Amid Boom, 4 Building Projects Hit Delays

Three different developers promised to build over 460 apartments and 132 hotel rooms across four different city-approved projects downtown amid a building boom.

Years later, those projects remain unbuilt — and the lots they’re slated for are still empty and, in one case, strewn with rubble. 

What happened? And will these developments ever get done?

Those questions linger over four downtown parcels of land that remain stubbornly vacant with no cranes in sight. 

Proposals for all four locations won site plan approvals from the City Plan Commission between December 2018 and November 2020. The developers touted transformative building projects for these sites well before that. 

Those four still-unbuilt downtown properties are:

• The former Coliseum site bounded by Orange Street, George Street, State Street, and MLK Boulevard, where the Norwalk-based developer Spinnaker Real Estate Partners plans to build 200 new apartments and retail space in the first phase of a major redevelopment.

• The former Webster Bank building site at 80 Elm St., where Spinnaker plans to build a new 132-room hotel.

• The former Kresge department store site at 842 – 848 Chapel St., where local landlord Paul Denz’s Northside Development company plans to build 166 new apartments across two new residential buildings.

• The former Harold’s bridal shop site at 19 Elm St., where local landlords Jacob and Josef Feldman’s Mod Equities company plans to build 96 new apartments. 

In response to commenter requests for updates on long-delayed development projects that were greeted with such fanfare when approved by the City Plan Commission years ago, the Independent did some (metaphorical) digging on why so little (actual) digging has taken place at these four spots. (Click here to read a recent article about how the Hamilton Street clock factory redevelopment project has also stalled out for years.)

According to the developers for each of these four downtown locations, these projects will get built.

Probably.

Even as rising interest rates, supply chain disruptions, and construction material price inflation throw the industry for a loop.

“Interest rates have been very, very low, which have enabled developers to gloss over some difficulties, because there were financial rewards,” said Spinnaker CEO Clay Fowler, whose company has built hundreds of new apartments and groundfloor retail space on Audubon Street over the past few years.

With rising interest rates and construction material prices, he said, ​“that headroom, that freeboard, that relative ease in which it appeared to be able to make profits, that’s gone. It is totally gone. That’s why things are stalling out. People in the industry, whether they be bankers, investors, buyers — they’re more circumspect.”

Denz agreed. He said that unbuilt projects, like his on Chapel Street, are now coming in at prices 15 percent higher than pre-pandemic budgets.

That will make them more challenging to build as originally approved.

Meanwhile, new apartments have continued to be built — or at least demolition and construction work have begun — during the ongoing pandemic, including for projects on Olive Street, Howe Street, York Street, Gold Street, Foster Street, Munson Street, Blake Street, and Olive Street again.

Delayed Development #1: Coliseum Site

What was supposed to be built? Why has it been delayed? And will these projects ever get done?

First up: the 4.4‑acre former Coliseum site bounded by Orange, George, and State Streets and MLK Boulevard.

In November 2020, the Norwalk-based developer Spinnaker Real Estate Partners won site plan approval from the City Plan Commission to build a new 200-unit apartment building and a retail ​“laneway” as part of the first phase of development — known as Phase 1A — a new ​“mini-city” just south of the Ninth Square. 

Spinnaker received that site plan approval after taking over the long-delayed project in 2019 from the Montreal-based firm LiveWorkLearnPlay, which first signed a deal with the city in 2013, but then — either because the developers couldn’t raise money or unexpected design problems got in the way — never wound up building anything.

Today, the former Coliseum site is still just a surface parking lot.

In a July 2019 interview and during September 2019 and June 2020 public meetings, Spinnaker representatives estimated that their company would begin construction on phase one of the Coliseum site in Spring 2021. 

At a virtual outreach meeting for small contractors in February 2022, the developers said they should begin construction this spring.

On Monday, Spinnaker CEO Clay Fowler told the Independent that the project has a new timeline — and reinvigorated life.

He expects his company will close on its financing for the $75 million Phase 1A project and then begin construction in the next 90 days.

The Coliseum’s Phase 1A project ​“is financed, which is what we were waiting for,” he said. ​“The bank and us are putting together the documents necessary to close the loan so that construction can commence. The contractor has been selected. We have close to our final numbers. We’re very confident that we’re going to start construction” in the next 90 days.

Why has the project been delayed?

“It’s a more complicated deal than normal because it has a lot of parties involved. It’s got the public involved,” because of the original Development and Land Disposition (DLDA) with the city that Spinnaker took over from a firm called LiveWorkLearnPlay.

Another complicating factor is that Spinnaker is building out Phase 1 in ​“two phases,” Fowler said. The first involves the 200-unit apartment building and retail ​“laneway” and surface-level parking. The second calls for a new parking garage plus another 75 new apartments.

And, Fowler said, everything in the construction industry has gotten more difficult due to Covid — and ​“the fallout from Covid.”

“Who’s kidding whom?” he said about construction price increases. ​“We’re wrestling with cost escalation,” just like every other builder in the country. ​“It’s 15 to 20 percent more expensive than we thought it was going to be.”

He said his company is nevertheless proceeding with the project. ​“I think that demand remains strong, as evidenced by the fact that pretty much everything that goes up in New Haven is rented pretty quickly.”

Fowler warned that ​“storm clouds” are overhead for developers like his company.

“The underlying construction costs for building, we may see some leveling, but we don’t see any decrease in costs” any time soon. And the ​“financing costs with interest rates have risen significantly. They’re still historically low, but it’s a bit of a shock to be paying 50 percent more on our financing costs than we did two years ago.”

“Those are all impetuses to increase rents,” he said.

City Economic Development Administrator Michael Piscitelli said via email that his office is ​“working closely with the Coliseum team leading up to a construction start in the fourth quarter, 2022. Construction documents are well underway and the developer has led two information sessions with local subcontractors, all key steps toward the start of construction. There will be a community meeting in late summer to preview what to expect during the construction phase.”

According to a presentation that Spinnaker representatives gave in June 2020, the development plan for the Coliseum site — including Phase 1A, Phase 1B, and Phase 2 — should see the construction of 700 apartments, 594 parking spaces, 50,750 square feet of retail and restaurants, 44,440 square feet of public open space, and 199,950 square feet of office and/or lab space. Per the DLDA with the city, 20 percent of those apartments must be set aside for tenants earning between 80 and 120 percent of the area median income (AMI.) (That currently translates to an annual income of between $89,400 and $134,100 for a family of four.)

Delayed Development #2: Hotel At 80 Elm St.

Up next: 80 Elm St.

That 0.6‑acre site sits at the corner of Orange and Elm Streets, right next to the municipal office building at 200 Orange St.

In January 2019, Spinnaker won site plan approval to construct a 132-room Hilton Garden Inn hotel at the corner site. From December 2019 to January 2020, the developers knocked down a vacant 1948 art moderne former bank building — as well as the remains of the former church building hidden within — to make way for the new hotel.

For the past two and a half years, the site has been one big fenced-in hole in the ground, covered in rubble and debris from the demolition.

“Covid blew that hotel out of the water, so to speak,” Fowler told the Independent.

“We had a loan, and we were ready to close. And Covid hit, and the bank pulled out.”

He said that Spinnaker and its development partner the Olympia Companies still plan on building a Hilton hotel — now a ​“Tempo” rather than a ​“Garden Inn.” ​“We changed it to a more boutique‑y” Hilton product, he said.

But all that depends on whether or not they’re able to line up investors for the project.

“We went out to bid, and, frankly, the costs dissuaded us from moving forward,” he said. ​“We’re still looking for a way to move forward with a different investing partner.” But rising costs and interest rates — and a pandemic-induced hit to the hotel market — will make that a challenge.

Fowler noted that other hotels have been built around the city over the past few years, including the new Hotel Marcel on Long Wharf and the Cambria hotel on Rt. 34. ​“I think demand is a little bit suspect” for more hotels in the city, he said. And ​“we’ve not been able to replace some of the investors in the deal.”

So. What now?

“We’re looking at alternative uses,” Fowler said. ​“Those alternative uses fall on us.”

First, his company will take the next 30 to 45 days to ​“see if the hotel can be done.” If not, then ​“we are ready to propose moving forward in another direction.”

What does he think of the site as it currently exists — and has existed for the past two-plus years?

“We don’t like it. We think it’s an embarrassment, and it’s not the way we wish to present,” he said.

Asked for the city’s take on this 80 Elm St. project, Piscitelli said, ​“The hospitality market slowed considerably during the pandemic so it is very encouraging to see that two of three hotel projects moved forward, Hotel Marcel (165 rooms) and Cambria (128 rooms). It is unclear if 80 Elm Street will move forward and we are looking to assist in this regard.”

Delayed Development #3: 166 Apts. On Chapel

What about the empty building and vacant lots on the southern side of Chapel Street between Orange and Church Streets?

Back in December 2018, Paul Denz’s Northside Development company won site plan approval to construct a new 120-unit apartment complex atop the site of the former Kresge department store.

In March 2020, during the last in-person full Board of Alders meeting before the Covid-19 pandemic sent local legislative meetings online, the alders approved a DLDA that would sell publicly-owned vacant lots at 848 Chapel St., 812 Chapel St., and 108 Orange St. for $1,057,500 to Denz’s company.

Denz planned to combine the land included in that swap with adjacent properties that he already owns to build the new 120-unit apartment complex at 842 – 848 Chapel St., as well as an additional new 46-unit apartment complex at the southwest corner of Chapel and Orange Streets.

According to the city land records database, Denz and Mayor Elicker signed the city-Mid Block DLDA for the site in August 2020.

Since then, the site has remained empty — an overgrown fenced in lot at Orange and Chapel, a vacant building (formerly home to Foot Locker) next door, and a surface parking lot next to that.

What happened? And what’s happening?

The Independent spoke with Denz twice over the past week about this project.

In the initial interview, before he received a new set of pricing for the construction project, he was more optimistic about construction starting this calendar year — either under his company, or under a potential new developer whom he might sell the project to.

Then Denz reviewed those new prices. He found that the project will cost 15 percent more than the $40 million he had initially budgeted. So in the second conversation, he was less optimistic — about construction starting this year, and about being able to sell the project.

In the first interview, he said the pandemic and its effects on the construction industry significantly slowed this development.

“We went into a pretty long Covid scare where nothing was really progressing on the development front because everyone was worried about staying alive,” he said. ​“There was a long, long delay there.”

Now, he said, ​“we are actively re-pricing the development costs, and they swing pretty dramatically.” Material costs are 10 to 15 percent higher now than when the project was initially budgeted. Plus, it’s hard to actually get the construction materials his company needs, because of shortages in key materials like lumber.

“I have talked to numerous suitors, and we’ve probably identified one that would be a really good candidate” to buy and build the new apartments as envisioned and approved.

“My outlook on it now is that someone will be building that project in calendar 2022,” he said in that first conversation.

Given that the project is now 15 percent higher than he initially thought it would be, he said, these new higher prices will likely ​“further slow us down while we continue to try to really zero in on what it’s going to cost to build.”

“I really want to get this project going,” he said. He downgraded his assessment of whether or not construction will start this year from confident to ​“hopeful.”

What about the prospects of selling the site? ​“I’m less confident than when you and I spoke before,” he said. ​“Now it’s more of a 50 – 50.”

What does he make of the current state of this Chapel Street undeveloped site?

“Unfortunately, for 20 years, it’s been a sore thumb of downtown New Haven,” he said. ​“That’s why I wanted to build a development there. I’ve always said it would be a transitional development.”

In the meantime, Denz’s company has sued the city in state court in a bid to drop the 842 Chapel St.‘s post-revaluation assessed value, and therefore its local property tax bill. The city most recently assigned the property a total assessed taxable value of $531,400.

“We filed because we think it’s been overvalued,” he said.

Delayed Development #4: 96 Apts. At Harold's

And what about the long-vacant former Harold’s Bridal Shop building at 19 Elm St.?

In April 2020, an affiliate company of Jacob and Josef Feldman’s MOD Equities won site plan approval to build a new 96-unit apartment building at that site.

They won that approval three years after they got permission from the City Plan Commission in 2017 to build a smaller, 46-unit apartment building at that site instead.

The developers’ application to the City Plan Commission in 2020 stated that they expected to begin construction upon site plan approval, with major construction to be completed by Spring 2021.

What happened?

“After a long journey, I think we’re getting to a point where it’s going to go up soon,” Jacob Feldman told the Independent in a brief phone interview. 

He did not comment on what caused the years worth of delays so far.

“The MOD Equities project at 19 Elm Street is dormant from the City’s perspective,” Piscitelli said. ​“This is an appealing site, but the development team clearly has been focused on other work including the renovations at 129 Church and State/Court.”

The Feldmans’ company has been working on converting the James English building at 418 State St. at the corner of Court Street into 39 new apartments. After winning site plan approval in June 2021 to convert the office building at 129 Elm St. into 92 new apartments, their company sold that property for $8 million to a different set of local investors.