KENNETH BOROSON ARCHITECTS
Paul Denz’s proposed new Mid Block Chapel Street development.
Breen Photo
Farwell: Units worth more than cash.
Alders unanimously recommended moving ahead with two land deals that would bring in over $1.2 million to city coffers and produce nearly 200 new market-rate apartments.
The deals would also see nearly $120,000 set aside into a new city affordable housing fund — and let private developers off the hook from building affordable apartments themselves.
That was the outcome of Tuesday night’s three-hour-plus Community Development Committee meeting in the Aldermanic Chambers on the second floor of City Hall.
Alders unanimously backed two proposed city land sales that would bring in a significant chunk of change to the public purse and set aside 10 percent of gross sales towards the creation and preservation of affordable housing citywide.
The committee alders supported the projects somewhat reluctantly, lamenting that neither would lead to the direct creation of any new affordable units.
Tuesday night’s Community Development Committee hearing.
One of the proposed deals discussed Tuesday would see the city sell publicly-owned lots at 848 Chapel St., 812 Chapel St., and 108 Orange St. for a total of $1,057,500 to local developer Paul Denz of Northside Development.
Denz plans to combine the land included in that swap with adjacent properties he already owns to build a new 120-unit apartment complex at 842 – 848 Chapel St., the former home of the Kresge department store.
The deal would also allow him to build a new 46-unit apartment building at the southwest corner of Chapel Street and Orange Street on a block currently beset with vacant lots and empty storefronts.
The other proposed city land deal would have the city dispose of a lot at 92 Olive St. and agree not to take back a lot that sits partially on 98 Olive St. in exchange for $180,000 from local landlord Abraham Meer.
Meer plans to combine those Olive Street lots with property he already owns to convert a former law office building and parking lot into 31 new market-rate apartments.
Both proposed land sales now advance to the full Board of Alders for first and second readings and final votes.
Affordable Housing “Funding Gap”
Chapel Street and Orange Street: future home of 166 new apartments? Below: Dwight Alder Frank Douglass and Wooster Square Alder Ellen Cupo.
While the committee alders wound up unanimously supporting both proposed deals and their underlying new housing projects, they grilled the respective developers and city economic development staff on why the local legislature should settle for just cash and not require the developers to actually build out new deed-restricted affordable units in these apartment complexes.
“Was this amount agreed upon in lieu of affordable housing being included in this development?” Wooster Square Alder Ellen Cupo asked about the $100,000 that the city has proposed taking from the $1 million-plus Denz deal to put into a new affordable housing fund.
“Yes,” Deputy Economic Development Director Steve Fontana replied. The same is true for the $18,000 the city has proposed taking out of the $180,000 Meer deal to put into that same affordable housing fund.
Well, Cupo replied: Why?
Attorney Ben Trachten and local developer Abraham Meer.
In both cases, the respective developers responded that the cost of construction, the value of the land, and the dearth of state subsidies for affordable housing development all make it virtually impossible for builders to charge anything other than market rates for newly built apartments.
“If there was a funding source, we would do affordable,” local attorney Ben Trachten said on behalf of his client, Meer.
“If a funding source opened up, we would still be able to do affordable housing, and we would consider it. But we can’t commit to something that has a funding gap. Which you’re going to find from just about every developer that comes before you.”
Denz made nearly the same exact argument during his time before the committee alders.
Denz: “The program is closed.”
“Earlier complexes were built with State of Connecticut funds,” he said. Those included “Just In Time” grants that allowed for the inclusion of an affordable rental component in otherwise market-rate new construction.
“Those programs are not available,” he said. “The program is closed.”
While his company could in theory apply for competitive state tax credits that could subsidize rents for some units, he said, that process would take upwards of two years.
“We thought that [paying into a new affordable housing fund] would be a great way to get the money into the system as quickly as possible,” he said.
Meer, Trachten and city economic development deputy Steve Fontana.
Fontana, speaking on behalf of the city, agreed.
“We wanted to figure out a way we could move forward in a constructive situation,” he said. Some way to allow the developers to be able to finance their respective residential projects while still securing money dedicated for affordable housing.
He pointed out that the city does not currently have any inclusionary zoning law on the books, and therefore can not require developers to set aside deed-restricted affordable units in projects they’re looking to build in town.
Fontana noted that alders have, however, created a new permanent Affordable Housing Commission. He said the city’s proposed strategy of setting aside dollars from city land sales into a new affordable housing fund would give that not-yet-formed commission the flexibility to distribute public money towards rental assistance, eviction prevention, and other relevant initiatives.
WAYNE GARRICK
Proposed new apartments at 98 Olive St.
“We’re trying to support affordable housing in the deals we’re striking without an inclusionary zoning ordinance in place,” Fontana said. “I believe both developers would say that the city drives a very hard bargain and gets a lot of money. If that’s the case, I’m proud of that.”
Because his department’s goal in these negotiations, he said, is to encourage development and bring in as much money as possible that can be used to support the mayor’s, the alders’, and the public’s interest in addressing the local affordable housing crisis.
Fontana added that both proposed land deals would also require the respective developers to hold job fairs for local construction and to abide by the city’s current requirements regarding small and minority-owned construction contractor representation in the building work.
“Not Getting What We Really Need”
During the public testimony sections for both the Chapel Street and Olive Street proposed land deals, New Haven Urban Design League President Anstress Farwell (pictured) encouraged the alders to push harder for more actual affordable units to be included in the two projects — or to at least consider setting aside more money from the prospective sales of these two properties into the affordable housing fund.
“Ten percent in cash is a lot less in value than 10 percent in units,” Farwell argued. That is, 16 dedicated affordable apartments in newly constructed residential buildings on Chapel Street and 3 dedicated affordable apartments in a newly constructed residential building on Olive Street would cost a lot more to create and maintain than $100,000 and $18,000, respectively.
She recommended that the city push for, or at least set aside, whatever the true cost of actually creating new affordable housing in those areas would be.
“We’re still not getting what we really need,” she said.
Jongyol Lee (pictured) agreed. He said that his family ran two small businesses out of the buildings that formerly stood on the Denz-owned lots dating back to 1986. Those buildings are now gone, as are his family’s businesses. As are many of the street-level, mom-and-pop retail operations that flourished in the Ninth Square in the 1980s through 2000s.
“I would like to urge you to take this opportunity to get as much as you can out of these guys,” he said about Denz and his development company. “I want to see those two blocks blossom into what they can be.”
He said the city and the alders need to play hardball with the developers in order to get enough money and concessions to ensure that the developer benefits in tandem with the community, and not at the expense of it.
Nevertheless, he said, “I think the worst thing to do is to let it go as it is.” These Chapel Street blocks have suffered due to the undeveloped lots between Orange Street and Church Street for too long.
“I think this is an opportune moment for both the city and the developers to deliver more for the city.”
The alders ultimately agreed — siding with the affordable housing theory that the most effective strategy is to build, build, build housing for all ranges of the rental market rather than to hold up projects and potentially stymie development because it doesn’t include a dedicated set-aside.
“We’ll fix it somehow, some way, some day,” Newhallville/Prospect Hill Alder Kim Edwards (pictured, with Beaver Hills Alder Jill Marks) said about getting to a place where the city can actually require affordable units in new buildings.
“I will not penalize this project and risk losing this opportunity.”
Just to clarify, the City is selling three City-owned parcels (two on Chapel Street and one on Olive Street) to private developers for a total of $1.2M in order to help the developers create 200 market rate apartments in three buildings. The City is voluntarily deciding to set aside 10% of that $1.2M, or $120K, for the Affordable Housing Fund. The developers are not contributing anything to the fund; they are merely paying market value for the City-owned properties as they normally would. Do I have this correct?
Or did the City negotiate for a higher sale price than the developers would normally pay for the land in order to support the Affordable Housing Fund?
Will these developments be participating under the new Tax Deferral program, which will contribute an additional payment to the Affordable Housing Fund, or are they participating under the previous Tax Deferral program, which will not contribute an additional payment to the Fund?
Personally, if the City adopts an Inclusionary Zoning Ordinance, I am in favor of one that requires all large developers (whether or not they are building an apartment building) to pay into a Fund in lieu of creating their own below market rate housing units. That Fund, however, should have strict requirements for qualifying for funding. I also wish the City had more competently revised the Tax Deferral Program, which is still an overly generous subsidy to developers even with the recent changes to it.
[Reporter's note: Thanks for the questions!