Swap Roadmap Baffles

Board of Finance Chairman Joseph Mooney was perplexed. Why, he wondered aloud, did a proposed building swap, first announced last June by First Selectman Unk DaRos, bypass the Board of Finance (BOF) and go instead to the Representative Town Meeting for approval? This decision, Mooney said, ​“puts us in the reverse role that we ordinarily are in.”

“Why not stick to a process and protocol that has worked for years?” he asked at the board’s meeting earlier this week. 

DaRos, an ex-officio member of the board, said a full presentation would be given at the BOF’s Feb. 28 meeting. He did not answer Mooney directly, but the ups and downs of the project have left uncertainty as to which groups would occupy the buildings. Even today it is still uncertain where the Board of Education’s (BOE) central office plans to go. 

The swap involves three buildings. The Board of Education (BOE) central office would move to the Canoe Brook Senior Center, which is owned by the town and the senior center would move to 175 N. Main St building, which is owned by the Giordano family and is called the Office Network. The town would give its BOE building at 1111 Main St. to the Giordano family in exchange for 175 N. Main St. The Giordano family would convert the corner BOE building for commercial or business use. Click here to read more about the family’s plans for the area.

Mooney suggested that the RTM move with caution because the building renovation costs associated with the swap have not been reviewed by the BOF. The RTM’s administrative services committee meets next Tuesday and the RTM meets Wednesday. ​“I don’t want to be pushed by something that we don’t have any control over. I don’t know if we are talking about $100,000 or $5 million,” he said. The meeting was held at Canoe Brook Senior Center, a town-owned building involved in the swap. 

The decision to put the BOF last surprised Mooney. Afterward he told the Eagle that he had never heard of buildings being swapped in town. It was all new to him and to his board. Asked if he thought the buildings were of comparable value, he shrugged. ​“We have seen nothing yet.” 
 
The costs to renovate Canoe Brook for the BOE and to renovate 175 N. Main for a senior center have not been announced but are believed to be in the $3 million range, half of what it would cost if each building were to be done from scratch, DaRos says. He also told the BOF that the time was right for these projects because borrowing rates are low and jobs are competitive. This presumes the Board of Education agrees to go to Canoe Brook instead of the 14,000 square foot Giordano office building. 

The BOF, one of the town’s most powerful boards, oversees all allocations of funds for all departments, before sending the budget to the RTM. It has been this way since the Town Charter was adopted more than 50 years ago. This board has knowledge, experience and budgetary depth and sets the town’s financial philosophy and goals. It could also provide pertinent questions on the swap. 

Mooney noted that whatever the costs, other projects were vying for funds and this project would be weighed along with them. In March the BOF conducts public hearings on next year’s budget before it recommends the amount of money the town may spend for the ensuing fiscal year. This budget estimate then goes to the RTM in April for final action. After the RTM votes, the BOF sets the tax (mill) rate for residents in May.

The BOF schedule puts funding for the swap into a tight time frame. Finance Director Jim Finch gave the board a broad overview of the swap project and said more details would be presented at their next meeting. 

DaRos told the board that outside professional consultants will provide the BOF with ​“every scenario there is.” The expenses will vary depending upon how much is done and when. A building could be ​“fully built out” or ​“half built out” There would be different ways to address each building, he said. He added that he would have the proposed plan to the BOF in roughly 10 days. 
 
He told the board that the swap would solve the space problems of the senior center and the BOE. Each group would double their current space — -if the BOE goes to Canoe Brook instead of 175 N. Main. 

Comparable?

The basic premise of the swap between the Giordanos, who are developers, and the town is that two buildings — the BOE building on Main Street, across from the town green and the Business Network building at 175 N. Main — ​“are comparable” in their appraisals, meaning they are roughly equivalent in value.
 
DaRos describes the two buildings as ​“an even exchange,” even though the BOE building, located across from the green, is in a prime location, reminding one of the adage, ​“location, location, location.” The Giordano building at 175 N. Main St. lies along a road of car dealerships. It sits next to a trailer park and near an open lot for school buses.
 
Other than the appraisals of both buildings from one appraisal company there has been no in-depth inquiry into the two properties, in part because the BOF has not been involved.

Last August, the Buckley Appraisal Services of Niantic examined the Office Network at 175 N. Main and the BOE building, formerly the old post office at 1111 Main, and determined the Office Network was valued at $910,000 and the BOE building was valued at $835,000. 

To arrive at the final appraisal, the appraiser multiplied the cost of a square foot in each building by the building’s actual square footage. The BOE building went for $225 a square foot. The first floor is 3,712 square feet of gross building area. The Giordano family building is nearly 14,000 square feet at $65 a square foot.

Republican Frank Twohill, the RTM minority leader, first raised questions about the appraisal after a well-known realtor in town called him to say there were ​“serious flaws” in the appraisals. The realtor said the corner BOE building was worth $1.5 million because it also had a finished basement that was not included in the overall square footage. ​“Sell it,” the realtor recommended.
 
The appraisals undertaken by Buckley, a firm the town often turns to for outside assistance, show that the 3,712 square footage of the BOE building is for the first floor where the school superintendent and his staff work.
 
However, Vision Appraisal land records state there is a finished basement with an additional 1,856 square feet in the BOE building, a space the Giordano family plans to make prominent use of in its makeover. The 1,856 square feet was not counted in the final appraisal. 

At a September hearing before the Planning & Zoning Commission, which approved the Giordano plans for the BOE building, the Giordano’s architect said using the basement is part of their plan. The plan is to drop the grade down around the south and east sides of the building to open the lower level and expose the windows. This will help make the basement usable. The basement will probably be office space.

P&Z chair Ellsworth McGuigan noted at the time that by doing that they were essentially doubling the size of the building with no new parking spaces. The Giordano engineer explained that parking would also be available at the nearby Branford Building Supply Co., which the Giordano’s also own.

Even though the finished basement is essential to the Giordano plan, it was not counted because it doesn’t have to be.  An outside appraiser contacted by the Eagle said it is standard procedure for a building’s living space to be counted, but not the floors below. In this case, the floor below is both the 1,856 square feet containing the finished basement as well as another 2,096 square feet that is identified as an unfinished basement. 

In an interview, the appraiser, who requested anonymity, said that when “you are trying to compare apples and apples, you would also not include the lower level of the building because it is below grade. Even if the basement had no environmental issues whatsoever it is probably worth half of the above level…” The building at 175 N. Main has no basement.

However, in terms of the old adage, ​“location, location, location,” the appraiser said he did not think the two properties were comparable and said other appraisal methods were available aside from square footage to determine worth. The historic BOE building he said, was located in a prime area and gave the developer far greater latitude in what can be done. The 175 N. Main Street building is far more limited, even for a business, he said. But he added there could be other variables he did not know about.
 
Board of Education Chair Frank Carrano said he had never seen the finished basement and that this section is not part of any daily use. The reason it is not in use is because of asbestos and/or lead findings that are potentially toxic. 

EnviroMed Services, Inc., which conducted a survey of the basement and delivered its finding on July 20, 2009, estimated it would cost about $50,100 to remove asbestos in the basement. (If the BOE stayed put, the basement could be cleaned up and renovated for its use.)
 
If the town decided to sell the building to an outside bidder, it would be worth more. Excluding the unfinished basement, at $225 a square foot, the finished basement and the current first floor combined would put the value of the BOE building at $1.252 million. And if the unfinished basement were finished, that would put another 2,096 square feet into the equation. 
 
The company also found lead paint contamination, according to a study filed with the town that we examined. It estimated the cost to remove the lead paint located in various places to be about $104,500. It also based its costs on a ​“gut rehabilitation” of the building. A proposed agreement between the town and the Giordano’s takes this into consideration in figuring out the costs to be borne by the town and the developer. 

Republican RTM member Peter Black said weeks ago at a meeting that the BOE building is defective. ​“If you fix the defect, it is worth more.” The appraisal is based on defects, Black said. 

The appraisal report, signed on July 8, 2010, is based on the presumption, it said, that ​“there is no environmental contamination of any type.” If contamination does exist, the appraiser said he reserved the right to revise his findings. The basement contains a boiler room, storage files on metal racks and a bathroom. It is not clear that the appraiser ever saw the EnviroMed Services report issued a full year before.

Buckley Appraisals also conducted an inspection of 175 N. Main, which is occupied by the Office Network. The building has 36 offices — -five or more are vacant — two conferences rooms, an employee lounge with a kitchen and two bathrooms, each with a shower, the report says. The building is 14,000 square feet. There is no basement. Built in 1935 as a telephone company service garage, the building was later remodeled. The Giordano family‘s Queach Corp. purchased the building in 1954. 

Kurt Schwanfelder, a former Republican RTM leader for many years and the same RTM member who led the fight back in 1996 to give the legislative body the power to reject all land deals, called the deal ridiculous when it was first raised. If this were the game of Monopoly, he said, the town would be giving up pricey Park Place to get ordinary Baltic Place at 175 N. Main.

The Agreement

The 10-page letter of intent between the town and the Queach Corporation, owned by the Giordano family, was signed on Jan. 14, 2011. It, too, raises a number of questions. The RTM must eventually approve it.
 
The agreement does not as yet include a deed restriction requested by Town Historian Jane Bouley regarding the historic nature of the BOE building and how it shall be preserved if the Giordano family sells the property. However, the agreement does permit a deed restriction to be inserted at a later date before the closing.

The agreement says that the transfer of the properties will be exempt from state and municipal conveyance taxes as outlined by statute. The seller usually pays the conveyance tax. 

During the nearly one year it may take for renovation, the town of Branford has agreed to be responsible for all ​“costs of upkeep, maintenance and operation at 175 N. Main.” The town will pay the building’s insurance for the next 11 months as well as the cost of all utilities, at approximately $3,380 per month. The Giordano family will pay property taxes. 

Gone from the final agreement is section 13, which gave to the Giordano Construction Co., first crack at any town ​“construction or renovation” exceeding $100,000 at 175 N. Main. Many called it a sweetheart deal.

The RTM’s administrative services committee meets Tuesday, Feb 8 at 7.p.m at the police station, to discuss the swap. The RTM will hear a full presentation the next day at 8 p.m. at Canoe Brook Senior Center.

Then again, the swap could be postponed or re-referred as it has in the past. If that happened, the board of finance would get to go first, as it always has. Feb. 9 is the latest deadline set by the Giordano family for the town to act, but it, too, could be extended — - as it has in the past. 

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Diana Stricker contributed reporting for this story.