Thomas MacMIllan Photo
As the Hill Development Corporation struggles to stay afloat, the city is stepping in to buy back six crumbling houses the community development organization has failed to renovate.
Hill Development (HDC) has been an institution in the Hill neighborhood for decades. The not-for-profit organization has a history of acquiring homes and fixing them up. But recently HDC has suffered from dried-up funding and entanglement in costly litigation.
With no money left to pay salaries, the agency fired its director and half its staff last fall. HDC has shut down its property acquisition department and locked up its Howard Avenue offices.
Nearly lost in the shuffle are six abandoned houses in the Hill. HDC bought the homes from the city in 2004, intending to fix them up and turn them over to new homeowners. Then grant money fell through and a lawsuit with a contractor drained resources. The renovations never happened.
With the properties in foreclosure, the city is negotiating with Citizens Bank to buy the houses back from HDC for a fraction of the debt owed on them. New Haven’s Livable City Initiative aims to rehabilitate the properties for new tenants. Two of the buildings are in such bad shape that they will have to be demolished.
The Board of Aldermen voted unanimously on Tuesday night to approve the purchase of the six houses.
In 2004, HDC acquired 11 properties from the city. Five of them were renovated and sold. Due to a combination of market, organizational, and legal problems, the remaining six were left incomplete and have fallen into neglect. HDC eventually defaulted on the six properties with the mortgage lender, Citizens Bank.
Now the LCI has stepped in to bail out HDC. LCI’s Cathy Schroeter said last week that the department was nearing an agreement with Citizens Bank to buy back the mortgages.
HDC has been unable to develop the six Hill properties in foreclosure due to a lack of funding, said Fair Haven Alderman Joey Rodriguez, an HDC staffer. The project’s financial troubles are partly due to drawn out litigation with the renovation contractor, he said.
“Several years ago, the developer took HDC to court,” Rodriguez said. “He tried to do 50 percent of the work and take 100 percent of the money and walk away.”
The litigation was just a one of a number of financial setbacks that have beset HDC in recent months. Hill Alderman Jorge Perez, who sits on the HDC board, said the recession has hit the agency hard, he said. “There was a series of grants that we didn’t get.”
The organization was forced to lay off the director and “most of the staff” several months ago, Perez said. The agency is now trying to figure out how to carry on, he said.
Rodriguez said HDC’s Howard Avenue office has been closed for months, with a padlock on the door. The organization’s property management offices on Davenport Avenue remain open, he said. “The management component of Hill Development Corporation is thriving,” he insisted. The corporation manages 65 affordable housing units, he said.
Abe Colon, spokesman for the HDC board of directors, offered a different appraisal of the organization. “There’s not much going on,” he said. After grants didn’t come in, HDC was forced to shut down most of its operations, he said.
Now the board is trying to regroup, he said. “We’re trying to work through this and see what the future holds,” he said. “Times are really tough.”
HDC is not ready to throw in the towel yet, Colon said. “By no means do we intend to leave or close up shop.”
Colon expressed support of LCI’s efforts to pick up the six unfinished homes. It’s good that the city will be stepping in to develop the abandoned buildings, he said. “The last thing we want to do is to create more blight.”
“The board is currently meeting and trying to prepare some contingency plans,” Colon said. HDC will continue to seek federal, state, and city grants, he said. It’s a “very, very difficult time” to be trying to do development work, he said.
HDC may have to sell more properties if it can’t afford to maintain them, Colon said.