Development Commish Sees The Upsides

Paul Bass PhotoNew Haven has hundreds of new apartments that most people can’t afford to rent? Not to worry — other rents may go down as a result. And no one’s being displaced.

An out-of-town company bought a local factory and is sending its workforce to Meriden? Not to worry — the workers will keep their jobs, and a new owner will bring more jobs than before the local factory.

Welcome to the new New Haven, as observed by Pedro Soto.

Soto has made those observations from close range: He is the president of the New Haven Development Commission. And he ran (and now still works for) an East Street-based jet-engine parts manufacturer called Space-Craft.

During his six years on the Development Commission — which mostly previews and reviews economic development projects rather than casting binding votes — Soto has watched a market-rate apartment and now hotel building boom take hold. He used to watch the city need to lure builders with tax incentives. With a few exceptions (like this one)  the city no longer needs to pay people to build market-rate projects. At this month’s commission meeting alone, Soto said, city officials briefed members on 17 development projects in the works including five potential hotels.

Meanwhile, the city has struggled to keep and lure well-paying jobs like the ones at Space-Craft, which Soto’s father John started in 1970. (Read a story about that here.) A corporation called DRT Power Systems has bought the company. Soto has remained on in sales. DRT is moving the 50-member skilled workforce to a Meriden plant. Most of those workers will be staying with the company, Soto said. He said another business, Lucky Climbers, plans to move in to the East Street plant. Because of advances in technology, Space-Craft needed the deeper pockets of a larger corporation to invest in new equipment and engage in the “fierce competition” for highly-skilled workers, Soto said.

Soto, who grew up in Orange and now lives in Westville with his wife and young son, plays a role formerly filled in New Haven by executives of local banks and larger factories and partners in locally based white-shoe law firms, back when New Haven had significantly sized local banks and larger factories and white-shoe law firms: Civic volunteer leader. He has served as president of the preservation trust and on boards of organizations ranging from Gateway Community College to the now-defunct Elm City Market coop. His is a reasoned, calm, informed, engaged voice in an era of apoplectic talking-head public debate.

And he sits through a lot of meetings.

While he shares the concerns about affordable housing and manufacturing decline, Soto has a basically upbeat take on New Haven’s recent fortunes. He offered that take during an appearance on WNHH FM’s “Dateline New Haven” program. He also wrestled with how gray areas in preservation debates come into play when a community decides whether or not to allow developers to demolish older buildings, like the former Webster Bank at 80 Elm and the Church Street South apartment complex.

Gentrification? Or Looming Correction?

KENNETH BOROSON ARCHITECTS, LLC“I think it’s great that market-rate apartments are showing up all over town,” Soto said, from the Novella on Howe Street to the Corsair in Goatville, from the soon-to-start Hill development on long-underused surface lots in the Hill and Audubon Square on a flattened “superblock” off Orange and Grove to five separate projects on just one block of Crown Street.

Those developments bring more people into town. They create jobs. They build up the tax base.

They have also raised wide concerns about gentrification. Many families, especially working families earning above the poverty line, have trouble finding affordable places to live. Monthly downtown rents have hit a high of $6,200.

Soto noted that New Haven has been building quality low-income housing as well, from the new Farnam Courts complex currently taking shape on Grand Avenue to set-asides of 10 to 30 percent of subsidized units in market projects like Randy Salvatore’s in the Hill. “New Haven moves in both directions,” he said.

Gentrification traditionally involves displacing poor renters by converting existing low-rent apartments into upgraded high-rent housing, Soto noted. Almost all the new construction in New Haven is taking place on empty lots or in empty buildings, displacing no one, he said. One exception was the purchase of the Hotel Duncan by a developer of upscale “boutique” inns. Soto noted that the developer and the city’s housing authority promptly found new apartments, many nearby, for the tenants booted from the single-room-occupancy units after the sale.

Soto disagreed with the notion that the new market rate apartments will raise rents elsewhere in town for existing tenants. Rather, he said, they can just as easily increase supply and drive down prices elsewhere. In any event, he predicted “We’re building at such a rate, at some point, we’ll reach a tipping point.” That will produce a market correction that drives down rents at even some of the newer buildings, he predicted. A similar process took place when condo developers overbuilt in Fair Haven in the 1980s. Many observers predict a similar correction at sites like Winchester Lofts, a converted factory complex which opened with two-bedrooms renting for $3,000 a month.

Timely Clock Plan

CROSSKEY ARCHITECTS

One project currently before city regulators does involve a large subsidy: a $40 million plan to convert an abandoned clock factory complex on Hamilton Street into 130 apartments for low-to-moderate-income artists and “makers.” The developer, the Portland, Oregon-based Reed Realty Group, seeks a full 15-year tax freeze at the current rate, which nets the city $46,000 a year.

That proposal has won the support of city officials and citizens at a recent management team meeting. It produced extensive debate among Independent readers, some of whom argue that the city can’t afford to hand out such breaks any more, and doesn’t need to.

“The ask is pretty big,” Soto acknowledged. But he said he supports the proposal because of unique circumstances: The city has tried for decades to find someone to rescue the historic clock factory, without success until now. He called this proposal the last chance to save it — and to clean up the pollution there. The developers plan to undertake a $6.5 million clean-up, with the state covering $4 million of the cost and the city another $400,000.

“You’re not giving anything up,” Soto noted. “Nobody is going to come clean it up” if this proposal fails. He also noted that the project will create affordable, not luxury, housing.

When To Demolish?

Brian Slattery Photo

While preservation is close to Soto’s heart, he doesn’t automatically oppose demolition. Two recent projects reveal the nuances of his position: He supports the planned demolition and rebuilding from scratch of the Church Street South apartment complex, but does not side with fellow preservationists trying to save the former Webster Bank building at 80 Elm St.

He was pressed in the radio interview from both sides — accused first of being dogmatically pro-preservation, then of being insufficiently pro-preservation. Excerpts of that exchange follow:

WNHH: This is the thing that gets me about historic preservation. If you go to the outside of that building, it’s pretty ugly.

A lot of times historic preservationists say even if something was butt ugly in its day, that eventually becomes historic. So we have to spend a lot more money to retain [features] to show us how butt-ugly things were. Why is it important to do that?

Pedro Soto: One person’s butt-ugly is someone else’s beauty in a different era. In the 1950s and ‘60s all these gorgeous Victorian buildings in the city were destroyed across the city because they were considered ugly. When you see pictures, you say, ‘What were they thinking?”

In 50 years the building might be gorgeous. Modernism is having its heyday.

But in the ‘50s and ‘60s we tore down beautiful buildings and built ugly, inhumane structures, some of which we’ve knocked down soon. Now preservationists may say we’ve got to [keep] those ugly structures because [they represent] an historical moment.

It’s hard. Some buildings age better than others. I would say a complex which was lauded in its day and probably should be demolished is Church Street South. That won national awards.

Jonathan Hopkinsthinks that should be saved.

He’s a very, very smart guy.

Why would you tear it down?

Because I think the buildings are in terrible shape. And I just think the whole point about how the buildings are, they are large units, which is nice. But they’re kind of impersonal. I don’t think that the type of living that it has is what that area needs. It turns inward.

It’s ugly and dehumanizing. Preservations might say, “Keep it. We might change our minds in 20 years.”

Some would. I don’t think anyone from the Preservation Trust has raised their hand to keep it. [Read Hopkins’ argument here.]

What about the Webster Bank building?

That’s a good question. I’m a little conflicted on that one. I think bank buildings are really hard. Once they’re a bank, they’re really hard to turn into anything other than a blank in a bank.

This wasn’t originally a bank. This was a church.

Once you’ve gone past the point where the building is a church, it’s not a church anymore. It’s a churchy bank building.

Now I’m going the other way around on you. What about those buildings we tore down in the ‘50s and ‘60s? They were no longer their original uses. Some were theaters. The use can change. There’s still value in the original.

Definitely I agree. I think that this building wouldl have a very hard time being reused. And I think that that’s the hard part. Optimally you want to find a reuse first above all else. I think this building, especially where it is sited downtown in one of the few [lots] we can probably put a very good tower on, it probably is going to get demolished. It would surprise me if it was stopped.

Sometimes you can gibe economics and historic preservation pretty nicely. The Winchester factories, for example, were beautifully restored. That makes it a better project. In most cases adaptive reuse makes for better projects. It’s hard when a building has a difficult use.

Sometimes you can do a facade-ectomy. You destroy the building behind it and preserve the front of the building. In this case you’re not gaining much. I don’t know how you can restore the building.

Click on or download the above audio file or Facebook Live video below for the full interview with Pedro Soto on WNHH FM’s “Dateline New Haven” program.

Tags: , , ,

Post a Comment

Commenting has closed for this entry

Comments

posted by: Kevin McCarthy on April 19, 2018  8:56pm

Paul, I think the introductory paragraphs to the story, as distinct from the interview, is not entirely fair to Soto (who for the record I don’t know).  It portrays him as blasé on gentrification and the relocation of manufacturing jobs, which is not borne out by the interview itself.

posted by: Esbey on April 19, 2018  9:11pm

I don’t know Soto or Kevin McCarthy, but I agree with McCarthy’s point. Paul is almost always very fair and accurate, but in the interview Soto specifically supports lower income housing backed by government funds. I think one would guess the opposite from the intro.

[Paul: Thanks for the feedback! I most certainly did not intend to portray Pedro as blase about anything, including gentrification. But I can see why it read that way to some folks. I thought he was making the case that classic gentrification is not happening.]

posted by: robn on April 20, 2018  6:53am

No Clock Factory!
The clock factory subsidy is unfair to other property taxpayers (including renters) who have waited years for (not transpired) reduction in taxes related to other developments. The Clock Factory is poised to have many hundreds of households not paying a fair share of city operating expense.

posted by: Kevin McCarthy on April 20, 2018  7:03am

Thanks, Paul. It is clear from the interview that you respect Soto and enjoyed talking with.

One thing you discussed is indirect gentrification, which has received relatively little play on these pages. New Haven has seen little classic gentrification (the phenomenon 3/5ths occasionally addresses). But there are signs of indirect gentrification. Some owners of buildings near new developments are raising rents, sometimes after improving their buildings, sometimes without doing so. This has happened in the immediate vicinity of the Corsair. I would not be surprised if it happens near the Munson Street and Hill developments that are in the works.

BTW, the article 3/5ths links to in his post is very good.

posted by: HewNaven on April 20, 2018  10:03am

from the NYT article:

The force that had historically pushed policy to the economic left — organized labor — has for the most part been marginalized. African-American and Hispanic voters have shown little willingness to join Democratic reform movements led by upper middle class whites, as shown in their lack of enthusiasm for Bill Bradley running against Al Gore in 2000 or Sanders running against Clinton in 2016.

If the Democrats could find someone who looks like Obama and talks like Sanders, they will win in 2020. Otherwise, more of the same (i.e. race to the bottom)

posted by: Jonathan Hopkins on April 20, 2018  12:00pm

While I agree with much of what Pedro has to say regarding recent development trends in New Haven, I do so begrudgingly because the kinds of developments we’ve seen lately are certainly better than nothing, but I suspect that there are potentially better ways of achieving economic goals and appeasing long-time residents’ legitimate concerns than the process we’ve seen thus far.

Just to clarify my position on Church Street South:

The complex was value engineered before and during construction. It was also left to rot for 50 years without routine maintenance. It’s possible that the only viable solution today is to redevelop the site. I am dismayed, however, that no honest attempt was made to study an alternative redevelopment scheme that involved renovation and new infill construction instead of wholesale demolition. I doubt we will ever know this for sure, but I suspect that Church Street South could have been rehabilitated into a viable mixed-income and mixed-use community without demolishing the entire site.

posted by: HewNaven on April 20, 2018  1:34pm

If find it suspicious that no one can produce any data to prove the “market correction” of rent in a neighborhood like East Rock due to the influx of new market-rate housing, but only provide anecdotal evidence. If there is such an obvious correlation, why can’t anyone measure it? All I’ve heard for years is, “Wait and see. It’s coming! Rents will have to be adjusted to prevent vacancies” You can understand why that starts to smell like crap after a few rounds of debate.

The reality for people who actually pay rent would suggest that NOTHING HAS CHANGED. Housing is not a commodity like paint where the consumer will simply vote with their dollars, and find the cheaper supply. Housing immobility is very real and land owners know this. They realize they have captive consumers, and they take advantage of that fact. That’s why the rent in Fair Haven or West Hills is not that much different from the rent in Wooster Square or Westville. As the population increases in New Haven, each square becomes more valuable. Yes, more housing will stabilize the market, but only to the degree that renters can afford the bottom rung of the market. If wages cannot keep up with expenses, as has been the trend for 30+ years, we will see an increase in the population of subsidized renters, and a continued exodus of middle-class wage earners and professionals whose work may not be directly connected to New Haven. I think the true measure of the success of our economic development team will be the measured rate of middle class residents returning to New Haven after decades of absence.

posted by: Kevin McCarthy on April 20, 2018  4:08pm

HewNaven, I don’t know that anyone publishes rent data at the neighborhood level between decennial censuses. The American Community Survey data are more recent but are at the city level.

posted by: 1644 on April 20, 2018  5:43pm

Hew: Have you really compared rents in Fair Haven and Edgewood to Westville or Prospect Hill?  The rents I read about for 66 Norton and the leaded Fair Haven apartments strike me as two thirds to half what a comparably sized dwelling would cost in a better neighborhood.  NHI recently wrote of a tenant in Fair Haven Heights paying only $700 for a one bedroom, and three bedroom apartments at 66 Norton were going for $900.  As for falling rents, I don’t know, but I do hear vacancies are up in East Rock, and I know property values are way down in Westville., making purchase, if not rental, more affordable.  (Note in our other conversation, the value of Yale’s golf course land fell about $3 million between 2015 and 2016 Grand Lists.). The downtown developments have created a third acceptable neighborhood for professionals who wish to live in New Haven, depressing demand for the other two neighborhoods for professionals.

posted by: HewNaven on April 21, 2018  11:22am

1644,

You can pretty easily shop around on Zillow (or something like it) to see what I’m talking about.

Just one example: The typical multi-family house that I moved into in the Edgewood neighborhood, near the park, was assessed at $100K when I moved there in 2005. I shared the rent of $860/month plus utilities for a 2BR second-floor unit. Since then, the assessment went up to almost $200K back down during recession, and now back up to $200K. So, admittedly, the owner is paying about twice in taxes now as in 2005. And, maybe the owner can justify having the rent now reach $1400/month. But, like I said before, if people’s wages have not DOUBLED over this same period, then that rate of growth in property value can not be sustainable for the current population. They will be displaced to lead-infested housing like the one you cite, or they will just have less to spend, with more of their income dedicated to housing. Either way, we all lose.

posted by: HewNaven on April 21, 2018  11:43am

Kevin,

I also don’t know of any data that goes down to the neighborhood level. Admittedly, my research is anecdotal as well. But it seems to be a common concern when you talk to people all over New Haven.

I do like the National Low Income Housing Coalition’s website. They use statewide data, and you can compare Metro areas. A minimum wage worker in CT ($10.10/hour) will have to work 78 hours per week to afford an average fair-market rent for 1BR.

https://tinyurl.com/yb2btjbg

posted by: 1644 on April 21, 2018  4:43pm

Hew:  My guess is that taxes and insurance far more than doubled in that period, so your $900/month apartment should go for about $2000 if the rent tracked the landlord’s expenses.  (I know my taxes and insurance more than doubled.  Remember, the mill rate has not been constant over that period.).  In any case, whether or not wages have kept up is a different topic as to whether or not new construction has depressed prices of older buildings.  One of the keys to a successful life is choosing a career which will support you in the lifestyle you want.  Often, these means hard work and deferred gratification.  There are a lot of forces depressing US wages, among them overseas competition and increased immigration.  The golden era (at least for white men) of the 1950’s and early1960’s had little overseas competition and virtually no immigration depressing wages.

posted by: HewNaven on April 24, 2018  10:52am

1644,

The depression of wages is a serious issue for EVERYONE, and the causes are varied:

The Great Recession, of course, set worker welfare back badly. But the roots of wage stagnation run much deeper. In part, the problem has been caused by the globalization of the labor force, which pits workers in one country in more direct competition with workers in other countries, often with large differences in wage levels. Laborers also find themselves competing against human-replacing machines. The IMF study estimated that half the decline in workers’ share of income in the developed world can be attributed to advancing technology. Unions have also been defanged in many countries, stripping the proletariat of its ability to call for increases in wages. In 2016, 6.4 percent of private-sector wage earners were members of unions in the U.S., a drop from 16.8 percent in 1983. Individual countries also suffer from their own specific wage-destroying dynamics. In Japan, for instance, one cause of stagnant wages is a dual-track labor system in which corporations have hired more and more workers in often poorly paid part-time positions, undercutting the bargaining power of the country’s formerly fierce unions.

https://www.bloomberg.com/news/articles/2017-09-21/why-wages-aren-t-growing