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Developer Ditches, Auctions Off Trolley Square

by Paul Bass | May 20, 2014 4:10 pm

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

Posted to: Business/ Economic Development, Fair Haven, Upper State Street

Paul Bass Photos The future of one of New Haven’s budding creative-economy hubs will be decided soon—upstate in Rocky Hill.

An auction is scheduled to take place there on June 19 for a 320,771 square-foot former swimwear factory and (before that) trolley storage facility hard by I-91 at 1175 State St.

A listing for the auction presents the complex as tired, empty and neglected—only 15 percent occupied with no local management, a “non-core asset” belonging to an “out-of-town” “absentee landlord.”

Walk inside, and that 15 percent materializes as one of the livelier and funkier, if hidden, future-oriented business communities in town, called Trolley Square. Businesses from a fast-growing e-marketing firm called Digital Surgeons to the Channel 1 skateboard/graffiti-art shop and a vintage clothing shop, from Lumber Liquidators to a new outfit called Octopusake share space with art, photography, aikido, and capoeira studios as well as a busy fitness center. One-shot happenings, such as a pop-up “Fem/me” exhibit and a “Beer, Bourbon, BBQ & Bacon” fest, have brought up to 4,000 people inside the remodeled space where workers once turned out Robby Len one-piece bathing suits.

Tenants and city officials expressed hope that a new owner who sees that potential and has more of a commitment to invest in the Trolley Square property emerges on June 19.

The bidding starts at $1.8 million. That’s how much the current owner, a partnership run by controversial New York City real-estate mogul Joshua Guttman, paid to buy the brick circa-1925 building in 2003.

Since then, the owner promised major improvements. He ran into trouble with city inspectors as well as the federal Environmental Protection Agency, which fined him $48,100 in 2007 for asbestos removal-related health and labor violations. He hired a property manager from Bridgeport who oversees buildings in numerous cities at once.

Thomas MacMillan File PhotoHe also ran into the ultimate roadblock: the never-ending state government effort to rebuild the State Street Bridge, closed off a block away. That project, across the street from 1175 State, has dragged years behind schedule and choked travel and commerce along the area’s one main artery. At one point, Jack Guttman, part of the Guttman family business, looked at another former trolley storage building across the street with thoughts of expanding. (He’s pictured on that tour.) The Guttmans apparently decided instead to focus their energies outside of New Haven.

Despite the obstacles and neglect, the Trolley Square building started humming with activity. It has become, in the words of one major tenant as well as city economic development chief Matthew Nemerson, an emerging New Haven slice of Brooklyn. (In fact, if that bridge ever gets fixed, people will be able to walk from 1175 State to here for a $3.50 cup of Ethiopian Yirgacheffe pour-over joe.)

“A part of New Haven that’s beginning to play the part of Brooklyn with a New England” twist, is how Nemerson put it. He said Joshua Guttman was among a crew of out-of-town “bottom-feeders” who bought big old “complicated” abandoned industrial buildings two decades ago, cheap.

“I think there will be a lot of people bidding on this project. He’ll probably make a lot of money,” Nemerson predicted.

Lou Cox hopes Nemerson’s right about the interest. Cox, who moved his Channel 1 shop from downtown to Trolley Square, is on a month-to-month lease, paying $1,000 a month for 1,000 square feet. He worries about what will happen to tenants like him; he also worries about the building suffering from further neglect in the wrong hands.

The building manager (who also could not be reached for comment) told Cox that Trolley Square was not a high priority for the New York-based owner, Cox said. The owner is auctioning three properties at once on June 16. The other two are a former factory building in Chicopee, Mass., and a former Ames Department Store headquarters in Rocky Hill.

Tenants’ hopes recently rose when the Guttmans finally paved the driveway off State Street, Cox said. “I thought the building was going in a positive direction.”

The Guttmans failed to respond to phone and email requests for comment for this story.

Down the hall from Channel 1, David Salinas of Digital Surgeons said he’s not concerned about the sale.

For starters, he has another three years left on his lease. His new-media company, representing the new economy, is the kind that landlords work hard to attract and keep.

“I’m one of those people that don’t get worried before it’s time to get worried,” He said. “For all you know, Donald Trump might buy the building and put $5 million into it.

“It’s a great building. With some TLC, it can be fantastic.”

It’s been good for Digital Surgeons, the online marketing company Salinas, a University of Bridgeport grad originally from Queens, founded. As the business has grown over eight years—with clients ranging from the city of New Haven to Ovation guitars to Lady Gaga—Salinas has been able to keep expanding, and designing, the space. The company now has 32 employees. The main workspace looks out (over the highway) onto a majestic view of East Rock. The above photo shows another room where three of Salinas’ employees were working Monday.

Salinas said he spent a lot of time in Brooklyn in his youth, before tech and urban amenities drew investors and young new entrepreneurs and artistic types who transformed the landscape. He said he senses the same transition happening in New Haven, a college town where rents are low compared to New York. (It’s no coincidence that his firm designed the city’s latest web-based homeowner-marketing campaign.)  He sees that transition happening in spots like Trolley Square He argues that the bridge closure doesn’t matter that much, because the promise lies not in retail business, but creative and tech space.

Carla O’Brien, co-owner of the CrossFit gym at Trolley Square, also has a long-term lease. “We’re here to stay” no matter who buys the building, she said. “The building is definitely lacking in maintenance and upkeep.”

Erik Johnson, director of city government’s Livable City Initiative (LCI), said he had hoped Guttman would invest more in the building and market it better. “That’s been a little disappointment,” he said. “There’s clearly a market for affordable non-downtown office” space. Johnson said to succeed, Trolley Square needs “five Digital Surgeons,” new-media tech-oriented companies, rather than more workout and dance spaces, to anchor it. For now, there’s plenty of room for all.

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posted by: anonymous on May 20, 2014  4:18pm

Imagine the tax revenue that could be generated if the building across the street - the CT Transit one along Humphrey - were converted into a new train station serving workers and residents who walk from the growing East Rock, Fair Haven, and Mill River areas.

Trains will soon be running every half hour to Hartford, and service to Fairfield and New York City will improve dramatically, too. 

With a new train station, the entire area between Goatville, Farnam Courts, Grand Avenue, and Erector Square would become the hottest waterfront property in the state, overnight.  Later on, I-91 could be buried for a few blocks, freeing up additional hundreds of acres of waterfront property.

posted by: Threefifths on May 20, 2014  4:33pm

Lou Cox hopes Nemerson’s right about the interest. Cox, who moved his Channel 1 shop from downtown to Trolley Square, is on a month-to-month lease, paying $1,000 a month for 1,000 square feet. He worries about what will happen to tenants like him; he also worries about the building suffering from further neglect in the wrong hands.

This is a done deal.The rents are going to go up.All fo them will be gone.Like I said Gentrification Vampires are coming.

posted by: hrsn on May 20, 2014  8:55pm

Connecticut is too small to talk about “upstate.” Rocky Hill is 40 minutes away from NH on I91. It’s local, like pretty much everything in CT.

posted by: Stylo on May 21, 2014  12:08am

@anonymous: I like that idea! It’s probably the only chance that old Transit property has a future. Have you wrote to anyone in the city?

posted by: Bradley on May 21, 2014  6:42am

3/5ths is it your view that the building should remain in its current condition with an 85% vacancy rate?

Anonymous, the commuter rail service is supposed to go in service more than three years from now, according to DOT. Moreover, no mechanism has been established to fund its operating costs and the Special Transportation Fund, which pays for both transit and highway programs, is going broke. I know that cars are heavily subsidized and you and I agree that the gas tax should be hiked. But I doubt that a new station will be built anytime in the foreseeable future.

posted by: Threefifths on May 21, 2014  8:50am

posted by: Bradley on May 21, 2014 6:42am

3/5ths is it your view that the building should remain in its current condition with an 85% vacancy rate?

There are people there.In fact I know what of the tenants and he told me the building was going to be fix up.

Carla O’Brien, co-owner of the CrossFit gym at Trolley Square, also has a long-term lease. “We’re here to stay” no matter who buys the building, she said. “The building is definitely lacking in maintenance and upkeep.”

Like I said when the rent is jacked up,There will be gone.

posted by: shadesofzero on May 21, 2014  10:22am

Three-fifths’ hatred of gentrification is so fantastic that he would rather we all live in squalor next to vacant row houses, because hey, at least the rent’s cheap!

posted by: Threefifths on May 21, 2014  10:36am

posted by: shadesofzero on May 21, 2014 10:22am

Three-fifths’ hatred of gentrification is so fantastic that he would rather we all live in squalor next to vacant row houses, because hey, at least the rent’s cheap!

what I hate about gentrification is long-time residents who are displaced due to their inability to afford increased property taxes, rising housing prices, and far higher rents brought on by gentrification.

posted by: markcbm on May 21, 2014  11:52am

Shades of 0,

While 3/5s likes to bang his anti-gentrification drum, I don’t think his point is that he prefers New Haveners live in Squalor.  Rather, his point is rather a disappointment about a phenomenon where, as a neighborhood grows nicer and more liveable, it simultaneously becomes less possible for the folks who live there to be able to enjoy the fruits.

Yes, it’s easy to take shots at comments here. But 3/5s isn’t 100% off the mark.  There are several areas of New Haven that have changed for the better over time and, as a result, many of the former residents have been displaced to less-desirable areas of town (ever wonder why crime has grown so much around exit 8? Some of the folks who couldn’t get into the mixed-income housing were displaced to the outskirts).

So you’re ignoring that fact that as a place gets nicer, some of those people who helped make it nice must resign themselves to the fact that they must move to another area of ‘squalor’.

And by the way, in the article on the redesign of the Broadway area, just because someone - i.e. me - doesn’t think a small roundabout on Broadway can reasonably accommodate the traffic that passes through doesn’t mean they are small-minded or haven’t traveled outside of the U.S. 

Food for thought: comments that disparage others for their perceived ignorance often boomerang back and make the commenter appear to be ignorant or small-minded.

posted by: shadesofzero on May 21, 2014  3:29pm

Yes, it is an unfortunate side effect of gentrification that people will be priced out of the market. The alternative is stagnation. How we can look at these neighborhoods and think that the status quo is sufficient is beyond me.

I apologize if I offended anyone, but I just find that NHI comments are often reactionary and quickly reduce themselves to a choir of boos towards general government competence. My comments were not meant towards anybody in particular.

posted by: markcbm on May 21, 2014  4:26pm

Shades,

“I just find that NHI comments are often reactionary and quickly reduce themselves to a choir of boos towards general government competence.”

I totally agree.

posted by: cedarhillresident! on May 21, 2014  4:29pm

I actually agree with 3/5th about the gentrification.

Living in Cedar Hill this property can make my community a better community. But that dam bridge being closed isolated us even more than we are already and made it hard for this cool space to grow.

With that said I think that if the new owner can continue with the direction this property owner has with how he has rented it. I think it can have a positive effect on my community without pushing us out…..but that DAM BRIDGE.

posted by: Threefifths on May 21, 2014  8:30pm

posted by: markcbm on May 21, 2014 11:52am

Shades of 0,

While 3/5s likes to bang his anti-gentrification drum, I don’t think his point is that he prefers New Haveners live in Squalor.

Correct.whatI hate about gentrification is long-time residents who are displaced due to their inability to afford increased property taxes, rising housing prices, and far higher rents brought on by gentrification.I have friends who live downtown and near exit 8.they tell me there rents have gone up.Some have told me the landlord have told them if the move they would help them.This is going on across this country.what you see in New Haven is the first steps.for those who want proof,here is a good book on the real deal of
gentrification.



Root Shock: How Tearing Up City Neighborhoods Hurts America, and What We Can Do About It Paperback
by Mindy Fullilove (Author)


http://www.amazon.com/Root-Shock-Tearing-Neighborhoods-America/dp/0345454235

Like i said keep sleeping New Haven.

My bad.Did not the BOA sell yale a street.

posted by: Threefifths on May 22, 2014  7:37am

Hot off the press.

New Haven planners approve 763-space garage along Route 34 despite protest.

Commissioner Adam Marchand, the alder from the 25th Ward, said he would even prefer to have a larger garage to allow for more development where there is now surface parking for the retail component, as that portion of the plan is too suburban for a city intent on dense development.

Economic Development Administrator Matthew Nemerson said the proposal is the best compromise all the parties could reach.

He said you can’t let perfection be the enemy of the good.

Notice the above Players.


But the opponents weren’t swayed.

Elaine Quinn, a longtime resident of Dwight Street, called the garage “a monstrosity” and said the overall plan does not connect the neighborhoods split more than 50 years ago in the heyday of redevelopment when Legion Aveue was cleared of houses.

She accused the commission “of selling us down the river” and concentrating too many garages in one area.

Like I said Keep sleeping New Haven.Gentrification Vampires are coming.

My Bad you can read the whole story.


http://www.nhregister.com/general-news/20140521/new-haven-planners-approve-763-space-garage-along-route-34-despite-protest#disqus_thread

Keep voting them in.

posted by: New Haven Taxpayer on May 22, 2014  10:14am

3/5’s
Is rent control the answer?

posted by: William Kurtz on May 22, 2014  10:59am

Actual question, not provocative challenge: how hard would it be to enact a sliding-scale property tax system of some kind, that rewarded people for long-term ownership and occupancy by reducing (or at least keeping consistent) residential property taxes after a period of time?

For example, let’s say a couple buys a house in an inexpensive neighborhood while in their 20s or 30s, raises their family there, contributes to the stability of the neighborhood, then elects to stay there once their children have grown. They could pay the standard taxes, with the attendant fluctuations for 30 years and then as they approached retirement, pay some fixed or reduced amount for the rest of their time occupying the property. Maybe fixed amount, based on the average of the previous ten years?

posted by: markcbm on May 22, 2014  1:56pm

William,

I like your tax idea, or at least the spirit in which it was proposed. I’m no urban development expert, but I do know that these things are thorny.

While a fixed/grandfathered-in tax rate could in fact help those who would otherwise not be able to afford to stay in a gentrifying area because of tax increases (and other cost increases too), it could also have the downside of depriving the city of those needed extra taxes.

Also, it puts the city in the game of choosing who qualifies for this kind of tax relief (would longtime property owners on St. Ronan also be able to participate in this plan?).

I’m not clear on the details, but I believe California law sets property taxes at the value of the house when it was purchased. This is great for all the folks who purchased their homes decades ago, but it leaves municipalities collecting a small fraction of taxes on estates that today are valued at exorbitantly higher prices.

I suppose some kind of strategically deployed “empowerment zone” status could be designated for certain blighted areas. At the end of the day, though, it’s a free market and, lets face it, gentrification happens. 

It’s worth remembering that the process can also be beneficial to residents who are able to stay or to sell their property for much higher prices as a result.

To me, “white flight” and gentrification are two sides of a coin. And so it goes.

posted by: Bradley on May 22, 2014  4:17pm

William, while I appreciate your motives, your proposal would lend itself to all sorts of gamesmanship. I’ve worked with elected officials for nearly 30 years, and like and respect most of them. But the temptation to carve out provisions to address the needs of individual constituents could end up with a policy nearly as complicated as the Internal Revenue Code.  Also, as Markcbm notes, California’s Proposition 13 has had lots of unforeseen, negative consequences to housing markets there.

posted by: Threefifths on May 22, 2014  7:08pm

posted by: New Haven Taxpayer on May 22, 2014 10:14am

3/5’s
Is rent control the answer?

This was one of the question,I ask when I came to this state.I think Rent control and Rent Stabilization would help.May be some one can tell me why this state does not have Rent control and Rent Stabilization.

http://www.nycrgb.org/html/resources/faq/rentcontrol.html#difference

posted by: vintanthromodernvintage on May 29, 2014  7:24am

Vintanthromodern Vintage, along with Haven Events (a collective of small creative business entrepreneurs) have been trying to promote this amazing space since November through a series of pop-up multifaceted social, networking and shopping events (Holiday Haven, Love Haven, Spring Haven).  Through our grassroots efforts we’ve attracted hundreds of people into this dynamic, potential filled space.  We hope that whomever buys the space values both small businesses, several of which already exist in Trolley Square AND larger ones like CrossFit and Digital Surgeons.  A bustling, vibrant atmosphere can be be achieved via a mixture of both types of tenants.

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