BOARD OF ALDERMEN APPROVES LAND DISPOSITION AGREEMENT AND DEVELOPMENT AGREEMENT FOR SHARTENBERG SITE
(9/4/2007) $160M project brings new market-rate and affordable housing and jobs to the City
NEW HAVEN- In a vote of 18 to 8 the New Haven Board of Aldermen approved the land disposition agreement and development agreement for 745 Chapel Street, better known as the Shartenberg site. This approval allows development firm, Becker + Becker, to proceed with their plans to build a 400,000 square feet LEED-certified green project on the site that has been vacant for 40 years.
“This is a great development for New Haven,” said Mayor John DeStefano, Jr. “This project increases the tax base taking some pressure off of our residents and represents new life in our City. We appreciate the support of the Board of Aldermen and the hard work they put in to negotiating this deal in the best interest of residents.”
This $160M project will include more than 450 residential units, which will add vitality and additional pedestrian activity to the growing downtown. An early childhood education center and a full-service urban grocery store will be located on the ground floor in addition to other retail uses. The project also features at least 500 on-site parking spaces, which will have active uses on the street frontage and takes advantage of its location near the State Street Train Station and the upper floors of the garage will be “wrapped” and integrated into the design of the building. The developer brings at least $100 million in financing to this deal; much of this funded through union-backed pension funds. This project will be built by union labor and follow all City hiring and contracting rules. The redevelopment of this site is expected to bring 1,265 construction jobs and 125 permanent jobs to the city.
While announcements were made in May regarding the conceptual design and basic terms that the City agreed to with Becker + Becker, the Board of Aldermen expressed concerns about the delay in payment of building permit fees. However, after a series of negotiations between the Economic Development Administrator, the two co-chairs of the Joint Finance and Community Development Committees, and Becker + Becker, an agreement was reached that would allow the City to recuperate $3.1 million in building permit fees earlier than expected.
Becker + Becker will apply to the State of Connecticut Urban and Industrial Sites Reinvestment Tax Credit program. The project could be eligible for up to 12 percent of the project’s $160 million cost in tax credits. Last week’s negotiations yielded a 60 percent net cash benefit to the City of this credit if the developer is approved for this funding. All parties involved agreed that the City of New Haven would get 60 percent of the net cash benefit, if any, received by the developer from such tax credit after all expenses and fees incurred in connection with the application are deducted. This cash benefit would be applied to the total outstanding building permit fees. Initially, the City had agreed to allow Becker and Becker to pay these fees over a period of 20 years. This 60-40 agreement speeds up the reimbursement process.
“The Development and Land Disposition Agreements before the Board of Aldermen represent months of extensive negotiations between the City and the developer,” said Alderman Sergio Rodriguez (D-26), Chair of the Finance Committee. “We are pleased that we were included in this final set of negotiations and are very proud of the results. The Shartenberg project provides a great opportunity to create jobs, grow the tax base and continue to lead the state in the highest quality green construction and design.”
“This is a great achievement for New Haven,” said Alderman Edward Mattison (D-10), Chair of the Community Development Committee. “We all worked hard to make sure we were getting the best deal for all New Haven tax payers and that we were opening the door to increased vitality in our downtown.”
Further, the Shartenberg site was burdened with a series of very costly encumbrances that Becker and Becker voluntarily absorbed. As part of the deal, Becker and Becker agreed to replace 175 spaces now used by the Connecticut Financial Center at the development site, a burden that would otherwise rest on the City.
“The cost of building these parking spaces is approximately $6.1 million, by Becker + Becker replacing these spaces, as part of the project, they are providing a significant financial relief to the City; no other developer offered to do this,” said Kelly Murphy, Economic Development Administrator. “Becker + Becker is making a real investment in New Haven. This partnership represents only the beginning of future projects in downtown that will create a more vibrant, attractive urban center both for residents and businesses.”
Becker and Becker is also taking full responsibility for all environmental remediation and all costs related to traffic improvements required as part of the City and State Traffic Commission review. “While some people expressed concerns about the City selling the land for $1, we’re being released from a minimum of $7.1million in costs. This is a great deal that at the end of the day provide significant savings for taxpayers, as well as enabling this $160 million project” said Murphy.
Over 15 years, the City of New Haven will collect a minimum of $22.5 million in taxes for the Shartenberg re-development. The Becker + Becker project, in addition to being the first piece of new major construction in downtown in almost 20 years, will also bring at least $1.5 million in tax revenue annually as of the fifth year (taxes will be phased in under the as-of-right Tax Deferral Program available to all new residential construction projects beginning at an estimated $300,000 in the first year) and will attract hundreds of new residents to downtown. These residents are expected to add $30 million in economic activity in downtown.
“I’m very excited about Becker + Becker’s project,” said Alderwoman Frances “Bitsie” Clark (D-7). “At the community hearings weeks ago I was very delighted to hear lower Chapel Street merchants supporting this development. It’s gratifying to know that there are so many people who are really behind this and who see how great and important this project is for the City. The benefits are tremendous. I know the whole Ninth Square is looking forward to having all these new people and the new retail come in. This is great for jobs and for the growth of our Downtown.”
Becker + Becker has one remaining obstacle to overcome before they can break ground. The developer needs approval from the State Bond Commission so that the City may receive an Urban Act Grant of $9.9 million. Becker + Becker’s primary investor, Kennedy Associates, must receive confirmation of this transfer from the Bond Commission before they will fund the project. Becker and Becker has asked the commission to consider the transfer during its September meeting.
The Administration is very grateful for the legislative support this project has received, not only from the Board of Aldermen but also the State Delegation. "The delegation has been briefed on the project and we are counting on them to take our project through the bond commission. Representative Staples in particular has had an active roll in our application process at DECD and intimately understands the merits of the project and the great benefits the City stands to experience upon its completion," said Murphy.
“We are hopeful that this item gets on the bond commission so this very important project can break ground this construction season so that the City can begin to reap the benefits of taxes, jobs and new housing by summer 2009.”
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