nothin Dwight Gardens Rescue Effort Takes New Turn | New Haven Independent

Dwight Gardens Rescue Effort Takes New Turn

Thomas MacMillan Photo

LCI’s Johnson: Failed developer won’t get a dime from city.

A tax auction? Or a sale to a developer chosen by weary tenants?

Erik Johnson is weighing those two options for rescuing a battered housing co-op — and prized piece of New Haven property — now that city talks have broken down with a failed developer.

That prized piece of property is Dwight Gardens, the largely trashed 80-unit complex at 99 Edgewood Ave., down the block from Dwight Street and across the street from Amistad Academy.

Until late this week, the city agency Johnson runs, the Livable City Initiative (LCI), had been meeting with tenants to choose a developer to buy the complex from the Bridgeport developer who promised to fix it up, then didn’t. The city was brokering the sale on behalf of the Bridgeport developer, Garfield Spencer. (Six other developers are competing for the prize.)

Then LCI failed to reach an agreement with Spencer about the terms of the sale. So now Johnson, who wants to resolve the complex’s future as soon as possible so remaining tenants won’t endure another difficult winter in rundown conditions, has to make a choice, he said Friday.

One option: Have the city foreclose on the property for back taxes; Spencer owes around $170,000 in unpaid taxes and interest. A tentative Aug. 24 date has been set for such a sale. That would enable the highest qualified bidder to take the property. The advantage of this choice: It would make a sale happen sooner rather than later, allowing a new developer to begin pouring millions into the property.

The other option: Have the federal Department of Housing of Urban Development (HUD) foreclose on the property. (It has a right to do that because it has a reverter deed” on the property.) Then HUD would transfer the property to the city. And the city would resume a process it began recently: Meeting with Dwight Gardens tenants to hear which developer they want, then negotiating a sale with that developer. The advantage of this choice: It would preserve a promised role for the tenants in determining the future of their complex.

Johnson said he plans to make the decision in coming weeks so that, either way, the saga of Dwight Gardens pivots to a happier denouement.

The saga of Dwight Gardens (nee Dwight Co-Op Homes), one of a number of 60s-era federally backed housing co-ops that have failed in recent years, has been a painful one for tenants. The tenants in some cases have lived there for decades, most of that time as co-op members who came tantalizingly close to owning their complex outright before it all fell apart. The federal government previously had foreclosed on the property in 2010 and sold it to the city, which in turn sold it to Bridgeport developer Spencer, despite his spotty financial record, on the condition that he make $6 million in repairs, $1 million of that coming from a city loan.

Spencer failed to make most of the repairs. The once-proud complex slid into further disrepair. Only 30 of the 80 homes are still occupied.

In order to get the complex in new hands as fast as possible, Johnson sought to avoid having to go through a foreclosure. He and Spencer agreed to let the city broker a sale for a new buyer. That process started while Johnson, HUD and Spencer continued negotiating one crucial detail: How much money Spencer would recover in the deal.

HUD, which had backed the original construction of Dwight Gardens and retains the rights to ensure it continues to support affordable housing, concluded that Spencer is entitled to be reimbursed about $600,000 in construction costs he incurred in his aborted attempt to rebuild the complex. Spencer insists he’s owed $1.2 million, according to Johnson. (Spencer failed to respond to a request for comment for this story, as he has repeatedly over the two years to Independent has covered the Dwight Gardens saga.)

New Haven is unwilling to make up the money Spencer wants to walk away from the property.

He’s in default. Why would I pay him more money to get him out?” Johnson said Friday in an interview in his third-floor City Hall office overlooking the Green. (The city never ended up lending Spencer any of the $1 million, because he never got the project to the stage where he’d qualify for it, according to Johnson. A plan to have the housing authority partner with Spencer also fell apart.)

So now the city must decide fast whether to proceed with foreclosing on Spencer and holding the Aug. 24 auction — with any qualified developer able to win the property. Or whether to ask HUD to foreclose and resume the process of having tenants help decide on a buyer. In either case, the buyer would have to commit to spend at least $3.7 million on renovating the property.

Tenants Rule Out Pike, Harp

Friday’s latest development means that the city will put on hold a series of interviews that had been scheduled with some of the would-be buyers.

When it planned to broker the sale on Spencer’s behalf, the city set up a review committee to vet the proposals that came in from developers. Six developers originally put in proposals; one, Community Builders, dropped out, while another, Bridgeport-based Navarino Capital Management, added a new one. The review committee includes two Dwight Gardens tenants, tenants Georgia Ballard and Richard Davis; their alderman, Frank Douglass; attorney Tim Yolen, Brett Hill of Home Inc., and LCI’s Johnson.

The committee decided to eliminate Pike International, which bills itself as New Haven’s largest private landlord; and a partnership between Municipal Capital Appreciation Partners (MCAP), a national developer, and Renaissance Management, a New Haven business run by Matthew Harp, the son of Democratic mayoral candidate Toni Harp.

The tenants have the top say” this time around in choosing the next would-be rescuer, said Douglass. I’m making sure they don’t run into the same problem they had before. I hate to see them go through another winter like they did. Last winter was atrocious; no one was taking care of the place.”

The committee scheduled interviews in coming weeks with the four finalists. Johnson said Friday those interviews need to be put on hold until the city decides which route it will take to disposing of the property — and therefore whether the committee will continue vetting proposals or not. (If not — if the city opts to proceed with the foreclosure and auction — the eliminated developers would have another shot at the property.)

The committee’s four finalists are:

• A local partnership between David Rubin and developer DJ Onorato of Off Broadway Management. The group’s proposal offers two scenarios, based on which kind of government tax credits can be obtained. One scenario calls for spending $12 million on rehab, another, $8.5 million. The proposal envisions setting aside 10 percent of the units for supportive housing” (subsidized apartments with on-site social services), perhaps for veterans.

• Glendower Group, a development arm of the Housing Authority of New Haven. The group proposes spending $15 million to fully renovate all 80 units. It would set aside 49 apartments to be covered by the Rental Assistance Demonstration program; 11 as working-family units” for renters earning between 50 and 80 percent of the area median income; and 20 unassisted units for individuals with incomes not to exceed 115 percent” of that median. The proposal called for adding garages to the townhouse apartments, enlarging the second floors, putting in new bathrooms.

WiSe Urban Development of Boston. The company proposes spending $11.4 million to create a mixed-income community. It promises to put in new siding, windows, heating systems, kitchens, bathrooms. Its plan calls for selective demolition” and creation of a new playground surface with new equipment.

• Bridgeport-based Navarino Capital Management, which proposes spending more than $6 million on rehab. We are committed to the Dwight project,” said company principal Justin Goldberg. We don’t just fix up property and leave town. We make long-term commitments.” Goldberg said his company will adhere to all the city and HUD requirements for how the property should be redeveloped.

According to minutes of the review committee’s July 18 meeting, it eliminated the MCAP/Renaissance proposal — which would have turned the complex into Section 8 housing — because it involved moving tenants during the rehab process. Also, tenants said they were largely unaware” of the developer’s completed projects elsewhere.

Both Alderman Douglass and LCI chief Johnson said they were respecting the tenants’ clear preference not to have to move during construction, whether or not that proves the most efficient approach.

Paul Bass Photo

They said they also deferred to tenants who wanted to eliminate Pike from the mix based on what they’d heard about conditions at Ethan Gardens, another failed former housing co-op around the corner which Pike bought and renovated. Pike envisioned a mixed-income community at Dwight Gardens.

Alderman Douglass and [tenant] Georgia Ballard [pictured] expressed their opinion that … the property needed a higher level of rehab than what was done at Ethan Gardens and expresse[d] some concerns about Pike[‘s] ability to manage in the property to the satisfaction of the residents,” according to the minutes.

Pike disputed that depiction of its performance at Ethan Gardens, citing this federal inspection report concluding that the company has done an excellent job in transforming this property far exceeding the Post-Closing Requirements in many areas.”

I don’t agree or disagree with” the review committee’s take on Pike, Johnson said. There have been significant management issues with Dwight Gardens. The tenants and the alderman wanted to feel there aren’t any questions [with their new developer]. That’s not a knock on Pike. They have a high-quality product. We wanted to the community to be able to speak about how to go forward. This has no bearing on” future city dealings with Pike.

Dwight Gardens graffiti.

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