17-Year Tax Break Advances

A developer got penultimate approval for a 17-year tax break to build 56 townhouses on long-vacant Route 34 land, but not before two alders questioned whether the help needed to extend that long.

The approval came in the form of a voice vote at a joint meeting at City Hall Thursday night of the Board of Alders Community Development and Tax Abatement Committees. The matter now goes before the full board for a final vote.

A recommendation to approve the tax break — for a proposed development at 16 Miller St. a block from the Boulevard, on a chunk of undeveloped median strip that was originally cleared during Urban Renewal days for a highway that never got built — came from a Tax Abatement Review Committee consisting of city staff from economic development, the Livable City Initiative (LCI), the finance department, the assessor’s office, the legislative office, and alders David Reyes and Ernie Santiago. For the next 17 years, the 16 Miller St. development’s proposed tax assessment for the project would be $700 per unit, or about $40,000 a year. Supporters said the project has the potential to jumpstart development, put a little money in the city’s coffers, and a small dent in the city’s affordable housing crisis.

The plan calls for building 56 affordable rental apartments in 11 buildings and an office meeting center on a site at 16 Miller St., which is bound by Ella T. Grasso Boulevard to the west, North Frontage Road to the north, Tyler Street to the east, and Legion Avenue to the south. (Click here to read about a City Plan Commission site plan review of the project.)

LCI Executive Director Serena Neal-Sanjurjo laid out the precise terms of the proposed tax abatement, which she negotiated: The developers would pay $700 in tax per unit for three years (during which time the complex would be built and then leased). In year four, taxes would increase 5 percent. They would rise another 5 percent every five years through the term of the agreement.

Click here to view the full proposal submitted by the developer, which details the project’s finances.

The project is being developed by the West River Housing LLC. The limited liability corporation is a result of a partnership put together with LCI’s help. It consists of two groups: The New Haven-based West River Self Help Investment Plan (SHIP) and New-York based National Housing Partnership Foundation, a not-for-profit developer of low and moderate income housing in 15 states and Washington D.C. The NHP Foundation has a portfolio of approximately 7,000 units of multifamily rental housing, according to documents provided to the city.

The plan for the 4.3‑acre site is more than 20 years in the making, as city and neighborhood leaders have sought to figure out how to bring new activity there. Their efforts once focused on homeownership; the new vision focuses on providing affordable rental units, reflecting changing needs.

The developers are seeking low-income housing tax credits and other funding from the Connecticut Housing and Finance Authority (CHAFA) to provide units for people who make up to 80 percent of the area median income, or AMI.

“Quite A Conundrum”

Quinnipiac Meadows Alder Gerald Antunes praised the project. But he asked why the developers need a tax break from the city if they plan to get tax credits from the state.

Jamie Smarr, a representative with the National Housing Partnership Foundation, said the credits from the state help cover some but not all of the construction costs. Paying less in property taxes allows the development to keep its operating costs low, which ultimately helps offset the costs of providing below-market rents.

“You’re saying you want to build low-income housing, but you can’t afford to?” Antunes quipped.

“It’s quite a conundrum,” Smarr said.

“That sounds like a yes,” Antunes said.

“It’s troubling to me to ask for forgiveness in a time when we’re trying to find more money to operate our city,” Antunes went on. ​“And 17 years? That’s another generation.”

Antunes ended up passing rather than voting yes or no.

Neal-Sanjurjo pointed out that the property has been undeveloped for decades — a time when it brought in no revenue at all. The city also has a voracious need for affordable housing units at a time when state and federal investment in such housing is low. She said the abatement review committee concluded that a 17-year break allows for the long-term viability of the project while simultaneously maintaining its affordability for renters.

“We’re trying to fill two empty pots — one for affordable housing and one for bringing some income back into the city,” she said.

Smarr pointed out that the debt service and the affordability requirements will outlive the tax abatement, clocking in at 40 and 50 years respectively.

Neal-Sanjurjo said that CHFA [Connecticut Housing Finance Authority], the quasi-state agency that hands out federal housing tax credits, looks favorably on developers who can show that they will be able to maintain their projects after they’re built. Because the 56 units won’t be market rate, CHFA needs to feel certain the developers can meet their debt service. The review committee determined that 17 years was the shortest time period that could be recommended for the deal to work.

“Having the abatement gives some level of comfort that they’re not paying over and above what they can afford to maintain the housing,” she said.

More Details Requested

Newhallville/Prospect Hill Alder Steve Winter pressed Neal-Sanjurjo for more detail about how the review committee landed on 17 years. Though he went on to support the tax break, he expressed concern that the committee hadn’t had access to a detailed breakdown of the financials prior to having to vote on the plan. Neal-Sanjurjo promised to provide that detailed breakdown.

Dwight Alder Frank Douglass praised the Jerry Poole and the West River SHIP, but given his colleagues’ concerns that the committee might be giving away too much of a break he wanted to know specifically how the city would benefit.

“The city would get 56 new rental units with layers of affordability,” Sanjurjo said. ​“That’s crucial to the work we’re doing. This project has spurred a significant amount of interest in that area and it will allow us to keep growing.”

Smarr also noted that, once the project is complete, West River SHIP will be a local entity with the know-how to do other such affordable developments from ​“soup to nuts” on its own without a partner.

Fair Haven Alder Ernie Santiago, who sat on the review committee, told his fellow alders that he’d pressed city staff to work the numbers on the project to get more money for the city, suggesting that the assessment go up 3 percent annually. But ultimately that would not have made the project financially viable, he said.

The project has the backing of West River Alder and Board President Tyisha Walker-Myers, who submitted a letter of support, and Hill Alder Dolores Colon, who lived on North Frontage Road for 11 years.

“It was disheartening to look out on that unkempt lot and the parking lots out there,” Colon said. ​“Putting housing on this particular plot is a very good idea. I hope colleagues see fit to approve their request.”

Instead of abstaining from the vote, Antunes ask that the record reflect that he passed on voting.

“I think it’s a good idea,” he said. ​“But there is one problem — we’re giving away city tax dollars and we can’t afford to do it. I feel we need to come up with another scale. It’s too much money for too long a period of time. That’s my only complaint.”

Winter echoed the concern but ultimately decided to support the tax abatement.

“It’s not a zero-sum game and it could help stimulate more development,” he said. ​“We are getting something where we are currently getting nothing. I do share the concern about the length of the abatement. I feel like we need more of a rationale for 17 years and we need to see those numbers ourselves to make sure that’s reasonable.”

Sanjurjo said that West River Housing is racing to get its application into CHFA by the Oct. 31 deadline.

“Our hope is that we will have it go in on time,” she said. ​“Hopefully we will be successful in the submission. If it doesn’t work we will continue to seek funding. This is a great project with a wonderful partnership between nonprofits.”

Paul Bass contributed reporting.