Artists Eyed For $40M “Clock Shop Lofts”
| Feb 19, 2018 12:07 pm
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Posted to: Arts & Culture, Housing, Wooster Square, True Vote
A developer is seeking a 15-year tax break and $400,000 in city environmental clean-up help to transform a long-vacant clock factory complex on Hamilton Street into 130 low- and moderate-income apartments for artists.
The developer, the Portland, Oregon-based Reed Realty Group, has “99 percent” of its needed financing in place to undertake the $40 million project, according to a filing with the Board of Alders by city Economic Development Administrator Matthew Nemerson. (Reed has formed a Connecticut limited liability corporation, Taom Heritage New Haven, in conjunction with a Bay Area investment firm called Silfra 100M to undertake this project.)
Reed has an agreement to purchase the property for $1.7 million. (Click here to read the details of that agreement. Click here to view the site plan.)
The city had been trying for years to find someone to renovate the historic 130,000-square-foot factory complex just on the east side of I-91 in Wooster Square. It has been empty for more than three decades.
The developers plan to undertake the renovation of the “Clock Shop Lofts” with a mix of private financing, low-income historic tax credits obtained through the Housing Authority of New Haven, and other federal and state tax credits. The property, a block from where the Housing Authority of New Haven is rebuilding the Farnam Court development, is listed on the National Register of Historic Places.
The development company projects that the site needs a $6.5 million environmental clean-up. The Harp administration is asking the alders to approve a $400,000 grant from the city’s Economic Development Capital Projects bonds fund toward that effort. The state is expected to put in around $4 million toward the effort under its brownfields loan program.
The Harp administration is also seeking approval of a tax abatement agreement for the project, under guidelines in a state affordable housing law, freezing taxes at the current rate for 15 years after construction ends. The complex currently pays $46,000 a year in taxes to the city.
The developer will “work with the community” to select tenants for the complex, Nemerson wrote, seeking “artists who come from and represent the community as well as ... from outside of New Haven’s borders to enhance arts activities within New Haven.”
The proposed abatement order and grant approval were submitted in advance of Tuesday’s night’s full meeting of the Board of Alders.
Wooster Square Alder Aaron Greenberg said he supports the abatement and clean-up grant.
“The project will bring the beautiful and historic clock factory back to life,” he said.
“I’m especially excited that the units will offer an affordable place to live for New Haven’s creative community.”
More than 1,500 workers once turned out more than three million clocks a year at the site, originally called the Jerome Manufacturing Company complex, before it closed in 1959. Since then it has been rotting. Founder Chauncey Jerome was considered an innovator in mass production techniques for clocks.
Previous dreams for reviving the property failed to come to fruition. City economic development staffer Helen Rosenberg, who is quarterbacking the current project, was working on the same property back in 2000 when the city won $1.5 million in federal grants and loan guarantees to tear down part of the complex to enable Palmieri Food Products to expand its spaghetti-sauce business. But the New Haven Preservation Trust opposed the demolition, and the city ended up not accepting the money. Since then some demolition has “happened anyway by deterioration,” Rosenberg noted.
130 Apartments, 100 Designs
Reed Realty, which has been in business around a decade, specializes in historic rehabs, including a recently completed renovation of an old hotel into the 20-story mixed-use Jefferson Memorial Tower in Birmingham, Alabama, according to Joshua Blevins, the company’s director of historic redevelopment and governmental affairs.
Part of the challenge of renovating it, in addition to the environmental clean-up, lies in the fact that the complex’s 12 buildings were gradually constructed between 1866 and and 1936.
That means designing new apartments there is more complicated, according to Blevins.
He said the company is about to begin an historic rehab of an old wool factory in Lawrence, Mass.. That complex has over 500,000 square feet. But because it is laid out in a basic horizontal design, it required only four different architectural designs for the apartments, Blevins said.
By contrast, the architects on the New Haven project, Crosskey, needed to come up with 100 different designs for the 130 apartments because of the different floor layouts. “You don’t have the same efficiency in running a water line, a drain line” as in a building that was constructed all at once in block style, Blevins said. “From the outside the [clock] building looks to have been built in one or two phases. From the inside you might have a different floor height. This column is here. The next column is two feet off of center because it’s actually in a building that was built 20 years earlier. You can’t just have a big column in the middle of a bedroom or two feet in front your dishwasher.”
The apartments will mostly be one and two bedrooms, Blevins said.
Some one-bedrooms will be as large as 1,000 square feet, leaving room for artists to work as well as live in them. He said rents will qualify as “affordable,” targeted to lower and moderate-income artist and “maker” renters. (He didn’t have details on the rental prices.)
“Great cities generally have great art. They have a great creative class of people. We don’t want those people to be priced out of being able to stay in New Haven,” he said. “Keep it vibrant and funky.”
“We feel like these buildings deserve to have some new life breathed back into them so they can have a second go at things and give something back to the community,” Blevins added. “We’re pretty optimistic about the building. We think it’s got a tremendous amount of character. It has a proud industrial heritage.”
Daniel Fizmaurice, who runs the Arts Council of Greater New Haven, praised the proposed project, saying it follows a path forged by the late local powerbroker and arts patron C. Newton Schenck.
Newt Schenck participated in early versions of planning for the clock factory to become arts-related housing, Fitzmaurice said. “Fifteen years later, the need for affordable artist housing locally has only grown. However, it will also make New Haven a destination for artists, and eventually audiences, from throughout the tristate area.
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posted by: Noteworthy on February 19, 2018 12:15pm
Clean Their Clocks Notes:
1. Just say no. This city is broke. It can’t cover its existing deficits without constantly refinancing its bonds and avoiding payments - we should borrow more money to make the problem worse? No.
2. Tax abatement means it will far into the future before the possibility of full property tax payments are remotely possible. So even if the current $46K stands - it will not change the financial picture for New Haven. When it comes time to pay the full rate - there will be another appeal to extend the abatement because the project is not financially viable - think Ninth Square debacle.
3. Taxpayers here are as generous as they need to be via the state program. We all pay into that program too. That’s enough.
posted by: Kevin McCarthy on February 19, 2018 12:16pm
But of course, we all know that artists are gentrification vampires.
posted by: Esbey on February 19, 2018 12:36pm
Sounds like a good deal for the city. A small grant and an extended tax abatement brings in millions in state funds + 130 new lower-rent apartments that will eventually be on the tax rolls. You could reasonably oppose the abatement if you think the building will be developed without it. History suggests otherwise, especially given its historic status, meaning *less* eventual tax revenue without the abatement.
I do wonder a bit about the privileging of artists over other low(ish) income groups. I feel like it may partly be a way to exclude certain low income groups without being explicit about it. Maybe artists contribute back more to the community by their activities? But more than a beginning public school teacher? I am not so sure.
posted by: THREEFIFTHS on February 19, 2018 1:06pm
posted by: Kevin McCarthy on February 19, 2018 11:16am
But of course, we all know that artists are gentrification vampires.
We all know that the gentrification vampires are behind this.
posted by: Esbey on February 19, 2018 11:36am
I do wonder a bit about the privileging of artists over other low(ish) income groups. I feel like it may partly be a way to exclude certain low income groups without being explicit about it.
posted by: 1644 on February 19, 2018 1:18pm
On one hand, fifteen years seems like a short time compared to the half-century it has been vacant. On the other hand, what happens when that fiscal cliff approaches in 15 years? A phase-in seems to make more sense. Like Esbey, I do wonder, why artists? Why not teachers, firefighters, cops, etc? Guys like Firefighter Chin? As for discrimination, New Haven seems to have lots of “minority” artists. The leaders of the Dixwell project are black, and I think of Mr. Wisdom’s custom clothing, too. NHI regularly runs articles about the local arts scene that highlight “minority” artists.
posted by: Noteworthy on February 19, 2018 1:20pm
Tax Credit Notes:
1. The accumulating tax credits from the Housing Authority, the state and the feds will either be sold for 80% of face value or be used to make sure the corporation that owns this property will not pay income taxes for a very long time.
2. Generally, tax credits are based on the acquisition cost of the property plus rehab costs and allocated across a set number of years. It used to be 10 - it may be longer now.
3. Whatever the formula is means this has high profit potential - and any abatement of property taxes are not necessary for viability. Property taxes are also a function of rent - let the tenants pay like they do everywhere else.
4. Saying they’re going to target artists over others is kind of an interesting take on things. If you’re not an artist, you can’t live there? Asking all of us to pay for the benefit of a targeted few is unseemly. Still say no.
posted by: robn on February 19, 2018 2:07pm
I have a problem with a 15 year tax abatement. New Haven homeowners have been hammered by radically escalation property taxes and , in the case of those that rent apartments in their home, an unlevel playing field of developer units that pay far below rate for far too long. This is too much.
posted by: robn on February 19, 2018 3:29pm
Every new tax abatement should be accompanied legislation giving guaranteed dollar for dollar property tax reduction equal to the total abatement dues at the expiration of the abatement. If that can’t be done, then the abatement isn’t worth it.
posted by: Brian McGrath on February 19, 2018 3:39pm
A good deal for the city. Short sighted posters do not understand the economics. Low-mod credits can be obtained for any property in the city but remediation grants do not grow on trees. Unless this factory building is remediated it may sit another 50 years and never be on the tax rolls. Favoring artists is not a bad idea if you can figure out how to discriminate by occupation through the rental process. Low-mod credits also contribute federal dollars into the New Haven development system. Mentioning the Ninth Square was irrelevant. The City volunteered to refinance that project to keep it from going market rate. Don’t blame the owners.
posted by: DFitzmaurice on February 19, 2018 4:00pm
With all due respect, artists that this project will attract have very different professional circumstances from teachers, firefighters, and police officers:
1.) need adequate physical space and supportive neighbors to work at home
2.) part-time or gig-to-gig income, paying out of pocket for health insurance or any other benefits
These unique needs are built into this project. Other cities are supporting similar initiatives but I’m optimistic that the Clock Shop Lofts will keep New Haven in a competitive position to both retain and attract artists.
posted by: mikewestpark on February 19, 2018 4:07pm
15 years, absolutely not. How are you going to explain to someone in East Rock that this company is only going to pay half of the yearly taxes that they are paying now for the next 15 years. In 15 years that person in East Rock likely (with the way our taxes are increasing) will be paying the same taxes as this entire complex. That not fair to the rest of us who invested in this city when the city had higher crime and wasn’t as prosperous., Yet we invested, albeit on a smaller scale, and it’s bad business and even worse governance to allow this deal that will allow this company to prosper from the turnaround that earlier Newhaveners made happen (and no, it isn’t anyone in politics that can take credit for the turnaround, it happed in spite of them, not because of them). Businesses the size of the one wanting this project’s completion are do not get into deals like this unless they know they are investing in a good market. New Haven is not Flint Michigan. We no longer have to do ridiculous giveaways to attract business here.
posted by: THREEFIFTHS on February 19, 2018 4:28pm
posted by: Kevin McCarthy on February 19, 2018 11:16am
But of course, we all know that artists are gentrification vampires.
What Role Do Artists Play in Gentrification?
By Peter Moskowitz
Sep 11, 2017 6:21 pm
Researchers have long identified four distinct stages of gentrification. The first is when the artists, so-called hipsters, and other individuals move into a low-income neighborhood and start repairing its often vacant structures. The fourth is when gentrification is mostly carried out by developer conversions and an influx of business or managerial middle class. But in my recent book, How to Kill a City: Gentrification, Inequality, and the Fight for the Neighborhood (2017), I argued there’s nearly always a stage 0, when a city opens itself up to gentrification. The authors of “The Fine Art of Gentrification” found that government grants and tax breaks to developers were a necessary component of the East Village’s gentrification-by-art in the 1980s. The artists wanted to be there, but they needed government assistance for permanent change to really take hold.
NYC Artists’ Lofts Before and After the Loft Law
As written in the same New York Times article, by 1970, some artists were already worried that “Real estate developers would jump at the chance to replace the [neighborhood’s] stubby buildings with profitable high-rise buildings.” There was also concern that the city’s Planning Commission may simply raze the neighborhood to make way from middle-income housing. These concerns were not unfounded. Buildings that had sold for $30,000 in 1960 were, by early 1970, being sold for $150,000.
Be careful what you ask for.
posted by: Noteworthy on February 19, 2018 4:57pm
The creature of the City Hall machine speaks - we’re short sighted. Yeah, and we were short sighted when we warned against rampant debt, unpaid pensions, endless reliance on the state and feds, an unaccountable BOE, short term financial gimmicks and unaccountable waste and abuse of the private PILOTS and tax gimmicks that put an increasing amount of pressure on homeowners and other tax paying businesses. Now look at the mess that is city finances.
If our economy is so robust - the project will stand on its own without more subsidies from homeowners over and above what we contribute the millions they’ll get from the state.
posted by: OhHum on February 19, 2018 5:31pm
How does one determine who is an artist? In the New Haven world of ART, one need only make the announcement that they are an artist to be recognized as one of the elite. Perhaps a panel of recognized artists would judge the “artists” portfolio before determining their “artist” status. But alas, this certainly would not be egalitarian enough for the ART scene of New Haven. So…we’re back to allowing anyone who says they’re and artist rent in the artists residential loft space. What a setup for disaster. But this is what New Haven has become.
posted by: EPDP on February 19, 2018 7:53pm
What does local artist Bill Saunders think about this?
posted by: Kevin McCarthy on February 19, 2018 9:18pm
Mikewestpark, I’ve been an East Rock homeowner for 25+ years (SoHu, not St. Ronan Street). Your assertion that the developer is going to pay only half of the taxes East Rockers pay now is implausible. As high as property taxes are in the neighborhood, I very much doubt that anyone is paying $92,000 in taxes per year. You’re right that New Haven is not Flint. But this property has been vacant for more than 30 years, i.e., several real estate boom and bust cycles. If you think it will be redeveloped without substantial government assistance, I have a bridge you might be interested in.
1644, a phase-in makes sense. But I don’t think it is an option under current state law, which governs the abatements the city can grant. Noteworthy, the same thing applies to your first comment - the city cannot extend the abatement under current law. Of course, the legislature can amend the law, but I don’t see that happening any time soon.
3/5ths, I wrote my first post to prompt your response. In some cases, artists are indeed a catalyst for gentrification. But, notwithstanding the best efforts of my hipster friends, New Haven is not Williamsburg.
Robn, I don’t understand your 2:29 post - it is missing several words.
OhHum, you require applicants to file their recent federal tax returns with the application, to verify their income and occupation.
posted by: 1644 on February 19, 2018 9:23pm
From the map, this building is the site of the late Stage Door Johnny’s and its successor strip clubs (which change names after each shooting). It’s an undesirable residential location, with the exception of Ferraro’s supermarket across the street. On East Street is the the Catwalk strip club, some sort of addiction treatment facility, and, of course, the high-cost/low income housing to the north. Tucked between the interstate and the railway, I have a hard time seeing how people with other options would choose to live here. It’s pretty desolate.
posted by: robn on February 19, 2018 9:32pm
Bottom line, the city is giving more and more generous incentives to private developers that are rolling those incentives into housing products that are intense competition for local homeowners who rent apartments in their overtaxed homes (rentals that barely if even pay the outrageous property taxes charged by the city). This plan is forcing homeowners to subsidize competition by paying the competitions taxes. Incentives made sense in the 90’s but not now.
If you don’t understand my last post here it is in a nutshell. I don’t want to give tax breaks to any more private developers unless the city can promise a dollar for dollar return to other tax payers (in the form of a tax reduction) by the end of a reasonable term like 7 years.
posted by: robn on February 19, 2018 9:37pm
PS The insanely low $46,000 of property taxes being proposed for this 130 unit project for the equally insane period of 15 years is the same that’s paid by about 3 or 4 houses on Orange Street. So walk one small block down Orange and you’ll easily pass MWP’s figure. Absolutely insane. Doesn’t surprise me that Alder Greenberg loves it…he just loves other peoples money.
posted by: AverageTaxpayer on February 19, 2018 10:22pm
The article doesn’t include any information about what low and middle income will be defined as, what the rent structure might be like, and how the benefit of tax abatements might flow to actual artists in the form of cheaper rents. (Usually rents are determined solely by what the market will bear.)
Also, how much money are we talking about here? What will get kick-backed to the developers in the form of tax savings?
Let’s be generous and pretend the city were to value this $40 Million project, ($300k/unit), at a low valuation of $15 Million. That would ordinarily create property tax revenues of roughly $400,000/yr. ($15 Million times 70% assessment, times the current mill rate of approx. 39 mills.)
Locking in the current $46,000/yr for 15 years, means a savings of $350,000/year, or over $4 Million over the course of the 15yr agreement. (the math is a tad complicated as without a further abatement the project is set to receive standard a 0/20/40/60/80% phase-in over the first five years.)
Is the $4 Million kicker really necessary to get this property off the ground? And if the BofA votes to provide it here, do tax abatements become the new norm for future out of town, large scale developers? (Will the next Corsair-type project expect similar tax breaks?)
Personally if tax abatements are to be given out, I’d like to see them go for condominium projects and increased home ownership. In this case, even if the numbers warrant an absolute need for an abatement, I don’t the City should go there without pause and lots of debate.
posted by: 1644 on February 20, 2018 7:16am
DFitz: Okay, so artists are different from police officers, firefighters, school teachers. But what makes them more worthy of a housing subsidy? With this deal, the city (and state and federal government through tax credits, are essentially paying artists. Why? Why shouldn’t artists have to row their own boat like everyone else? Regardless of the subsidy, New Haven already has a vibrant arts scene, largely due to Yale. Why should the city FURTHER subsidize artists? Why not subsidize day-care workers?
posted by: robn on February 20, 2018 7:57am
I was doing the same math. Assuming the developers would spend $350K per unit for a total of $40M, the $4M environmental grant is a 10% bonus and the $4M tax abatemnt is another 10% bonus. Plus the land cost is tiny (equal to about three houses on Orange st) What developer wouldn’t jump at that chance?
Under other circumstances I’d love to see this building renovated but really; what is city hall thinking? Insane subsidies and way unlevel playing field.
posted by: Kevin McCarthy on February 20, 2018 8:08am
1644, your description of the site is accurate, which is why I’m less worried about gentrification there than 3/5ths. But a large proportion of low/moderate income households in the city are spending half of their income on rent. I suspect the developer will have little difficulty filling the building.
Robn, the city does not have statutory authority to do what you suggest. The state, not the city, sets the parameters for property tax exemptions and abatements. Some of these are local option, but the city cannot choose which eligible properties get the tax break. Moreover, your approach would require a case-by-case benefit/cost analysis. Do you believe the city would conduct these analyses apolitically?
posted by: Kevin McCarthy on February 20, 2018 8:23am
AT, the Register story on the development states that it would be open to people earning 80% of area median income. It also notes that the site is literally radioactive - radium was used in watchmaking.
posted by: robn on February 20, 2018 8:48am
If the city can’t be fair to current taxpayers, quite simply, it shouldn’t be offering double digit vigorish to private developers.
posted by: JCFremont on February 20, 2018 9:28am
3/5th’s is right about artist communities. Artists begin changing, they may have invented the “re-purposing” of old abandoned industrial buildings, at times illegally. The change in property values often begins when a few achieve success. In art, entertainment and athletics the percentage of financial success is low, but those successful artists become landlords or stay because of the low rent with large spaces but with stability come families and talk of comfort and “safety” and the finding you’ve outgrown the bohemian lifestyle, it often beware the first noise complaint filed. Question, If 15 very successful artist and musicians moved in or rented space into this space do the landlords still deserve a 15 year tax break?
posted by: Noteworthy on February 20, 2018 9:36am
The seven houses on my side of my block in Westville - pays more than than $46K a year. This property tax level reflects the current value - it doesn’t begin to reflect the future value. Once the property is completed, the property taxes should be based on current value - calculated three different ways and averaged. If that’s a deal breaker - let it stay vacant. The rest of the city should not be held hostage on a bad deal that provides zero benefit to the whole. We are all in this together. If the city needs help negotiating, I’d be happy to offer my services for free. But this deal stinks.
posted by: brownetowne on February 20, 2018 10:27am
This looks like a great project and such a place would be an asset to New Haven. Although it does seem unfair to current homeowners, the downside of the tax break should be considered along with the huge upside of the state and federal money that would come to New Haven for the cleanup. Fifteen years does seem like a long time and it’s unlikely anyone in city hall brokering the deal will be around at that time. A phase-in would be more palatable to the public and might prevent having to renegotiate 15 years down the road when taxes need to be paid. Remember that 360 State was unhappy with their assessment after their free ride ended and I think the city had to accept less.
posted by: mikewestpark on February 20, 2018 11:28am
@ Kevin, you misread my statement. I stated that East Rockers on average were paying half of the current tax base on the project that was going to be carried forward for the next 10 years. ( they pay 46 while East Rock is paying 23). The reason why I find that rediculious is because of the square footage and the number of apartments involved and the comparative income streams. An east rock three family will bring in $3400-$6000 per month in rent. Of that money $1600-$1800 will go to taxes.
This project will pay double that for the next 15 years even though, when the project is done, the income will be very conservatively $100,000 per month. If the city wants to fund this project then they should offer the same tax abatement terms for anyone investing in that three family as well. The city’s obvious counter-argument why that would not a economically feasible plan is the same reason why they shouldnt give the abatement. At least negotiate for a better deal, I bet they will still do the project for a five year abatement. If they won’t then that just means the financials of the deal are thin and 15 years from now we will be dealing with another ninth square scenario. Its called property inveatment, which comes with risk. Stop allowing these development companies to pass off the risk of their investment to the New Haven taxpayer.
posted by: Bill Saunders on February 20, 2018 12:13pm
Since you so kindly asked…...
This ‘affordable artist loft’ promise has been out there for a long time… developers love hitching a wagon to that star. I just don’t believe the hype…. or the tax break…. I have never seen it come to fruition with outside developers….but I have seen this ‘paper tiger’ time and time again….
At least this development is planning on housing actual humans, disguised as artists or not…... which makes it less of a scam than Titus Kaphur’s 5 million dollar private hotel for visiting artists….but a scam none the less….
But you don’t have to believe a cynic like me…..Heaven forbid I should get in the way of anybody’s ‘feel good’ vibes…
Time will be the ultimate truth-teller…...
posted by: concerned_neighbor on February 20, 2018 12:28pm
If the 9th Sq apartments can’t make it financially, how are these going to make it? Tax abatement or tax freeze for any period of time just kicks the can down the road. If it isn’t profitable to build now, will it ever? Why should taxpayers subsidize the profits of these developers? New Haven has done this time and time again with mixed results. Will they need another tax abatement in 15 years? The City can’t afford it.
posted by: StopTHEWaste on February 20, 2018 12:29pm
This is great!
To the Economic Development Department and Nemerson:
Don’t let this one fall through the cracks! Seize the opportunity while it lasts or we’ll just be left with another decrepit building in an already run-down part of town.
To everyone on here that continues to bash development in our city; things change. This is a good thing for the city. I would rather trade a 15yr tax break for a rotting building with no potential tax income. At this stage, at least the building can be renovated, if it sits for another decade or two, the building will most likely need to be torn down. The state is already in the toilet, do you want New Haven to be flushed with it? Stamford and New Haven seem to be the only things going for the state. If projects like this are not embraced, expect to see more people leave this state. If things don’t drastically change in this City over the next 10 years, a few of you on this board will probably have already moved for greener pastures (when the jobs dry up).
posted by: BetweenTwoRocks on February 20, 2018 1:46pm
It’s hilarious to me how many people will cut off their nose to spite their face. This place has been vacant for 50 years and is contributing essentially nothing to this city. So the city is willing to help out a little bit, and it’s the end of the world, and what makes artists more deserving (aside from their poverty), and how dare they get a tax break when I don’t, and who would want to live in a place like this (did we forget that artists were literally squatting on Daggett St)?
It’s not a perfect project. No kidding.
Meanwhile, the Edgewood bike lane has been more or less cut since it was delayed by local people complaining and the state can’t afford it anymore, and the dearth of hotel rooms continues as the Marriott couldn’t expand. Is New Haven better for those failures? Is it safer? More prosperous?
I think sometimes we just need to accept that even an ugly project is way better than nothing, especially when it’s almost entirely financed by private dollars. Perfect remains the enemy of good.
posted by: robn on February 20, 2018 2:00pm
Additional property is additional cost burden for the city including schooling, roads, sewers, policing, etc. The complaints are not about “no taxes vs some taxes”.
The complaints about the double whammy of the city over-subsidizing competition for existing properties and then offsetting their tax burden onto those properties they just undercut.
posted by: robn on February 20, 2018 2:02pm
PS I’ve had many long conversations with people who like me, sincerely would love to have artists housing in the city. The problem is that one cannot filter applicants without being at least accused of elitism and at worst being sued for discrimination.
posted by: Brian McGrath on February 20, 2018 2:16pm
@Noteworthy You seem to have newly discovered the way the government handles financial affairs. It has been that way for 100 years,doesn’t get better.doesn’t get worse. Stop worrying and be happy.
I always remember the lessons of the massive amount of “subsidized” development we did during the DeLieto years. We faced a massive army of naysayers and nincompoops during the public approval process. They were convinced that nobody would ever want to live downtown,buy a unit on Audubon St, locate their business office or drive in from the suburbs to a New Haven restaurant. They were convinced that no one would rent any of that office space. The City knew however that we were rapidly becoming Bridgeport, you cannot rent a housing unit or office space that you do not have or do not build on speculation, and that if you don’t act now there will be no “there” there. We ignored Henny Penny and the flock of ostriches and it all worked out fine. It is possible that New Haven may be the last city standing in this state. Forces and tsunamis beyond local control have been operating against America’s cities since the founding fathers. Can you blame your local government officials for treading water?
posted by: Jonathan Hopkins on February 20, 2018 2:36pm
This report (https://www.sas.upenn.edu/urban/news-events/news/high-and-low-realigning-housing-incentives-promote-equitable-development) on tax abatement investments in Philadelphia indicates that more widespread investing in smaller scale residential development such as renovation, addition, and infill construction provides a better bang for the municipal buck as compared to subsidizing large scale real estate investment firms for large developments. it may be worthwhile for the city to consider it in relation to this project.
posted by: Esbey on February 20, 2018 2:43pm
I just want to point out that the pained cries from tax-paying East Rock property owners are evidence that new development *drives down rents* on existing properties. If it were true that “gentrification by vampire-artists drives up rents,” then these East Rock property owners would always be thrilled by new development. Their rents would increase while their taxes would stay the same.
Instead, these tax-paying landlords are only willing to support development if it drives their property taxes down, right now. Otherwise, they (probably rightly) feel they are facing subsidized competition. Downward rent pressure plus high taxes does not make for happy landlords. I have talked to much larger landlords, of older rental stock, who are similarly unhappy. Which is good news for renters!
I personally think the city overall is better off with this development rather than without (in part *because* it lowers rents elsewhere!), but I see their point of view.
By the way, in 15 years the city could just not extend the abatement and let the apartments go market-rate. The city could have done that in Ninth Square, if it wanted. The city has instead decided that it is willing to subsidize below-market units, to some degree.
posted by: Kevin McCarthy on February 20, 2018 3:46pm
Mike, that is what you meant but it is not what you wrote. You wrote “how are you going to explain to someone in East Rock that this company will only pay half of the yearly taxes that they are paying now for the next 15 years.” Since the story states that the company’s annual taxes will be frozen at $46,000 during this period, “they” has to refer to the East Rock resident (it should have been “she” or “he”, but I will leave that to the grammarians).
posted by: StopTHEWaste on February 20, 2018 4:10pm
We are talking about property that has been ABANDONED since 1959. These people deserve tax breaks for tackling such a project. We are over subsidizing this company because this building could transform a whole neighborhood.
Kevin and Robn,
I am a landlord, and yes, I would like tax breaks too, but I don’t renovate old factories in an already sketchy side of town. This is a huge risk and the city should bear some of the cost to kick start this project. I don’t mind paying a little more to prop up the economy in my City. If these projects are successful, they increase the property values and the general popularity of our city. We already have a “bad” name from the surrounding communities as an unsafe city. We have a chance to make the city safer and more enjoyable.
Kevin, if you decide to renovate an old factory, let me know, I’ll be the first to your defense on the tax breaks, until then, pay your New Haven taxes like everyone else. Right now, we don’t get a lot for our tax dollars here, but, these types of building projects are solid investments in the City’s future sustainability and long term growth.
posted by: 1644 on February 20, 2018 5:01pm
Essay: The residents of this project, like those of many other projects, will be a drain on the cities resources. They will have children who need to be schooled, cars that will be broken into needing police reports, and medical emergencies required fire/EMS response. The amount this building will pay in taxes will not approach the costs of its residents. Those costs will be borne by property owners in East Rock, Westville, etc., as the mill rate increases on a shrinking tax base. The tax base will shrink because this subsidized competition will lower rents, thereby lowering property values (the value of rental property is a multiple of its rental income).
Fundamentally, I ask, what is so special about this building that it should be preserved at such high cost to taxpayers? The are many others like it in New Haven, in more desirable neighborhoods, and thousands, if not millions like it in the northeast. It sits in the middle of an industrial zone, filled with things people with options don’t want to live near. So, why not let it return to industrial use, even if that means razing it and letting someone like Onofrio build new?
posted by: Andrew Giering on February 20, 2018 5:55pm
I also have serious concerns about the tax abasement, when the City should be considering any and all means to expand its tax base.
posted by: opin1 on February 20, 2018 8:34pm
Thoughtful and valid comments on both sides of this. My thoughts, both for this and against it, have already been stated by others. I’d like to see it happen but $400,000 plus 15 years tax-free seems pretty steep. If they could get it done with the tax breaks being for 7-10 years I’d be more excited.
I’m also curious if the city put it out to bid with the current terms if other developers would be interested. I know it’s been vacant forever, but I wonder if some developers ignored it because they didn’t think getting such good terms would be possible. Now that the city (and state) is willing to provide those generous benefits, would it be worth requesting additional proposals?
I’d be curious to hear Petra/Salas-Romer’s opinion since their proposed Heights on the River development would be targeting a similar demographic. The article about their development didn’t mention any abatements or public funding. I suspect they would support this, but I’d be curious to hear.
posted by: Noteworthy on February 20, 2018 10:48pm
Let Them Eat Clock Cake Notes:
1. This Clock project has nothing to do with sustainability or attractiveness of the city. Most people do not venture into this part of town. It could stay vacant for another 50 yrs and nearly all of us would never know or care.
2. When the taxes on just 7 homes in Westville exceed the tax payments of a project worth $40 million plus - Houston - you have a problem.
3. If this tax abatement is approved, the moan and groan of “our city has 54% of its tax rolls are exempt” should never again pass the lips of Mayor Harp or anybody else. You can’t give wave away tax responsibility and then complain about lack of taxable property.
4. @brian - you’re stuck in yesteryear. We are in a different place and significantly more in debt and with higher taxes. You have nowhere to go.
5. @StopTheWaste - There is nothing in your comment that is remotely tied to facts. You make huge assumptions about outcomes that are just not real or suggestions that this project will somehow be the saving grace of New Haven before falling into the abyss of the state. The state is losing population every single month. The income disparity that we are losing vs. what is moving into the state is in deficit. A big one.
6. @1644 - spot on. Net loss. Very high cost to taxpayers. Not worth it.
posted by: Kevin McCarthy on February 20, 2018 11:39pm
StopTheWaste, in a prior life I was a non-partisan staffer at the legislature and tried very hard to keep my views out of my analyses. I guess this has carried over to retirement. I actually favor the development, although I wish the city had more had more abatement options.
1644, 107 of the 130 units will be one bedroom. There won’t be that many school-age kids living there.
Esby, you’re right about the impact of the new developments on the East Rock market. But it does not follow that the developments have lowered rents in other neighborhoods. Some of the people who are living in the new developments would have lived in East Rock had they not been built. The new developments have increased the rental vacancy rate and thus rents in the neighborhood (the root of Robn’s complaints).But I suspect the developments have had little impact in Dixwell, Fair Haven, etc.
Opin1, soliciting bids makes a lot of sense when the city owns the property. That’s not the case here. Good point about the Fair Haven Heights developers. I think they are addressing a somewhat different market and are operating on a different schedule. Assuming they get their variances, I suspect they could start construction this year. Cleaning up the clock factory would take longer.
posted by: opin1 on February 21, 2018 2:29pm
KM - I know they don’t own the property but they helped broker the deal between the seller and Reed. Presumably the seller doesn’t care who they sell to, their interest is to get the best price. The city could easily contact their Rolodex of developers to see if anyone else would be interested, and if so, with less assistance from the city. For ex/ if another developer said they could do it for the same purchase price and clean up aid, but with a 7-year abatement, the seller likely wouldn’t care, and the city could simply say we aren’t willing to give 15 years. If no other developers bite, that supports the argument that the current deal is worth doing.
Great point by JH - if the city is willing to give $400m and a 15 year abatement to a big developer, would they be willing to offer similar terms to smaller investors who want to buy smaller run-down, single or multi-family properties? That way at least the wealth/profits stay local, rather than go to large out-of-state developers. (I’m not sure that’s a great idea either, but if you offer deals like this it sort of sets a precedent (as averagetaxpayer stated)).