City Looking To Revive Defunct Deals

After more than a decade of inaction, a seemingly dead land disposition agreement to put condos on a vacant Chapel West lot is on the way to resurrection. Without the condos.

If that happens, it would be the first step along a complicated road to developing the Chapel Street West site and an estimated 17 others in limbo around the city because of deals struck in different economic times.

Chapel Lofts II LLC, a partnership led by apartment renovator Shneur Katz, purchased the vacant lot at 1198 Chapel St. from the city for $80,000 under a now long expired April 18, 2005, agreement that called for them to build a mixed-use building with retail on the first floor and nine condos above. The development was never built, city officials said, because of a real-estate downturn. (Katz did renovate the former office building next door into apartments.)

Since 2005, the real estate market in the city’s downtown has rebounded, though for rental housing, not condos. The developer has signaled to the city that amending the LDA to allow for construction of a 19,000 square foot building with first-floor retail and 24 apartments above would make the deal viable again.

The city’s anti-blight agency, the Livable City Initiative, is seeking to amend the LDA. The request was forwarded from the city’s Property Acquisition and Disposition Committee to the City Plan Commission, which voted Tuesday night to recommend that the Board of Alders approve the amendment.

The Harp administration could have taken developers to court for defaulting on the agreements. Instead it wants to work with developers like the owners of 1198 Chapel St., who entered into land disposition agreements, or LDAs, to purchase city-owned land for developments that never materialized in hopes of jump starting those projects.

To that end, the original developer is being offered an opportunity to amend the agreement with the city, for no additional money if minor changes can still make the project work, said City Development Administrator Matthew Nemerson Tuesday.

“Chicken & Egg” Questions

At Tuesday night’s City Plan meeting, Commissioner Leslie Radcliffe asked for more details. A proposed building nearly double its original planned size of 10,000 square feet? How tall will it be? What will it look like?

“We don’t actually have a plan,” City Plan Staffer Ted Stevens responded. ​“The unusual thing is that they say it’s going to be a 19,000 square foot building but we haven’t actually seen the plans for the building.”

“For me to even visualize 24 units in there I need some idea of what space this structure would take up, how tall it’s going to be,” Radcliffe pressed.

“There’s nothing we can look at to tell us how large it’s going to be or whether it complies with the rest of the zoning ordinance,” staffer Anne Hartjen said. ​“The caveat here is that … the applicant has to understand that it does not mean that they do not come back to the BZA [Board of Zoning Appeals] or CPC [City Plan]. They may need zoning relief to put in their 24 units. We don’t know because we don’t know what it looks like.”

“That’s what I’m saying,” Radcliffe said. ​“Without knowing what it looks like I don’t see why I would even consider amending the LDA.”

“It’s a backward process,” Hartjen concluded — giving a recommendation to consider a general reworking of the original plan, then returning to hone the details.

“Why aren’t they waiting until they’re further along?” Commission Chairman Ed Mattison asked. ​“What do they gain?”

“They want to know whether they have permission under the LDA before they even start designing,” Hartjen said. ​“It’s kind of a chicken and an egg question.”

The commission ultimately decided to recommend the approval of the amendment to the LDA, but included in its advice to alders an emphasis that though creating such a mixed-used building is permitted in BD‑1 zone, the owners might still have to come back before the BZA and the commission. And they would certainly have to come back for site plan review.

That’s just the first in a series of regulatory hurdles that will have to be cleared before the 18-month clock starts ticking again on the development. The proposed amendment also has to go before LCI’s board.

Nemerson said the city is taking similar looks at LDAs with other for-profit developers as well as with not-for-profits and homeowners with agreements that expire because the economy soured.

“The mayor looked at the list and all the different circumstances and very much wanted to come up with a solution that was fair to everybody,” he said. ​“In many cases, the important decision was not to change the price.”

That means that for 1198 Chapel St.. which was purchased for the early 2000s market rate of $80,000, the city isn’t forcing the owners to pay any of the difference between the original sale price and the property’s current value. It is instead banking that getting the vacant property developed would benefit the city more in the long run.

“New Haven has gone through a pretty substantial increase in property values in the last 15 years, and that would impact many of the organizations that have been in fact maintaining the property, paying taxes. And with the higher cost of development now, if everybody just started thinking about doing their project, it wouldn’t be fair to increase the price,” Nemerson said.

“We also didn’t think that people should make a profit off of not developing the project,” he added. So giving LDA holders another opportunity to make good on their projects by modifying their agreements in ways that could make them viable again. Having those modifications vetted ultimately by the Board of Alders was the approach that the city came up with, he said.

“Going forward we ask them to live up to the timing that would be in the LDA,” Nemerson said. ​“That was something we wanted. It didn’t feel right to treat each of them differently. We wanted to treat them in a way that all holders of agreements would be happy about.

“That’s often hard to do in the public sector,” he added. ​“But the mayor was adamant that we treat everybody with respect for the reason that they were not able to do their projects because something happened to the economy and that the original organization was willing to do something now, we would hold the price.”