City’s Co-op Savior Has Troubled Track Record
by Thomas MacMillan | May 7, 2010 10:06 am
New Haven is preparing to sell a Dwight apartment complex to a Fairfield County developer who faces allegations of negligence, fraud, and building leaky condos in Bridgeport.
The Board of Aldermen Monday night approved a deal that will sell the Dwight Co-op Homes at 115 Edgewood Ave. to the First National Development Company.
That company’s principal, developer Garfield Spencer, is currently being sued by over 40 condo owners in Bridgeport. They contend that Spencer failed to follow through on promised construction, leaving them with leaky doors and windows, a roof that needed to be replaced, and an unsafe elevator, among other problems.
While the lawyer representing the condo owners warned that Spencer plays “fast and loose” with his development projects, Livable City Initiative director Erik Johnson expressed confidence in the city’s choice of developer.
In other legal trouble, First National Development was fined $40,000 in 2009 in Pawtucket, Rhode Island, for allowing tenants to occupy a building it converted into apartments, before working fire alarms or sprinklers were installed. The town evicted 28 people when it was found that the company allowed them to move in before the building was done, when the building had no heat nor a certificate of occupancy. According to a local news report, Spencer agreed to pay the fine but failed to follow through on that promise.
For years, the Dwight Co-op Homes complex on Edgewood was owned collectively by its residents. Then it fell into disrepair and now faces foreclosure. The city stepped in to work with the federal Department of Housing and Urban Development to find a buyer for the apartments.
It is one of several 1960s-era housing co-ops around town that provided affordable communities for working-class families for decades, then slipped from their hands amid mismanagement and debt, only to land in private hands before the families could pay off the mortgages. In one case, the city found a not-for-profit developer; in the Co-op Homes case, the city has chosen a for-profit developer.
First National Development agreed to take over ownership of the Dwight Co-op Homes and redevelop them as mixed-income apartments. As part of the deal, the city is offering up to $1 million towards the project.
Meanwhile, in Bridgeport, condo owners are up in arms about a project belonging to another Spencer company, Lancaster Gate. In a 72-page complaint filed on July 8, 2009 in Bridgeport Superior Court, over 40 condo owners charge that Spencer failed to address construction defects in the development of the Lofts on Lafayette, an old factory that was made into condos. Read the complaint here.
Spencer’s attorney, Daniel Shepro, said the case is a relatively routine lawsuit that looks like a bigger deal than it actually is.
According to Ron Barba, attorney for the condo owners, his clients were forced to pay $900,000 to repair a faulty roof that Spencer refused to fix.
Barba said he was surprised to hear Spencer is being considered as a developer for a project in New Haven.
“He’s long on promises and short on delivery,” Barba said of Spencer.
Spencer has a “track record” of “fast and loose treatment of his responsibilities as a developer,” Barba said. He’s known for delivering a “less than quality product” and leaving others with liability, Barba said.
The Lofts on Lafayette complaint contains a list of alleged defects found at the property: improper roof construction, faulty roof drains, “water infiltration at windows, doors and walls throughout the buildings,” “inoperative and unsafe elevator,” lack of fire-stop material in walls, water infiltration under one building, and rusted steel support beams.
The complaint accuses Spencer of “sophisticatedly concealing matters that would have been materially important to each condominium purchaser.” He allegedly failed to inform condo-buyers of building defects, including water infiltration and code violations. He did so “to artificially inflate the already substantial profit to be made for himself and his company in a plan to foist the expense of remediation upon the purchasers at LOFTS,” the complaint states.
The complaint also accuses Spencer of “unfair and deceptive acts,” including “bad faith negotiations aimed at delaying and thereby prejudicing the plaintiffs’ legal claims,” and compelling buyers to waive their rights to a planned community center.
In a phone conversation, attorney Shepro sought to refute the claims. The lawsuit looks like a bigger deal than it is because a lot of small complaints have been bundled together, he said. He had sought, unsuccessfully, to have the cases tried separately.
He said the case is a matter of addressing minor “punch-list” items—the final construction details of each apartment. Many of the items have been addressed and more are in progress, Shepro said.
The roof doesn’t need repair, he said. The community center wasn’t built because zoning regulations didn’t allow for it, but no one pressured condo-buyers to agree to that, he said.
Asked if New Haveners should be concerned that a developer with pending development-related litigation is taking on a project in the Dwight neighborhood, Shepro said that in his more than 40-year career he’s found that 50 to 60 percent of condo developments result in lawsuits of some kind. They generally get resolved, he said.
Johnson, the head of LCI, said the city was aware of the pending litigation against Spencer when it chose him as the Dwight Co-op developer: “We had done our due diligence to vet them.”
Johnson said he visited the Lofts on Lafayette and saw the work that had been done there. The quality is good, he said.
New Haven will have oversight structures in place to ensure that Spencer follows through on his commitments at Dwight, Johnson said.
The Bridgeport case is not relevant to the Dwight project, Johnson said. “I don’t think that has any impact on his ability to complete the project on time and with high quality.”
Johnson said he was not aware of Spencer’s legal trouble in Pawtucket, Rhode Island. “I’m still confident in First National Development’s ability to complete” the Dwight Co-Op project, he said.
Work should begin at Dwight this fall, Johnson said.
Other Legal Complaints
Attorney Barba had another complaint about Spencer. He said the developer has been trying to delay the Lafayette Lofts lawsuit by avoiding the process of discovery.
“That’s not accurate,” Shepro said. The case had been delayed while the judge ruled on a motion to have the condo owners’ cases separated, he said.
Barba is not the only attorney to complain about the way Spencer handles lawsuits. In another ongoing case in Bridgeport, attorney Alexander Trembicki has filed four motions of contempt against Spencer. Trembicki represents the owner of a building next to a building owned by Spencer. Trembicki’s client contends that Spencer has interfered with the heating and water systems that pass through Spencer’s property into his. The motions of contempt claim that Spencer has failed to abide by an agreement not to interfere in his neighbor’s property use.
The Bridgeport cases are two of several against Spencer in Bridgeport court. Spencer is also being sued for allegedly failing to pay about $20,000 to an engineering and surveying firm that worked on his home in Fairfield. Lancaster Gate also has a property in foreclosure in Bridgeport. The lawyer for the foreclosing bank has filed a motion for default in that case, based on Spencer’s alleged failure to plea.
Wait And See
Michael Shanklin, a 59-year-old resident of the Dwight Co-op Homes, said had heard of the Bridgeport lawsuit and said he’ll be watching closely to see what happens when Spencer comes in.
“I know shoddy work because I’m a craftsman,” Shanklin said. “I’m going to be cautious. ... I’m a watcher. I sit back and watch.”
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Can someone please explain why, if the city is selling this complex to the developer, the city is apparently “offering up to $1 million towards the project?”
No way should this developer be allowed to manage this property with all his short comings. I’m sure the city can find someone better qualify if they look. To many people lives is estate here.
Seems the like the city has once again failed to do its homework and brought a questionable developer to an already plagued city of slum lords & run down houses etc. And to make things better we are giving 1 million for the project. Hmmm….......
This sounds crazy! and it sounds like a step-up for failure of the new developer. His track record is not good and usually that’s how one decides if they are worthy of something or not. And the city again, always have money for these things but never money for the uplifting of communities.
Why doesn’t the city just put the $1 million towards building improvements and just collect rents directly from the tenants? Why sell to a private developer at all?
Ugh, can you say NO? Hello? And we expect Andy Rizzo to be there to pick up the pieces? Disaster waiting to happen.
... How dare Michael claim that he will be watching someone
Could someone please tell me what “mixed-income apartments” means, and is everyone aware that the Dwight Coops are directly across Edgewood Ave from the new home of the Amistad Academy?
Sell the urban government housing, comrades, and reap the capitalist tax benefits.
Just to put things in perspective, that property is assessed at 2.8 million dollars. Wouldn’t it be great if we all could get a 1/3 rebate on actual worth.
Its deals like this that continue to bankrupt the city.
I can’t believe the City of New Haven has chosen this developer given all the outstanding allegations against him. $1 million is a lot of money to hand over to a developer with such a poor track record especially when the City is considering raising residents’ property taxes ~10%. I hope the City reconsiders their decision!
Former Resident at the Lofts
The whole purpose of developer/builder is to promote and encourage growth for homeowners/business and community. Unfortunately, this has not happened in this case. Anyone who doubts should talk directly with a homeowner that has bought under Spencer’s projects. Lofts on Lafayette is not to be considered “singular”. Look at the resume/history.