Thomas Breen photo
Two-families on the rise: A construction worker on the job on Downing St.
The only contractor to respond to a city bid to build a new two-family house in the Hill won the contract at a price of $690,000 — or roughly $246 per square foot — raising questions about just how much it costs to construct small-scale residential developments in New Haven in 2023.
That contractor is Concrete Creations LLC, a Fair Haven-based firm run by Ralph Mauro of Branford.
At a celebratory groundbreaking held earlier this month, Elicker Administration officials announced that the city had picked Mauro’s company to build a new two-family house atop a vacant city-owned lot at 455 Howard Ave.
Developed as part of a years-in-the-making partnership between the Hill South Community Management Team and the city’s Livable City Imitative (LCI), the new house, when finished, will be sold to an owner-occupant making 80 to 100 percent of the area median income, or up to $112,600 per year for a family of four. Per the house’s deed, it will have to be owner-occupied for its first 30 years.
City officials and supporters who spoke up at the groundbreaking hailed the project as a novel way to undertake small-scale residential development that is steered by Hill neighbors and that is funded in part by money the city received from Stamford builder Randy Salvatore’s company.
“This is a great day for the Hill,” Ward 5 Alder Kampton Singh said at the Jan. 11 press conference. “This is a model. We need more like this.”
The soon-to-be construction site at 455 Howard.
The project’s pricetag, however, shows just how difficult this city-sponsored new-construction model may be to replicate.
That’s because the new 455 Howard Ave. house is expected to cost $690,000 to construct, according to a professional services agreement that the mayor and Mauro signed late last year.
Over $516,000 of that bill will be covered by local capital funding approved for housing and homeownership development. The rest will come from the management team, including a $83,333 payment from Salvatore’s company that the city secured as part of a separate deal related to the five-building “Hill to Downtown” network of apartment complexes.
The new two-family house on Howard Avenue will be roughly 2,800 square feet according to city spokesperson Lenny Speiller. That means that the city has agreed to pay Mauro’s company around $246 per square foot to build this project.
How does that price stack up against the average per-square-foot cost for similar new-construction projects in New Haven, and across Connecticut?
It depends where you look, and whom you ask.
$150? $210? $246 Per Sq. Ft?
A new two-family house going up at 511 Dixwell.
I spoke for this article with local builders and state construction industry experts and national housing researchers about what an average per-square-foot cost is for a project of this size. I also read through city building permit records to see how much other recent new two-family houses in New Haven cost to construct, at least according to what builders listed as estimates for the sake of determining city permit fees.
While the costs vary significantly, I did consistently hear that: 1) the price the city is paying for this Howard Avenue construction project is on the high end; and, 2) inflation and labor shortages keep driving the costs of building new housing, especially smaller-scale residential properties like that envisioned for 455 Howard Ave., up and up and up and up.
“The houses that we’re building are a little bit larger and the prices that we got are a little bit less, but I don’t think that that’s an unreasonable price for the cost of labor and materials nowadays,” Neighborhood Housing Services of New Haven (NHS) Executive Director Jim Paley said about the city’s $246-per-square-foot deal with Concrete Creations.
Paley’s local affordable homeownership nonprofit has spent decades rehabbing two- and three-family houses in Newhallville, and is currently working on building a handful of new two-family houses. Its model calls for building and renovating houses well so they last rather than cutting corners.
“I think working with a local management team and providing expertise and homeownership are a good thing,” Paley added about the city’s Howard Avenue project.
Jim Perras, CEO of the Home Builders & Remodelers Association of Connecticut, said that his organization’s members are currently seeing sales prices between $210 to $225 per square foot for a typical 2,200 to 2,500-square-foot home.
Those sales-price numbers run parallel to what it costs to build a new house of that size, “just without the builder’s profit and overhead,” he said. He added that that price an increase of $5 per square foot caused by new state building code requirements. (The Independent’s review of all 232 two-family houses that sold in New Haven in 2022, meanwhile, showed an average sale price of around $301,000.)
Bryant Thomas, a local construction contractor who is currently building a new two-family house at 511 Dixwell Ave., told me that residential developments of this size in New Haven typically cost between $100 to $150 per square foot, according to his professional experience.
120 and 126 Downing St.
63 Chamberlain St.
A review of city building permit records, meanwhile, reveals that other recent new two-family builds across the city have come in at much much less than $690,000 — at least, according to the estimates that builders list on required permits.
The city’s Building Department issued a total of four permits in 2022 for the new construction of two-family houses.
When taking into account separately pulled building, mechanical, electrical, and plumbing permits for each project, the cost estimates for these other recent two-family builders come in at less than half, or even a third, of what the city has committed to pay for 455 Howard Ave.
According to building permit estimates, the planned new two-family house at 511 Dixwell Ave. will cost $168,000 to build, the two planned new two-family houses at 120 and 126 Downing St. will each cost around around $191,000 to build, and the planned new two-family house at 63 Chamberlain St. will cost around $255,000.
LCI also hired Concrete Creations to build nine different new two-family houses on Winchester Avenue and Thompson Street back in 2020 as part of a different affordable homeownership development projects. According to city building permit estimates, the two-family house at 15 Thompson St., for example, cost around $259,000 to construct, while the two-family house at 523 Winchester Ave. cost around $253,000 to build.
In general, people in the industry say, contractors have an incentive to underreport the projected cost of a project, to lower the cost of building permit fees, so precise comparisons may have limited utility.
LCI: "An Incredibly Important Initiative"
Laura Glesby Photo
City officials and Hill South leaders break ground on Howard Ave. on Jan. 11.
In a set of email comments provided to the Independent for this story, LCI’s Arlevia Samuel acknowledged that that the price the city is paying for this Howard Avenue project is indeed high. But, she stressed, the bigger-picture goals are well worth pursuing.
“We are very excited about the project at 455 Howard Avenue and this partnership with the Hill South Management Team to build more affordable housing in the neighborhood,” Samuel said.
“While the price is higher than the City would typically pay for this kind of project, this was an incredibly important initiative for the neighborhood, the Hill South Management Team, the Alder, and other local leaders. Importantly, this project is also about capacity building and providing support for the Hill South Management Team as they seek to become their own developer and continue the important work of creating additional affordable housing units and helping to revitalize the Hill South neighborhood.”
Samuel said that the city put out a request for proposals (RFP) for a general contractor “that required all workers on the project to be paid at least a living wage, which naturally increases the cost, and only one bid was submitted. By the end of this year, we look forward to two new families becoming long-term Hill South residents and enjoying this beautiful new home for decades to come.”
Builder: "The Price Is Skyrocketing"
Thomas Breen photo
Two Concrete Creations-built, city-funded houses on Thompson St.
In a separate interview, Mauro pointed to sustained inflation as driving up the costs of construction materials for projects like this.
“Everything you touch right now, if you can get it, it’s very expensive,” he said.
He defended his companies’ developments as “very well-built houses. You can’t cut corners on it.”
He said that all of the materials that go into a two-family house like this — “from doors to roofing material to plywood” — all of the prices for these materials have “increased drastically in the last couple years. It’s amazing how the price went up.” Same goes for the cost of fueling up construction vehicles, and the costs of hooking up water and sewers.
Mauro said that the price of labor is “about constant” when compared to a couple years ago. “The profitability is constant” too, he said.
Asked about how the $690,000 pricetag for 455 Howard is so much higher than the construction cost estimates listed on building permits that the city issued for other two-family houses in New Haven, Mauro stressed that the number that contractors put on building permits “sometimes doesn’t reflect what the real cost is” to build a building. Rather, “that’s an estimate. Nobody knows what the house is gonna cost” until it’s built. “You never know what you’re going to run into.”
And asked about how the cost of his company’s previous two-family builds for the city on Winchester and Thompson compared to the Howard Avenue project, Mauro said that the prices for building materials now are in a significantly different place than they were less than three years ago. He also said that those buildings wound up costing more to construct than the initial estimates included on the relevant building permits.
“The price is skyrocketing,” he said.
Researcher: Labor Costs On The Rise
511 Dixwell, under construction.
Stephen Smith, the executive director of the Center for Building in North America and a housing researcher who focuses on building codes and construction policy, stressed how market-dependent construction costs can be.
For example, in California, the $690,000 pricetag for a new two-family house would be a “screaming good deal.” He said that price for the New Haven market sounds high, but “not insanely high,” given his understanding of costs in this area.
Smith focused instead on concerns related to labor, and the fact that only one contractor responded to the city’s bid for this project.
“I think, for a two-family job, the biggest issue is the lack of availability of labor,” he said.
Unlike in much of Europe, he said, where open labor markets between European Union countries allow workers to move pretty freely between, say, Poland and Romania and Switzerland and Germany, “there is no legal way to enter this country as a construction worker.”
That means that the labor on construction projects tends to be “undocumented immigrants” who often bear the very high cost of crossing the U.S.-Mexico border themselves. “It’s a huge barrier for workers,” Smith said. “Construction labor throughout the developed world is immigrant heavy.” When there are such barriers to immigration, that can drive the cost of construction up.
Another big-picture issue with construction’s labor market in the U.S., he said, is this country “does not have great government support for apprenticeships, for getting young people into the trades. It’s a much easier and straightforward path in Europe, where there’s a really well-developed vocational system, a lot of apprenticeships.” Smith argued that it is much easier to secure government support to get college training to become a nurse or a programmer, for example, than it is to become a construction worker.
Why does this matter? “Labor is subject to the law of supply and demand like anything else,” Smith said. “Construction wages have risen a lot.”
Smith also raised concerns about there only being one bidder who responded to the city’s request for proposals for this Howard Avenue project. That might speak to other contractors’ reluctance to stick with the pay, reporting, and compliance requirements that are part of the city’s bid process, he said. Either way, when only one contractor is responding to work on a city project, that too likely drives up the cost.
I don’t like it, but I get it. In theory.
If the city looks at it as long term investment, might as well go all the way and use bricks and cement rather than wood. Make it last for 100 years! If the city was to further that investment by taking care of the roads, provide better police services to the area, make sure that the schools provide good education while keeping the taxes down and keep the taxes stable, it would make sense.
Having said that, the city and its current administration will do none of these things, Howard Ave will continue as is and then have fun trying to find a decent homeowner rather than a conglomerate who would be willing to pay $700K for a house there. Zillow houses for $700K in nearby cities…
I want to believe in the city, and there’s good people here, but as long as we keep placing selfish and self absorbed people in leadership positions from the mayor down, this is what we’ll get.