Thomas Breen photo
Residences at Ninth Square.
A Boston-based developer has closed on its purchase of the 335-unit, mixed-use complex that anchors the Ninth Square, thereby preserving over half of the buildings’ apartments as affordable in exchange for a 20-year tax break.
The developer, Beacon Communities, announced the finalization of its purchase of the Residences at Ninth Square from the previous landlord, the Ninth Square Limited Partnership, in a press release put out Monday afternoon.
The final deal follows the terms that the city, led by Livable City Initiative (LCI) Executive Director Serena Neal-Sanjurjo, negotiated and the alders approved months ago. The final terms include:
The deal includes the following:
• Beacon will invest $13.2 million into capital improvements to the residential and commercial complex.
• Beacon will pay the city $660,000 per year in property taxes for the next 20 years, with a slight increase kicking in every five years by a percentage equal to the increase in adjusted gross revenue over that five-year period.
• Beacon will reserve 56 percent of the housing units for tenants earning 60 percent or less of the region’s average median income, which is around $52,860 per year out of an $88,100 annual benchmark for a family of four. The rest of the units will be available for rent at market rates.
• Beacon will pay the city $2 million in return for the forgiveness of over $5 million in debt that the Ninth Square Partnership owes the city.
• Beacon will convey the 290-space parking garage at 270 State St. to the city in exchange for $3.6 million paid out over 30 years.
• Beacon will deed the surface parking lots at 31 and 39 George St. to the city for $80,000.
• Beacon will retain the complex’s current staff for a minimum of one year.
Click here, here, here, and here for previous stories about the transaction.
City transit chief Doug Hausladen, Beacon CEO Dara Kovel, and LCI chief Serena Neal-Sanjurjo.
Read Beacon’s full press release below about the closing of its purchase of the Residences at Ninth Square.
In a transaction that will maintain affordability and stabilize a downtown housing and commercial asset, Beacon Communities LLC, a Boston-based developer, has closed on the purchase of The Residences at Ninth Square, a commercial and residential development in downtown New Haven spread across multiple city blocks originally developed in the early 1990s.
The property includes 335 apartments and more than 20 retail tenants in about 50,000 square feet of commercial space, as well as structured parking. The long-term viability of the property was threatened in recent years by financial instability.
Beacon Communities CEO, Dara Kovel, praised the work of New Haven city officials and the Connecticut Housing Finance Authority (CHFA) in helping to execute the complex transaction.
“We are delighted to be able to make this important investment to maintain the affordability of this critical housing resource and improve the property for the long-term,” said Kovel. “We appreciate the tireless commitment of city officials and CHFA in making this happen.”
Last year, CHFA and the previous owner, a joint venture between Related and McCormick Barron, selected Beacon Communities from among 20 proposals to buy, renovate and redevelop the property. The transaction required restructuring the project’s financing to stabilize the property and preserve the affordability of the apartments.
“CHFA was pleased with the level of interest in the bidders for Ninth Square and appreciates the commitment of Beacon Communities to furthering the goals of CHFA in preserving much-needed quality affordable housing in the State of Connecticut,” said Lisa Kidder, Director of Communications for CHFA.
New Haven Mayor Toni Harp thanked Beacon Communities for the willingness of Kovel’s team to work with the city through every step of the negotiation process. “This is a great partnership and one that acknowledges Beacon’s continued commitment to the City of New Haven,” said Mayor Harp. “This was a collaborative negotiation involving city administrators and members of the Board of Alders to result in 189 affordable units of housing remaining available downtown. It will also result in the revitalization of a historic downtown building that is home to businesses vital to the local economy.”
Over half (56%) of the apartments will remain restricted to households earning at or below 60% Area Median Income (“AMI”) and the balance are offered at unrestricted, market-rate rents. Financing for this transaction includes tax-exempt financing and Low Income Housing Tax Credits from CHFA, tax rebates from the City of New Haven, investment from Beacon Communities, debt from BlueHub Capital, and tax credit equity from WNC/Citibank.
“Beacon will invest $13.2 million in much-needed capital improvements to Ninth Square and revitalize this critical downtown neighborhood,” added Serena Neal Sanjurjo, Director of New Haven’s Livable Cities Initiative. “Under this agreement, Beacon will also turn ownership of the State Street Garage over to the City. The collaborative spirit that Mayor Harp, the Board of Alders and Beacon brought to the negotiations was just phenomenal and contributed greatly to this new partnership for the City.”
BCJ, an affiliate of Beacon Communities, owns the 339-unit Monterey Place in the Dixwell neighborhood and 315 units at Southwood Square in Stamford. Beacon is also completing Montgomery Mill, a 160-unit mixed-income development in Windsor Locks.