Thomas MacMillan Photo
Mayor DeStefano backed off his assault on the Elm City Coop.
When the city announced a brand new apartment tower would bring in $1.4 million in taxes per year — not the eye-popping $5.7 million bill now being floated — it was based on a comparison to the Eli luxury apartment building that today’s assessor now says is not valid.
That explanation came from a document the city released Friday in response to a Freedom of Information Request from the Independent.
The explanation was the latest development in a growing controversy over a sky-high real estate assessment for downtown’s biggest apartment tower, 360 State. The Independent revealed last week that the 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 per year, instead of an estimated $1.4 million. The dispute has emerged as a campaign issue because the suit poses a threat to one main tenet of DeStefano’s reelection campaign — his claim of record growth on the city’s grand list of taxable properties.
Seeking explanation on how the assessment on the property grew by a multiple of four, the Independent requested an initial property assessment that was the basis of the $1.4 million tax estimate.
City spokesman Adam Joseph released a spreadsheet Friday that gives a partial answer to that question. (Click here to read it.)
The spreadsheet lists the developer of 360 State, Becker + Becker, as well as four other groups of architects and developers that responded to a Request For Proposals to build on the city’s vacant lot, the site of the former Shartenberg department store.
The sheet was prepared by former Assessor Dave Ambrose in conjunction with Becky Bombero of the Office of Management and Budget and consultant Lisa Grossman, Joseph said.
It lays out projected tax revenue from several proposed projects based on one assumption: That the projects would be assessed at the same rate as the Eli luxury apartments on Church Street, at $70 per square foot. (The Eli has since depreciated and is assessed at $60.38 per square foot.)
Based on that assumption, the projected tax revenue of Becker + Becker’s building would be $1.4 million, the document calculates. Here’s the math: The building at the time was projected to be 489,000 square feet. The projected assessment would be 70 times that, or 34,230,000. Multiply by a tax rate of 42.21 mills and presto — you get an expected tax revenue of $1,444,848.
The projection is couched as a “conservative scenario.” The spreadsheet contains a caveat that the building’s value may change.
It doesn’t say that the main assumption would be thrown out the window and that the new building would be assessed at a rate that’s nearly four times the one in the projection.
Developer Bruce Becker was chosen among the nine competitors to buy the lot and build there. His resulting building, which is owned by a union-backed pension fund, is being assessed at a rate of $256.67 per square foot for the residential component.
City Assessor Bill O’Brien said last week that 360 State is not comparable to the Eli because it is brand new, “modern and contemporary,” whereas the Eli was retrofitted into an older building. The two luxury apartment buildings have comparable rents.
Reached Friday, Joseph said the projection included in the document was never meant to be used as a prediction of future tax.
“They used the Eli as a conservative estimate to use as a base number. It’s the most conservative estimate possible.” He said it was meant to provide an “absolute floor,” a baseline that aldermen could expect to come from the building.
Joseph said he’s not sure when the document was created, but a handwritten date on it reads 7/25/07. Because other Shartenberg suitors are also listed on the document, it’s not clear if this was the document Murphy’s office used as a basis for the public projection that the project would bring in $1.4 million in taxes. But it gives projections in the same ballpark as Murphy’s presentation to aldermen in 2007.
Joseph said the spreadsheet was not meant to predict future tax revenue, but to inform the city’s decision on whether to let the developer waive building permit fees and buy a choice piece of land for one dollar.
In the end, the city determined not to waive the $3.1 million in expected building permit fees, but to allow the developer to pay those fees over the course of 12 years. The city did sell the land for a dollar, with the caveat that the developer had to provide parking for a nearby office building and take on millions of dollars in environmental cleanup.
Joseph said the projection was made at a time when the city didn’t know how big Becker’s building would be.
Indeed, the project ended up expanding beyond 489,000 feet. Becker added a 207,986-square-foot parking garage below 446,320 square feet of apartments, adjacent to 801,352 square feet of retail space.
The total project is now 681,772 square feet.
The per-square-foot assessment still appears to be much higher than other buildings of its type.
For example, the parking garage is assessed at $59.89 per square foot, compared to $32.58 for Yale’s Amistad Street Garage and $27.46 for the city’s Temple Street Garage.
The $256.67-per-square-foot assessment of 360 State’s residential component is four times higher than many competitors, including the Centerpointe ($40.31 per square foot) and the Taft ($46.22).
Spokesman Joseph Friday stuck by the assessment. He said the assessor is just following the law, valuing 360 State at what it’s worth.
360 State Stays Neutral
Melissa Bailey Photo
Meanwhile Friday, Mayor DeStefano backed away from fiery rhetoric against the Elm City Market, the food cooperative that’s set to open in October on the ground floor of 360 State. And a union representative expressed optimism about organizing efforts there.
Moments after a roaring campaign stump speech to a crowd of union loyalists at a rainy rally Wednesday, DeStefano tore into the volunteer board of the market for allegedly refusing to unionize its workforce. He called on the board to sign a “neutrality agreement” to allow grocery store workers to form a union by “card check” recognition, rather than a secret ballot election.
“It’s insane to me that the board of directors” has refused to sign such an agreement, DeStefano said at the time. “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.”
On Friday, the Independent passed along to the mayor a “neutrality policy” issued by the market, wherein the management vows to neither encourage nor discourage the formation of a union there.
After reading the policy again, and cooling down from the rally, DeStefano struck a more conciliatory note. He said he’s optimistic about the situation because the United Food and Commercial Workers union is talking to the grocery about organizing workers.
Tom Wilkinson, president of UFCW Local 317, the union that represents nearby workers at Stop & Shop, confirmed Monday that his union has been in discussions with Elm City Market about unionizing the workforce.
So far, only 20 non-managerial workers are employed there, plus 20 managers. The grocery is set to open later this month with 100 workers, according to the market’s latest newsletter.
Wilkinson said he’s optimistic his union can set up a union before doors open. He recounted a series of positive talks with the grocery board beginning early this year. He said he approached the mayor earlier this year and asked him to set up a meeting between union members and the board that governs the grocery. The mayor obliged, he said.
Wilkinson said he and John Olsen of the AFL-CIO sat down with Bruce Becker and other members of the board. They talked about the union’s desire to run the grocery as a union shop. Wilkinson said the board was open to the idea.
“The response was never no,” he said. “The door was always open.”
The parties also talked about the grocery signing a neutrality agreement, Wilkinson said. The grocery board then went back and drafted its own neutrality policy, which it approved on Aug. 10.
Wilkinson Monday applauded the move. He said it makes sense coming from a project that is owned and financed with money from union members’ retirement accounts.
“I have to compliment the market for taking the step on neutrality,” Wilkinson said. “That shows goodwill on their part that they wouldn’t be involved in anti-union tactics. I’d like to think we’re going to deal with a progressive company labor-relations-wise.”
Wilkinson said he’d prefer to set up the union through card-check neutrality, where members can form a union by signing union cards, rather than conducting a secret ballot election.
He’s making plans to try to do so. He said the grocery store has granted the union access to the building. UFCW plans to set up a couple of union meetings there once more staff are hired, and start collecting union cards. He said the union aims to collect enough authorized union cards then ask the management to recognize the union before the store opens.
“I don’t anticipate any problems” establishing a union at the grocery store, Wilkinson said.
The market hasn’t specified that it will accept that method of unionization, but it has left the door open to the possibility.
The market’s policy states the board will allow for any election called for by the National Labor Relations Board, and “we are also open to discussions about alternative election processes consistent with our principles.”
DeStefano previously blasted the board for not committing to card-check neutrality instead of a secret ballot election. He backed off of that criticism Friday.
“I actually think card-check has worked well,” but what matters most is that “the parties are in discussion,” DeStefano said. “They’re talking, which is more important than the policy.”
He said he had read the neutrality policy before he denounced the grocery’s board at Wednesday’s rally. Asked about his marked change in tone, DeStefano replied, “the sun is out today.”