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Dwight Gardens Rescue Deal Reached

by Paul Bass | Jan 24, 2014 9:05 am

(9) Comments | Commenting has been closed | E-mail the Author

Posted to: Housing, Dwight

Paul Bass Photos Some of New Haven’s longest-suffering, lied-to and let-down tenants took a bold step: They chose to hope.

They crowded into a community meeting room: young adults tired of shivering in cold apartments, old-timers who watched their complex deteriorate after decades of building it up and coming within agonizing months of owning it outright. They met a 33-year-old South African-born Fairfield County real-estate developer who promised them he will now rescue their homes and make them “the most desirable apartment buildings in New Haven.”

They heard him make the same promises that another Fairfield County developer made to them three years ago—before trashing their homes to the point where much of the complex has become empty and uninhabitable.

And they believed the 33-year-old. Not out of desperation. Not out of naivete. Out of a sense that he meant what he said, that he and the people he brought to meet them have a solid plan.

The 33-year-old developer is Justin Goldberg, the scion of a family business called Navarino Capital Management, who happened to spend his last two years of high school boarding at the yeshiva at New Haven’s Elm and Norton streets.

On Thursday the federal government gave final approval for Goldberg to buy Dwight Gardens, a former co-op of 80 townhouses surrounding inner courtyards on Edgewood Avenue between Dwight and Garden streets. Only 27 homes, at last count, still have people living in them. And they’re often shivering or mopping up leaks.

A Navarino-created limited-liability corporation will take the property over from failed Bridgeport developer Garfield Spencer. Goldberg promised to make immediate repairs for families contending with broken furnaces and leaking ceilings; and to pump $4.5 million into remaking the entire complex into a colorful, landscaped community in just a year’s time. He signed a deal to guarantee affordable rents for low-income and working households for 25 years. He promised to keep everyone in place while renovations take place. He promised to meet with every tenant within two weeks of the sale’s closing to learn what immediate repairs to make. he introduced them to the property manager he said would work on-site five days a week. He introduced them to the man from New England Construction who would oversee the renovations. He promised to establish a 24-hour emergency repair line, which a human being will always answer. He even offered to take the tenants on a bus trip to see the apartment complexes he runs in Bridgeport.

“I guarantee,” Goldberg told the crowd, whom his team treated to coffee and glazed Dunkin’ Donuts, “we are not a slumlord.”

“We’ve been handed a lot of b.s. The same things have happened over and over,” 89-year-old Hazel Lee (pictured) told him. She has lived at Dwight Gardens—nee Dwight Co-ops—since the 1960s, when the government offered families a complex to run themselves and then own outright after 40 years. Lee and her neighbors succeeded for decades. Then, as at other similar New Haven co-ops from the era, board infighting, mismanagement, and debts led to the project’s failure, and a foreclosure in the 39th year of a 40-year mortgage, followed by failed outside private ownership. “I’m very pleased with what I’ve heard tonight.”

“These people are here to help us,” she said after the meeting broke up at the Dwight police substation. “They’re going to put someone on the premises.”

“I feel good about it,” echoed Georgia Ballard (second from right in the photo at the top of this story), who has lived at the complex for over 30 years. She pulled out copies of Goldberg’s professional bio, which she had printed out from the web before the meeting. “He works with his family. He graduated from New York University; he studied finance.”

The Details

In an hour-long discussion with a standing-room only crowd of some three dozen neighbors, then in a conversation afterwards, Goldberg, who spent his last two years of high school boarding at the yeshiva at New Haven’s Elm and Norton streets, and Livable City Initiative (LCI) chief Erik Johnson (pictured with Goldberg), the city official who struck the deal, laid out the details. They said they anticipate the deal could be signed as soon as within a week, pending an OK from Mayor Toni Harp.

• Goldberg’s company won’t pay any money to Spencer for the property, but will assume “over $1 million” in debts and fees Spencer racked up, from unpaid taxes to sewer liens to unpaid mortgage interest. That’s on top of the $4.5 million it promises to spend fixing up all 80 homes.

• The company has 24 months to complete the repairs. Goldberg told the crowd Thursday night he believes the job will be finished in 12 months.

• If the company tries to flip the property sooner or sell it before 27 years, it will not be allowed to earn full market value. Plus, it can’t sell the property during that time without approval from the city or the federal Department of Housing and Urban Development (HUD). “We’re not going to leave town the day we’re done,” Goldberg said. He said his family company is in the business of renovating and then maintaining and renting properties for decades at a shot.

• It will reserve 20 of the apartments for households earning up to 50 percent of the area’s average median income; another 20 units for those earning up to 60 percent; another 20 units for those earning up to 80 percent; and the last 20 for those earning up to 115 percent. It can raise rents, but only according to a HUD schedule of allowable hikes for each income category. In other words, the rents stay below market rate. For 30 years. “It won’t be $700 anymore” for a four-bedroom apartment, LCI’s Johnson told the tenants. “But it won’t be $2,000” either.

• The developer will take out a performance bond on the full $4.5 million job—so if the repairs don’t get made, the money’s gone. Johnson failed to put the requirement in the deal he struck with the previous developer, Spencer. Johnson said he learned this time from his mistake.

• Goldberg’s crew will first fix all the vacant townhouse apartments. Tenants will remain in their current apartments during that time, and the developer will repair the many problems there, too. When it comes time to renovate their apartments, they will have guaranteed “comparable” spots in the renovated units. Goldberg was asked if he can guarantee that the tenants can eventually return to their original apartments. He said he wasn’t ready to make that guarantee. But “we can talk about it,” he said.

• The deal includes no government subsidies to the developer. Johnson said in the future the city might consider offering lead abatement money to Goldberg, from money reserved for (but never used by) Spencer to use at Dwight Gardens.

He “Stuck With Us”

Tenants did reprise some of the venting that dominated previous meetings. Al Gadsden spoke of how the previous developer simply slapped siding on top of rotting old wood. “They gave the termites a home, comfortable,” he said.

“No offense to you, [but] we’ve been told before, ‘We are doing this. We’re doing that.’ It comes out that they’re slumlords. I’m not saying you are,” another tenant told Goldberg “But I want to know my windows aren’t going to fall out and my boiler’s not going to break,” another tenant told Goldberg.

Goldberg said that won’t happen.

Erik Johnson said he’d checked out Goldberg’s properties and record. “I’ve seen their stuff. I think their stuff is good,” he said.

“No offense,” the tenant continued. “We can’t take Erik’s word either at this point.”

“You can only know by seeing it,” Goldberg said. Then he promised to hand out a list of his properties so people can check them—and “if there’s a real desire, we’ll get a bus” and tour them: Bridgeport properties like Ellsworth Apartments and a complex at 345 Benham Ave., a “tough property in a tough neighborhood” that he later said his company turned around after picking up in foreclosure.

Other tenants recalled how they’ve vented for years at Johnson as he has heeded their emergency complaints while developer Garfield was AWOl.

“Thank God he has stuck with us,” said Bobby Ewing, one of the original Dwight Co-op tenants (pictured meeting Goldberg outside the substation before Thursday night’s meeting).

Another tenant thanked Johnson “for standing with us while we’ve been going through this drama. Even if we beat you up, I want to say thank you.”


Previous coverage of the Dwight Co-Ops/Dwight Gardens Saga (in chronological order):

On Verge Of A Dream, Co-op Faces Foreclosure
City Finds Potential Buyer For Dwight Co-Op Homes
City’s Co-op Savior Has Troubled Track Record
Dwight Coop Rescue Advances
Dwight Co-op Deal Squeaks Through
Housing Authority Quits Dwight Co-Op Deal
Dwight Co-Op Makeover In Limbo
Day Laborers Move The “Mountain”
City Turns Up Heat On Dwight Co-Op Landlord
City Seeks New Buyer For Dwight Co-Ops
6 Vie To Buy Failed Housing Co-op
Dwight Gardens Rescue Effort Takes New Turn
Not So Fast! Auction’s Off
Dwight Gardens Rescue Plan Advances
Fed Shutdown Stalls Dwight Gardens Rescue
Erik Johnson Races The Clock
Dwight Gardens Shivers

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posted by: Threefifths on January 24, 2014  10:07am

People wake up.You all are being sold snake oil.This is the real plan.

Big Real Estate Firms Buy Up in Poor Neighborhoods.

http://disinfo.com/2013/06/wall-street-investors-buying-up-entire-neighborhoods-in-poorer-areas/


Look at what happen in Harlem,

Tenants Struggle as a British Landlord Goes Bust


http://www.nytimes.com/2009/12/22/nyregion/22dawnay.html?pagewanted=all&_r=0

posted by: robn on January 24, 2014  12:12pm

3/5,

This so called “drama” was created by the former-owners/tenants themselves by putting $5.5M of deferred maintenance and unpaid mortgage into their own pockets.

posted by: Threefifths on January 24, 2014  4:00pm

posted by: robn on January 24, 2014 11:12am

3/5,

This so called “drama” was created by the former-owners/tenants themselves by putting $5.5M of deferred maintenance and unpaid mortgage into their own pockets.

True But not in all cases.Across this country land graping is happing.

Chinese Buyers Flood Real Estate Market in Search of Kids’ College Housing

http://www.olr.com/Pictures/CompanyNews/2354_Chinese Buyers Flood Real Estate Market in Search of Kids.pdf

posted by: shadesofzero on January 24, 2014  4:52pm

Time will tell, but I don’t see Threefifths volunteering to help out this complex. Either it’ll work or it won’t, but it doesn’t exactly sound like the status quo is working very effectively.

posted by: Threefifths on January 24, 2014  5:16pm

posted by: Josh Levinson on January 24, 2014 3:52pm

Time will tell, but I don’t see Threefifths volunteering to help out this complex. Either it’ll work or it won’t, but it doesn’t exactly sound like the status quo is working very effectively.

In the words of Marcus Garvey

If white people were dependent on others, they would not be as successful as they are today. If Japan were dependent on other countries, she would not be as successful as she is today. As long as the Negro is dependent on other groups, he will remain the lowest down——-MARCUS GARVEY

Black people should not look to whites for charity forever. What we lack is self help and self reliance. We are always wanting somebody to do something for us. As a race we are too envious, malicious and superficial, and because of this we keep ourselves back———MARCUS GARVEY (from his lecture at Collegiate Hall in Kingston Jamaica , given in 1915)

As far as me volunteering to help out this complex.I did.I told some of the people I know to go to the Black Churches and have them invest some of the money they collect to purchase this complex.

posted by: NewHavenTaxTooHigh on January 25, 2014  3:13am

I’m glad the families that are in the building will be protected. The article covered every aspect of the issue, except one very important one: what is the short and long-term impact to New Haven’s Grand List?

posted by: Serf of New Haven on January 25, 2014  6:40pm

I think all these units should have been broken down into condominiums. The 27 holdouts should have been given their units, free and clear of title, and all the attachments and fees of a condominium owner that goes with it. The developer would have done a one time renovation on their units and then they follow the condo guidelines afterwards. It’s the least we could have done for people who were so close to ownership.

The developer could have sold the remaining 53 condominiums at any price point he chose. If he thinks the market can get it, he could sell $200,000 3bdrm condos @ $10,000,000. With the 27 owning $5,400,000 in equity.

But no. Thanks to the brilliant ones at city hall, the developer is getting it for free, just assuming liabilities and renovation promises while following some bizar wealth ratio to determine tenancy. I don’t know much about social engineering, but what happens if you change your income percentile? Does everyone have to submit a tax form yearly to establish rent?  Do you move to a nicer unit and someone else moves out if your income goes up?

And he’s given nothing but promises to anyone, nothing a bankruptcy court can’t handle. We should have given these people ownership, not some empty promise to keep the rent between $700 and $2000.

IMHO we failed miserably again here.

posted by: robn on January 25, 2014  8:15pm

SONH

The almost owners stuck money in their pockets when they shod have been maintaining the building (accumulated debt to the tune of $5.5). They were nowhere near the end of their mortgage because they didn’t fulfill the commitment to ownership that is upkeep. A bailout would have bend a $61,000 gift to each unit. Gimme a break!

posted by: Serf of New Haven on January 27, 2014  7:19pm

robn

Agree. But it would have been the ultimate carrot to get this complex out of HUD and other agency control. Now its’ going to some other slumlord who knows how to game the HUD system for maximum profits.

This is good real estate. My solution would have allowed a release to the private sector, while those residents who held out could of had windfall gains at the same time.

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