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Advising New Haven to “just say no to subsidizing wealthy developers,” mayoral candidate Kermit Carolina has come out against a proposed $10 million-plus bailout of the Ninth Square project.
“In a mind-numbing display of arrogance that only makes sense to those who live in a parallel universe, McCormack Baron Salazar and Related Companies — the big guys who are the developers of the Ninth Square Project — are asking New Haven taxpayers – the little people who struggle day in and day out to just barely make ends meet – to forgive nearly $10 million in unpaid interest,” Carolina is quoted as saying in a statement released by his office late Wednesday.
He advised Mayor John DeStefano to say no to the request.
Carolina — one of seven Democratic running in a Sept. 10 party primary for the nomination to replace retiring two-decade incumbent Mayor DeStefano — was reacting to a deal the developer proposed to its lenders last fall. The developers say they need new tax breaks and tax credits and forgiveness of debts in order to pump needed new money into the Ninth Square development and keep it viable
In the Ninth Square, the city used public money and state-issued tax credits to help McCormack Baron/Related fix up historic but neglected three- and four-story brick buildings and construct some new brick ones throughout the district, which is bordered by Chapel, State, George, and Church streets. The developer created 335 new apartments, with a mix of low-income and middle-class renters, plus 49,000 square feet of stores and restaurants and galleries. That was the start of a broader rebirth of downtown into a place where people live and hang out at night.
Fifteen years later, the developers are asking to city to renew a just-lapsed tax abatement saving it more than $750,000 a year in taxes; and to forgive $9.9 million in interest payments on debt. The developer has asked all the project’s lenders (the city, the Connecticut Housing Finance Administration, and Yale) to refinance a total of $86 million under a new entity created by floating a new set of state tax credits for the project. Pending a deal, CHFA agreed to grant the developer a six-month moratorium on payments on a $13.7 million outstanding loan, with all late fees waived, while a restructuring deal is worked out. (Read more about that here.)
But that deal has hit a snag: Yale has stated it’s not interested in investing any further in the project. Read about that here.
Meanwhile, one Democratic mayoral candidate, Toni Harp, has expressed deep reservations about the proposed deal. Two other candidates, Henry Fernandez and Matthew Nemerson, have supported the idea of reaching some form of a deal to continue subsidizing affordable-housing downtown in what has been a successful project to date.
In Wednesday’s release, Carolina did not mince words.
“We cannot – no, we must not – support this deal,” he stated. “If Ninth Square has to be sold to another company, so be it. But make no mistake about it – as mayor, I would use all the municipal resources at my disposal to get the unpaid taxes owed to this city. In fact, I would be present at the sale of Ninth Square to make sure we get that nearly $10 million owed to the city. If we expect the little guy to pay, the same expectation must exist for the big guy!”
“If any New Haven resident is late in paying car taxes – no matter what the amount — we get a letter from the city telling us that our car can be booted. I wonder if there is any way to place a giant boot around Ninth Square so that the wealthy developers can see how that feels,” Carolina said.
Click here to read the full release.
There is practicing politics and then there is advocating strong policy. I'm deeply saddened to see Mr. Carolina employ the former at the expense of the latter. It is clear that he has no idea of how property development truly works and/or how detrimental some decisions can be on the long-term viability of a New Haven revitalization.
Right now, New Haven is on the verge of what may become a housing bubble. That is in part due to the success of Ninth Square - people saw that mixed-use properties in New Haven could work as a business model and are choosing to emulate it. There is much to be thankful for in Ninth Square.
The part of his comments that are offensive to any business person is that he has not expressed an interest in reviewing their books and records. It is not altogether clear whether their current tax assessment is logical or feasible from a business perspective. Moreover, I highly doubt he knows the terms of the loan or how much money the city and state might lose if this project is put up for sale. In short, he's done no research and is merely trying to be a populist candidate rallying the troops. This is simply foolish.
Let's listen to what Senator Harp, Mr. Fernandez and Mr. Nemerson said and actually review their books and records before jumping to conclusions. Business is tricky, if just anyone could do it - we'd all be successful business people.
I do hope that Kermit does not employ the same act first think second mindset in his current position. And more importantly, that if he is elected, he does not continue to do so.