City Plan Balks At Beacon Tax Break

It seems that the tax break just passes the cost along to the rest of the city. That might be a nice idea in general, but in this case you have some prime land across from a major train route to millions of jobs. Furthermore the developer is planning only four stories when it seems that there would be demand for a 20 story building, easily.

Instead of a tax break for a few units of affordable housing, perhaps the land should be used to generate the highest possible tax revenue. Build a luxury condo tower and tax it appropriately.

That tax revenue could then be used by the city to build/rehab affordable housing, fix lead paint issues, and address other problems in the neighborhoods outside of downtown that are struggling.

If this Property is sooo valuable and suuuuccch a good investment; they should be able to develop it without tax payer assistance. Why do they want breaks? Because they know a desperate sucker city when they see one. If this is such a hot deal; I have a loser airport right nearby that I'd like to sell them, too....

Thanks, Ed Mattison , for at least telling the truth---"... somebody's pocket is going to have to be lined if we're going to get affordable housing, in my opinion." Too bad the commission was too scared to JUST SAY NO!

McCormack Baron ran the 9th Sq properties into debt and then whined about not being able to refi the property in terms equally egregious to the original deal. So they sold to Beacon but only after the city ponied up $3M of the bad debt, and 660,000/yr in tax abatements for 20 years. Which for the 335 residents means that they are off the hook for $2,400/yr in property taxes.

Would anybody else in NHV like their tax bill decreased by this much? Is the city getting ready to do that for everyone? No they are not. They are getting ready to redistribute even more public money into subsidized housing. This in a city with one of the the highest per capita subsidized housing in the country.

This has got to stop.

The State of CT needs to review affordable housing at a state wide level. Cities with high amounts of property mandated tax exempt by the state can't continue to afford to subsidize affordable housing with tax breaks when they have such a small percentage of land on their tax rolls to begin with. Cities and some towns are shouldering the burden of providing those tax exempt property uses, government services, social services, public services, hospitals, higher education, and affordable housing for the good of the entire state, due to many suburban towns zoning those uses and services out of their borders. It's created some of the most segregated municipalities in the country, and a sharp divide between wealthier suburbs and poorer cities and towns struggling with high mill rates, low tax base, and many providers of services for the good of the public that NIMBY suburbs don't have to contend with. The state has to come up with a system that more fairly compensates the cities and towns that are in this situation, and provide affordable housing throughout the state, and that promotes diversity in housing, and that doesn't force all of the necessary public good services into a few select cities and towns.

The full absurdity of this result is revealed looking at the proposed rents. The rents prosed for 30% AMI, the cheapest available, are close to the HUD fair market rates for New Haven county. These rents are 40% percentile rents.

https://www.huduser.gov/portal/datasets/fmr/fmrs/FY2021_code/2021summary.odn

Beacon is not proposing to rent at rate below what is available on the open market. There is no special deal for anyone but Beacon, which obviously is a high-cost housing provider.

As much as it pains me to agree with Robn, his comments are dead on correct. NHV has an insane amount of affordable housing already. No developer can provide housing to the lowest AMI cohorts without massive subsidies coming from tax abatement, grants, low interest loans, tax credits, and other complex financial tools.

The local community has been suckered into this idea that building affordable housing will help solve some widespread "affordability" problem. Such a problem does not exist in new haven. We have a massive pay gap between the top and the bottom of our population; that can't be solved with a housing hand-out.

When a developer builds affordable units that will rent for $900-2000 per month, but the cost to build the unit is $250,000-$500,000, the numbers just don't work. It doesn't take an advanced degree to know that affordable development will need periodic bailouts every 15-20 years when repairs are needed or debt terms out. Our model for how we approach this housing type just doesn't work.

And, ultimately, this is a regional problem that needs a regional solution. When surrounding communities have 2, 3, 5 percent affordable units and we have 30 percent, someone isn't picking up their fair share. But it's such a fraught discussion because everyone leading the conversation just loves to throw around the word "racist" and the claim that housing is a social justice issue. It transcends all that and all the holier than thou talk just alienates communities that might be open to allowing thoughtful change permitting denser and more affordable housing.

So, everyone, tell the city plan commission what a stupid idea the proposed inclusionary zoning ordinance is (as proposed) on the 28th of July at the next hearing. If no one shows up to the meeting, we will be one step closer to the end of NHV being attractive for development. No developer (other than affordable housing companies) wants to do affordable units. The economics don't work.

There is no affordable housing crisis in New Haven. People can rent a 5 room (2 -3 bdrm) apt in most parts of town for about $1,250 a month.

Dennis: Exactly, which is actually less than the most affordable apartments Beacon is proposing, with huge subsidies from federal, state and local taxpayers. Beacon ran the same racket with the Ninth Square Residences. It demands subsidies, then gets fair market rents from HUD Section 8 or otherwise.

Ben hits the nail on the head and this should be the nail in the coffin of the fake affordability crisis. New Haven has a variety of neighborhoods . Some are nicer than others and some are more expensive than others, however as a whole the City is already affordable to anyone with a decent job. We need to bring more and better employers to the area so that people can afford market rate housing, not subsidize housing for people who are underpaid.

And no, Yale can't can't promise a salary to each resident in New Haven. We need OTHER good employers.

Dennis- a single adult person would have to earn $25/ hour pre taxes for 40 hours to afford $1,250/month rents according to the rent calculator link below-
https://www.myfirstapartment.com/2016/07/how-much-rent-can-i-afford-on-my-hourly-pay/
-That of course, doesn't take into account all the other expenses such as utilities, food, healthcare, medicine, transportation, student loans, childcare costs, child raising costs, cell phone service (because employers and childcare providers expect you to be reachable all the time these days,) internet service (which is a necessity these days for schooling or for searching for jobs, applying for many jobs or working at jobs,) clothing and other life necessities. Minimum wage in CT is $13/hour as of August 1st, most minimum wage jobs get raises of 25-50 cents per hour once a year if in a good economy, this past year and a half of pandemic inflated the cost of doing business and economic losses from the shut down and pandemic related restrictions means that many employers can't afford to give out raises this year. So yes, New Haven and CT has an affordable housing problem, as well as an livable wages problem, and a lack of diversity in housing problem.
it's time for the Federal government to create a comprehensive plan for affordable housing and living wages and universal single payor healthcare for everyone who needs them so that basic life needs like food, shelter and healthcare are met in every community.

Q: What has the building boom done for the residents and taxpayers of New Haven?

historical memory. Most of the great architecture was torn down in the name of urban renewal and increasing the tax base.
Even the oldest building in town, a gem from the early 1700s, was moved so the police station could expand.

with limited affordable mandates (as was done at 360 State St.) or other benefits to the general pubic, but we have a building boom that coincides with tax increases (not just the past real estate taxes, but the increase in permit fees, etc.) and cut backs in public services (as in the Parks Dept.).

I don't know that the city has the statutory authority to grant this abatement. CGS § 8-215 allows municipalities to abate taxes on "property used for housing solely for low or moderate-income persons or families". This limitation is stated three times in a paragraph-long statute. This is a mixed-development. The tenants paying market rents are presumably not low or moderate income. Unlike condos, apartments are not assessed separately.

Patricia Kane: Stamford's mill rate is 26, lower than all of New Haven's suburbs, much lower than New Haven, Woodbridge, West Haven, and Hamden. New Haven's mall died long before Stamford's, essentially dying with Penny Serra. And the pedestrians are regularly killed by reckless drivers in New Haven, too. Downtown Stamford is soulless, but the northern section is gorgeous, prettier than anything New Haven has, including Westville and Prospect Hill.

They're proud of Beacon's track record? Beacon bought Ninth Square for a song - and taxpayers and lenders got hosed after being lied to for years by the then mayor DeStefano, by Harp and by Economic Development. Beacon didn't do us any favors. Good lord - the world we live in means we have to "line somebody's pocket?" No.

With all due respect - Ald Marchand's confidence in uber secret LISHTA and the Finance Committee is laughable. Let's just start with the lack of financial acumen of the members - and remember these are the same people who rubberstamp every budget, every debt, every union contract and have run the City of New Haven into deficits for years.

Just like the Q House - these groups will cut their deal in private, make a few grunts during one public hearing, and then approve this stinky deal because it's "affordable housing." One committee member famously said of the the Q House - just ay you support the Q and you'll get reelected. Nobody asked any questions about the financing of the Q either before it became a secret department under Harp and formally funded by Elicker.

Beacon's latest effort to line its pocket with a tax payment so low it wouldn't pay for a one full time cop is bad policy, unfair to the rest of us taxpayers - and will unfairly enrich Beacon at our expense.

Heather - no single adult needs a 2 or 3 bedroom apartment so you're numbers aren't applicable. You can rent a one BR or even an efficiency for much less.

Noteworthy- I meant a single wage earning adult, many single adults have children. I also said nothing about the number of bedrooms.
I gave no numbers other than those in the "My First Apartment" rent calculator.
The below link to an article in the NHR states similar numbers-
https://www.ctpost.com/news/article/Campbell-State-residents-face-rent-roulette-16338365.php

Heather C.: The minimum wage was never meant to be a livable wage. It's fine for a 15 year old with a part-time, summer job painting fire hydrants. As for adults, it behooves all of us to get further along the career path than a minimum wage job before setting up our own households, and particularly before having children. Women should consider their financial means before bringing a child into this world. (Under Roe v. Wade, the ultimate decision to bear a child rests solely with the prospective mother.) Also, for most of human history, people have paired with partners in relationships such as marriage that are often romantic but always economic.

1644: You are completely wrong. FDR said before the passage of the FLSA, "By living wages, I mean more than a bare subsistence level. I mean the wages of a decent living."

Anyone working a minimum wage job should absolutely be able to live a comfortable, if only basic, life off of it. You have been tricked into thinking that it isn't meant to be a liveable wage, because it is definitely not today. It has not risen with inflation and labor productivity. But to say that the minimum wage is only fit for teenagers doing summer work is both insulting and a lie.

The original, 1938 FLSA set a minimum wage of 25 cents per hour, or about $4.25 in today's dollars. FDR had originally wanted minimum wages set for every occupation, as in the NRA, and then supported a 40 cent per hour wage, but that was rejected by Congress and the wage set at 25 cents per hour. The minimum wage hit its real dollar peak in 1970, at about $10/hour in todays dollars ($1.60 in nominal dollars).

https://www.statista.com/statistics/1065466/real-nominal-value-minimum-wage-us/

1644, you misinterpreted the table. It provides data on gross rents. The units for people at 30% AMI are expected to use project-based Section 8 certificates. The federal government will pay the bulk of the rent for these units.

And according to the Bureau of Labor Statistics, a majority of minimum wage earners are 25 or older. While the minimum wage was never designed to allow for a middle class lifestyle, it was meant to be livable. In 1970, the federal poverty level for a single person was just under $2,000. A person working full-time at a minimum wage job would have earned about $3,200. In contrast, the current federal poverty level for a single person is a bit below $13,000. A person working full-time at the federal minimum wage would make about $14,500.

Kevin: Ah, thus the PBV, project-based voucher. Regardless, Beacon is not taking any less for rent than many fully taxed landlords like Pike and Netz take. If Beacon cannot make the numbers work with HUD rents, they are paying too much for each dwelling. Why use what is now prime land for low-income housing? New Haven needs revenue: its land use decisions should maximize it.

1644, I actually agree with you that the information contained in this article is insufficient to support a tax abatement. Beacon may have filed supporting documents, which may or may not have been supplied to the NHI (not that I would expect the NHI to publish pro formas or similar documents).

While what Beacon would make from the Section 8 units is not substantially less than what Pike and Netz make, the amount its tenants pay would be substantially less.

Kevin McCarthy: A section 8 tenant pays the same regardless of the landlord, no? If the city/NHHA requested vouchers in lieu of project based subsidies, tenants could use them in residences that paid taxes. Meanwhile, Beacon, or whoever, could build a market rate complex that paid taxes, as is residents patronized businesses that provided employment and paid taxes, making everyone better off. Meanwhile that 40th percentile rent would flow to neighborhoods that don't support them on the free market, enhancing property values and therefore city revenue. It's a win all around.

1644, not exactly. The landlord can charge whatever they want, but the federal subsidy is tied to the program's Fair Market Rent, which can vary by zip code. I believe the rents that Beacon proposes to charge are slightly below the relevant FMRs.

More importantly PBV and portable vouchers are separate programs, with separate funding levels. Part of the rationale for PBVs is to help finance new construction, while portable vouchers are routinely used for existing housing. HUD cannot simply substitute one type of voucher for another.

It has been many years since I staffed the legislature's Housing Committee. My understanding of the programs may be dated or incorrect. I would welcome any clarifications from people currently working in the field.

Kevin McCarthy: It's unclear if Beacon's proposed rents include utilities. The HUD "FMR" rates are meant to be inclusive of utility costs. As a landlord, I had always thought that if I accepted a HUD contract I cannot charge more than the HUD rate. In any case, the section 8 contracts are unfavorable for landlords (e.g., only one month security), so the landlords only accept them if the FMR is above market for their particular units. (Location, location, location.)
PBV were exchanged for portable vouchers with CSS, so why not here? In any case, at $500K/unit for new construction, going open market would double the amount of housing that could be purchased. New construction seems oriented not to provide housing, but to fill builders' pockets.

1644, we agree that (1) it is unclear whether the proposed rents include utilities and (2) the way Section 8 works concentrates vouchers in areas where the FMR exceeds actual market rents. Under some circumstances, the actual rent can exceed the FMR - see the discussion of payment standards in https://www.hud.gov/hudprograms/hcvp

The key word in my point on the relationship between the programs was "simply." HUD can approve the substitution of one type of voucher for another. But the programs are designed to do different things and the substitution is not straightforward. And without imputing bad motives to developers, they are a constituency for the project-based program, with their own interests.