Thomas Breen photo
Connecticut FBI building at 26 Grove St. / 600 State St.
The city brought in $2.5 million after selling the land underneath downtown’s FBI building to the local private developer that has leased that property for the past two decades.
That sale was recently recorded on the city’s online land records database.
On Aug. 4, the City of New Haven and the New Haven Redevelopment Agency sold the roughly 3‑acre parcel of land at 26 Grove St. / 600 State St. for $2.5 million to Fusco Arena Associates LLC, an affiliate of the Long Wharf-based construction company Fusco Corporation.
The property — referred to in the quitclaim deed and in an accompanying memorandum of lease termination as the “Arena Block” — is currently home to the five-story Federal Bureau of Investigation (FBI) regional headquarters building. Fusco constructed that federal government-leased office building in 1999 on the site of the former New Haven Arena hockey stadium and performance venue.
According to that same lease termination document, which was filed on the city land records on Aug. 4, Fusco has owned the FBI building since it was built over two decades ago. Back in 1999, however, the city signed a ground lease with the local developer — meaning that, while Fusco owned the building itself, the city retained ownership of the underlying land.
That ground lease included a provision allowing Fusco to purchase the property outright from the city if it wanted to.
That, according to city Deputy Economic Development Administrator Steve Fontana, is what Fusco recently decided to do.
“Under the lease, Fusco Arena Associates had the right to request that the city sell the property,” Fontana told the Independent in a recent phone interview. When the city received that request, “we negotiated a fair purchase price,” and then sold the underlying land.
“The city is always looking for revenue,” Fontana said when asked about the benefits of this sale to city government. This sale therefore provides a $2.5 million boost to city coffers.
Fontana added that the original ground lease between the city and Fusco was for a nominal amount of $1 per year. The lease was set up in such a way to ensure that Fusco had to pay property taxes on both the building and the underlying land, Fontana said.
City Assessor Alex Pullen told the Independent that the recent sale of the underlying land at 26 Grove St. / 600 State St. should not affect its local property tax status. That is: Fusco will still have to pay property taxes on the site now that it owns the underlying land and the above-ground building.
The city last appraised the underlying land as worth $5,491,700. It last appraised the above-ground building as worth $13,419,200.
A representative from Fusco did not respond to a request for comment about this property transaction by the publication time of this article.
Okay, why is the recent land value appraisal so much higher than the sale price? Was the sale price predetermined by the lease contract? Did the appraisal fail to account for the lease encumbering the land? Was this some sort of fire-sale where an asset was sold for revenue to fund operating expenses rather than for liability reduction because, once again, the city overestimated revenues and underestimated expenses?
BTW, for those who may criticize the $1/year lease payment, the land had lain fallow for decades before Rosa DeLauro got the FBI to build there. (I had always thought the land was federally owned, and therefore tax-exempt.)