Melissa Bailey Photo
Challenger Jeffrey Kerekes accused Mayor John DeStefano of dishing out “gifts to the gilded”; City Hall said his claims are based on faulty assumptions.
The charges came Wednesday morning, in the final stretch before Kerekes (pictured), a petitioning candidate, faces 18-year-incumbent DeStefano in Tuesday’s general election.
In a press event outside the Elm Street entrance to City Hall’s underground garage, Kerekes claimed the city missed out on $2 million in revenue because of “special deals” to well-connected parties. The presser followed on the heels of one last week, in which Kerekes called for an inspector general to investigate preferential treatment and “corruption” inside City Hall, and City Hall cut away at his claims.
On the sunny sidewalk Wednesday morning, Kerekes pointed to two more cases: Back taxes on the YMCA building on Howe Street and parking fees on the garage underneath City Hall. The latter involves a painful memory for some longtime city development watchers: the lucrative deal that Hartford developer David Chase struck with New Haven during the “go-go ‘80s” to build a new City Hall and adjacent office tower.
“It is no surprise that a challenger running for Mayor six days before an election would accuse his opponent of the most corrupt dealings possible,” responded DeStefano campaign chief Danny Kedem Thursday. “What is absent from this political theater is actual positive solutions for the city.”
Case 1: The YMCA
The city lost nearly $500,000 in revenue when it “waived” back taxes on the YMCA’s property in an illegal “backroom deal” behind the backs of aldermen, Kerekes charged.
City Hall’s top lawyer called the candidate’s reasoning flawed, but left one aspect of the case — the amount of alleged debt — unexplained.
The YMCA deal concerns a cluster of properties at 50 – 52 Howe St., 139 Dwight St., and 1252 Chapel St. About 60 percent of the space is housing; the rest is recreational space and supportive services.
The Y, a not-for-profit, owns the space through a series of subsidiary entities. The technical owner is Howe Street Limited Partnership, which is owned by another limited partnership, which is owned by top directors of the Central Connecticut Coast YMCA.
According to a deal struck in 1993, the YMCA agreed to make payments in lieu of taxes on the property for 17 years, up to the grand list of October 2010.
Kerekes presented evidence that the Y slipped behind on years of those PILOT payments. He produced copies of tax liens from the city’s tax collector, dated May 11, 2009, showing the city aimed to collect over $387,000 in PILOT that the YMCA had failed to pay. With interest, that total would reach $466,000, Kerekes calculated.
Kerekes claimed the city agreed to “waive” those back taxes in a private meeting with Attorney Anthony Avallone, a longtime Democratic Party powerbroker who was representing the Y.
Kerekes’ evidence: A Feb. 16, 2011, letter from Avallone to then-city Controller Mark Pietrosimone. Kerekes claimed the letter describes a “settlement” that forgave $500,000 dollars in back taxes in exchange for $91,397.85 in payments.
The letter describes how the YMCA will make two payments — a $26,209.59 check plus another $1,000 — in order to settle outstanding PILOT debt with the city, including “any interest of lien fees claimed by New Haven.” The letter spells out two additional scheduled payments that would fill out the rest of the term of the 17-year PILOT deal.
Together, those payments total $91,397.85 — the cost of the “settlement,” in Kerekes’ eyes.
He called the “settlement” an example of a “gift to the gilded”: YMCA President/ CEO Philip Dwyer makes a $225,000-plus salary, according to tax records. Kerekes produced tax records showing the Y lent Dwyer $100,000 in 2009 — even while it was allegedly ducking its PILOT payments.
Kerekes didn’t provide any evidence that Dwyer is personally connected to DeStefano or his campaign. However, he described Dwyer as a “connected” man who is running for the school board in Fairfield. (The YMCA did not return several messages left Wednesday afternoon.)
Reached Wednesday, City Hall Corporation Counsel Victor Bolden dismissed Kerekes’ reasoning. He said in researching the case, he could find no basis for the amount of debt cited in the tax collectors’ liens.
“I’m not saying that someone didn’t believe that at some time that is what was owed,” Bolden said. But “there’s nothing to provide substantiation for that figure.”
“Without being able to substantiate [the debt], this notion of being able to collect something is not easy to do,” Bolden said.
He acknowledged the confusion: “It’s unclear what is exactly going on,” and said he’d look into it further.
But according to his research, there was nowhere near that much debt: “When you go back and look at the PILOT agreement, you can’t come up with that amount.”
That undermines one premise of Kerekes’ claim — that the YMCA owed half a million dollars, Bolden argued. From there, he said, the argument falls apart. The city can’t “waive” half a million dollars in back taxes if those taxes weren’t really owed to the city, he argued.
In testimony before the Board of Aldermen’s Joint Finance/ Legislation Committee on July 14, 2011, Avallone alluded to the discussion with the city. Avallone noted that “there had been some concern regarding the funds owed to the City under an existing tax agreement.” He said “it had been worked out,” according to official minutes from the meeting.
Avallone made those remarks as he sought Board of Aldermen approval on a new PILOT agreement to replace the one that was expiring. He proposed a new, 17-year deal that would begin with the grand list of October 2011.
The YMCA needed the abatement before December 2011, Avallone argued, to beat a deadline to “complete use of a $2 million neighborhood stabilization loan.”
Kerekes argued the aldermen should have known about the other “special deal” before approving another PILOT agreement.
Bolden replied there’s no evidence of any “special deal,” or “settlement,” as Kerekes had charged. He said the letter from Avallone appears to be a “clarification” of which outstanding PILOT payments needed to be made.
Case 2: The Chase Garage
Gesturing to the gaping entrance to the garage at his back, Kerekes outlined how the city lost, by his calculation, $1.5 million in untapped parking fees.
That’s how much the Chase Family Limited Partnership has reaped in parking fees at the 600-plus-space subterranean garage below CIty Hall in the past year, Kerekes claimed — even after ownership of the garage was supposed to revert to the city.
The property is part of an infamous “Chase deal” struck under former Mayor Biagio DiLieto in 1985. Among other things, the deal locked the city into a 20-year agreement to buy energy and granted Chase a continuing right to park on the former Shartenberg department store lot, even after the lot changed hands and became 360 State. (Chase also got 99 years of free rent on prime land across the Green for its commercial office tower next to City Hall.)
Kerekes produced emails and a portion of a document that seem to indicate that when the time came last year to break free of one part of the agreement — that granted Chase ownership of the garage under City Hall — the city didn’t seize the opportunity.
After Sept. 5, 2010, “the city becomes the owner of the parking garage” at 175 and 191 Church St., wrote Patricia Solomon at the Office of the Controller, in a June 21, 2011 email to the tax assessor.
A copy of a tax agreement penned in 1985 appears to corroborate that claim: “Landlord shall become the owner of the Leasehold Improvements” upon the 20th anniversary of the deal, which took effect in 1990.
Bolden confirmed that Chase continues to collect parking revenue on the spaces in the garage. He didn’t know how much the spots were going for. Kerekes said there are 688 spaces, most of which go for $185 per month, except for 40 spaces reserved for City Hall, which go for $90 per month.
Extrapolate those costs over the course of one year, and you get about $1.5 million in lost city revenue, Kerekes calculated.
“They say we don’t have the money. The money’s here — it’s all in the special deals for [the mayor’s] friends. We can’t afford another two years of DeStefano,” he charged.
Bolden didn’t have an answer on whether the parking garage should have returned to the city. He cautioned against “trying to oversimplify the language” of a “complex” document.
“We’re undergoing a careful review,” Bolden said. “It’s not something we’re going to talk about publicly without reviewing it and thinking it through.”