, and Holmes is wrong. Yes, Alderman Holmes, this is about fairness. Surely it’s NOT fair that the city held out a tax figure, shook hands on the deal for 360 State, then—when the building was done—turned around and quadrupled it. But there are degrees of unfairness and kinds of unfairness. No one ever wants his own taxes ever to go up. But if my house is taxed high, it doesn’t affect the whole city. Quadruple the tax on a building like 360 State, however, and you can say goodbye to ever seeing another one. And this is a highly, highly visible building. Slamming it with this tax hike will turn it into a huge billboard screaming, DON’T DO BUSINESS HERE!

This isn’t a “special circumstance for large corporations,” as Alderman Holmes claims. First of all, 360 State is owned by LABOR UNIONS. But more important, fixing this tax-jacking is all about PROTECTING NEW HAVEN and its future. People have to understand this. They can’t let themselves be hoodwinked by the “fairness” argument. It’s simply not the same as your or my property tax.

Allowing this quadrupling to go unfixed will kill future development. This is why the city can’t afford to let this mess languish in court. As for the Mayor calling this a “circumenvention” of the legal process, well, that’s a joke. What do you call it when you go around boasting about a huge grand list growth—and 65% of that growth comes from A SINGLE BUILDING whose assessment your own assessor quadrupled?

For a mayor running for office, that’s just campaigning as usual. For a city it is suicide. Please, Aldermen, do step in to make sure that this doesn’t happen. 360 State represents terrific progress for the city, and we need more like it. Hausladen is completely in the right, and anyone who cares about the direction New Haven is taking needs to show up on Tuesday night and be heard.

posted by: PH on August 31, 2012  3:35pm

Did that 2007 projection include the assessment jump that hit properties across New Haven this year?  I should think that the tax estimate should have been flexible enough (and a sophisticated developer and investor informed enough) to understand that an estimate is just an estimate and that things change.  Quadrupling may be a harsh revaluation, but doubling should have always seemed eminently possible.  If the $10K per apartment assessment is correct, then it sounds like it is in line with other residential properties of similar value in the city.  I know apartment buildings are valued differently, but it is hard for me to generate pity for investors in large commercial properties.  Risks are on the downside too, you know!

posted by: Anderson Scooper on August 31, 2012  6:26pm

@bert—

“Tax-Jacking”? C’mon, Becker is a very smart guy, and he knew exactly what it meant to take the land for a dollar, then to proceed without a tax abatement in hand. (Which the BofA would never have agreed to, btw.)

What did it mean? It meant that his development would be taxed ad valorem, just like every other property in New Haven! What is unfair about that?

Yes, given the fact that 360 State would never have been built without the tens of millions of dollars in public subsidies, it seems a bit unfair for the City to try and value the project at its $180 Million construction cost. But that is just a departure point for a valuation that will be settled in court. (Fwiw, it was always heading to court.)

It’s pure conjecture on my part, but my guess is the City only whacked Becker the $180M valuation, after he trotted out that low-ball $1.4 Million unofficial “promise”. (Which would value 360 State at a ridiculous $50 Million.) If Becker is going to head to court with a starting point of $50 Million, why should the City start at a compromise of $130-$140 Million?

Also this notion that the City “quadrupled” Becker’s taxes is just absurd. When building this project Bruce never thought his tax bill would be a mere $1.4 Million, as he himself projected it at almost twice that amount at a Downtown-Wooster Square CMT meeting. Before he broke ground, I asked Bruce specifically about property taxes, and he told me there was no abatement deal in place, and that the revenues would be north of $2.5 Million.

In any case the courts are quite able to resolve this dispute.

posted by: Charl on August 31, 2012  6:30pm

QUADRUPLED?! 

Did I read that right?  Not twice as much, not thrice as much, but four times the initial estimate?

That is absolutely outrageous, and I swear, the near-sightedness of this city and its administration is criminally inept.

This ugly situation makes me recall DeStefano & New Haven selling the Broadway parking lot to Yale for a large lump-sum payment to cover the shortfall for one year, and then a 99-year lease at $1 per year.  In 99 years, people will not be using parking lots, because they will not be using cars. 

What the city did was lie in order to get the developers to build, and then pulled the ol’ switcheroo. 

I agree with the sentiment that this, unless remedied, will destroy any meaningful development in downtown New Haven. 

Regardless of whether you dislike/distrust Unions, corporations, etc., please look at this issue from a standpoint of ethics:

Ask yourself this:  If this same situation happened with your property taxes, or your car taxes, how would you respond?

posted by: Tilly Hatcher on August 31, 2012  10:22pm

PH - I’d like to point out that the assessments of all the properties comparable to 360 State remained the same from 2010 to 2011.

posted by: robn on September 1, 2012  10:26am

CURIOUS,

East Rockers are satisfied that the lack of concern shown toward their abominable property taxation, was shared with another. Truly democratic.

Seriously though, if anything, a reval of 360 State based upon the recent construction cost is a much more real indicator of economic value than the capricious (and rapacious) system of tea leaf market valuation thats enforced upon the rest of us.

posted by: David S Baker on September 1, 2012  3:09pm

Don’t blab nonsense about “collaboration between the City and the development team” while pulling a stunt like this.  If 360 State gave a rats keester about the community they would continue to appeal the scale of the assessment with the city FAIRLY rather than litigate tax loopholes that will be embraced and abused by other projects of this scale, require tax dollars to fight, and essentially screw taxpayer wallets on the next budget cycle.

posted by: Tilly Hatcher on September 2, 2012  12:55am

Anderson Scooper,

The discussions between the development team and the city are well documented and there was never a time during the planning stages, the construction period, or even during the first 6 months that the project was occupied, that MEPT expected annual taxes to be higher than about $1.4m after the phase-in, nor were the City’s approved estimates increased at all during that time. See documentation on the 360StateTaxProblem.com website here:

http://www.360statetaxproblem.com/correspondence-involving-taxes.html

I confirmed with Mr. Becker that he never stated taxes would be higher than $1.4m at the Downtown-Wooster Square Community Management team meeting.  That meeting was covered by the Independent, the Register, and live tweets from DesignNewHaven, so any change in the tax projections would have certainly been picked up in the media.  See:

http://downtownnewhaven.blogspot.com/2008/04/500-unit-shartenberg-mixed-use.html

If you contact me, I would be happy to walk you through the documentation.

David S Baker,

I’m not sure what “tax loopholes” you are referring to. MEPT would rather not go to court at all. That is why we are asking the Board of Aldermen to address the problem.

posted by: robn on September 2, 2012  12:23pm

TH,

Problem is that your (five?) letters to the city projecting taxes generated by your property don’t constitute reality. It’s very much ex parte (something you try to enforce upon someone else without their explicit participation or agreement.) Its about equal to some homeowner marching around for four years saying his property is worth a small amount and then complaining when it’s assessed for more in a conventional manner..

posted by: Anderson Scooper on September 2, 2012  1:49pm

Hi Tilly,

The only problem is that Bruce did indeed put his tax bill at north of $2.5 Million, at that meeting of the DWSCMT.

Look, you don’t know me, but I am very good at asking pointed questions. In terms 360 State I was very wary about both the amount of public subsidy the project was getting, and also its immense size. In counter-balance to that would be the amount of property taxes that would be flowing into the city’s coffers.

Therefore I insisted on getting both Becker and Kelly Murphy on record as to the amount of taxes we should expect. The first question was whether there was any tax abatements attached to the project. I was told no, that there would be the standard 20-40-60-80-100% five year phase-in that all new developments get, but outside of that 360 State would be paying the same as everyone else.

My follow-up was another simple question, which was how much benefit would the project yield to the City in future tax dollars. I was told at least $2.5 Million, by Bruce himself, with Murphy nodding along.

Five thousand dollars an apartment was the quick math. Not bad I thought.  Maybe 360 State is a good thing for the City.

In terms of the $1.4 Million? It’s a joke. That’s valuing a $180 Million project at a mere $50 Million! Had Bruce floated that number at our CMT meeting I would have quickly called both him and Murphy out on it. “There’s no tax abatement tied to the project, but for tax purposes the City is going to value the property at a third of its worth”???! (And yes, I am that quick with my math.)

So sorry, I’m not mis-remembering the exchange, no matter what Bruce might state to you now. He did tell us at least $2.5 Million, and I’m happy to swear to my version in court.

{Fwiw, subsequently I sold more than one person on the project, pointing out that while the gentrification of downtown isn’t necessarily a benefit to the people of New Haven, we need the tax dollars! And while a project like 360 kicks in a good deal of revenue, it doesn’t take much out in terms of police and fire resources, or children in schools…..}

posted by: FactChecker on September 2, 2012  4:06pm

Perhaps this is what Anderson Scooper is confused about:

http://www.360statetaxproblem.com/correspondence-involving-taxes.html

If you click on the spreadsheet and look at the pro forma tab it shows taxes starting out below $1.4m but growing to $2.3m in 20 years, assuming escalation in the mill rate and/or value of the comps.  This initial assessment after phase in was always around $1.4m, and those numbers were based on a larger and more valuable building with more gross income than the current project.

posted by: Stephen Harris on September 2, 2012  4:39pm

It makes sense to settle out of court whenever you can. Future developers are going to look twice at New Haven before investing money in the City.

posted by: Anderson Scooper on September 2, 2012  7:53pm

@FactChecker—

I’m not confused about anything. The question I asked was not what your taxes might be, twenty years out. It was what the City should expect once the building was complete.

Again, if Becker had wanted a tax abatement he should have negotiated one up front. (But given all the other subsidies he received, such an abatement would never have been approved by the BofA.)

I do wish one of you Becker backers could explain what “no property tax deal” actually means.  Does it mean that the City had some secret deal in place to quietly value the project at 1/3 of its construction cost? How can anyone float that argument?

Me, I look forward to MEPT paying property taxes according to 360 State’s actual value, according to the same playing field the rest of us face.

posted by: bert on September 3, 2012  10:27am

Anderson Scooper:

Shouldn’t income be used as a basis for understanding a building’s “worth,” and not cost of construction? A lot of grant money went into 360 State, tax credits helped fund it, there are costly features like the fuel cell, etc. There are plenty of recent buildings in the city (Rowe Apartments, eg) whose assessment is a small fraction of what they cost to build. The city should have stuck by the original comparables and/or used an income basis.

One thing that’s clear is that if the quadrupling of the tax happens, the building will be worth a LOT less. $10K of taxes on every single apartment—most of them 700 sq ft apartments? I own a multi-family house I rent out, and with a monthly rent-to-tax ratio of about 4 to 1 I still barely make money. Inflate that to 1-to-1 and I’d have to sell the house… except that no one would buy it.

Also, finally, why do you use the phrase “Becker backers”? So many respondents seem to focus on this idea of a rich developer getting a tax break. Becker doesn’t own any of this building! He already got his development and design fees. It is MEPT, the union pension fund, that is getting screwed here. Why don’t people get this? Those who oppose this tax quadrupling are union-backers… and New Haven backers.

posted by: FactChecker on September 3, 2012  10:33am

Anderson Scooper-
MEPT (and the union retirement workers its fund represents) are only seeking a level playing field - having the building assessed in the same other downtown apartment buildings are assessed - which the city confirmed and reconfirmed consistently and publicly from 2007 to 2010, would result in an assessment for the apartments of about $70 psf.  MEPT relied on those confirmations in proceeding with the project.  The City should stand behind its representations so other investors are comfortable coming to New Haven and creating new jobs.  The city’s approved estimates of the assessment, which MEPT relied on, are crystal clear.

posted by: DownTownNewHaven on September 3, 2012  2:51pm

Yes, leaving it to the courts always seems to work out in New Haven’s favor. (sarcasm)

posted by: ameyer on September 3, 2012  8:37pm

this bogus tax assessment saga is absurd and the alderman should know that taking it to court as opposed to settling will adds years of uncertainty scaring developers (including Becker) out of the city.  As a major catalyst of economic growth throughout the city, all constituents should be concerned with this issue.

posted by: Anderson Scooper on September 3, 2012  11:24pm

@Amye-

So the BofA should assume the role of the courts and settle all of the hundreds of tax appeals currently pending? Of course that’s absurd, as the courts are the only proper venue.

Without a tax deal as part of Becker’s development, there is but one question here, (and it’s not whether MEPT wants relief from New Haven’s high property taxes, as we all do). Instead it’s a question of what 360 State is actually worth.

Those of you who think 360 should be valued at a mere $50 million are missing the point, which is that Becker and MEPT went forward with the understanding they’d be taxed in the same manner as the rest of us. There was no tax deal in place. Can I say that again? There was. I tax deal in place.

I have no doubt the courts will knock down the City’s $180 Million valuation will be knocked down. But that figure is much, much closer to 360 State’s actual worth than the $50 Million that Becker and MEPT are Becker are doing their best to float.

Finally, where is the call for statewide property tax reform? If 360 State had been built in Stamford, its tax bill would be 60% less. Isn’t that the real fight on our hands?

posted by: WestvilleAdvocate on September 5, 2012  4:27pm

Agree with Anderson Scooper.  The state really does need to look at this and present fair tax reform for all.

If the BOA acted as court, honestly, as a tax payer myself on multiple units of property in this city I would try to bring a class action against the city on behalf of myself and others I know against our mayor and the BOA and the tax assessor.

This has to go through the proper channels, like all other tax payers, and the state needs to step up and make a commitment to even the playing field around the state so we all pay the same tax rate.  We are too small of a state for this nonsense.  It is counterproductive to have so many taxing districts.