Beacon Communities
A “massing study” of the planned redevelopment of State and Chapel.
Beacon CEO Kovel: Tax break key to making numbers work.
A Boston-based developer has taken a second crack at obtaining subsidies for an affordable housing project downtown — this time with more apartments planned, and a larger tax break.
That developer is Beacon Communities.
Beacon CEO Dara Kovel has submitted to the Board of Alders a tax abatement request for 79 new apartments slated to be built across five different properties at the corner of State Street and Chapel Street.
The planned development would include 44 studio, one-bedroom, and two-bedroom apartments in a new four-story complex to be built atop the current surface parking lot at 300 State St., 26 apartments to be included in the existing commercial buildings at 742 – 746 Chapel St., and another nine residential units to be included in the existing commercial buildings at 756 – 760 Chapel St.
Beacon, which also owns and manages the nearby Residences at Ninth Square, bought those five separate properties last year for a combined sum of $8.9 million.
Beacon Communities
Proposed development for State and Chapel, with proposed rents.
Proposed rents for the planned new State-Chapel development.
In their latest local tax break application for the site, Beacon indicates that 63 of the 79 total planned new apartments at State and Chapel would be deed-restricted at affordable rental rates. That includes 16 units for renters earning at or below 30 percent of the area median income (AMI), 33 units at 50 percent AMI, and 14 units at 60 percent AMI, with the remaining 16 units renting out at unrestricted market rates. The federally defined AMI for a New Haven area family of four is currently $93,000.
According to data included in Beacon’s tax abatement applications, rents would range from $977 per month for some of the studio apartments to $2,000 per month for some of the two-bedrooms.
To help make this local affordable housing vision a reality, the developer has requested that the city freeze local property taxes for the 63 affordable units at $400 per year for 15 years. Beacon would pay full local property taxes on the remaining 16 market-rent units, as well as on the groundfloor commercial properties slated to stay on the Chapel Street side.
“The redevelopment of State & Chapel will transform an historic city block only steps from the New Haven State Street Transit Station into a vibrant mixed-use, affordable housing community that restores the historic urban fabric including pedestrian connections to a revitalized commercial district,” Kovel wrote in her June 1 letter to the alders.
“Currently a gap in the commercial street wall, the surface lot at 300 State Street abuts historic buildings at 742 – 760 Chapel Street. A new structure will be built at 300 State, of a type and scale compatible with the adjoining historic structures and connect to the rear façade of 742 Chapel to create one integrated mixed-use property. Careful design of the new construction will provide for new pedestrian connections from the train station and State Street to the revitalized Ninth Square commercial district. The new State Street building and upper floors of the Chapel buildings will consist of apartments at varying incomes. The ground floors at 742 – 760 Chapel will be dedicated commercial space. The project will create a total of 79 new affordable and market rate units and support approximately 23,000 of commercial space on a prominent, active street corner.”
Click here and here to read the application documents in full.
Larger Project, Larger Tax Break
Thomas Breen photo
742-760 Chapel St.: Soon to have upper-story residential?
The local tax abatement application comes roughly nine months after Beacon first sought city support for a planned new apartment complex at that same State-Chapel corner.
That earlier application proposed a smaller residential development of 60 new apartments, with 48 restricted at affordable rents — all limited to a new six-story building to be constructed atop the 300 State St. lot. That initial application did not include the four existing Chapel Street buildings.
That previous pitch also sought a less generous local tax break of $600 per affordable unit per year, with a 3 percent annual increase over the 15-year term of the deal.
Last October, the aldermanic Tax Abatement Committee fast-tracked Beacon’s tax break request for approval — alongside two other local tax abatement requests that asked the city to freeze taxes on affordable units at $400 per apartment per year with a 3 percent annual increase. City staff explained at the time that the proposed Beacon deal was at the higher $600-per-affordable-unit tax break simply because that was the number that Beacon had come to the negotiating table with.
Roughly one week later, Beacon pulled its local tax break application for the project — citing as its reason a decision to delay submitting a separate application to the Connecticut Housing Finance Authority for 9 percent Low Income Housing Tax Credits for the affordable housing development.
Beacon Director of Development LeAnn Hanfield was asked why Beacon has come back to the city this time around seeking a more generous local tax break for the deal — at $400 per unit with no annual increase for 63 apartments, rather than $600 per unit with a 3 percent annual increase for 48 apartments.
“The project has changed, resulting in increased benefit and increased units to the city,” she replied. “We also understand that the current proposal is consistent with the recently approved tax abatements for other projects with comparable affordability proposals.”
Hanfield said Beacon plans to submit a relief application for the project to the Board of Zoning Appeals in August. The developer is currently “in the process of connecting with community stakeholders” to discuss the proposed development .
“The tax relief sought through this application represents a critical piece of the financial transaction that will allow this important affordable housing development to move forward,” Kovel wrote to the alders. “By providing operational security to generate a viable financing package for the proposed project, we will be able to demonstrate readiness to proceed in the State’s competitive funding round” for additional state affordable housing subsidies.
16-Month Construction; $40.3M Development
Beacon’s tax break request includes a wealth of other details about the proposed financing for the project, and about how the new 79 new apartments might affect the existing downtown corner block. Some of those details include:
• 20 percent of the 79 total units will be restricted as “permanent supportive housing units serving vulnerable populations and will provide services in areas such as financial literacy programs, job education training, and technology education programs,” according to Kovel’s letter.
• 10 percent of the units will be fully accessible for people with mobile and sensory disabilities.
• Beacon is seeking 9 percent LIHTCs and “soft debt” from the state Department of Housing to help fund this project. Beacon plans to submit an application for such state funding in the fall.
• Beacon projects that this apartment project will take 16 months to construct, with completion in early 2024.
• The estimated total development cost of the project is $40.3 million. The total “hard costs” for construction are estimated to be $22.1 million, with the project’s general contractor likely being Enterprise Builders. The remaining roughly $18 million of development costs are comprised of “architecture & engineering fees, surveying, environmental engineering, legal fees, financing costs, real estate taxes & insurance, and other soft costs,” according to Beacon’s local application.
• The proposed development would create between 75 and 100 temporary construction jobs, as well as three permanent property management and maintenance operations upon completion.
• According to a preliminary “massing study” included in the tax abatement application, the downtown music venue The State House—which is currently located in a Beacon-owned building behind the 300 State St. parking lot — would remain in place, even after this new development is built.
What’s Next?
The new proposed tax break now advances to the aldermanic Tax Abatement Committee for a public hearing, likely to be held later this summer.
But before heading to the Tax Abatement Committee, the application will be heard by the top-secret Low Income Supportive Housing Tax Abatement (LISHTA) committee.
That’s the public body that meets with developers behind closed doors to hash out the details of proposed tax break deals before they receive a public hearing with the Tax Abatement Committee, and then a final public vote by the Board of Alders.
LISHTA’s secrecy recently led to a confused and confusing Tax Abatement Committee meeting where aldermanic staff forgot to invite the petitioning developers, and committee alders appeared to have misread parts of two different tax abatement applications.
City Economic Development Administrator Michael Piscitelli and city development staffer Clay Williams confirmed that Beacon’s application has not yet been heard by LISHTA. Piscitelli said LISHTA will likely meet to discuss the item before July 28.
On June 2, meanwhile, East Rock resident Kevin McCarthy wrote directly to aldermanic leadership and staff, asking for a public hearing on whether or not LISHTA meetings should be open to the public. McCarthy’s request was included as a communication in the June 7 full Board of Alders meeting agenda.
His request came roughly six months after East Rock Alder Anna Festa and Downtown Alder Abby Roth also submitted to aldermanic leadership a request for a public hearing on LISHTA.
Below is the full text of McCarthy’s June 2 email request, followed by the full text of Festa’s and Roth’s Dec. 15, 2020 public hearing request.
Kevin McCarthy’s June 2, 2021 Public Hearing Request
Madame President:
I am writing to request that the Board of Alders hold a hearing on the status of the Low Income Supportive Housing Tax Abatement (LISHTA) committee.
I am a Ph.D., not a lawyer. But I served on the non-partisan staff of the Connecticut General Assembly for 30 years. I spent much of that time interpreting the statutes for state legislators.
I believe that the LISHTA committee is a “public agency” as defined by CGS § 1 – 200, and thus is subject to the state’s open meeting law, CGS § 1 – 225. CGS § 1 – 200 defines public agency very broadly. It includes political subdivisions of the state, such as the city. It also includes any committee of, or created by, a political subdivision. Similarly, the law defines “meeting” broadly. It means “any hearing or other proceeding of a public agency … to discuss or act upon any matter over which the public agency has supervision, control, jurisdiction, or advisory power.” The Board of Alders is not bound by the recommendations of the LISHTA committee, but the committee clearly has “advisory power” in this area.
The board may also wish to address whether (1) documents submitted to the committee are “public records” for purposes of the Freedom of Information Act and thus generally subject to public disclosure and (2) the committee can go into executive sessions to discuss such documents.
I have cc’d my alder, Abby Roth, and Al Lucas of the Office of Legislative Services.
Thank you for your consideration.
Kevin E. McCarthy
Alder Festa’s and Alder Roth’s Dec. 15, 2020 Public Hearing Request
Dear President Walker-Myers,
We are writing to request a public workshop, before the appropriate Alder committee, on the operations of the City’s Low Income Supportive Housing Tax Abatement Committee (LISHTA). In recent years, the Board of Alders has had a number of proposals come before it from LISHTA.
We need more affordable housing in the City, and LISHTA plays a significant role in the process of enabling such housing to be developed. We therefore believe it is important to understand the history of LISHTA and the standards it currently is following to make recommendations to the Board of Alders about affordable housing tax abatements.
At a recent City hearing about a proposed tax abatement, a member of LISHTA stated, “When the LISHTA committee was first formed back in 2018, we were given guidelines about what this was all about, but we weren’t given guidelines around what we ought to charge” for affordable housing tax break deals.
We believe it would be valuable to consider if it would be beneficial to develop guidelines to ensure consistency, which could both help the Board of Alders in making decisions about proposals — and help developers hoping to build affordable housing, by creating predictability. Such guidelines could be structured to incentivize certain types of housing, such as housing at a lower level of Area Median Income or housing for families. We believe it would be beneficial to see if other cities have standards that might be worth drawing upon.
Thank you for your considering our request for a Workshop on this important issue.
Sincerely,
Anna Festa, Ward 10
Abigail Roth, Ward 7
Just say No!