Can Building Boom Fill The Gap?

Paul Bass PhotoAs New Haven reckons with two recent credit downgrades, a substantial structural deficit, and a double-digit tax increase, city officials are banking on a bright light at the end of the tunnel to guide the Elm City towards future financial health.

That light? New construction.

That was the thrust of a recent presentation before the Standard & Poor’s (S&P) credit rating agency. In the presentation the Harp administration singled out the city’s building boom as a critical, positive counterbalance to recent cutbacks in municipal aid from a state that has a $5 billion projected deficit over the next two fiscal years.

The thrust signaled part of the administration’s strategy in tackling a structural long-term city deficit estimated at $30 million or more.

The pitch ultimately failed to ward off bond rating downgrades this year from two of the big three credit rating agencies, S&P and Fitch.

Although the city does not engage the third big rating agency, Moody’s, to evaluate its debt, Moody’s nevertheless published a report in August that mirrored S&P and Fitch’s concerns with the city’s recent decision to refund $160 million worth of existing debt to help cover current operating deficits and to delay debt service payments.

All three rating agencies also expressed skepticism that New Haven’s current economic strengths are sufficient to sustain city finances in the event of an economic downturn. They also were wary of just how much of the city’s economy is dependent upon major academic and medical non-profits that are by law exempt from paying property taxes on all of their real estate except that which is put to explicit commercial use.

Nevertheless, the July 18 presentation reveals a confidence in City Hall that the burst of mostly academic, medical, research, hotel, and market-rate apartment construction in the past five years represents a safeguard against future deficits.

In the pitch, officials noted that declining and expiring tax deferrals should increase the property tax revenue from existing projects by over $12 million by 2026.

Those waning tax deferrals on existing buildings could take a big chunk out of the city’s persistent $30 million structural deficit.

“It is no exaggeration to say the City is enjoying an economic boom, the likes of which I can’t remember,” Mayor Toni Harp wrote in the S&P presentation, which the Independent obtained from City Hall through a Freedom of Information Act (FOIA) request. She described a “remarkable surge of investment and job growth which continues to accelerate” as a balance to what are likely to be lasting cuts to state aid.

The presentation, which can be downloaded here, also laid out a series of proposed financial management reforms, such as the imminent development of a citywide five-year financial plan and increased employee medical and retirement contributions as part of newly negotiated union contracts. But roughly a quarter of the 32-page document is dedicated to the city’s economy.

City Economic Development Administrator Matthew Nemerson and Deputy Economic Development Director Steve Fontana, who worked closely on the economic portion of the S&P presentation and who are the City Hall employees most responsible for drawing developers’ eyes and dollars to New Haven, told the Independent that the city’s economy is uniquely positioned to flourish now and in the years ahead.

The reasons, they said, are threefold: knowledge, geography, and diversity.

Can the city’s construction boom save government’s finances? Nemerson and Fontana argued the prospects look good. 

A Knowledge Center

Thomas Breen photoThe first slide of the economic portion of the S&P presentation indicates that New Haven has a thriving economy with a roughly 2 percent annual job growth rate in large part because it is an “education, health, high-tech, and bioscience center.”

Yale University, Yale-New Haven Health, Technolutions, SeeClickFix, Alexion, and Biohaven are just a few of the local “eds-and-meds” (education and medical) players that the city references.

The presentation notes that 39 of the state’s 52 biotech firms are located in Greater New Haven; that local organizations have received $421 million in National Institute of Health (NIH) grants; and that in 2016 the state awarded the city a $2 million “Innovation Places” grant that has thus far helped fund 16 new small businesses.

“I think that investors are saying that New Haven is a worthwhile place to invest,” Fontana said. He said the pillars of the city’s economy transcend yearly ups and downs largely because of the pillars of Yale University and the Yale-New Haven Hospital system.

“I think we have structural advantages,” he continued. “Our location is one of our structural advantages. [So is] the fact that we have two significant industries in the city that can’t relocation: the university and the hospital.”

Nemerson agreed, saying that New Haven’s economy is more resilient than that of other comparable post-industrial cities because of the “institutional core of a great university and a big hospital system and all of the ancillary businesses and foundations and others that go with it.”

He said that the city has seen an average of $400 million worth of economic development each year for the last four years, and that around 60 percent of that has come from Yale. He acknowledged that the university will likely not keep up the same fervid development pace it has gone on in recent years, when it has spent over $300 million on two new residential colleges on Prospect Street and over $120 million on a new building for the Yale School of Management (SOM) on Whitney Avenue. Nevertheless, he said, the university and the hospital have proven through their recent construction projects that they are confident in investing in their New Haven campuses.

And yet, he noted, that investment and expansion do not come without its share of financial headaches for the city. Although the local non-profit behemoths’ continued construction projects do bring in building permit fees for New Haven, all but a small percentage of explicitly commercial Yale properties owned are exempt from property taxes per the state’s constitution.

And with the state’s Payment in Lieu of Taxes (PILOT) program funded at less than 40 percent, that means that New Haven gets just a trickle of property tax reimbursement dollars for some of its most valuable real estate.

“It’s not Yale’s fault per say,” Nemerson said about New Haven’s struggles with tax-exempt real estate. “But we need to be working together to make sure that the legislature understands. Knowledge centers need to be encouraged. We can’t have an expansion of hospitals and colleges if in fact there’s nothing in it for the host community. We don’t build prisons without giving the host communities benefits.”

Yale also gives the city an annual voluntary contribution of around $8.6 million. The university increased its pledged payment to the city to just over $11 million last fiscal year to help the city close its $11 million operating deficit.

Declining Deferrals

Some of the private, existing eds-and-meds companies are going to be bringing in more revenue to the city soon, Nemerson and Fontana pointed out, because of the lapsing and expiration of property tax deferral deals.

“Having completed its last re-evaluation in 2016,” one of the slides in the S&P presentation reads, “one would expect only small increased to the Grand List for the next four years. However, due to the unique timing issues centering around deferral exemptions set to both decrease and expire, New Haven is posted to reap the benefits of its investment in economic development.

In the presentation, city officials estimate that declining and expiring tax deferrals on existing and pipeline projects should add nearly $12.8 million in annual property tax revenue to city coffers by Fiscal Year 2025-2026 (FY26).

Finished buildings with waning tax deferrals include the Winchester Lofts, Alexion Pharmaceuticals, the Novella, the Corsair, and the DISTRICT.

Upcoming projects with projected temporary tax deferrals include The Blake, Stamford developer Randy Salvatore’s new luxury hotel to be located at the corner of High Street and George Street; The Lofts at Audubon Square, a new superblock’s worth of market-rate apartments and commercial space at Audubon Street and Orange Street; and The Duncan, a new boutique hotel to be located at the old Hotel Duncan on Chapel Street.

City of New HavenFontana and Nemerson said that by far the biggest tax deferral expiration and subsequent revenue will come from the Alexion Pharmaceuticals building at 100 College St.

The property is currently assessed at nearly $111 million. But, because of the tax deferral deal that the state and city struck with the now-halfway-departed pharmaceutical research company when it came to town in 2013, the property owners only had to pay around $125,000 each year between 2014 and 2018. This fiscal year the owners, Winstanley Enterprises, through their holding company WE 100 College Street LLC, are slated to pay closer to $140,000 in property taxes.

Over the next five years, Fontana said, property taxes should phase in at a quicker clip on 100 College Street’s owners. Once the deferral has completed expired a few years from now, the property owners will be on the hook for the full annual property tax bill, which, if calculated at FY18’s mill rate of 42.48, would be close to $4.7 million.

“There’s an accelerated amount of receipts that we get as all of these projects that we’ve been working on for the last several years start to roll off in the out years,” Fontana said. “And these are just projects that we have under contract now or have pending contracts.”

Location, Location, Location. & Transportation.

Nemerson and Fontana noted that Yale isn’t the only profitable, immovable entity nearby that helps boost New Haven’s economy. There’s also New York City.

Over the past decade, around 75 percent of all jobs between Trenton, N.J. and New Haven have been located in Manhattan or Brooklyn, according to Nemerson. He said that the Elm City benefits tremendously not just from its proximity to New York, but because of the relative public transit accessibility of the Big Apple.

“New Haven is doing well because it’s got a four-track train system that goes to New York City,” Nemerson said, “and places that don’t are going to be disadvantaged.” He said that rail transit has become all the more important in the age of the smartphone, because people can now begin and continue their workdays as they commute.

“The reason that trains are so important and the reason we have this fantasy about autonomous cars,” he said, “is that with cellphones, you can be working all of the time now. … New Haven’s actually closer to New York operationally than some people who just go there to watch a show or visit a relative think.”

Fontana pointed out that New Haven’s transportation advantages extend well beyond the Metro North and Amtrak.

“We’re one of three deep water ports in the state,” he said. “Two major interstate highways intersect here. We have three commuter rail lines now coming in from the west, the north, and the east. And we even have an airport.”

“A Complete City”

New Haven’s economic strength does not lie just in its growing knowledge sector, its proximity to New York City, its access to regional transit networks, or the timely decline of tax deferral deals, Nemerson and Fontana argued.

It also relies on all of those economic factors working in concert with the city’s arts and culture scene, its walkability, its unique neighborhoods, and its demographic diversity.

“One developer said to us, ‘We like New Haven because it’s what we consider a complete city,’” Fontana said. “By that I assume to mean that we offer, and this is something that Matthew and I and our team work very hard on, that we make New Haven a city where you can find anything, no matter who you are or what you want. You can find something for yourself, something new, a place to make your mark and fit in.”

Nemerson said that, unlike during the urban renewal period the 1950s and 1960s, many people no longer think of cities as simply places to locate businesses for suburban residents to commute to and from.

“Now the whole city is becoming a place where you can live,” he said. He said every neighborhood needs to have great restaurants, places for different generations to live, entertainment venues, and other amenities that make for a high-quality life.

He said, unlike many former industrial hubs, New Haven has successfully reinvented itself as a livable city with ready access to a diversity of jobs, housing, and amenities.

He said that, between New York and Boston, only Stamford offers anything close to what New Haven unique intersection of economic attributes.

Nemerson also said that New Haven’s commitment to social services for the poor, elderly, homeless, and other disadvantaged groups makes it that much more stable of a city.

The city “does have the ability to handle the challenges of the post-industrial world,” he said, “which does have to do with making sure that the people who over the last 40 years have been displaced from good-paying manufacturing jobs can be reconnected to society. That’s a very important part of it.”

Nemerson and Fontana said that that unique convergence of economic factors and nationwide trend towards city living is what they pitch to developers considering investing in any city between Baltimore and Boston.

Nemerson said he is currently talking with two different developers who are each considering New Haven projects in the $150 million to $250 million range. He and Fontana said that prospective developers regularly reach out to their team to learn more about the city’s redevelopment plans for Long Wharf.

“That’s what their job is,” Nemerson said about developers looking to invest tens and hundreds of millions of dollars on new properties in cities throughout the Northeast and Mid-Atlantic. “Their job is to invest that money. And our job is to get them to think about investing it here.”

Strong Enough?

The city’s presentation doesn’t touch on potential limits on a strategy that relies heavily on a continued building boom, such as the potential for booms to end, or the impact of tariffs on the price of steel.

Mohit Agrawal, the chair of the independent Financial Review and Audit Commission (FRAC), said he agrees that the city is benefiting from a construction boom. But hepointed out some of its limitations. In particular, he said, he is concerned that high property taxes, high energy costs, and crumbling infrastructure will prevent the economic surge of the building boom from benefiting all segments of society.

“Yes, New Haven in growing,” he argued, “but is the tide raising all boats? Given our budget difficulties, the city would hope to use any new tax revenue related to grand list growth simply to balance rising costs rather than to make targeted investments that will raise our quality of life.”

He said that the city’s debt service costs on a cash basis are slated to increase by over $34 million over the next several years, that health costs will continue to rise at 7 percent each year, and that the city’s pension costs should increase to around $140 million per year by 2041.

He estimated that if New Haven were able to increase its annual growth rate to 4 percent and keep it there, “we would have a good chance to grow our way out of our budget deficit. However, the more likely outcome is that grand list growth will help but not fully close the deficit.”

He said that the average annual growth rate for the city’s grand list has been 3.8 percent over the past 22 years. But over the past 5 years, that average annual growth rate has dropped to 1.9 percent.

Furthermore, he said, grand list growth can be a double-edged sword for lower-income families whose income may not rise in proportion to the increasing value of their homes or cost of their rentals.

“So voters and policy makers must think carefully about public policies that would lead to growth being shared broadly,” he said.

All three major credit rating agencies acknowledged the city’s economic strengths. They all also expressed reservations that the city’s current development boom may not be sufficient to sustain city finances in case of an economic downturn.

In their July 27 report, Fitch analysts lauded New Haven as a “regional center for higher education, healthcare, transportation and the arts.” They recognized that the city’s economy is anchored by Yale University and Yale-New Haven Hospital, which provide “stability to the economy” and continue to “attract development and investment from biotechnology, pharmaceuticals and life-science companies.”

But, the report notes, “the city’s unemployment rate remains elevated and wealth levels are well below state and national averages, as has historically been the case. Both statistics are somewhat influenced by the level of students residing in the city. The city’s 2016 poverty rate was a high 26.1 percent.”

The Fitch analysts write that new development and declining tax deferrals “should help modestly offset the need for future tax rate hikes.”

“Fitch believes the city’s ability to reduce expenses tied to its services will become limited in a future economic downturn,” the report continues.

S&P’s analysts expressed similar cautious optimism about the city’s economy in their July 25 report.

They wrote that the city has a “strong economy, with access to a broad and diverse metropolitan statistical area (MSA) and a local stabilizing institutional influence, but also a high percentage of exempt properties within its tax base, making it difficult for management to raise local-source revenues.”

The analysts warn that many people who work in New Haven live in outlying suburbs, “which limits New Haven’s ability to capture revenue from its primary economic strengths. Economic redevelopment efforts have yielded only modest increases in the city’s grand list in recent years.”

In their Aug. 21 report on New Haven finances, Moody’s analysts offered perhaps the most succinct summary of the local economy’s strengths and vulnerabilities.

“Positively,” they wrote, “the city’s tax base and local economy are strong, benefiting from the presence of Yale University (Aaa stable) and Yale New Haven Health (Aa3 stable). However, these important institutions are tax exempt and constrain the city’s ability to generate significant additional property tax revenues. Property tax revenue accounted for 43.3 percent of the city’s fiscal 2017 revenues.”

Paul Bass PhotoClick on the links below to read other stories about the city’s structural deficit and ideas for closing it.

Hey, Buddy, Can You Spare $30 Million?
If City’s Broke, Can MARB Fix It?
Fixing the Budget: Fire Choices
Old Debt Plugs Old $10M Shortfall
Police, Fire Chiefs: Overtime Budgets “Unrealistic”
Record Bond Sale OK’d; Discipline Vowed
Like Hartford, New Haven “Scoops & Tosses”
S&P Downgrades City Credit Rating
City Will Refinance Debt To Avoid Takeover
Mayor Open To Idea Of Fewer Top Cops
City Ends Policy As It Begins To Pay Off

Tags: ,

Post a Comment

You must be logged in to comment

If you already have an account, please log in here | If not, please .

Comments

posted by: Noteworthy on September 11, 2018  5:56pm

Voodoo and Hope Notes:

1. This is a toxic brew and one that is sure to fail.

2. The simple truth is that increased costs and spending outpace any meaningful harvest of a tax break that’s ending. Taxpayers will never benefit.

3. Hope is never a strategy.

4. It is no small wonder the ratings agencies sniffed and shoved it away.

posted by: AverageTaxpayer on September 11, 2018  6:09pm

Sure would be nice to see something happen with the old Coliseum site. Isn’t it about time for Max Reim to give us another update, stating that good news is just around the corner?

Perhaps it’s time to get a petition up, asking LWLP to exit the deal, and free up the land for someone else to buy and develop? At what point to we get to declare a default? Maybe Yale’s higher echelon cluld help pressure Reim to bow out?

And what is happening with retail development on Long Wharf? We’ve got two mega-anchors to die for, (IKEA and Jordan’s), and a wasteland in between!

posted by: robn on September 11, 2018  7:07pm

Taxpayers revolt. Get these people (ALL of them) out of office. The mayors pitch to the rating agencies includes a wink that she can always raise taxes on you again. Like this years 11%. Show the fat cats you’re not going to take it.

posted by: __quinnchionn__ on September 11, 2018  7:19pm

Between NYC and Boston — New Haven has to be the place that leads all other cities in Connecticut. I honestly believe that New Haven has the potential to have up to a half of a million residents living here. (Maybe even more) — The strength of this state will only depend on the strength of the cities, but as far as that goes I think New Haven MUST be the leader in the clubhouse. A “structural booming economy” is only a fraction of what makes a city economically stronger. There are other factors of course. You also have to play your cards right when it comes to money and making certain decisions, but I think what the city needs to work on is having more advantages than disadvantages for people who really wants to be here. I think New Haven is not quite at that point yet, but it’s certainly growing into being a better city.

posted by: Patricia Kane on September 11, 2018  7:44pm

If these rosy projections are to be believed, then why do we need to subsidize the Ninth Square?- in addition to the wealthy non-profits and Tweed Airport?
It’s insane to offer tax breaks to these developers and then add 11% to already burdened property owners.

posted by: Kevin McCarthy on September 11, 2018  10:28pm

I respect and like Mayor Harp and may well vote for her again if she runs for re-election. But this is whistling past the graveyard. The new developments under construction and in the pipeline are good for the city. But they will bring relatively modest revenues in the next few years.

AT, I suspect you’ve seen the story in the Register where IKEA is proposing to put in a hotel in the Pirelli building.

posted by: NHPLEB on September 12, 2018  5:22am

@ P.  Kane— exactly right.  Why subsidize Tweed or any other project if NH is such a hot place to be?  Because Tweed is a loser and the developers make more money on the abatements than the building itself.  Wake up , people

@ Kevin McCarthy—-  you don’t vote for Mayor Harp or anyone else because you “like”  them.  This is not a high school prom vote.  NH is teetering on the verge of becoming a Detroit;  where vultures swoop in and residents are driven out.  You think that’s “nice”??

posted by: robn on September 12, 2018  7:59am

Let me explain what a BS argument the mayor is presenting.

We have a structural deficit of $30,000,000 and the mayor is telling us that (eventually, over a decade) new properties tax contribution will take a bite out of our property tax bills. For that to happen, we would need this…

Our property tax mill rate is 42.98, meaning for every $1,000 of assessed property value, the city taxes $42.98 (for example, if your house is assessed at $100,000, you pay the city $4,298)

Our deficit of $30,000,000 / $42.98 = 698,000…that’s how many $1,000 chunks of property we’d need to cover the structural deficit.

698,000 x $1,000 = $698,000,000…that’s how much assessment value we’re talking about.

To put this in perspective, Yale owns property assessed at about $2.6B….$2,600,000,000. Our current building boom would have to be worth about a quarter of Yale’s entire building stock.

Not going to happen…not even close.


https://www.nhregister.com/colleges/article/Yale-s-tax-exempt-New-Haven-property-worth-2-5-11372847.php

posted by: DRAD on September 12, 2018  8:45am

@robn (7:59am)

Best. Comment. Ever. Posted.

posted by: anonymous on September 12, 2018  8:45am

If you really want to see a boom, allow 3-4 more commercial flights to land at Tweed. There are already countless private flights, so doing this would have absolutely no negative impact on the surrounding neighborhood. In fact, a more prosperous city core could easily double the value of East Shore/Morris Cove homes.

posted by: Stylo on September 12, 2018  9:42am

Time for new leadership.

posted by: AverageTaxpayer on September 12, 2018  10:02am

@ Kevin — yes, I’ve seen the story about the Pirelli building. But I was thinking further retail development. Still wonder why the high-end outlet center, “The Haven” is going into West Haven, and not Long Wharf!

https://www.nhregister.com/news/article/The-Haven-high-end-outlet-mall-advances-winning-13067785.php

@ Robn — a little simpler math. The new upscale apartments being built are generating about $4,000/year in property tax revenues. Let’s be generous and call it $5,000/year.

If we need to close a structural $30,000,000 budgetary deficit, that’s just 6,000 luxury units! How many have been built? How many in the works? How many more do we need to create?

Anyway, this is why the LWLP/Coliseum site is such a friggin fiasco. New Haven needs those revenues!

posted by: JCFremont on September 12, 2018  11:15am

First off I hope now that the properties will be paying real estate taxes they landlords are able to keep rents at a level that renters have some money left to “enjoy” New Haven. Second the landlords will be able to maintain the buildings and continue to keep sustainable tenets.
We need to stop thinking that New Haven being a stop off between Boston and New York, it’s hard enough to get people who live in Trumbull to travel up to New Haven. They built the Coliseum and the CT Tennis Center factoring in those cities and where left with spaces that could not reach half its capacity. Connecticut’s “Brain Corridor” is too spread out where as Boston has Harvard, MIT, BC and BU all with in a stones throw of each other. As far as Yale’s tax exempt properties, please explain to me what utopian vision do you see replacing those buildings with that would be equal to current value? The Prospect area’s sat dormant for decades, what is the value of public housing on Hillhouse Avenue? If the city taxed all of Yale’s educational properties do you think they would have purchased or rather “saved” them to begin with, or would they have limited their purchases and building.

posted by: Kevin McCarthy on September 12, 2018  11:30am

NHPLEB, Toni was a state senator for most of the 30 years I was on the legislative staff, and I developed a real respect for her there. But notwithstanding this, the idea that the current developments will bail the city out of its fiscal mess is implausible. The same mess will likely deter most plausible alternative candidates from running for mayor. The mayor, whoever that is, will have to cut services, raise taxes, or some combination of the two.

AT, three possible answers to your question about The Haven (1) West Haven is slightly closer to Fairfield County and its wealth than New Haven, (2) land prices near I-95 are probably lower in West Haven, and (3) development procedures and politics are somewhat less complicated in West Haven.

posted by: HewNaven on September 12, 2018  12:27pm

There was an as yet unprecedented building boom in New Haven in the 1960s. Yet it didn’t stave off macro economic and social trends (e.g. white flight, stagflation, loss of blue-collar jobs, etc.)

posted by: AverageTaxpayer on September 12, 2018  12:31pm

@ Kevin —

1. At the juncture of I-95 & I-91, with much greater visibility,  Long Wharf is a much better location than where “The Haven” is going. (Just one exit and 3/4 of a mile away.)

2. Probably so.

3. Ding! Ding! Ding! West Haven has aggressively worked to make the project happen. Meanwhile Long Wharf remains under-utilized, with the City losing out on the revenues it could generate. (If the Long Wharf Mall has happened, what would be the tax receipts?)

posted by: MohitAgrawal on September 12, 2018  1:46pm

Thank you for this deeply reported article, Tom.

posted by: Jonathan Hopkins on September 12, 2018  3:15pm

Great article.

I think that New Haven’s building boom has certainly better than no investment at all, but I am suspicious about 1) the sustainability of this level of investment, 2) the long-term market for these kinds of dwelling units, 3) how buildings will be adapted should market demand change in the future, and 4) the actual benefit to New Haven’s existing residents.

I wonder if it would be productive for the Economic Development Administration to try to figure out how many people there are in the City like Ed Rodriquez (https://www.newhavenindependent.org/index.php/archives/entry/fair_haven_sweep/) and if people like that can play a role in building housing, starting businesses, and growing New Haven from within. I’m much more interested in the prospect than continuing to shape land use policy to empower out-of-town and out-of-state developers to build mega-structure rental apartment buildings.

PK,
I believe the Ninth Square could have been converted to a fully market rate development. It was maintained as a mixed-income project because the political backlash from certain groups about gentrification, displacement, relocation, loss of affordable housing, and other concerns arising from a transfer to entirely market rate apartments would have been politically taxing on Harp’s administration.

posted by: 1644 on September 12, 2018  6:12pm

PK:  The city does NOT need to subsidize that Ninth Square.  The tax abatement is on the BoA agenda for 25 September.  As Kevin says, if the city does not pass the abatement, complex may become market rate.  The result would be fewer poor people living near downtown, and, perhaps, fewer poor people living in New Haven.  There result, of course, is that services used by Ninth Square residents are paid for by other residents and non-resident property owners.

As for Tweed, if the state allowed the city to expand the runway, the subsidy could be reduced.  Ideally, the airport would break even.  The more flights and passengers, the less subsidy would be needed.

As for the non-profits, show me the numbers as to an actual subsidy.

posted by: 1644 on September 12, 2018  6:18pm

JH;  For the city, the game is tax revenue, and tax revenue is only generating through taxable property.  Who owns the property and where they live makes no difference to the revenue.  The city should welcome any investment, regardless of source, and the more the better.  Of course, often the city deliberately lessens the value of developments through affordable housing requirements, or pro-actively seeks to keep property from being revenue producing, as with the Strong School and Fair Haven Health Clinic expansion.

posted by: Jonathan Hopkins on September 12, 2018  11:17pm

1644,
Thanks for the info about the Ninth Square hearing. For some reason, I had it in my head that the tax abatement and sale to the new owners had already been approved. I still think that the Harp administration probably thinks that to support conversion to market rate would be politically risky.

I agree with your points about property assessed at its full market value paying more property taxes than subsidized housing with depressed values, local tax abatements, or other distorting features. However, I’m not so sure that the residence of New Haven’s real estate investors, owners, and managers is irrelevant.

Would New Haven do better or worse if more of the City’s real estate investors, owners, and managers lived within the City and spent some of that revenue on local property taxes on their primary residence in the City, shopping at local stores, supporting local cultural venues, and engaging in local politics? My position, is simply that we should, to the maximum feasible extent, encourage New Haven’s real estate investors, owners, and managers to reside in the City and to encourage real estate investment, ownership, and management by people already residing within the City. That’s it. And I think it’s largely in agreement with your point, because if New Haven were more fiscally sound with a greater proportion of properties assessed at full market value, the City might be a more attractive place for the investor class to live, and from which a local investor class could emerge.

posted by: UrbanPlanner on September 13, 2018  2:13pm

Has the city considered cutting its budget? ... maybe that would help.

Having an 11% tax increase in one year and still falling short is the beginning of the end

posted by: 1644 on September 13, 2018  3:55pm

JH:  Sure, it would be marginally better if all owners of New Haven real estate lived in New Haven.  The fact is, there is a very limited pool of people willing to undertake the risks of real estate investment.  New Haven does every thing it can to increase those risks and make it difficult to be a landlord in New Haven, so that pool is even smaller for New Haven.  Moreover, New Haven has few neighborhoods that would appeal to the investor class.  Hillhouse has been destroyed by Yale, Route 34 destroyed Dwight, and institutional and multi-family development has encroached on Prospect Hill/East Rock.  (Which isn’t to say there aren’t some nice places, some investor friends of mine have a part-time place on Ogden.).  Westville haas some nice places, but otherwise the choices are Woodbridge, Bethany, Guilford, Madison, and parts of Branford.  Ed & Mary Fusco lived in Branford, but I think most of their kids live in Guilford now.  Even in the 1960’s, the Fusco’s would had difficultly finding a place with room for a tennis court, pool, and for a dog to roam.
  Moreover, absence of local banks makes financing difficult.

posted by: Jonathan Hopkins on September 13, 2018  6:23pm

1644,
The Fuscos are an interesting example. What began as a small time local construction firm has grown into a major corporation over subsequent generations. Why aren’t more Fusco-like enterprises emerging from New Haven these days? The absence of local financial institutions certainly contributes, though perhaps Start Bank could do more. I suspect another factor is zoning, which has largely prohibited New Haveners from making commercial investments in residential property since 1963 (and to a lesser extent since 1926). In effect, New Haven’s 10,000+ homeowner occupants today are unable to built an additional dwelling unit on their property, operate a commercial home business, or do much of anything other than make cosmetic changes to their residence. This is a major impediment to the kind of entry level real estate investing experience that allows the next Fusco to emerge. Wholesale upzoning of residential districts to allow commercial development is obviously dead-on-arrival, but I wonder if provisions to allow accessory commercial uses and accessory dwellings in New Haven’s residential districts would be palatable.