Antillean Manor Tax Break Advances

A proposed tax break for a failed Dwight housing co-op on the brink of demolition and reconstruction moved ahead — after debate about how it fits into efforts to promote affordable housing and avoid a local tax hike.

Besides tax forgiveness, the overall project includes a $1.5 million ​“development fee” for the co-op’s buyer and $400,000 in federal anti-poverty block grants along with a building contract for a construction affiliate.

The Board of Alders Tax Abatement Committee voted during a virtual meeting Tuesday night in support of the proposed tax deal for Antillean Manor.

That’s the 31-unit, Section 8 Project Based Subsidy-supported housing complex at 206 Day St. between Chapel Street and Edgewood Avenue.

The proposed tax abatement would freeze local property taxes for the affordable housing complex for up to 17 years at the property’s current annual amount of $42,554.

The deal now goes before the full Board of Alders for a final debate and vote.

Like most city tax abatement deals, the term would include up to two years for construction, then an additional 15 years after the owner has pulled a certificate of occupancy.

The site’s property taxes would increase only if the failed co-op’s prospective new owner, the Meriden-based Carabetta Companies, raises the rent for its tenants. In that case, taxes would rise proportionately with rents — with, for example, a 2 percent annual hike in rents resulting in a 2 percent annual hike in local taxes during the 15-year term.

“These projects, but for these public subsidies, do not happen,” Carabetta Management Development Officer Helen Muniz told the committee alders Tuesday night.

She said the incoming landlord plans to knock down the current structure and build an entirely new four-story, 31-unit affordable housing complex in its stead. (See more below.)

“It’s not because we do not want to pay taxes,” she said about the local tax break request. ​“It’s the only way to get this project to pencil out financially.”

The committee alders ultimately agreed — not without some hesitation.

The only alder to vote against supporting the deal was Downtown Alder Abby Roth.

“I’m not comfortable tonight given the lack of a clear standard” by the city’s Low Income Supportive Housing Tax Abatement Committee, or LISHTA, as to how the city calculates tax breaks for any given affordable housing project, she said.

Too many deals have come before the alders in recent months with disparate levels of tax abatement requested.

“Next week, we’re going to receive what the proposed budget is,” she said, referring to Mayor Justin Elicker’s March 1 deadline for submitting a first draft of next fiscal year’s budget, ​“and I fear there is going to be a very high proposed tax increase.”

Returning to the Antillean Manor proposed deal, she said, ​“I feel like there could be a way to increase what the developer has to pay in taxes every year and still make this project work.”

Her colleagues ultimately disagreed.

31 Affordable Homes

Muniz and local attorney Jim Segaloff told the committee alders Tuesday that Carabetta owns a total of 20,000 apartments across three states, including several hundred units at the Bella Vista senior apartment complex on the far east side of town. They said Carabetta has entered into an agreement to purchase the defunct co-op.

After buying the property, Muniz said, Carabetta plans to tear down the existing structure and build a new four-story, 31-unit building with five one-bedroom apartments, 11 two-bedroom apartments, 14 three-bedroom apartments, and one four-bedroom apartment — the same mix that exists today.

The new apartments would be reserved at the same affordable rents as today, for tenants earning no more than 50 percent of the area median income (AMI). So a qualifying family of four would earn no more than $45,900 a year. 

All current tenants will be (or already have been) relocated during the demolition and construction period. Those same tenants will all be able to return — if they so choose — to the rebuilt new apartment complex.

Muniz said that two of the apartments are currently vacant, and two families have voluntarily left the complex. So 27 families who are current tenants of Antillean Manor plan to return to the complex when it is rebuilt.

Of those 27 families, a vast majority have already been moved out of the complex in anticipation of demolition. Four households remain at the project to be relocated.

Carabetta has managed the property since 2017, during which time, in conjunction with New Haven Legal Assistance Association attorneys and current tenants, they helped reconstitute the board.

“The co-op was having a very difficult time trying to manage this property,” Segaloff said. ​“There were issues with boilers, with heaters, with leaking. So Carabetta came in and got it under control.”

“Not only were they experiencing significant deterioration of the building,” Muniz added about the soon-to-be-former housing co-op’s board. ​“They were experiencing some financial management issues.”

She said the company ultimately decided to knock down and rebuild the 50-year-old ​“eyesore” in large part because, no matter how many capital repairs of the ​“cinderblock construction” that the management company invested in, tenants were still stuck with a crumbling property.

“The cost to continue to put band-aids on it was getting extraordinary,” she said.

After several applications to the state, Carabetta has lined up funding for the demolition and reconstruction of the affordable housing complex, Muniz continued.

That includes $3.1 million recently approved by the State Bonding Commission, $6.2 million from the Connecticut Housing Finance Authority, $521,857 to be invested out of the company’s own coffers, and $400,000 from the city in the form of locally administered, federal Community Development Block Grant (CDBG) funds.

Carabetta’s tax abatement application to the city indicates that the estimated total development cost for the project is just over $15.1 million, with the total ​“hard costs” of construction likely coming in at around $10.4 million. ​“The remaining of the TDC is comprised of architecture & engineering fees, surveying, environmental engineering, legal fees, financing costs, real estate taxes & insurance, and other soft costs.”

$1.5M ​“Development Fee” & Inside Construction Co.

City Business Development Officer Clay Williams, a member of the LISHTA committee who helped negotiate the proposed tax abatement deal, said that Carabetta plans on taking a $1.5 million ​“development fee” for this demolition and construction project.

The construction company that plans to knock down and build the apartment complex, SRC Construction Services LLC, is also affiliated with Carabetta.

Williams said that the proposed tax abatement deal requires the city’s $400,000 CDBG fund investment to ​“stay with this development,” or else it has to be repaid.

Carabetta has to own and run the property for at least 20 years. If they sell the property, then they’d have to repay the $400,000 city investment and the new owner would lose the local tax abatement perks.

And, per the terms of the federal housing subsidies associated with the project, the apartments must remain at the same level of affordability — for tenants earning no more than 50 percent AMI — for the next four decades.

Williams said that a ​“back-of-the-envelope” estimate by the city assessor’s office indicated that, if this were a market-rate housing project when demolition and construction is completed, the property would provide an additional roughly $50,000 each year in local property taxes on top of the current $42,554.

“The committee definitely felt good that we can support 31 low-income families on $50,000 a year,” he said. Rather than thinking of this tax abatement as lost revenue for the city, Williams told the alders, try thinking of it as an investment by the city in affordable housing.

“We don’t want to do affordable housing, I don’t think, at all costs,” he added. But $50,000 a year for 15 years seems like an amount the city can and should support.

Williams also said that this tax abatement would see Carabetta paying roughly $1,370 per unit per year in local property taxes — significantly more than the $400 or $600 per affordable unit per year that other, larger projects have asked for in recent years.

Board of Alders President and West River Alder Tyisha Walker-Myers (pictured), who represents the district that includes Antillean Manor, agreed during her testimony in support during the public hearing portion of Tuesday night’s meeting.

“The structure needs to come down,” she said about the current building. ​“It looks like a prison. People don’t feel happy living there. Now that can actually have a home they can feel proud of.”

“They’re Not Broke”

The two other people to speak up during the public portion of the hearing both urged alders to scrap the tax deal and try to get Carabetta to pay more.

“I just think this is another fleecing of the New Haven taxpayer,” said Westville resident and budget watchdog Dennis Serfilippi.

He said 31 units constitute too small of a complex to warrant such a favorable local tax deal. ​“I don’t see why the city wouldn’t make the project more dense and include mixed-income housing.”

“The city’s bankrupt,” he added. ​“There’s no money for parks. The neighborhood needs a new police substation. If I was at the table, I’d be telling Carabetta at least to take $200,000 off the development fee and invest in the neighborhood.”

Fair Haven Heights resident Patricia Kane agreed.

“We’re at the breaking point,” she said. ​“You’re really asking us, in addition to subsidizing Yale and Yale New Haven Hospital and Tweed airport, you’re asking us to subsidize all these developers.”

She called on the alders to ​“think about the people who are already here. If the development doesn’t benefit everyone, then we have to ask: Why do we need it?”

Kane said that the alders, at a minimum, should ​“put a freeze on all these tax abatements,” especially considering the city’s looming $66 million projected deficit and a likely large tax increase on the way.

Although they ultimately voted in support of the tax deal, Fair Haven Alder Ernie Santiago and Hill Alder Kampton Singh were sympathetic to those critiques.

“They’re not broke. They’ve got money. That’s why they develop,” Santiago said about Carabetta and other large-scale landlords and real estate companies.

He said that the city should consider tying future tax abatement deals to municipal property tax increases in some way, so that homeowners don’t continue to bear the entire burden of rising taxes.

“I am for this project, but I just want to look at fair numbers,” Singh added. He noted that the $42,554 tax number is based off of what the current Antillean Manor project produces in annual property taxes. That doesn’t take into account what a brand new building would produce, especially after the coming citywide revaluation.

“We should look at it after 10 years and then come back where we can look at the financials.”

Committee Chair and Fair Haven Alder Jose Crespo said, ​“We definitely do not want to sell the city short.” He added that he too was skeptical of the proposed deal when Carabetta first pitched LISHTA.

After several meetings and in-depth presentations, he said, ​“At this time, it makes sense to me.”

During his presentation to the alders, Williams said that LISHTA — the body charged with negotiating tax breaks deals that ultimately get voted on by the alders — ​“needs better guidance on what the city is willing to spend on affordable housing.”

He said that the committee needs to have a conversation with the still-forming Affordable Housing Commission, the Tax Abatement Committee, and the alders about ​“what is the city going forward willing to invest to get affordable housing. Do we want affordable housing at all costs? I don’t think we can afford that.”

“Right now, we’re kind of flying without any guidance and at what we consider to be reasonable cost and reasonable numbers.” This deal’s tax break, he said, struck him and the committee as reasonable.

More info on related issues, organizations:

• Empower underserved communities in Connecticut
• Learn about New Haven community wealth-building initiatives
• Organizations that support community development
Local Act: Connecticut Coalition To End Homelessness
Local Learn: New Haven Homelessness Fact Check
National Act: National Alliance To End Homelessness