John Slade Ely House Sale Put On Hold

Allan Appel Photo (Updated 4:06 p.m.) Dreama Gasaway and her six-strong Wells Fargo team of bankers and lawyers sat on one side of the room.

The former curators, lawyers, and the newly formed Friends of the John Slade Ely House (JSEH) sat on the other. The friends came determined that the building cannot be sold. Period.

The bankers presented the sale as the only way to stop the cash-bleeding on the long maintenance-deferred century-old house on Trumbull Street; do a sale, and use the proceeds to create a separate arts grant program elsewhere, sans building, to carry on the late Grace Ely’s legacy. That quest has provoked an uproar in New Haven arts circles and in City Hall.

The parties hadn’t talked to each other in months.

The scene was a probate courtroom in North Branford, where Wells Fargo asked a judge permission to sell the building. The bank has already informed the arts organizations that had occupied the building that the center will close to allow for a sale.

The two sides ended up talking to each other, and exploring a possible solution to the impasse, at the prodding of the judge, Frank Forgione.

He called the gathering, which took place Thursday afternoon at the North Branford Town Hall, as an information-gathering exercise after reading about the announced sale.

Click here to read that Independent article on the matter.

Wells Fargo, the fiduciary agent of the trust that controls the building, announced the sale earlier this year. It stated that income from the trust fund is insufficient to keep pace with expenses and the principal is being regularly invaded.

At the request of long-time users of the building, The New Haven Paint & Clay Club and the Brush and Palette Club of New Haven, the building was kept open through mid-July to allow for completion of planned exhibitions.

Yet a sale, and soon, remains in the offing.

That’s why at Thursday’s hearing, the Friends arrived in the probate court bearing a petition with more than 1,000 names, including of arts officials statewide, testifying to the JSEH being an anchor of New Haven’s arts life.

If the building goes, there goes the heart of the arts district, said Friends founder Jeanne Criscola.

The Friends had also contacted the state Attorney General’s office, which sent to the meeting two representatives. Assistant Attorneys General Caitlin Calder and Karen Gano submitted a motion to order that “the trustee should delay proposed marketing and sale of the property” to allow time for more due diligence.

The assistant AGs suggested 60 days. 

Wiggin and Dana Attorney Aaron Bayer, representing the bank, said that was a long time. He said the bank embraces the idea of a community dialogue about furthering the late Grace Ely’s arts-supporting vision for the use of her estate—with or without a building. But he called the building’s financial situation “dire.”

He said the trust has $890,000 left. The annual earnings are about $16,000 and the annual operating costs of the house and center about $120,000, meaning the principal is dipped into annually to the tune of $100,000.

Emergency roof and anti-leaking repairs alone, which he estimated to be between $390,000 to $515,000, would “cripple the trust,” Bayer said.

Ronald Pacacha, a volunteer representing past JSEH curators Anna Bresnick, Bob Smith, and Jeanne Criscola, said they had estimates that the leaks could be attended to and the building secured at least in the short run for far less, approximately between $53,000 and $100,000.

Each side said they didn’t trust each other’s numbers.

That’s of course what the status hearing was about. Quickly Judge Forgione saw need for more time.

Before he got to that matter, he had some financial questions of his own. He asked the bank’s annual fee to manage the trust.

“About 24,000,” replied Gasaway, the bank’s senior vice president for philanthropic services.

Then he asked the building’s appraised value. The answer: approximately $590,000. With adding that sum to what’s left in the trust, the total value, if the building were sold, and a new foundation created, would be approximately $1.2 million, Gasaway said. Because a private not-for-profit foundation should spend at least 5 percent of its assets annually, that would mean $60,000 to distribute to the community in arts grants. But no building.

Criscuolo and others said that making arts groups compete with each other for Ely money violates the spirit of the Ely will.

Might there be a John Slade Ely “space,” that is, a rental property, with the overhead much more affordable, that would fulfill the artistic purposes of the trust?

The New Haven Paint and Clay Club has some assets. It could contribute to keeping the building in tact. So could gifts from the new friends organization.

“Could the Friends raise money? Are they a 501(c)3” not-for-profit?” asked Judge Forgione.

Criscola said they are in process to become one, but in the interim people can contribute money earmarked for JSEH via the New Haven Paint and Clay Club and other similar organizations that have been using the house for half a century.

“Would the bank accept the money” to keep the house open and secure? asked the judge.

“A half million wouldn’t do it [even for the most pressing repairs.] Show us your bids,” replied Bayer.

“We’d like to see your bids too,” Criscola fired back.

Then the Harp administration tossed in its two cents via an amplified phone call from city Director of Arts, Culture, and Tourism Andy Wolf and Economic Development Administrator Matt Nemerson.

“We have a plan, but to date haven’t heard from the bank. We repeatedly reached out to Wells Fargo, but didn’t hear until the hearing today” said Wolf.

Wolf added that he would welcome Forgione’s supervision in the matter. The other parties agreed. A private meeting between the bank and Wolf and Nemerson was set up for Friday.

[Update: Nemerson said the two sides had a “long and frank” discussion Friday: “We did not feel there had been adequate maintenance of the building and therefore preservation of the assets for the benefit of the New haven arts community, and there hadn’t been an attempt to reach out to the arts community. They didn’t talk to the Arts Council. They didn’t talk to Andy Wolf. They didn’t talk to the [Community] Foundation … This mitigated any ability they had to begin any action to change the nature of either the building or the trust itself.” he said the city believes it “absolutely” has legal standing to intervene in the case moving forward.]

A continuation of the probate court’s status hearing was also scheduled for Friday, Aug. 7, at 9:30 a.m, at the same location.

At that time, the assistant attorney generals’ motion will be on the agenda. In the ensuing week, the bank promised it would secure the building and would not take steps to market or sell the property.

Criscola, Gasaway, and all the parties involved pronounced the meeting positive and encouraging.

Click here and here for a sample of the range of exhibitions that occur at JSEH, which includes the work of professional artists, amateurs, high school kids, art students, and prisoners.

A skeptic on the Friends’ side, with experience as a former IRS staffer, took a reporter into the corner of the room and whispered: If they sell the building, the bank’s annual management fee would likely shoot up from about $24,000 to $36,000.

Stay tuned.

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posted by: Ravenclaw on July 31, 2015  11:45am

$24,000 in annual fees to manage an $890,000 fund seems steep, doesn’t it? Almost 3% of the assets, which would pretty much wipe out the income from the funds right there.

And $515,000 for a new roof and plugging leaks also seems very high - especially on a building valued at $590,000! (Though as the skeptic pointed out, once the building was old and those funds added to those under management by Wells Fargo, their fees would rise considerably!)

Yep, it’s pretty fishy. On the other hand, there’s every reason to expect the folks running the place to bring in more revenue! Sounds like they’ve grown too used to having endowment funds to spend down and not tried too hard to think of ways of generating income or cutting costs. Maybe the best outcome will block the bank from selling the property but also install a more proactive board of trustees.

posted by: Gretchen Pritchard on July 31, 2015  3:10pm

Yeah, I remember posting a comment to the original article to the effect that this was a case of near-criminal negligence on the part of the Board.

And I agree that $590,000 seems an absurdly low appraisal.  Simply the location-location-location should put it a couple of 100K over that.  The obvious buyer would be a commercial landlord who would gut it inside (hopefully at least preserving the woodwork and windows in the foyer), and rent it out as offices to lawyers and shrinks.  Don’t tell me that’s not what the bank wants to do:  buy it at fire sale prices based on the “need for repairs,” and then make a whole bunch of changes that they would make even if it didn’t need repairs, and then rent out the offices for top dollar.

posted by: Ravenclaw on July 31, 2015  5:00pm

According to the New Haven Grand List, the property was appraised at $723,400 in 2014.

posted by: Bradley on July 31, 2015  5:02pm

The other thing that strikes me as odd is the return on the fund -less than 2% per year. The trustees need to prudent, but even if they invested the fund in high quality commercial bonds they would do better than that.

posted by: Jonathan Hopkins on August 1, 2015  6:48pm

$500,000 to replace a slate roof doesn’t seem that outrageous to me - it’s a pretty big house.

posted by: duo dickinson on August 2, 2015  11:48am

50,000 will not repair and renew a slate roof of that complexity, but $500,000 is totally nuts. There is weirdness here: Matt Nemerson is correct: lots of avenues for help have been untaken: is there a Board of Trustees?

posted by: EileenE on August 2, 2015  12:15pm

The investment earnings of this fund over the last several years should be a super embarrassment for any investment institution to the point that Wells Fargo should be sued for their outrageous mismanagement.
The funds (what’s left) should be removed from the bank and invested properly. The JSE needs their own board of directors not a self-serving bank with no concern to the purpose of the fund as Grace Ely set up or the community.

posted by: DEZ on August 4, 2015  1:47pm

“Yet a sale, and soon, remains in the offing” (of this property with a Wells Fargo mortgage).

Yet on Kneeland Road, Wells Fargo owns a home which somehow is not hitting the market. Left derelict, broken into, plumbing removed, house left in ruin, it sits, with only occasional management of the yard. Would this be different in another town? Sad. Terrific housing stock left to ruin by a bank that can’t seem to get it together. The house reverted to Wells Fargo. IN 2013!!


Location271 KNEELAND RD

Mblu042/ 0924/ 01000/ / Acct#OwnerWELLS FARGO BANK
Assessment$99,470Appraisal$142,100PID1807Building Count1


Owner WELLS FARGO BANK
Co-Owner
Address 5024 PARKWAY PLAZA BLVD
CHARLOTTE, NC 28217

Sale Price $0
Certificate
Book & Page   9020/ 69
Sale Date 07/09/2013
Instrument 14