Amid Confusion, Alders Slam Tax Breaks

Alders lambasted two low-income senior apartment building owners for failing to show up to defend requested tax breaks and for attempting to take advantage of a cash-strapped city without creating new subsidized housing.

It turns out the landlords were never invited — and they had filed plans about which the alders were either unaware or confused.

The lambasting took place Tuesday night at the latest virtual meeting of the Board of Alders Tax Abatement Committee.

The six committee alders present at the Zoomed public meeting unanimously voted to reject a 17-year tax break requested by the new owners of the 121-unit Fairbank Apartments complex at 355 Ferry St. in Fair Haven.

The committee alders also voted 5 – 1 in support of a one-year extension — rather than a requested 20-year extension — for the current tax abatement agreement covering the 150-unit Tower East, which is one half of the two-building Tower One/Tower East senior assisted-living complex on Tower Lane.

Click here and here to read those two tax abatement requests in full.

In defense of their criticisms of both the Fairbank and Tower East tax break applications, alders repeatedly cited how upset they were that no representatives from either organization showed up Tuesday night to explain and defend their requests.

“They’re just taking a stab in the dark, trying to see what they can get away with,” Fair Haven Alder and Tax Abatement Committee Chair Jose Crespo said about the Fairbank Apartments application.

“This is what they’re going to get away with,” he concluded, making a ​“0” with his hand to indicate no tax break.

The committee also criticized the applicant — an affiliate of the California-based Community Preservation Partners (CPP), which recently bought Fairbank for $11 million— for not adding any new affordable apartments to 355 Ferry St., and for seeking out an abatement just because one might be available.

The alders leveled a similar criticism against the separate Tower East tax break extension.

“This is not about the corporation. It’s about the families that are living there,” Morris Cove Alder Sal DeCola said in support of granting a one-year extension to the current deal.

He criticized Tower East’s owners for allegedly submitting their extension application only after their current tax break deal with the city had expired. Nevertheless, DeCola said, the low-income seniors who live at Tower East ​“should not suffer for the incompetence of a corporation.”

Downtown Alder Abby Roth agreed. She was the only committee alder to vote against the one-year extension for Tower East. ​“I think they’re taking advantage of us” by submitting an extension application so close to when their current agreement expires, she said. ​“It concerns me given the challenges all our taxpayers in our city face, to wait a whole other year and let them have this very low rate when we really don’t know that’s all they can afford.”

Based on the committee’s recommendations, the full Board of Alders will take up the Tower East one-year tax break extension for an expedited, ​“unanimous consent” vote at its next meeting in early June.

City legislators will then vote on the committee recommendation to reject — or, in aldermanic parlance, ​“leave to withdraw” — the Fairbank 17-year tax break application later this summer.

After an hour, with deliberations ended and votes taken, the committee alders adjourned their virtual meeting Tuesday night.

And that was that.

The Other Side Of The Story

Except it wasn’t.

After reviewing the tax abatement requests and interviewing alders, city staff, and representatives from both the Fairbank Apartments and Tower East owners, the Independent has determined that much of Tuesday night’s committee hearing appears to have been based on misinformation.

That misinformation came from good-faith miscommunications, apparent document misreadings, and the opaque, behind-closed-doors deliberations of an administrative body called the Low Income Supportive Housing Tax Abatement (LISHTA) committee.

The first mistake to come to light after Tuesday night’s meeting was that city staff accidentally forgot to invite landlord representatives to the Tax Abatement Committee meeting itself.

Soon after Tuesday night’s meeting, city Director of Legislative Services Al Lucas told the committee alders, and confirmed for the Independent, that city staff believed that the Fairbank and Tower East applicants already knew about the meeting, and did not contact them in advance. He said the error was one of omission by the staff, not one of commission by the petitioners.

When reached for comment Wednesday morning, Towers CEO Gus Keach-Longo told the Independent that indeed, he had no idea the Tax Abatement Committee was scheduled to meet the night before.

If he had known, Keach-Longo said, he would have gladly shown up to explain the tax break extension application for Tower East.

“I’m so sorry I wasn’t there. I’m sorry that apparently because of communication glitches that we weren’t there. And I’m sorry that a lot of time and energy was spent that could have been saved. We want to work closely with the city,” Keach-Longo said.

If he had been present, Keach-Longo told the Independent, he would have explained to the alders that the current tax break agreement governing Tower East has not expired yet.

In fact, it doesn’t expire for another two years, not until March 2023.

Contrary to alders’ accusations that Tower One/Tower East deliberately delayed submitting its application until the last minute so as to put the city in a corner, Keach-Longo said his organization actually submitted its tax break extension this March—two years in advance of when the current agreement expires. It did so in order to have plenty of time to discuss and negotiate with the city. Keach-Longo said the tax break agreement is critical for the Towers, and he wanted to make sure to have ample time to work through terms of an extension.

The alders’ apparent misreading of the current agreement centers on when that deal went effect.

The current Tower East 40-year tax break deal was signed on Dec. 31, 1980. It restricts taxes owed on the building to the amount equal to the different between 6 percent of the building’s gross rent and the full amount of the current annual real estate tax due.

That means that the building’s owners paid $211,485 in city taxes on the property this fiscal year. If the building had no tax break, it would have provided $403,585 this tax year.

During Tuesday night’s meeting, Morris Alder Sal DeCola, a member of LISHTA, presented on behalf of LISHTA in the absence of any representative from Tower East. He claimed that the 40-year deal had either expired or was about to expire.

“They’re not here to defend themselves or explain themselves,” he said about Tower East’s representatives. ​“This is a 40-year deal. I guess it just fell between the cracks. In the LISHTA committee, we were not accepting this agreement to continue.” Thus the recommendation that the alders grant an emergency one-year extension while the city, alders, and Tower East negotiate a new deal on more favorable terms to the city.

The problem with that reading is that the Tower East tax abatement agreement didn’t go into effect the day it was signed in 1980. Rather, per the explicit terms of the agreement, it went into effect when the city issued a certificate of occupancy for the building.

And, per a photocopy of that document provided by Tower East’s owners in their tax abatement extension application, that certificate of occupancy was not issued until March 24, 1983.

Keach-Longo said that his organization approached the city in 2018 or 2019 about extending the Tower East application. They were told that they were reaching out too far in advance.

When he found the certificate of occupancy and realized that the agreement wouldn’t end until 2023 — 40 years after the certificate of occupancy was issued — he said, he decided to reach out again this March to give his organization a two-year head start in working with the city on a new or extended deal.

“We wanted to make sure there were no hiccups,” he said.

Keach-Longo also took issue with committee alders’ statements Tuesday night that the Towers owners can afford to pay more taxes on Tower East because they already pay more taxes on Tower One, which is governed by a separate tax abatement agreement with the city.

Keach-Longo said the alders had the issue backwards.

The Towers — which owns both adjacent senior apartment complexes, which merged into one business in 2017 — currently pays more taxes on Tower East, not on Tower One, as claimed at the hearing. The business paid $211,485 on Tower East this current tax year, according to city online tax records, while it paid $179,258 on Tower One in that same time.

Keach-Longo also explained that Tower East has more designated affordable units than Tower One, a further argument in favor of an extended tax break.

He said that all 150 of Tower East’s apartments are supported by federal Section 8 rental subsidies for low-income seniors. Only 93 of the 178 apartments at Tower One are supported by federal Section 8 rental subsidies, he said, with the remaining 85 units rented out with no federal subsidy (though he said that those units too are rented at below market rates to low-income seniors.)

And, he added, his company’s 116-page tax abatement extension application included a wealth of details on Tower East’s finances.

When asked about the apparent mistakes behind the committee’s understanding of the Tower East agreement, DeCola told the Independent, ​“If there was some clerical error, we’re going to get this resolved. We’re going to work through this. If there was a miscommunication, if I misread something, I’ll take the hit. Nothing is dead in the water; it can all be reopened.”

DeCola offered a similar response when asked about potential misunderstandings around the Fairbank Apartments tax abatement application.

Fairbank: New Affordable Units?

During Tuesday night’s meeting, DeCola said that LISHTA recommended turning down the Fairbank tax break for several reasons.

Fairbank’s new owners, CPP are seeking a 17-year tax break that caps local taxes owed at the 121-unit property at $1,500 per unit per year, with a 3 percent annual increase.

First, DeCola said Tuesday night, the new owners don’t plan on adding any new affordable apartments to the complex. The building would continue to have its current stock of 121 apartments, even if the owner receives a tax break, DeCola claimed.

Second, the requested tax break as proposed would not take into account the building’s current groundfloor commercial space, currently occupied by a bank. Instead, it would be keyed entirely to the building’s residential units. DeCola said that tax breaks granted by the city are typically tied only to designated low-income units, not to a building as a whole.

Third, he said, the tax break as proposed would drop the building’s current annual taxes owed to the city from $284,950 to $181,500.

Fourth, DeCola said, the new owners ​“never reached out to any of the alders of the area.”

He said that LISHTA’s recommendation was therefore to deny the tax break in its entirety.

“I think they just wanted to see if we were willing to give them something,” he said. ​“This is dead in the water.”

The Independent’s review of CPP’s tax break application and previous interviews with CPP Senior Development Manager John Arthur Richard Fraser and CPP Senior Vice President Seth Gellis point to a slightly different set of facts from those presented by DeCola Tuesday night.

One hundred of the Fair Haven complex’s apartments are currently restricted to affordable rates through Section 8 subsidies, Fraser and Gellis told the Independent for a previous story. And those units are restricted for tenants earning no more than 80 percent of the area median income (AMI). The remaining 21 units are rented at market rates.

According to those CPP representatives, the new owners plan to use state and federal subsidies as well as the requested local tax break to restrict all 121 units to affordable rates, and to deepen that affordability from 80 percent AMI to between 50 and 60 percent AMI.

Plus, they told the Independent in a previous interview, the new owners plan to invest more than $7 million in renovating the entire building, including all 121 housing units.

“It’s CPP’s mission to preserve and protect affordable housing across the country,” CPP’s Fraser told the Independent in an email comment Wednesday afternoon. ​“We will continue to work with the Board of Alders Tax Abatement Committee with the goal of helping the New Haven community maintain its current affordable housing supply, as well as add 21 more affordable housing units to its current inventory.”

DeCola did not mention that planned $7 million renovation, the 21 newly affordable units, or the deepening of the affordability at the complex in his remarks Tuesday night.

He also did not mention that, per the owner’s local tax break application, Fairbanks Apartments’ landlords expect to take a $2.1 million development fee from their planned government-subsidized work on the complex.

“The LISHTA committee recommends no deal at all, because there’s no benefit to the families of the area and to low-income families” at the complex, DeCola said. He said LISHTA instead recommends that the new owners apply to the city’s tax assessment deferral program for new construction and building renovation projects.

When asked Wednesday about his presentation on the Fairbank application Tuesday night, DeCola stressed that the new owners wanted a tax abatement to apply to the whole property, including the bank on the ground floor. ​“KeyBank shouldn’t be abated,” he said.

“We’re trying to make it equitable and fair to the taxpayers. The taxpayers are always crying that we’re giving away the bank.” Thus the recommendation to deny this particular tax break.

DeCola was also asked about how the new owners appear to be adding more affordable units and to be deepening the affordability of existing units at the property. ​“If something was not correct and an error was made,” he responded, ​“it will be resolved and we will be moving forward.”

Top-Secret Meetings

That raises one more question, hanging over all of last night’s public meeting and subsequent interviews with alders and city staff:

What about LISHTA?

What is LISHTA?

Is this a public or a private body?

What’s its role in this whole tax abatement process?

LISHTA is often referenced during public aldermanic meetings about tax breaks. Usually, city economic development staffer Clay Williams presents on behalf of the group.

DeCola, who is a member of LISHTA „ represented that body during Tuesday night in Williams’s absence.

DeCola told the Independent Wednesday morning that LISHTA consists of alders, city economic development staffers, and city Livable City Initiative (LCI) employees.

“We review the applications [for tax abatements] and try to work with the developer before we go to a public meeting. It’s to make it fair across the board,” he said.

LISHTA was created in 2015, and emerged from an effort dating back to 2012. It is an internal administrative review group, not an aldermanic committee.

Therefore, DeCola said, LISHTA meets behind closed doors, with no public notices or agendas or access.

Before LISHTA was created, he said, ​“the administration would just work on an agreement with a developer, and the Board [of Alders] would just amend” and vote on the terms as negotiated solely by city staff.

Now, he said, alders have a seat at the table in crafting those terms.

When asked why LISHTA meetings being closed to public view, DeCola responded, ​“Some things have to be navigated and communicated between developers and the administration. Sometimes racial tendencies tend to come out with some of these developments.”

He said that inflammatory comments posted to the New Haven Independent comments section along those lines point to the need for LISHTA meetings continuing to take place behind closed doors.

“I’m very upset when people make these comments” in the Independent, he said. ​“It’s very sad.”

DeCola and Crespo, who chairs the Tax Abatement Committee and did not respond to multiple requests for comment by the Independent, are the aldermanic representatives on LISHTA.

During Tuesday night’s public meeting, both frequently referred to a private, prior LISHTA meeting where alders and city staff discussed the Fairbank and Tower East tax abatement requests.

DeCola ultimately presented at Tuesday night’s public Tax Abatement Committee meeting the recommendations formulated during the private LISHTA meeting.