City Hall, 360 State Battle Intensifies

Under fire for revelations about an eye-popping property assessment at 360 State, Mayor John DeStefano came back swinging, blasting the developer of downtown’s largest apartment tower and seizing the chance to burnish his campaign bona fides as a working man’s candidate.

DeStefano’s remarks came on the day the Independent revealed that owner of 360 State is fighting the city in court over a property assessment that is four times higher than what city officials led the public and the developer to believe it would be back in 2007. The assessment puts the project on track to pay $5.7 million in city property taxes after a five-year phase-in, instead of an estimated $1.4 million. The suit poses a threat to one main tenet of DeStefano’s reelection campaign by calling into question how much the city’s grand list of taxable properties grew this year.

In his first public remarks on the controversy Wednesday, DeStefano used the opportunity not to apologize for the discrepancy in 360 State’s assessment, but to couch himself as a friend of the working man rather than of an out-of-state developer. DeStefano said the city has done enough for Bruce Becker, the architect and developer of 360 State, the state’s largest apartment tower.

“He got his piece of the pie, Bruce Becker,” DeStefano fumed in an interview Wednesday afternoon. ​“He doesn’t need any more” tax ​“breaks.”

DeStefano took the battle to new ground by denouncing Becker and his associates over whether workers will be unionized at the Elm City Market, a food co-op that’s due to open next month on the ground floor of the tower. The co-op, which is run by a volunteer board, is leaving that question open to its workers; DeStefano called the board ​“insane” for refusing to sign a neutrality agreement with a union that seeks to organize there. Becker and the board declined comment for this story.

DeStefano’s sole opponent in the Nov. 8 mayoral election, independent Democrat Jeffrey Kerekes, held a press conference Wednesday outside the tower to blast DeStefano for ​“killing” future development downtown. He warned that 360 State’s ​“surprise” assessment would scare off future developers looking to build in New Haven. Kerekes accused the mayor of ​“cooking the books” of the city grand list for political gain.

In response, DeStefano accused Kerekes of ​“getting into bed with a downtown developer” instead of protecting the working man. The ​“working man” became his theme for the day, as DeStefano headlined a rally with trades workers who are supporting his campaign.

Unlike many people who do business with the city, Becker has not given a campaign contribution to DeStefano. He hasn’t contributed to Kerekes, either. The mayor’s labor-themed barbs are aimed at a project that has major labor credentials: 360 State is owned and financed by a union-backed pension fund; its success brings more money to union members who invest in that fund.

As DeStefano lashed out at Becker, city officials said they are still looking for a document that’s key to the controversy surrounding Becker’s project. The Independent Wednesday morning submitted a Freedom of Information request seeking an initial property assessment that was done in 2007. That assessment was the basis of a public prediction that 360 State would bring in $1.4 million per year in tax revenue once a tax deferral ends — not $5.7 million, which is what owners are slated to pay according to the latest assessment.

Also Wednesday, city officials offered more answers concerning the dispute. Officials claimed that their own press release incorrectly emphasized 360 State as a prime reason the grand list grew this year. And the city assessor said he had plenty of reason — not just media reports — to believe the building rose in value as much as it did.

Business-“Killer”

Kerekes pounced on the controversy hours after the Independent reported the news. In a 1:30 p.m. press conference outside 360 State, he accused the mayor of deceiving Becker over what the project’s tax bill would be, effectively scaring off anyone who wants to invest in the city.

“Who is going to want to build here” if they risk an eventual tax burden that’s four times higher than they expected? Kerekes asked.

“This is going to kill future economic development.”

While Becker has remained mum, Kerekes said it’s clear from the lawsuit that the developer was ​“surprised” by the amount of taxes the project will have to pay. Becker built the tower on the premise that it would provide a certain return to the union-backed pension fund that financed and owns it, the Multi-Employer Property Trust (MEPT), Kerekes pointed out.

Kerekes said it’s not just the developer who will suffer: Tax bills get passed down to those who live, shop or rent in a building, he argued. He predicted the new assessment would lead to higher leases for the Elm City Market and Devil’s Gear Bike shop, which occupies the ground floor, as well as higher rents on already-expensive apartments. Devil’s Gear owner Matt Feiner said he has four more years on his lease, so any potential increase would not hit until after that time.

Kerekes also accused DeStefano of ​“fraud” by artificially inflating the city’s grand list for political gain.

Mayor: Unionize Grocery

A few hours later, DeStefano dismissed all those charges and added a few of his own.

He began by taking aim at Bruce Becker.

“Let me be very clear where I am: I’m fighting for homeowners who are on fixed incomes and seniors who are on fixed incomes, and I’m going to see that downtown developers pay their fair share,” DeStefano said.

He called Kerekes ​“an apologist for downtown developers who are charging rents in that building that are thousands of dollars a month.”

Becker got a tax deferral, DeStefano pointed out. Becker ​“didn’t pay any building permit fees and he got the land for a dollar. He got his fair share of city taxpayers’ money,” DeStefano said.

DeStefano said 360 State doesn’t deserve any more ​“tax breaks.”

He also called on Becker to sign a ​“neutrality agreement” between the grocery store and United Food and Commercial Workers, which he said is seeking to organize future grocery workers at the store. Such an agreement would allow grocery store workers to form a union by ​“card check” recognition, rather than a secret ballot election, DeStefano said.

“It’s insane to me that the board of directors” has refused to sign such an agreement, DeStefano said. ​“The new market at 360 State Street ought to be a union operation. It’s bizarre to me that it’s not, particularly given the fact that that project was built with union members’ money.”

Becker declined to respond to the attacks. He referred comment on the grocery store to other members of the board that runs it, which was elected by the co-op’s 700 members. Becker is one of seven members of the board. Board members declined to make a statement Wednesday evening.

For the record: Becker did get the land for a dollar, but the building permit fees weren’t totally waived — the city agreed to let the project pay the estimated $3.1 million in fees over the course of 12 years, with the help of state grants.

DeStefano made his remarks in an interview following a labor rally at the former East Rock Global Magnet School on Nash Street, which is being rebuilt as part of DeStefano’s $1.5 billion school construction program. As the mayor spoke, a few union members listening in on the conversation echoed DeStefano’s call for unionizing the grocery store with murmurs of approval.

Union Cred

DeStefano was asked about his embracing unions support, given that the primary pitted his allies against a union-led attack on legislators loyal to the mayor. Candidates supported by UNITE HERE and AFSCME swept the city, winning 14 of 15 races.

One campaign aided by City Hall workers in Westville’s Ward 25 mailed a copy of a New Haven Register editorial to every Democratic voter’s household about the nefarious influence of unions in the race.

A close DeStefano ally, Democratic Town Committee Chairwoman Susie Voigt, blasted the unions for corrupting local politics with money from political action committees.

DeStefano said Wednesday he never had a problem with the union-led campaign. It targeted aldermen — not the mayor’s race, he noted. He said he has a long-running record of working with unions, including settling two labor contracts between Yale University President Rick Levin and Yale UNITE HERE unions in his office; getting the Omni hotel to unionize its workforce; and supporting an SEIU union organizing drive at Yale-New Haven Hospital.

In the current race, DeStefano has the support of two unions, the city firefighters and the building trades.

The 150-plus workers who gathered Wednesday came from the New Haven branch of the Building and Construction Trades Department, AFL-CIO. The group represents represents 18 trades with 12,000 members in the greater New Haven area. That includes iron workers, sheet metal workers, carpenters, electricians, and laborers — 4,800 of whom are New Haven residents, according to union president Andy Esposito. DeStefano said New Haven has the most members of that union in the state.

Esposito (pictured) is also the business manager for Iron Workers Local 424. He said the political action committee he runs, IRON PAC 424, has contributed $1,500 toward DeStefano’s campaign.

In a speech before his members, Esposito warned of what workers could lose with a change in the mayor’s seat.

“You don’t know what you’re going to get” with a new mayor, Esposito said. ​“We don’t want to lose good people.”

“I want you to keep your eye on the ball,” he urged his members. If they want to keep jobs in the city, he said, they should tell their neighbors to vote for DeStefano.

In a brief speech as rain began to turn the construction site muddy, DeStefano touted his construction program, which has rebuilt 40 schools so far.

The city’s practice of using Project Labor Agreements spurred Yale and Yale-New Haven Hospital to follow suit, leading to more union jobs, he said. All city construction projects, including schools, have requirements for the number of New Haven residents, minorities and women to be employed.

“The guy I’m running against thinks the school construction program was a mistake,” DeStefano warned.

“I need your help — I need your feet on the ground,” to encourage New Haveners to vote DeStefano. ​“Stand up not just for me but for yourselves.”

“We expect these guys to do a lot of work for us,” DeStefano said after he stepped down from a rainy platform and into the shelter of an umbrella.

DeStefano then tore into Kerekes for a lack of union bonafides, claiming his opponent is against unionizing the Elm City Market.

Kerekes ​“doesn’t stand up for the workers who are going to work in that grocery store and say that they should have the right to organize into a union,” DeStefano charged. ​“He’s just gotten into bed with a downtown developer who doesn’t like his assessment and who has a legal process if he doesn’t like that assessment.”

Kerekes said he was taken aback by the remark. He said he has never been asked about the grocery store union issue, nor has he made any public remarks on it.

“I hadn’t really thought about” whether the grocery should be unionized, Kerekes said. ​“I tend to think of these things as being best decided by the people who work there.”

Kerekes said he does have a record in supporting workers’ right to organize — he helped organize a union of social workers in 2003 when he worked as a social worker at Cambridge Hospital in Massachusetts, he said.

“I don’t really care about Bruce Becker,” Kerekes added. He said he publicly opposed giving Becker the old Shartenberg lot, on which 360 State now stands, for one dollar. He said his interest is not in defending one developer — but in honest dealings with city government.

“It’s about going back on your word, which kills economic development.” Kerekes said. 

Grand List Defended

Kerekes Wednesday took aim at one of the central claims of DeStefano’s campaign, that New Haven showed the largest growth in the state this year on its grand list of taxable properties. DeStefano announced in February that the city grand list showed an increase in $149 million, or 2.97 percent, in net assessed value compared to the prior year — the largest growth posted in the state, he has repeated along the campaign trail.

“We now know how John [DeStefano] makes the claim that he’s got the biggest tax roll growth in the state,” Kerekes wrote in a press release Wednesday. ​“He lies by stuffing it full with a property value that defies explanation and then tells the taxpayer to sue him if they don’t like it.”

“He’s lying to get elected,” Kerekes charged. The city jacked up the assessment on 360 State to an unfair proportion, he argued.

Kerekes gave two other examples.

Fusco Harbour Associates’ parking garage at Long Wharf Drive is now assessed at $10.60 per square foot. Meanwhile, the parking garage component of 360 State is assessed at $85.55 per square foot. Fusco’s garage has depreciated by 75 percent since it was built in 1989, according to land records.

And the Eli luxury apartments on Church Street were assessed at $60.38 per square foot. The residential portion of 360 State was assessed at more than four times that rate — $256.67 per square foot.

DeStefano later replied that Kerekes is ​“misrepresenting the facts.” The mayor said when he has talked about growing the grand list, he always meant the net grand list, which excludes properties with tax exemptions, like 360 State.

If the city was excluding 360 State from the tally, that wasn’t the picture given by a press release issued in February by the mayor’s office.

360 State is one of six property owners highlighted under the heading, ​“The largest increases in the grand list.” MEPT Chapel Street, which owns 360 State, is sixth on the list.

360 State is again highlighted in a subsequent list entitled, ​“The 2010 grand list demonstrates that the top ten tax payers in the City.” MEPT Chapel Street is number four on that list, with $130,051,320 in taxable property.

In an interview Wednesday afternoon, Assessor O’Brien called that list ​“a mistake.” The owners of 360 State weren’t among the top taxpayers, he pointed out, because they took part in a tax deferral program.

He said that list represents assessed values on the gross grand list, not the net grand list — even though the release makes no distinction between the two.

The gross grand list is the list of all taxable property after taking out tax-exempt properties such as colleges and hospitals, O’Brien said. That includes 360 State. To get the net grand list, you start with the gross grand list and take out properties that have specific exemptions, such as for the senior tax freeze, for veterans, and for properties in tax deferral programs, such as 360 State. Those exemptions tally to $274 million, O’Brien said.

O’Brien said both the city’s gross grand list and its net grand list posted the most growth in the state comparing this year to last year.

360 State’s eye-popping assessment is reflected in the growth of the gross grand list — but has nothing to do with the growth of the net grand list, according to O’Brien.

He said when the mayor states that the net grand list grew by $149 million, that figure does not include the new assessment at 360 State, so it would be unchanged by any lawsuit that might alter that assessment.

DeStefano accused Kerekes of fudging the facts. Kerekes is ​“apologizing for a huge downtown developer who is doing very well collecting millions of dollars of fees and he’s in his pocket.” 

“That’s pitiful and sad for a guy who started” the campaign as a budget watchdog, DeStefano charged.

“Jeffrey Kerekes just wants to give more and more taxpayers dollars away because he’ll go to anybody to gain support for anything. This is a guy who argues as a budget advocate, and flip-flops and now says we should be giving tax breaks out. I think that’s insane.”

DeStefano warned that as mayor, Kerekes proposes cutting Becker a break while slashing the city budget by 10 percent across the board. ​“He’s going to cut police, cut teachers, cut after-school, cut pre‑K programs so he can put money in Bruce Becker’s pocket. It’s wrong. It’s wrong. It doesn’t reflect our values as a city.”

The mayor ​“has no credibility,” Kerekes replied. ​“I’m not in anybody’s pocket. He should be talking when his entire campaign has been paid for by his employees, who feel they have to contribute for fear of retribution, and city contractors.”

Kerekes said the dispute ​“is about character and equal treatment under the law. ​“DeStefano has problems with both,” said Kerekes. ​“It’s also about bullying a taxpayer who has invested heavily in New Haven only to be screwed once the building is constructed.”

Murphy: We Lowballed

Meanwhile, the city’s economic development administrator, Kelly Murphy, offered some new information about the episode Wednesday morning.

Murphy (pictured Wednesday with developer Carter Winstanley at the opening of a new Chinese restaurant on Winchester Avenue) said she drew much of the information for her far lower 2007 projected assessment directly from the developer. She said she doesn’t remember if she saw or factored in a projection from the assessor’s office.

She said both she and the developer had reason to underestimate the eventual assessment and tax haul from the project — so that they wouldn’t end up promising the aldermen and the public more than they could deliver.

“I don’t assess taxes,” Murphy said.

Her public comments about how much tax revenue was going to be generated were part of aldermen’s decision-making process as they debated whether to sell a city-owned lot to developer Bruce Becker for $1. After much public debate, they approved the deal on Sept. 5, 2007.

And in a comment posted to the Independent Wednesday, city Assessor Bill O’Brien gave more information to defend 360 State’s assessment.

He cited seven sources where the developers cite the value of the project at between $140 and $190 million:

“Here is some important data related to this project: (1) the developers’ 2006 RFP submittal lists costs at $150.0 million; (2) the developers 2007 budget submittal indicates cost of $189 million; (3) a July 2008 submittal indicates costs of $186.5 million; (4) the developers’ May 2008 application to the State of CT DECD lists cost at $164.5 million; (5) the developers’ July 2008 project status indicates cost at $160.0 million; (6) the developers cite a value of $180 million to the New England Real Estate Journal December 2008; and (7) April 2009 developers submittal indicates partial, incomplete costs of $140.0 million.”

Back in his office Wednesday afternoon, O’Brien said he does not have a copy of a preliminary assessment done by his office in 2007 that projected the value of the building would be much lower. That document would have been prepared by a different assessor.

“I have nothing like that,” O’Brien said. ​“I certainly wouldn’t have composed one to those assertions.”

Paul Bass contributed reporting.