Sections

Neighborhoods

Features

Follow Us

NHI Newsletter

Some Favorite Sites

Government/ Community Links

Alders Balk At Plan To Unlock “The Cage”

by Liana Teixeira | May 30, 2014 11:47 am

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

Posted to: City Hall, Housing, West River

Thomas MacMillan Photo The Harp administration’s efforts to get a long-troubled West River property known as “The Cage” into the hands of a rebuilder ran into a snag, amid questions from city lawmakers.

The questions arose at a hearing Wednesday night of the Board of Alders Community Development Committee.

Erik Johnson, head of City Hall’s neighborhoods anti-blight agency, the Livable City Initiative (LCI), spent most of evening trying to win lawmakers’ support for a plan to sell the city’s right to the “The Cage”—aka 76 Sherman Ave., which is valued at about $600,000—for $25,000.

Johnson urged alders to nullify a city government land disposition agreement (LDA) on 76 Sherman Ave. dating from 1970. The LDA gives the city the right of first refusal in the event of a sale on the 22-unit property, a longtime neighborhood eyesore currently 60 percent occupied and in foreclosure.

Alders balked and questioned the long-term prospects of affordable housing at the property amid potential gentrification. The committee voted to table the item, with urgings that the proposal be renegotiated.

Old LDA Stands In Way

 

Deutsche Bank, the current mortgage holder on the property, is looking to sell the building, which earned its “Cage” nickname for its rundown condition and reputation for crime. Before it sells the 76 Sherman, the bank wants to nullify the LDA, so that a future developer can renovate the property unencumbered by a four-decade old agreement.

Developer Shmully Hecht, looking to buy the property, discovered the old LDA when he pulled the land records. Hecht, who runs Pike International, has previously said he wants to invest hundreds of thousands of dollars into building improvements, to turn the building into “upscale” but affordable housing for working people. Hecht said he doesn’t want to buy the property with the “outdated and arcane” agreement attached to it. Should he ever want to sell it, he could lose his investment if the city steps in and buys it from him for a mere $7,150, he noted.

According to the LDA, signed on July 22, 1970, the city is allowed to buy back 76 Sherman for $325 per unit, a mere total of $7,150.

But there’s a problem. Even if the city took advantage of this deal, the property, valued at $600,000, still has a $1.2 million mortgage attached to it. The city would inherit that mortgage. Selling the Sherman Avenue site at market value would result in a loss. What’s more, the property has a tax debt of $147,000.

Liana Teixeira Photo After taking into account inflation rates over the past 20 years, Johnson (at left in photo) said, the best solution is to sell the city’s right to the bank for $25,000. In turn, the bank would absorb all the debt owed on the property and look for potential buyers.

Currently the bank does not have contracts for buyers. If the request to nullify the LDA is approved, Johnson said, it will search for a buyer.

Affordable Housing

The proposed agreement between the city and the bank includes a renewal of an affordable housing initiative at 76 Sherman once the closing is complete. West River Alder Tyisha Walker, who ward includes the Cage, was the first to weigh in on this clause at Wednesday night’s hearing.

According to the proposed settlement agreement, 50 percent of the units must be used for affordable housing for a period of 15 years. Walker said her main concern lay with her constituents.

“What’s going to happen after the 15 years?” asked Walker, who said no one from the bank or city ever contacted her about these decisions. “Do they get 30 days to move out because they no longer meet the criteria?”

“What’s going to happen to the people living in the units for the next 15 years with this affordability clause? When 15 years come, that affordability clause is up. ...Why isn’t [the city] looking to continue that until the end of time?” she asked.

In response, Deutche Bank attorney Jim Segaloff stressed that drafting this agreement involved striking a balance. “An important factor is to try preserving some sort of affordability concept for people who want to rent these premises. And what we really did was negotiate,” he said. The alternative “is to keep it in foreclosure, take over the property and the city has to come up with $1 million to buy it. But now, there’s no affordable housing aspect. So, it wasn’t a take-it-or-leave-it. It was a negotiation.”

Johnson said he would try negotiating for more affordable housing provisions if requested. “If the city and the counsels direct me to try to negotiate for more, I will try to do that. But this is the deal we’ve been able to broker,” he said.

Beaver Hills Alder Brian Wingate shared Walker’s worries about the affordability agreement and asked that both sides be considered.

“We understand what the bank troubles are, but we have some troubles on this [constituent] side that we want to deal with as well. ... We want more time directed to affordable housing. The 15 years would be more appealing if it was longer.”

The committee subsequently tabled the issue of 76 Sherman until more information could be provided to the alders regarding affordable housing in the area.

Farm, Housing, School Projects Advance

Other items on Wednesday night’s agenda included additional orders by LCI to approve the acquisitions of 613 Ferry St. for $50,000 for a garden or farm for educational purposes, 494-536 Quinnipiac Ave. for $400,000 to construct single-family waterfront properties, 3 and 5 Runo Terrace for a total of $150,000 for public safety improvement redesigns near the Quinnipiac School, and a five-foot easement over the northerly portion of 551-553 Winchester Ave.

The committee were voted to send all these matters to the full Board of Alders. The matter of 3 and 5 Runo Terrace will be pushed to the top of the agenda for fast-track unanimous-consent approval.

Tags: , ,

Share this story with others.

Share |

Post a Comment

Comments

posted by: cedarhillresident! on May 30, 2014  12:22pm

My comment in the form of song….
http://tinyurl.com/mpgs8vg

posted by: robn on May 30, 2014  1:31pm

Ridiculous


1) First of all, the BOA has no data recording the existence of “gentrification, nor do they even have any generally accepted standardized definition of what this word means. They should think before they speak.

2) The city already has disproportionate public housing compared to other cities.

3) The city failed to exercise its first right of refusal through several purchases.

4) Developers just won’t touch the property with money losing requirements attached to it.

5) Sherman Avenue will be best served by a well maintained property filled with people who can afford to spend money in the neighborhood. That’s what creates economic stability, not clustering the poor.

posted by: Threefifths on May 30, 2014  4:25pm

posted by: cedarhillresident! on May 30, 2014 12:22pm

My comment in the form of song….
http://tinyurl.com/mpgs8vg

Homerun.

posted by: robn on May 30, 2014 1:31pm

Ridiculous


1) First of all, the BOA has no data recording the existence of “gentrification, nor do they even have any generally accepted standardized definition of what this word means. They should think before they speak.

What is your definition gentrification?

Like I said gentrification comes in steps.

My bad You said B.S. Here is the definition of
B.S. Blocks for Sale.

My bad again.Remember this.

Harp (pictured), the Democratic nominee for mayor, is running against petitioning candidate Justin Elicker in the Nov. 5 general election. She showed up Thursday to Anchor Restaurant at 272 College St. to meet some new faces and take in donations.

Look at the Money trail.

http://www.newhavenindependent.org/index.php/archives/entry/anchors_away_for_toni_harp/


Keep sleeping.

posted by: Razzie on May 30, 2014  4:56pm

“Deutsche Bank, the current mortgage holder on the property, is looking to sell the building ...”

“Developer Shmully Hecht, looking to buy the property,...”

“Erik Johnson, head of ...(LCI), spent most of evening trying to win lawmakers’ support for a plan to sell the city’s right to “The Cage”..., which is valued at about $600,000—for $25,000.”

“Currently the bank does not have contracts for buyers. If the request to nullify the LDA is approved, Johnson said, it will search for a buyer.”

Sounds to me like the bank already has an interested buyer in Pike International. And if the City sells its rights to the bank, it is unclear what happens to the $147,000 tax debt. Certainly, it makes little sense to negotiate away that tax obligation within the confines of the proposed $25,000 purchase price. It makes little difference whether the bank holds a super-inflated mortgage on the property or not. Someone has to take a haircut, and it shouldn’t be the City taxpayers.

posted by: WestRiver on May 30, 2014  5:49pm

We don’t need more “affordable” housing in West River.I live in West River.West River IS affordable housing.I’m guessing that West River market rents are close to what is considered affordable by area standards.The housing market in West River is still depressed with foreclosures still happening.We paid $155,000 for our one family house. Today,its worth about $40,000 less than what we paid. There has been no housing market recovery in this neighborhood. Absentee landlord/investors like Mandy have taken advantage of this and continue to buy up properties and do little or no work on them in order to keep their property taxes low and maximize their profits.The end result will be a further erosion of the tax base the next time an assessment is done.New Haven needs some economic balance and diversity in many of its neighborhoods in order to keep up with the costs of running a city.West River needs some gentrification.

posted by: Brian L. Jenkins on May 30, 2014  7:43pm

Though I sympathies with the alderman regarding the plight of the poor, however,  the idea that an opportunity to increase the tax base in that area should be welcomed expeditiously.

This venture should be partnered with the NHHA to ensure that the current tenants have a safe and comfortable place to relocate.

To the alderman in opposition, Should this property continue to languish and hold the neighborhood hostage? Absolutely not.

These foreboding dwellings are habitations for drug activity and robust violence.

I stand with the Harp administration on this one.

posted by: Wikus van de Merwe on May 31, 2014  9:53am

I thought the purpose of letting banks postpone due property taxes on empty properties was that the buyer would end up paying them.  It looks like here someone is proposing we let them weasel their way out of it paying $25,000 while simultaneously relinquishing leverage the city has on this property.  I understand the city has an interest in seeing this property developed but it seems like this bad deals for the city always get seeded in darkness and then we don’t find out about how much money we are going to lose until 20 years later.  The city needs to start getting tough with these banks and stop playing the fall guy.

posted by: Threefifths on May 31, 2014  10:13am

This will be next for New Haven.Just look at the rents downtown by the green.

Middle-Class Lament: Rent
Middle Class Finds Few Affordable Manhattan Apartments

http://www.nytimes.com/2014/06/01/realestate/middle-class-finds-few-affordable-manhattan-apartments.html

Keeo sleeping.

posted by: Threefifths on May 31, 2014  3:59pm

This is coming to New Haven.Mark my words.If you do not think so.Again look at the rents across New Haven and show me what you call Affordable Rental Housing.

Ths cost of Renting.

http://furmancenter.org/NYCRentalLandscape

posted by: Threefifths on May 31, 2014  4:12pm

posted by: Razzie on May 30, 2014 4:56pm

“Deutsche Bank, the current mortgage holder on the property, is looking to sell the building ...”

“Developer Shmully Hecht, looking to buy the property,...”

“Erik Johnson, head of ...(LCI), spent most of evening trying to win lawmakers’ support for a plan to sell the city’s right to “The Cage”..., which is valued at about $600,000—for $25,000.”

“Currently the bank does not have contracts for buyers. If the request to nullify the LDA is approved, Johnson said, it will search for a buyer.”

The BOA Needs to Check out Deutsche Bank history.

US Sues Deutsche Bank: Lied About Home Loans

http://www.reuters.com/article/2011/05/03/us-deutschebank-mortgage-lawsuit-idUSTRE7423LY20110503


In a semi-related suit across the country, the City of Los Angeles is also suing Deutsche Bank, accusing it of buying 2,200 properties in foreclosure sales and then allowing them to fall into disrepair.The city, which is calling Deutsche Bank a “major slumlord,” is also alleging that the bank is illegally evicting low-income tenants from those buildings.


My bad.There are those who will Blame the unions for the above.

posted by: Q-Bridge on May 31, 2014  8:45pm

“494-536 Quinnipiac Ave. for $400,000 to construct single-family waterfront properties” This is great waterfront property that would serve well for middle class housing. The city is going to ruin it with more public housing and continue to drive property values into the ground. When will it stop.

posted by: TheMadcap on June 1, 2014  3:41pm

“The city is going to ruin it with more public housing”

When you see comments like this it kind of sheds a light onto how much some people actually care about the poor.

posted by: accountability on June 1, 2014  6:40pm

Another silly day at the NHI comment page.

For all the pontificating, here’s what actually happened:

“The committee subsequently tabled the issue of 76 Sherman until more information could be provided to the alders regarding affordable housing in the area.”

The committee wants more information before it makes a decision. Wow, sounds like a case of massive incompetence.

If, as robn, West River and others claim, there is a glut of affordable housing in the area, the city will furnish some actual evidence of it, and the BoA may or may not move forward.

The mindless rush to criticize alders for actually doing their jobs gets tiresome.

A committee delayed action on a proposal to develop a blighted property with a thorny ownership situation to gather more information about whether or not it would be appropriate to press the developer for a stronger affordable housing commitment. Why is that a bad thing?

Hopefully they’ll the Administration will force Deutsche Bank to pay the taxes. They can certainly afford them.

posted by: Q-Bridge on June 1, 2014  6:50pm

@Madcap. This has nothing to do with caring about the poor. This has everything to do with a city that is on the verge of going broke. How much more and for how much longer can this city continue to give away tax dollars? New Haven already has a disproportionate amount of public housing compared to what is required by HUD to be eligible for federal funds. There are hundreds of unoccupied units in existing public housing complexes. Are we just going to continue to raise taxes to pay for all of this? Continue to drive businesses and hard working residents out of the city? We can’t stay headed down this road. This city is turning into Detroit.

Events Calendar

loading…

SeeClickFix »

Other
Sep 1, 2014 8:18 am
Address: 41 Howe St New Haven, Connecticut
Rating: 5

noise disturbance by group of college students partying every other night till 3 am with loud...

more »
Potholes
Sep 1, 2014 6:43 am
Address: 154 Whitney Avenue Yale University, New Haven, CT 06511, USA
Rating: 2

Location, length, and depth make this pothole a particular hazard...

more »
*** REMOVE FOR SLOWDOWN ****

PosterWallAdd your Poster

Sponsors

N.H.I. Site Design & Development

smartpill design