Here’s $69,000. I’ll Take $900,000

A developer who repeatedly broke a land deal with the city came looking for a bailout—and a chance to grab a six-figure profit that might have otherwise gone to taxpayers.

That “compromise” sounded good to City Hall and to a new elected official named Aaron Greenberg.

It mattered that the “compromise” sounded good to City Hall and to Aaron Greenberg.

City Hall’s Livable City Initiative (LCI) had the power to deny the bailout, take back the developer’s property, and put close to $1 million in the city’s treasury. Instead LCI negotiated the developer’s suggested “compromise.” Mayor Toni Harp signed off on it.

Aaron Greenberg is the new alder from the neighborhood, Wooster Square, where the developer’s land sits. Greenberg’s predecessor as alder, Michael Smart, called the proposed “compromise” an unethical “insider” rip-off when the developer first tried to obtain it; as the neighborhood’s then-alder he had the power to prevent it from advancing for public approval. With Greenberg’s support, and the approval of new Mayor Toni Harp, the “compromise” finally came before a legislative committee for a hearing at City Hall Thursday.

Paul Bass PhotoGreenberg, the developer, his lawyer, and an LCI official urged Greenberg’s colleagues on the Board of Alders Community Development Committee to act swiftly to vote in favor of the “compromise” in order to set a new precedent for how the city does business with developers who break the rules.

“I have been intimately involved in this process,” Greenberg, sitting next to the developer and his politically connected attorney, assured his colleagues on the committee at Thursday night’s hearing. “If this item does not move forward with this board, this building will remain vacant and unusable.” He and city officials said New Haven will set a meaningful “precedent” by getting $69,000.

His colleagues weren’t convinced. They tabled the matter rather than vote on it Thursday night. The matter will come back up again at the committee’s next meeting—and along with it a debate about how government should deal with developers.

A 12-Year Slog

Melissa Bailey PhotoThe developer in question is named Peter Chapman. The city sold him an abandoned six-story, 30,278-square-foot warehouse at 433 Chapel St. (pictured), near the corner of Hamilton, in 2002 for $150,000, or only $5 a square foot. In return Chapman agreed to renovate the building and put 18 apartments there plus ground-floor storefronts, and not to sell the building without the city’s OK. If he failed to complete the project within 18 months, the city could take the property back.

Chapman made some renovations but ultimately failed to complete the project—not just for 18 months, but for 12 years. The building remained a drag on the neighborhood. The city never took the property back.

Chapman created a limited liability corporation (LaSaraghina LLC) and transferred the property to it in order to protect himself from lawsuits. He never told the city or got its permission, despite the requirements of the original deal. The city never took the property back.

Chapman for a while illegally housed some tenants in the building without a certificate of occupancy. LCI found out and required Chapman to kick out the tenants. The city never took the property back.

What should the city do in a situation like that? Perhaps take the building back and resell it to someone who will create apartments?

Melissa Bailey PhotoChapman hired an influential zoning attorney, Democratic National Committee member and former state Sen. Anthony Avallone, to come up with a different idea. Chapman found a buyer for the property. He wanted to sell the property to the buyer, New York developer Jacob Feldman (operating under the corporate name MOD LLC). He wanted to get the money from the sale. Avallone convinced LCI Executive Director Erik Johnson to sign a deal in which the city would officially forgive Chapman for improperly transferring the property and allow him to sell the property.

Avallone warned said that if the city didn’t say yes, and if it tried to take back the property instead as called for under the original land disposition agreement (LDA), Chapman would likely sue. So instead of getting the property and having it turned into apartments, the city would face a potentially costly lawsuit. Better to compromise, and see the building developed, Erik Johnson subsequently agreed.

That deal needed the approval of the Board of Alders. Often the alder from a neighborhood in which a deal is proposed has initial influence on how his colleagues handle the matter. When Avallone and Johnson floated the deal last fall, the alder, Smart, decried it. He and Board President Jorge Perez refused to sign off on Avallone’s proposal that the full Board of Alders quickly OK the deal without sending it to committee for hearings.

So Chapman and Avallone waited. They didn’t have to wait long. An election was about to take place.

A New Day


In that election, Smart ran for a new position (city clerk) rather than remain as Wooster Square’s alder. Greenberg, a Yale graduate student backed by Yale’s unions, won the seat.

He said he immediately found himself in the room as a new version of the deal—a “compromise”—was hammered out. The compromise: If the city grants permission for Chapman to keep and sell the property, he’ll pay a “penalty” for the time he was in violation of the deal, beginning from when the city approved an updated version of it in 2009. Both sides agreed on a $50 fine for every day he was in violation. The deal would also allow the developer to build 22, not just 18, apartments.

Avallone, Chapman, Greenberg, and Assistant Corporation Counsel Alison Lanoue presented the “compromise” deal to the committee of alders at Thursday night’s hearing. In the process, they revealed two eye-popping numbers.

One: The penalties would add up to $69,000.

Two: Chapman’s buyer is paying $900,000, according to Chapman and Avallone. So Chapman would recoup six times the price he originally paid for the land. Taxpayers would recoup roughly 1/13 of the purchase price in the form of the “fines.”

Click here, here  and here to review some of the documents presented to the committee for a vote. 

Chapman told the committee that he sank around $500,000 into the property, not counting carrying costs. He described sitting in his car at night to ward off drug dealers. He complained about how repair work on the Chapel Street overpass a block from his building caused him difficulties. He said the 2008 recession set his project back.

“My dream is unfortunately unfulfilled,” said Chapman (pictured).

Chapman also owes $5,669.70 in back taxes on the property, according to mayoral spokesman Laurence Grotheer. That money would have to be paid as part of any sale.

“We felt it was in the best interest of the city at the end of the day to see the project built,” LCI Deputy Director Frank D’Amore told the alders. “We vetted” the buyer, who has the wherewithal to build the 22 apartments, he assured the committee.

D’Amore was asked afterwards why the city doesn’t take back the property and sell it to the buyer, reaping the $900,000 instead.

“We talked about that,” he said. “He had a hardship. We’re not in the practice of penalizing people to that extent. We’re trying to clear up a muddy” case that predates his time in his position.

Asked after the meeting about the wisdom of the deal, Greenberg argued that the imposition of the $50-a-day fine sends a powerful message to developers not to break agreements with the city. (Click on the video at the top of the story to watch the conversation; he contacted the Independent moments after the original conversation to ask to amend his thoughts, leading to a second conversation, also presented in the video.)

“The city is getting a precedent that will not just apply to projects of this size, but projects that are smaller, so that we can actually collect on LDAs that have been in default for some time,” Greenberg argued.

What if the city had set a precedent by exercising its right, already in the original deal, to take back the property and collect the benefits of selling the unfinished property?

That might prompt a lawsuit, Greenberg said.

He also spoke of the need to create a business-friendly climate in new Haven.

“I suspect that would antagonize developers,” he argued. “... I think we as a city we need to create some balance between encouraging developers to come and making it a good place to do business.”

He added that the city can raise the $50 fine in the future to exercise greater leverage.

Paul Bass PhotoTwo members of the public spoke in favor of Chapman’s proposal during Thursday night’s public hearing, which began after 9:30 p.m. (It followed an earlier three-and-a-half-hour hearing on the proposed Route 34 West development, which also ended with a committee vote to table. Click here for a previous stories on the arguments for and against the project.)

The alders on the committee appeared skeptical of the deal. They peppered Chapman’s team and city officials with questions about why the buyer wasn’t present (Lanoue said they hadn’t seen a need), about Chapman’s finances. They didn’t ask about whether the city should exercise its right to reclaim the property and conduct the sale itself.

After testimony concluded, the committee members huddled. Then committee Chair Frank Douglass declared, “We don’t have enough information.” The committee decided to table the matter, do some research, bring the matter back up at a future meeting.

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posted by: Jonathan Hopkins on March 28, 2014  3:16pm

Take back the property and sell it to someone else. Where’s the question?

posted by: Shaggybob on March 28, 2014  3:27pm

As much as this appears like a back room giveaway, lets say Chapman’s numbers our correct in regard to his expenses,

Taxes for 12 years approx. 87,000
He claims he put in     500,000
Purchase price         150,000
Penalty a $50 a day     69,000
          Total     806,000

(The tax collectors site is down from 3-5 pm EVERYDAY so hard tax numbers are conveniently unavailable)
He carried the building for 12 years so I am sure he had other expenses, sounds like the $900,000 is an overall loss for him. To take the building back now that he has a buyer AND will develop apartments sounds like a win win for everyone.

If the city had taken back this property LIKE THEY SHOULD HAVE 10 years ago then the City wouldn’t even be in this mess.

The new owner should be subject to the same terms and conditions of the original deal if not developed in a timely fashion.

Did we learn our lesson? Don’t wait until it’s too late.

I am VERY un-trusting of this new Administration, but with this issue I think it’s time to move on.

posted by: state st on March 28, 2014  3:33pm


posted by: Noteworthy on March 28, 2014  3:35pm

Rip Off Notes:

1. This is exactly how not to do business with developers like Peter Chapman. They are con men and rip off artists who live handsomely at taxpayer expense. This kind of look the other way has been going for years, including when the current mayor’s husband was pimping city taxpayers.

2. I am not surprised by Harp’s endorsement of it nor of Aaron Greenberg’s naivete approach to the problem. Both are insulting taxpayers, especially in light of the budget proposal currently under consideration that will require us to once again shrink our family budgets, deny our children and our own well being so that the well heeled and well connected can eat at the pig’s trough of the public teat. No thank you.

posted by: Noteworthy on March 28, 2014  3:41pm

And by the way, those who think Chapman’s numbers may be right, or are tempted to believe his numbers - don’t. There is near zero probability that $500K went into this dump. Before any consideration, he should produce receipts and canceled checks for any and all work along with bank statements that support it; and verification of where the money came from to pay for it all.

posted by: Wooster Squared on March 28, 2014  3:48pm

The City needs to take back this property. Shame on the developer for taking advantage of a young, well-meaning politician’s inexperience and gullibility.

This isn’t a compromise, it’s a developer taking the city and its taxpayers for a ride.

posted by: jim1 on March 28, 2014  3:57pm

ONE BIG “”“NO”“” ............
$50.00 a day got to be a joke.
Take the land back and have the town sell it.

This will be some more apts. that only rich people will live in overlooking Wooster Sq. park. {you might see the park from the roof}.  Looks like this part of town will be filled up with $2000.00 to 4,000.00 rents.

posted by: mechanic on March 28, 2014  3:59pm

I would love to know what Peter Thompson would propose on this.

posted by: mohovs on March 28, 2014  4:15pm

I don’t think the City should be owed the $900K, but they/we should at least get the estimated tax revenue from the last 12 years had the building been converted to apartments. Plus the fine.

Ps. there is no rule that a developer has to make money. It’s called Risk vs Reward except when you do business with New Haven it’s Reward vs Bigger Reward.

Please tell me when LCI is going to get on the Taxpayers side and enforce fines. There are way too many landlords & developers pushing the envelope and never get penalized, Every week NHI has another story like this. Thanks NHI for the reporting.

posted by: robn on March 28, 2014  4:22pm

Why is Attorney Avallone still taking clients? He’s been nominated for a sweetheart judgeship by Guv Malloy and after he’s served the next 3 years earning $150K/yr he can retire and receive $100K/yr. With the average US life expectancy at 79, that’s at least a $1.9M golden parachute!

posted by: cupojoe on March 28, 2014  4:31pm

How can Alders not know what is best for the CITY on this one? Property should belong to City of New Haven. Contract was broken over 10 years ago!

posted by: FacChec on March 28, 2014  4:39pm

I agree with the community development committee, take more time to read and study the entire agreements and the timeline. What is missing from this testimony is the original LDA with the legal actionable language. The other missing component is the prospective buyer’s testimony, he did not show up. Corporation counsel “did not see the need”.

Erick Johnson and LCI has a history of breaching it own contracts, just look at the example of the Dwight St Gardens project.
“Some of New Haven’s longest-suffering, lied-to and let-down tenants took a bold step: They chose to hope”.
Seen here:
The Dwight project is in Frank Douglas’s ward 2, Douglas should have already learned a lesson, listening and supporting the lies from Erick Johnson over a two year period.

Let’s hope Douglas and the committee does not repeat the mistake.

Here’s $69,000, No Thanks.

posted by: hdavid1 on March 28, 2014  5:20pm

I have an interest in a fair resolution of this longstanding issue since I live in, partially own and manage the adjacent property. I have developed my property over the past 15 years into very desirable loft style apartments and shares that rent for a very reasonable $750-850 per bedroom and there is strong demand for this type of space.

I really think we need to get the City and the developer to negotiate this contract and come to a settlement so the City can benefit from a developed property and I can have more pedestrian property flowing past my property.

I cannot comment on the penalties proposed but surely this can be settled by some fair compromise so that the City can see this site developed?

Finally, I regret the tone of the story and the negative aspersions cast about our Alderman Aaron Greenberg. I have found Aaron to be a very effective and energetic Alder in the very few months he has served. I have nothing but nice things to say about his service as Alder. He has involved himself and tried to make progress in more local issues than I have seen in the prior 10 years.

Let us see this contract resolved so I can look out across a decent housing development and New Haven residents can have more housing options.


posted by: HewNaven on March 28, 2014  5:38pm

Where’s Alder Stratton on this one?

posted by: Noteworthy on March 28, 2014  5:51pm

Another proposal:

I’ll put together a partnership - we’ll write the city a check for $69K - AND we will develop apartments and retail. Chapman will be out. Deal?

posted by: Martha Smith on March 28, 2014  6:27pm

If this is the type of developer that the City is afraid to scare off, it’s no wonder we have fiscal problems.

posted by: Cordalie on March 28, 2014  6:30pm

This article and some of the comments over simplify the situation.  Once real estate is deeded it takes a lawsuit to change ownership without the owner’s co-operation.

The proposal is a compromise to avoid court. (Once you are in court, you have already lost.)

The building in question and the block it is on are in much better shape than when Mr. Chapman purchased it.  The neighbors are in favor of this compromise.  I bet this is the reason our Alder supported it.

LCI has not always been led by Eric Johnson.  The compromise is a good way to create a road map to solve other problems that might be out there.

There was a public hearing, the opposit of a backroom deal.

posted by: wendy1 on March 28, 2014  7:14pm

I agree with hdavid my neighbor.  No matter how convoluted this deal or who makes the big bucks (Avallone??) I am wondering if we will see apts. for rent or sale in this building. ever. 

This is a somewhat dismal stretch of Chapel near a highway underpass and very close to several salvage yards on the way to “Fair” Haven.  Will it be empty another 12???

posted by: DingDong on March 28, 2014  8:07pm

To Paul Bass:

Thank you, thank you, thank you.  I’m so glad New Haven has you.

To the City government:

What the hell are you thinking?

posted by: DingDong on March 28, 2014  8:09pm

Somebody said: “(Once you are in court, you have already lost.)”

Are the City’s lawyers that incompetent?  Seems pretty open and shut to me.

posted by: NewHavenTaxTooHigh on March 28, 2014  9:10pm

The city ought to go to court and take back the property. If Chapman is as broke as he claims then he is in no position to endure a lengthy and expensive court battle.

posted by: cp06 on March 28, 2014  10:48pm

1- How much did Chapman collect in rents during all the years he owned this property?

2- Was it Harp or Elicker who was going to get rid of LCI? If it was Harp, what’s the status of it and why?

posted by: Bradley on March 29, 2014  6:54am

I support Mohovs’ position and believe that the taxes paid on the neighboring property (on a per square foot basis) would be a reasonable estimate of the tax revenue the city lost due to Chapman’s failure to comply with the agreement.

I also agree with Wendy1 that this issue needs to be resolved. There are a bunch of large housing developments in the pipeline or being proposed. At some point in the near future, the market will be saturated. Given the speed with which the city moves, there is a real risk it would miss the opportunity to redevelop the building. I think we all agree that it is in no one’s interest that this property stay vacant for another 12 years.

posted by: getyourfactstraight on March 29, 2014  9:41am

You know, this is one of those deals where you say “Whatever” because the damage was done. This city for the taxpayer is like shoveling (you know what) against the tide!

posted by: THREEFIFTHS on March 29, 2014  10:51am

Like I said.The gentrification vampires are coming.People you need to read this book.You will see the same things here in New Haven.

City for Sale: Ed Koch and the Betrayal of New York

posted by: HewNaven on March 29, 2014  12:24pm


What does “loft-style” mean? Either your units are lofts, or they are not lofts, and you’re simply trying to hook dimwitted renters by using the word. Regardless, thanks for actually doing something with your property and not asking our broke city for favors like Chapman!

posted by: Serf of New Haven on March 29, 2014  2:56pm

Chapman needs to take his loss like a man and not ask for a couple hundred thousand going away gift for doing the bare minimum to that property.
I know that property well.

$500,000??? Where are the receipts. Anyone can say they spent money trying to live for the last 12 years but we should not subsidize it. Wheres my subsidy for living the last 12 years?

There was plenty of money going around to fix the space. He chose not to fix it. Now it is time to take your loss Peter and go away.
I’m so sick of crony capitalists who never have to take losses on investment if they know someone in government.

I thought LCI charged $100 a day for code violations? Why is this shyster getting a break.

Kick Chapman out, get that property sold to the highest bidder in an open auction next Tuesday, and get LCI and the city out of it forever.

posted by: hdavid1 on March 29, 2014  4:04pm

HewNaven:  I will take your comments in the spirit it is offered.

I have no clue what loft-style means—it just sounded good at the time!!.  I wished to express the sense that the spaces were laid out with open spaces, a combined kitchen,dining and living area and a general industrial grade aspect to the whole place


I tried to suggest that prospective tenants expect that sprinkler pipes are exposed, some plumbing and electrical conduits are surface mounted, floors are restored hardwood but not perfect and walls are unpainted brick with original tin walls and ceilings.

I hope I have never fooled anyone since all prospects get detailed pictures with the ads I place, and have a chance to see the place before deciding, sometimes multiple times.

I am happy to tell you that loft-style or not, I manage to price the spaces so that they all get rented out without vacancies.  I will be glad to show you spaces for the August 1 rental year!!!

Regardless of all this, I really would like a fair resolution of the subject property so that this block—that really has no neighborhood—gets a chance for one… Just the prospect of more pedestrian traffic and perhaps a coffee shop will do wonders for this block.


posted by: Rick Dunne on March 30, 2014  9:25am

Maybe the City should never have entered into a deal with Chapman in the first place? It looks like he didn’t have the wherewithal to carry the property through development, but at this point settling is the smart move for the city, taxpayers & neighborhood.
I have no doubt that this guy could have spent $500k. Architects, engineers and land use attorneys would have cost that much before he remediated hazardous materials, rehabbed anything or got himself into trouble financially. At $900k of income I would guess he will lose a few bucks on the settlement.
Sounds to me like the Alder made the right recommendation. Time to move on New Haven, but try to learn from this, huh?

posted by: RHeerema on March 30, 2014  12:13pm

Once again, we are privatizing profits and socializing losses!

posted by: ctguy on March 30, 2014  7:25pm

This is an amazing display of gall. I would be rather surprised if the penalty is a flat 50.00 per day without any interest or penalty. That is not the normal practice in my limited experience. Kudos to the alders for asking tougher questions and not kowtowing to developers. Can this move out of the Community Development Board without a recommendation?

posted by: HewNaven on March 31, 2014  7:02am


Apparently the term “loft” is more ambiguous than I thought. I had the idea that it was applied exclusively to former industrial spaces, but as you pointed out, that is not the only criterium. It seems the word “loft” has come to represent the general ambience of the space, not necessarily indicating its former use. Thus, “loft-style” becomes the catch phrase for ‘in-between’ types of spaces. TIL!

Anyway, you seem like a good dude. Good job with your building!

posted by: Wooster Sq resident on March 31, 2014  11:04am

I said, “Once you are in court you have already lost.”  I was not commenting on the excellent quality of the City of New Haven’s legal team, I was talking about the fact that a settlement of any controversy, instead of going to court is superior.

posted by: Hill Resident on March 31, 2014  11:37am

Thursday night’s public hearing, which began after 9:30 p.m. followed an earlier three-and-a-half-hour hearing on the proposed Route 34 West development, which also ended with a Community Development Committee (CDC) vote to table. First let me suggest that the CDC do some homework before their meetings. It appeared that the public had more information than the committee. How could an Alder say she had NO INFORMATION on the DLDA for the Rt. 34 project and thus delayed the process/project? Why did they NOT read the Air Quality or Traffic Study before the meeting? Part of the Rt. 34 development DLDA is that if the developer does not finish the project in the allotted time (Phase 1 or Phase 2) that the property reverts back to the City and the developer forfeits their investment(including the 2.5 million purchase price). Now if Alder Greenberg does not think that it is in the City’s best interest to take back the 433 Chapel Street property, what can we expect the decision of the committee will be on the Rt. 34 DLDA? The reason why the City has attorney’s is to handle any litigation against those that do not adhere to the contracts the City makes with them. “I suspect that would antagonize developers,” Greenberg argued.  NOT taking the property back and NOT standing ground on litigation sends the wrong message to developers. And antagonizes the citizens. Bad call to settle so cheaply.

posted by: PH on March 31, 2014  4:23pm

The lawsuit threat is pretty empty.  It sounds like this guy has a pretty weak legal argument and city attorneys are paid a salary to defend against lawsuits.  Mr Chapman will end up paying a lot more for his lawsuit than the City will, and the $900,000 that the City seems likely to ultimately collect (as this property appears to have some value) will more than cover city attorney’s salary for years…

If you break the deal, you suffer the enforcement consequences! “Good business practices” does not mean insuring against losses with nothing to show for it.

posted by: HewNaven on March 31, 2014  4:53pm

It seems there are two issues in this situation:

a) What is ‘practical’ and economically feasible for the city (e.g. avoiding litigation)


b) What is the right message to send to developers who break promises with the city.

These two issues converge at a point, since taking any action, even the practical course, will set a precedent for developers to follow.

posted by: Bill Saunders on March 31, 2014  7:45pm


In New Haven, the enforcement consequence are usually written in Lemon Juice….

posted by: Really? on April 1, 2014  7:10am

I couldn’t agree more with PH

posted by: Really? on April 1, 2014  12:32pm

Deals like this will have the mill rate at 50 before long

posted by: disgruntled taxpayer on April 3, 2014  12:38pm

-The threat that Chapman would sue: on what grounds?  He violated the agreement in several ways: did not complete the rehab and transferred the property to a corporate shell.  Developers do take a risk!  They are not supposed to be compensated if they do not make the profit they intended.   
-The powerful message to developers here is that contracts with the city can be violated and the developer will profit.  The fifty dollar a day fine to Chapman which amounts to $69,000 is peanuts compared to his profits on the deal.

-The $500,000 worth of expenses Chapman claims are very hard to see when you
compare the building in 2002 and the building in 2014.  Did Chapman submit a list of expenses? Were those verified?  What about the income Chapman received during that time from the bike shop and the other tenants.  I understand that some of those tenants did work on their units-is Chapman given credit for that.
-If the city can raise the fine in the future, why wait?  Raise the fine now
In this particular case and raise it in honor of the taxpayers. 
-LCI Depute Director said that the city does not want to penalize people to that extent.  Is the city looking upon Chapman as a charity case? 
- Why doesn’t the city take pity on the taxpayers, extend charity to the
taxpayers instead of the developers who violated agreements?