Builders Bail, Cash Out At $15M

The original duo behind an ambitious Newhallville development pocketed $15 million as they ditched the unbuilt project — leaving behind cracked asphalt, overgrown weeds, mounds of dirt, and a lingering question: Will these apartments ever get built?

Those are the latest turns in the years-long saga of 201 Munson St.

That’s the 398-unit, mostly market-rate apartment complex slated to be built atop a 12.7‑acre vacant former site of the Olin Chemical Company bounded by Munson Street, the Farmington Canal Greenway, and Argyle Street on the Dixwell/Newhallville/Science Park border.

A slew of recent land-use and legal filings point towards new behind-the-scenes movement on the long-stalled project.

According to the city land records database:

• Companies associated with the New York City-based firm Ironburgh Organization—which bought up 70 percent of 201 Munson two years ago — pulled an $8 million open-ended mortgage for the project on May 18 from a lender called Lane Capital Partners.

• On that same day, those same Ironburgh-related companies paid $6 million to one of 201 Munson’s original co-developers, the New Canaan-based Doug Gray, to buy out his remaining 30 percent stake in the project.

• Then, on May 24, Resight Holdings LLC — a company controlled by Gray’s former business partner and the second half of the original 201 Munson development duo, Brent Anderson — withdrew a lawsuit from state court seeking to foreclose on an unpaid $1.8 million mortgage it had issued two years ago to Hudson Meridian, which is Ironburgh’s general contractor on 201 Munson.

• Resight then formally released Hudson Meridian from that mortgage through a filing on the city land records.

• At the same time, two engineering firms — Vertex Companies and Blochaus — filed separate land-use documents releasing Hudson Meridian from mechanics liens for debts long unpaid on contracting work they had performed at 201 Munson.

This latest flurry of paperwork raises a host of questions about the long-stalled project.

Are the new owners in a better position to start construction now that they’ve bought out a former business partner and ended over a year of legal squabbling involving unpaid mortgages and contracting work?

Or are they perhaps still hopelessly far from restarting the project? After two years of looking for funding, they have only been able to secure a loan for $8 million. All of that money went into people’s pockets, rather than into the ground.

And what tea-leaf reading can be done into the fact that 201 Munson’s original co-developers, who pushed for this project for years and vowed to restore a blighted former industrial site to grand productive use, have now both jumped ship?

Whatever these new transactions and legal briefings portend, one conclusion is inescapable: The world of New Haven real estate can be lucrative for investors, even when nothing gets built.

Gray Cashes Out: ​“Frustrated With The Current Situation”

The original co-developers’ exodus from the project began two years ago during 201 Munson’s first ownership shake-up.

That’s when Anderson and Gray formally split their ownership of the site in two and started selling to investors from the New York City-based Ironburgh Organization.

In March 2019, Anderson sold his 50 percent share in 201 Munson for $6 million, while Gray sold 20 percent of the project for $3 million.

At the time, Gray retained a 30 percent stake in the site while Ironburgh took control of the remaining 70 percent.

(A side note: These March 2019 transactions listed the property transfers as worth $1 a piece. The Independent incorrectly reported at the time that that’s how much money changed hands during the ownership shake-up. A subsequent review of those 2019 documents revealed that the actual amount exchanged at that time was much higher: $6 million for Anderson’s share, and $3 million for Gray’s. Developers engaging in high-dollar transactions sometimes try to obscure how much money is changing hands by not listing the actual dollar amount in the body of a warranty deed or quit claim. The actual amount, however, can be deduced based on how much is paid in local real estate conveyance taxes on any given land transfer.)

Two years later, Gray has now sold his remaining 30 percent share in 201 Munson for $6 million to Ironburgh-related investors.

That means that Ironburgh controls 100 percent of the project.

The original co-developers, Gray and Anderson, meanwhile, earned a total of $15 million between the two of them selling their shares in 201 Munson over the past two years.

That’s quite a bit more than the $10 their former company Double A Development Partners LLC paid for the site in December 2016 when Olin basically handed over the property for free, so long as the then-new owners took responsibility for the site’s environmental cleanup.

“I was just frustrated with the current situation and the situation before that, and I have to be in projects I am comfortable with, that I can move ahead with,” Gray told the Independent in a phone interview when asked why he cashed out of 201 Munson.

“The city’s been great to work with. And the community’s been extremely supportive. I’m just upset that we couldn’t, with the current partnership situation, that we couldn’t deliver on what I had intended to deliver on.”

He was asked about his walking away from the still-unbuilt project with $9 million more in his pockets after selling his shares to Ironburgh.

Gray said that he is still ​“carrying a substantial amount of debt on the property” even though he is no longer one of the owners. He declined to identify the amount of debt.

Anderson: We Did Our Part

Anderson, meanwhile, told the Independent in a recent phone interview that he effectively exited the project two years when he sold his 50 percent share to Ironburgh for $6 million.

“Our role in the project was to acquire from Olin, address the environmental issues, and secure the entitlements, all of which we did,” Anderson said. ​“At that stake in the game, our expertise added little to no value,” so his company — Resight — sold their shares and left.

“Our job was to take a fallow site that was undevelopable and bring it up to its then-market value and title the land for redevelopment,” he reiterated. ​“The fact that it’s still a fallow site, you have to ask Doug Gray and Hudson Meridian” about that.

Did that $6 million sale of his share in 201 Munson earn his company a profit?

“I would say it was profitable,” Anderson said. ​“I don’t think I’m going to say how much.”

“We like New Haven. We liked the project. It just wasn’t the right one for us” to stick with longer than he did, Anderson said. ​“I certainly hope it’s a successful project.”

Meanwhile, Back In Newhallville …

So. What has happened at 201 Munson since Gray’s and Anderson’s company first picked up the site for little more than a handshake four and a half years ago?

There has been some work at the site itself. Back in 2017, the company and its contractors demolished and remediated vacant former Olin buildings that remained on the site.

They also brought in a towering stockpile of clean dirt to be used to backfill the site once the remaining contaminated soil was trucked out or built over.

“There are some PCBs that have to be removed,” Gray told the Independent about the remaining environmental remediation still to be done at the fenced-in, post-industrial expanse that is 201 Munson St. today. ​“When grading, basically, the lead in the soil will be consolidated underneath the new buildings. Everything that’s there is typical of an older property or older building. … The only thing that’s left is lead and PCBs. The lead’s in the soil. [The developers] just have to make it where it’s not accessible to the public.”

True to the sometimes baffling logic of assessments and appraisals, 201 Munson St. has actually dropped in value — at least in terms of how much tax revenue it yields to the city every year — since Double A Development Partners took over the site and knocked down the remaining vacant buildings.

According to the city assessor’s database, the city appraised 201 Munson St. as worth $1,413,200 in 2017. Today, that property is appraised at $741,100.

In Fiscal Year 2016 – 17 (FY17), before the empty buildings were demolished, the property yielded $42,973.68 in local property taxes. This fiscal year, with the significantly lower appraisal — thanks to the property’s lack of buildings, empty or otherwise — the property yielded only $22,763.64 in municipal tax revenue.

New Haven Offered Support

So much of the activity that has taken place at 201 Munson over the past four and a half years, however, hasn’t occurred at the construction site. It has taken place at City Hall, in community meetings, and in land-transfer filings.

Different configurations of 201 Munson owners won a zoning change from the Board of Alders in 2018, a site plan approval from the City Plan Commission in 2019, participated in a handful of community meetings about ever-evolving building plans.

In addition to the initial demolition and remediation, Anderson told the Independent, ​“there needed to be a plan for how to redevelop and how you were going to take advantage of all these issues going ahead. Understanding what was there, integrating all that was fairly critical.”

That extensive pre-development work is necessary for brownfield projects like this one, he said. ​“They are not your typical real estate deals.”

The site then underwent its first $9 million ownership shake-up two years ago, when Anderson sold all of his share and Gray part of his.

After winning final site plan approval, the new-ish owners pulled a building permit in late 2019 for an estimated $53.1 million worth of construction work that, so far, has resulted in no actual building.

The Dixwell/Newhallville/Science Park ​“construction” site, meanwhile, has remained quiet for years, even as the legal and financial excavations taking place in court rooms and back offices this month have suddenly become cacophonous.

New(ish) Owners: ​“Necessary Step To Move Forward”

To Ironburgh’s Jeffrey Chung, Gray’s departure, the resolution of Anderson’s lawsuit, and the making whole of long-unpaid contractors mark critical advances for his company’s bid to turn the elusive 201 Munson apartment complex project into reality.

“This was just a necessary step to move forward. It was consolidating, just reshuffling,” Chung told the Independent.

He said Gray’s and Anderson’s exit from the ownership team ​“doesn’t affect our viability at all.”

“Resight really doesn’t typically building anything,” he said. ​“They get dirty sites from large companies, assess the risk of environmental impact, take it through upzoning if that’s possible, and then sell their position. Doug Gray is a different person, and he has some development experience, but not so much in the residential space, more in strip malls and things like that.”

Chung admitted that not all of the money is there — at least, not yet — for the new owners to begin construction.

“We’re going to need more money to build it, for sure. We had a construction loan lined up at the beginning of 2020. But due to the pandemic, things were delayed. Now we’re just reshuffling, reorganizing. We’re going to move ahead this summer.”

Chung said that Ironburgh expects to close on a construction loan for the project in the weeks ahead.

“Our firm does $500 million of development every year on the construction side,” he said. ​“We know how to build residential. We believe very strongly in New Haven. We’re looking forward to getting this project underway. We have the equity that we’ll need to put together the capital needed to complete this project. At this point, it’s just a question of what the debt looks like.”

He also confirmed that the $8 million ​“bridge loan” recently pulled from Lane Capital Partners went entirely towards buying out Gray, ending the Anderson lawsuit, and fulfilling debts owed to engineering contractors.

How much 201 Munson will cost to actually build is still up in the air. The December 2019 building permit pulled for the site estimated the construction costs at $53.1 million. A November 2019 application by the developer to the city’s assessment deferral program estimated that the construction cost is closer to $61.1 million.

And, just for the sake of record keeping, who exactly owns 201 Munson now? Here’s the breakout among Ironburgh investors:

• LinMunson LLC, a holding company controlled by Howard Lin of Forest Hills, N.Y., owns 30 percent of the site;
• ShermanChinMunson LLC, a holding company controlled by Sherman Chin of Manhattan, owns 25 percent;
• Lin Family Holding LLC, a holding company controlled by William and Diana Lin of Manhattan, owns 15 percent;
• CindyChinMunson LLC, a holding company controlled by Cindy Chin of Gahanna, Ohio, owns 10 percent;
• Melanie Chin Munson LLC, a holding company controlled by Melanie Chin of San Francisco, owns 10 percent;
• HM New Haven LLC, a holding company controlled by Hudson Meridian’s William Cote of Manhattan, owns 10 percent

Foreclosure Suit Highlights Financing Woes

While Resight has now withdrawn its foreclosure lawsuit against Ironburgh-related companies for a long-unpaid $1.8 million mortgage associated with 201 Munson, the many legal filings over the past year and a half in that case reveal how much trouble Ironburgh has had finding financing for the project since buying in in March 2019.

Anderson’s company first filed suit in September 2020.

That complaint notes that Resight issued a $1.8 million mortgage to one of the Ironburgh-related companies — HM New Haven LLC — on March 27, 2019. The lawsuit states that HM New Haven failed to pay off the remaining balance due on that mortgage by April 2, 2020, as required by the terms of the agreement.

“The Defendant NH New Haven has failed, neglected and/or refused to cure said Default or demand for payment and, as a result, the Plaintiff elected to commence this action for foreclosure of the Mortgage.”

That initial lawsuit also notes that, on July 13, 2020, an engineering firm called Blochaus filed a mechanics lien for $50,776.27 against Hudson Meridian for unpaid work at 201 Munson. Then on September 1, a separate company called the Vertex Companies filed a mechanics lien against Hudson Meridian for $59,222.06 in unpaid work at the site.

On Dec. 24, 2020, Vertex’s lawyer filed a special defense stating that, on June 4, 2019, Vertex and a Hudson Meridian-controlled company entered into a written agreement for Vertex to provide ​“engineering support, environmental construction management services related to on-site soil remediation, and to prepare a final regulatory action report and final regulatory submittals to those certain piece or parcel of land known as 201 Munson Street and 23 Shelton Avenue.” That project work authorization signed in June 2019 promised Vertex $151,433 for that work.

From June 5, 2019 through Oct. 19, 2020, Vertex’s lawyer wrote, the engineer contractor ​“furnished labor, materials, services and equipment” to the 201 Munson site.

On July 23, 2019, the Hudson Meridian-controlled company issued a change order to Vertex agreeing to pay $3,800 for additional work to be performed at 201 Munson, including ​“background soil concentration evaluation in the proposed mined soil area.”

On Oct. 21, 2019, the legal response reads, Hudson Meridian issued another change order agreeing to pay Vertex $14,711 for additional work, including ​“preparing an Environmental Condition Assessment Form and Form III submittal, and performing additional design modifications as a result of studying the mat slab soil management.”

And on March 23, 2020, that same legal response reads, Hudson Meridian yet again issued a change order agreeing to pay Vertex $26,700 for ​“additional regulatory submittals, additional oversight, and additional laboratory costs and pre-excavation waste characterization.”

The total value of labor, services, materials, and equipment furnished by Vertex at 201 Munson came to $196,644, that legal document reads.

As of the Dec. 24, 2020 filing, Vertex’s lawyer wrote, Hudson Meridian still owed the contractor $60,000.06.

The lawyer wrote that Vertex stopped performing work at 201 Munson on Sept. 3, 2020 in order to secure the balance, which was $59,222.06 at that time. That’s when the contractor filed a mechanics lien.

The subsequent months saw the legal battle between Resight and the Ironburgh-Hudson Meridian-related companies intensify.

On Feb. 12, 2021, Ironburgh-Hudson Meridian’s lawyer filed a response in court recognizing that Resight declared the $1.8 million mortgage to be in default, due and payable back on March 23, 2020.

“The Defendants offered to continue making interest payments to the Plaintiff while the Defendants sought new financing” at that time, the lawyer wrote. ​“Plaintiff, however, rejected that offer, insisted that the full amount of the loan was immediately due and payable, and began charging interest at the default rate.

“Defendants have continued to diligently pursue financing options, but have been hindered by, inter alia, delays in closing, COVID-19, and other factors.”

The Ironburgh-Hudson Meridian lawyer argued that Resight ​“wrongfully and substantially increased the Defendants’ overall indebtedness and caused the Defendants to incur costs that has [sp.] impeded them from curing the alleged default” by continuing to charge interest.

On Feb. 26, Resight sought to dismiss that defense, arguing that it was well within its right to foreclose on an unpaid mortgage after that loan came due.

On March 29, Ironburgh-Hudson Meridian pushed back again. ​“The Plaintiff began charging the Defendants default interest – at the outset of a global pandemic which has fundamentally changed the way people approach even the most mundane of daily tasks – indifferent to Defendants’ attempts to mitigate costs in order to cure the default upon later refinancing,” their lawyer wrote. ​“This was conduct was wrongful, and it was willful.”

Resight replied on April 13. ​“Defendants have alleged nothing more than that Plaintiff properly –not wrongfully – exercised its contractual rights to enforce the terms of the mortgage and note to which Defendants agreed, after Defendants defaulted,” its lawyer wrote. ​“Even if Defendants had hoped Plaintiff would act with more leniency, the contracts between the parties do not obligate Plaintiff to do so.” 

Then, all of a sudden, on May 24, Resight withdrew the lawsuit.

Ironburgh-Hudson Meridian had pulled an $8 million mortgage. Paid off Gray, Anderson, and the engineering contractors. Those disputes, for now, appear to be put to bed.

While there’s no sign of a dreamed-of new community at 201 Munson.