Perez: Tell us more.
The Board of Alders held off on approving a deal that would help dig the owners of Brewery Square Apartments out of a financial hole.
City officials sought to get the alders to approve the deal by unanimous consent at the board’s regular twice-monthly meeting Monday night at City Hall. The alders decided not to vote until they can get some questions answered about the deal.
Thomas MacMillan Photo
Under the deal, the owners of Brewery Square (pictured) — a former brewery at Ferry and River streets that a developer turned into private housing with government help in the 1980s— would pay $337,000 in deferred taxes early, instead of paying $500,000 that is due in 2025. The deal would wipe out the looming tax bill, clearing the way for the owners to complete a separate deal to borrow new money to keep the financially struggling complex going. The city would also obtain some undeveloped land by the property as part of the deal. (Click here for a previous story detailing the issue.) The brewery building features detailed brickwork and arches laid in the 1880s.
East Rock Alder Jessica Holmes questioned why there was a need to vote so quickly rather than allowing for a “slow and open process.”
Erik Johnson, head of the Livable City Initiative, said that the request for a speedier resolution was not from the city, but from the owners, who are attempting to arrange financing with the U.S. Department of Housing and Urban Development. The owner is trying to meet a closing date, a date that Johnson said has not been made known to the city.
Board President Jorge Perez had additional questions about how much the city was forfeiting (about $165,000) in potential tax revenue; proponents of the deal argue that by getting a big up front payment, the city comes out fine because of the interest that money can collect over time.
Perez also sought more details about why the owners needed help from the city, whether they had been able to collect enough rent to be profitable, and what the breakdown is for subsidized and unsubsidized housing in the development.
The board decided to give the order a first reading to allow more time for questions. The order will get its second reading and vote at the Oct. 20 regular meeting.
Johnson said the deal, if approved, would also clarify the city’s ownership of a parcel of riverfront land where planned townhouses were never built. The City Plan Commission recommended the approval of the plan back in June under certain conditions.
Its a strange argument to say that the city can collect interest on the up front money over time because the city isn't going to invest them money in a fund. What it will do is either spend it (they probably will because this BOA has zero respect for taxpayers) or they will pay down debt (an unlikely fantasy).
$337,000 borrowed at 3.5% annually would amount to $500,000 over 11 years (2014-2025). So if the city can immediately pay down $337K of debt issued at 3.5% or higher its a good deal. If all of our debt compounds at a rate below this, it isn't a good deal.
Of course all this is premised upon the BOA paying down debt instead of spending the money on pork barrel projects like the QHouse or the Armory; which they'll probably do.