Welch Annex Apartments Catch A (Tax) Break

Is every property owner in New Haven who makes studio, one- and two-bedroom apartments available for $1,000-$1,300 per month entitled to a one time $16,500 Community Development Block Grant and an $1,100+ annual property tax rebate for 17 years? Or is that just for developers from Fairfield County?

So the owners of this 45,000 sqft building will be paying just a little bit more property taxes than your average homeowner on Orange Street is paying now (probably less in the future)?
And this is good for taxpayers how?

If Salvatore's company sells the project, does the next owner have to abide by the agreement with the City ?

posted by: Patricia Kane on September 9, 2020 11:14am
If Salvatore's company sells the project, does the next owner have to abide by the agreement with the City ?

I was thinking the same thing.After all he did do this.

Salvatore Puts Novella Up For Sale.

Builder Randy Salvatore has invited potential buyers to make offers on the 136-unit luxury apartment building he erected on a former downtown red light-district corner.

He published a "call for offers" Wednesday and is hosting tours over the next two weeks of the 125,350 square-foot building on 1.01 acres at the corner of Chapel and Howe streets. The building features five stories of upscale apartments above a first-story pharmacy and unoccupied storefront.

The $40 million complex — a symbol of the torrid downtown market-rate housing market — opened its doors in October 2015. At the time Mayor Toni Harp declared that it had helped transform the former red-light district into a "green light" district. The building has been fully leased, Salvatore said.

So why sell?

The Stamford builder said in an interview Thursday that someone happened to approach him about buying it, so he figured he'd put it on the market to see what price it can fetch.

"If I can get a good offer, I will agree and put the capital into other projects. We'll know in a month or two if I can get a number I'm comfortable with. If not, I'll hold it indefinitely," he said.

https://www.newhavenindependent.org/index.php/archives/entry/novella_up_for_sale/

@ NH Urbanism--- it's a big club and you ain't in it! George Carlin

Robn--- taxpayers originally bought the building and now Salvatore will reap the benefits and the rents.

PKane--- if the building is a loser; the taxpayers have to take it back and foot the bill. If it's a winner, the developer gets the tax breaks/writeoffs, the rents, and the gain on the sale. He's no sucker. Taxpayers are.

But who is surprised by this? Would you be a landlord with an eviction moratorium and stay in a dying state like CT?

I love this project and I don't understand the negativity. The city gets affordable housing - real affordable housing, and a derelict property is rehabbed and put on the tax role. This is a win for everyone. EVERYONE! The developer can win too, its ok.

If you read the article you'd notice that yes, the apartments stay affordable for 42 years - I would be shocked if that was a 'handshake' deal and not legally binding. The tax relief lasts for 17 years and appears to work out to about $35k a year to the city - while that might be what folks on Prospect Hill pay in taxes in my neighborhood that works out to about 5-6 homes. This works for the city in short term basis in meeting the immediate need for affordable housing and the long term in providing a tax base and overall city improvement.

I'm amazed that people posing as urbanists and truth tellers would be so quick to spew hate. Smile once in awhile guys, it's gonna be alright.

I fail to see how a 2 bedroom apartment renting for an "initial" rent of $1,321.00 is affordable for a family with one typical essential worker/front line worker hourly wage, or a rookie/entry level public servant job salary job. CT needs affordable rents for all the workers who kept things running during the lockdown. The workers who show up every day to provide services we all need to make society run smoothly.

dear urban carpenter--- "hate" has nothing to do with it, so let's keep to the issue at hand.
Developers make money hand over fist in cities like NH. If they didn't; they'd be building in Madison. Why don't they build there?? No handouts and sweetheart deals. Face facts. NH and cities like it are troughs of corruption and a petri dish for every experimental program looking for desperate communities to be guinea pigs so developers and pols can score the dough.

The article states the most expensive 2-BR bedrooms (which presumably are 60% of the median AMI) are $1,321. Meanwhile the studios start at a startling <$400. That is incredibly affordable.

Yeah, the city is gonna lose taxes on it. But it's going to gain affordable housing. Which is desperately needs. And the developer will not lose money due to low taxes and grants from the state, housing authority, etc.

How many people who own houses in Orange St rent them out at the same level of affordable housing? Because last I checked, the answer is zero. Market rate in East Rock is quite high, and the taxes reflect that.

I pay New Haven taxes in Edgewood as well and I don't love it, but developers paying less taxes to provide more housing inventory for low-income residents doesn't hurt me at all. Right now it's a vacant building which is also not helping my tax burden.

The city gets slightly more taxes, but some more affordable housing, which it badly needs.

Why people have to take things so personally I don't understand.

A developer is never, ever going to build a luxury apartment building with affordable housing and pay full taxes without grants just to lose money. And the city does the best it can to provide as much affordable housing it can, but that's all more $$$ from the city.

It seems to me that quite a few New Haven residents just hate any development, period. Not enough affordable housing? Booo! Affordable housing but tax breaks! Booooo! Local developer but might slightly increase traffic in Dwight! Boooooo!

There's no such thing as a perfect development. Just be happy we're getting some ACTUAL affordable housing and not the 360 State version or people making 80K a year.

Ideally, the City of New Haven would have rehabbed this school building and continued to use it as a public school 20 years ago. Instead, the City opted to condemn and acquire hundreds of affordable housing units at Asylum and Congress Ave, demolish them, and build a new public school building in their place and spend a fortune on legal fees when aggrieved homeowners sued the City to keep their homes. Meanwhile, the City-owned school building on Prince Street and featured in this article sat vacant for years.

Having said that, if a developer could have privately financed the rehabilitation of the school into a market rate apartment building, then great. There would have been no complaint from me.

Insisting on subsidizing this project with local, state, and federal funds so that rents can be made available at Fair Market Value (the same price as dozens of unsubsidized apartments located a few blocks west) will illicit a complaint.

I'd prefer that grants, loans, and tax breaks go towards helping local residents create more housing rather then to subsidizing Yale postdoc researchers and out-of-town developers.

UC,

Ok so 5 houses pay the same taxes as 30 others who enjoy a rent break. Why? Why is are a select band of NHV taxpayers bearing the states burden of subsidizing low income housing? East Haven, West Haven and Milford are a 10 minute drive and one can get cheaper rents there in unsubsidized properties.

@CityYankee

I believe the issue at hand to be the state of the city we live in. I imagine we all want to live in a vibrant and successful city that can provide housing for those in need, not be littered with derelict buildings and afford to keep the lights on with the provisions from a viable tax base. Your anger and distrust

Developers are not always the bad guys. It takes incredible effort, risk and timing to complete a project of that magnitude. Sure they make money - it is a reward for the risk and effort. If there was no money in it then no one would do it.... or we'd be a socialist society.

Developers go where there is demand for development. Sometimes that's in Madison and sometimes its in New Haven. You should note that Madison, like every municipality in the nation except Houston, dictates what can be built where through their zoning ordinance. Developers are not universities or churches and hardly get 'sweetheart' deals. The city sets the parameters (zoning) for what should be built based on the city's long term goals. Developers then work within those guidelines or make proposals for modifications. The city negotiates to get the best product. The developer decides if the risk is worth the reward. The Illuminati are barely involved.

If you're not happy with a 100% affordable housing project at no loss to the city then I have to file you in the hater column. The Independent did phrase the headline to get you all riled up but that doesn't obfuscate the facts. This project is a win for all of us.

@ New Haven Urbanism

"Market-rate" is very much tied to supply/demand and the cost of construction. Construction costs don't go down so an apartment that was built this year costs more to build than the same apartment ten years ago. New will always cost more than old and so a new apartment will always have a higher rent than an existing apartment. It's incredibly difficult to build new or rehab construction that meets affordability standards. This building does so that should be applauded.

@robn

Sure, maybe there's cheaper rent in Milford. I know there's cheaper rent in South Carolina.

I know that New Haven has more than 50% of it's properties off the tax books. I know that New Haven is the cultural and transportation hub for the state but receives very little support. I know that New Haven has a univeristy and a hospital at it's core that contribute less than their share while gobbling city resources. I know that out of state slum lords own most of the rental property and jack rent and minimize repairs to keep their taxes low and profits high. I know that our mayors have repeatedly refinanced our debt and kicked it down the road. I know that I'm not an economist but the money has to come from somewhere and currently that is from people like you and me.

UC,

Not necessarily a win win.

Was the property put out to bid the on the market with no strings attached? If not then taxpayers did not get full value and maybe even forwent a good tax paying property (for 17 years!)

Will the property place a burden on city services? Most likely since lower income households tend to have more children in need of education which is our primary expenditure.

Patricia, the DLDA for the Coliseum project gives the developer's successors and assigns the same responsibilities and rights as the original developer. I suspect (but do not know) that is true for the agreement for this project.

Heather, with the exception of two of the studios, the project is affordable for moderate- rather than low-income households. There is a need for moderate-income housing. But the project, which has received substantial subsidies as well as the tax break, illustrates how hard it is to build affordable low-income housing.

@Kevin McCarthy: my question re: whether restrictions would be binding on a subsequent purchaser arose because one of Salvatore's Stamford project gave initial tenants all sorts of amenities that turned out not to be part of the lease. Upon sale to the purchaser, the tenants had no recourse. The amenities that attracted them to rent, were gone and they had no rights to insist that they continue.
I understand the trade offs in this Welch School development and not questioning the wisdom of the deal, just trying to ascertain whether the rental restrictions would remain in the event of a sale.

urban carpenter: "I know that New Haven is the cultural and transportation hub for the state but receives very little support."
About half of New Haven's budget is state and federal aid. That's hardly "very little". Of course, to New Haven's mayor and Alders, it's never enough. New Haven will always find some needy group or cause to support with hand-outs or make-work jobs. Meanwhile, New Haven undermines its own revenue with deals like this one.

BTW: There are no apartments anywhere for less than $900, because that's pretty much the break even point for taxes, insurances, and maintenance, even without a mortgage. There are, however, scads of two bedroom apartments at $1300, both in New Haven and the suburbs. My wife and I previously rented our two bedroom (detached house with private yard) for $1400, although the tenant turned out badly, so we no longer other it openly. We are now renting to a new PA at YNHH , at YNHH for $1100. Alternatively, he could have found housing in on Howard Ave for $1000 or less.
Milford is not South Carolina. In fact, HUD calls our area New Haven-Milford. Milford has lower crime, lower taxes, better (open!) schools, is quieter, in the same job market and a touch closer to the city with only a touch worse rail connections, and free station parking on weekends. Milford itself has lots of industry and jobs. What advantages does Morris Cove have over Woodmont? New Haven's advantage had been bars and music, but those are dead due to CoViD-19 restrictions. Branford is similar to Milford, minus the rail connections to the city. As Nemerson said, culturally, New Haven could be termed a bigger Branford or a smaller New York.