by Thomas Breen | Jul 4, 2022 9:30 am
(22) Comments | Post a Comment | E-mail the Author
How 4 downtown development sites were supposed to look ...
... and how they actually look today. Clockwise from top left: 80 Elm St.; 842-848 Chapel St.; 19 Elm St.; the former Coliseum site at Orange St., George St., State St., and MLK Blvd.
Three different developers promised to build over 460 apartments and 132 hotel rooms across four different city-approved projects downtown amid a building boom.
Years later, those projects remain unbuilt — and the lots they’re slated for are still empty and, in one case, strewn with rubble.
What happened? And will these developments ever get done?
Those questions linger over four downtown parcels of land that remain stubbornly vacant with no cranes in sight.
Proposals for all four locations won site plan approvals from the City Plan Commission between December 2018 and November 2020. The developers touted transformative building projects for these sites well before that.
Those four still-unbuilt downtown properties are:
• The former Coliseum site bounded by Orange Street, George Street, State Street, and MLK Boulevard, where the Norwalk-based developer Spinnaker Real Estate Partners plans to build 200 new apartments and retail space in the first phase of a major redevelopment.
• The former Webster Bank building site at 80 Elm St., where Spinnaker plans to build a new 132-room hotel.
• The former Kresge department store site at 842 – 848 Chapel St., where local landlord Paul Denz’s Northside Development company plans to build 166 new apartments across two new residential buildings.
• The former Harold’s bridal shop site at 19 Elm St., where local landlords Jacob and Josef Feldman’s Mod Equities company plans to build 96 new apartments.
In response to commenter requests for updates on long-delayed development projects that were greeted with such fanfare when approved by the City Plan Commission years ago, the Independent did some (metaphorical) digging on why so little (actual) digging has taken place at these four spots. (Click here to read a recent article about how the Hamilton Street clock factory redevelopment project has also stalled out for years.)
According to the developers for each of these four downtown locations, these projects will get built.
Even as rising interest rates, supply chain disruptions, and construction material price inflation throw the industry for a loop.
“ Interest rates have been very, very low, which have enabled developers to gloss over some difficulties, because there were financial rewards,” said Spinnaker CEO Clay Fowler, whose company has built hundreds of new apartments and groundfloor retail space on Audubon Street over the past few years.
With rising interest rates and construction material prices, he said, “ that headroom, that freeboard, that relative ease in which it appeared to be able to make profits, that’s gone. It is totally gone. That’s why things are stalling out. People in the industry, whether they be bankers, investors, buyers — they’re more circumspect.”
Denz agreed. He said that unbuilt projects, like his on Chapel Street, are now coming in at prices 15 percent higher than pre-pandemic budgets.
That will make them more challenging to build as originally approved.
Meanwhile, new apartments have continued to be built — or at least demolition and construction work have begun — during the ongoing pandemic, including for projects on Olive Street, Howe Street, York Street, Gold Street, Foster Street, Munson Street, Blake Street, and Olive Street again.
The surface parking lot at the former Coliseum site.
Spinnaker CEO Clay Fowler: The time of easy developer profits is "totally gone."
What was supposed to be built? Why has it been delayed? And will these projects ever get done?
First up: the 4.4‑acre former Coliseum site bounded by Orange, George, and State Streets and MLK Boulevard.
In November 2020, the Norwalk-based developer Spinnaker Real Estate Partners won site plan approval from the City Plan Commission to build a new 200-unit apartment building and a retail “ laneway” as part of the first phase of development — known as Phase 1A — a new “ mini-city” just south of the Ninth Square.
Spinnaker received that site plan approval after taking over the long-delayed project in 2019 from the Montreal-based firm LiveWorkLearnPlay, which first signed a deal with the city in 2013, but then — either because the developers couldn’t raise money or unexpected design problems got in the way — never wound up building anything.
Today, the former Coliseum site is still just a surface parking lot.
In a July 2019 interview and during September 2019 and June 2020 public meetings, Spinnaker representatives estimated that their company would begin construction on phase one of the Coliseum site in Spring 2021.
At a virtual outreach meeting for small contractors in February 2022, the developers said they should begin construction this spring.
On Monday, Spinnaker CEO Clay Fowler told the Independent that the project has a new timeline — and reinvigorated life.
He expects his company will close on its financing for the $75 million Phase 1A project and then begin construction in the next 90 days.
The Coliseum’s Phase 1A project “ is financed, which is what we were waiting for,” he said. “ The bank and us are putting together the documents necessary to close the loan so that construction can commence. The contractor has been selected. We have close to our final numbers. We’re very confident that we’re going to start construction” in the next 90 days.
Why has the project been delayed?
“ It’s a more complicated deal than normal because it has a lot of parties involved. It’s got the public involved,” because of the original Development and Land Disposition (DLDA ) with the city that Spinnaker took over from a firm called LiveWorkLearnPlay.
Another complicating factor is that Spinnaker is building out Phase 1 in “ two phases,” Fowler said. The first involves the 200-unit apartment building and retail “ laneway” and surface-level parking. The second calls for a new parking garage plus another 75 new apartments.
And, Fowler said, everything in the construction industry has gotten more difficult due to Covid — and “ the fallout from Covid.”
“ Who’s kidding whom?” he said about construction price increases. “ We’re wrestling with cost escalation,” just like every other builder in the country. “ It’s 15 to 20 percent more expensive than we thought it was going to be.”
He said his company is nevertheless proceeding with the project. “ I think that demand remains strong, as evidenced by the fact that pretty much everything that goes up in New Haven is rented pretty quickly.”
Fowler warned that “ storm clouds” are overhead for developers like his company.
“ The underlying construction costs for building, we may see some leveling, but we don’t see any decrease in costs” any time soon. And the “ financing costs with interest rates have risen significantly. They’re still historically low, but it’s a bit of a shock to be paying 50 percent more on our financing costs than we did two years ago.”
“ Those are all impetuses to increase rents,” he said.
City development chief Mike Piscitelli.
City Economic Development Administrator Michael Piscitelli said via email that his office is “ working closely with the Coliseum team leading up to a construction start in the fourth quarter, 2022. Construction documents are well underway and the developer has led two information sessions with local subcontractors, all key steps toward the start of construction. There will be a community meeting in late summer to preview what to expect during the construction phase.”
According to a presentation that Spinnaker representatives gave in June 2020, the development plan for the Coliseum site — including Phase 1A , Phase 1B , and Phase 2 — should see the construction of 700 apartments, 594 parking spaces, 50,750 square feet of retail and restaurants, 44,440 square feet of public open space, and 199,950 square feet of office and/or lab space. Per the DLDA with the city, 20 percent of those apartments must be set aside for tenants earning between 80 and 120 percent of the area median income (AMI .) (That currently translates to an annual income of between $89,400 and $134,100 for a family of four.)
Up next: 80 Elm St.
That 0.6‑acre site sits at the corner of Orange and Elm Streets, right next to the municipal office building at 200 Orange St.
In January 2019, Spinnaker won site plan approval to construct a 132-room Hilton Garden Inn hotel at the corner site. From December 2019 to January 2020, the developers knocked down a vacant 1948 art moderne former bank building — as well as the remains of the former church building hidden within — to make way for the new hotel.
For the past two and a half years, the site has been one big fenced-in hole in the ground, covered in rubble and debris from the demolition.
“ Covid blew that hotel out of the water, so to speak,” Fowler told the Independent.
“ We had a loan, and we were ready to close. And Covid hit, and the bank pulled out.”
He said that Spinnaker and its development partner the Olympia Companies still plan on building a Hilton hotel — now a “ Tempo” rather than a “ Garden Inn.” “ We changed it to a more boutique‑y” Hilton product, he said.
But all that depends on whether or not they’re able to line up investors for the project.
“ We went out to bid, and, frankly, the costs dissuaded us from moving forward,” he said. “ We’re still looking for a way to move forward with a different investing partner.” But rising costs and interest rates — and a pandemic-induced hit to the hotel market — will make that a challenge.
Fowler noted that other hotels have been built around the city over the past few years, including the new Hotel Marcel on Long Wharf and the Cambria hotel on Rt. 34. “ I think demand is a little bit suspect” for more hotels in the city, he said. And “ we’ve not been able to replace some of the investors in the deal.”
“ We’re looking at alternative uses,” Fowler said. “ Those alternative uses fall on us.”
First, his company will take the next 30 to 45 days to “ see if the hotel can be done.” If not, then “ we are ready to propose moving forward in another direction.”
What does he think of the site as it currently exists — and has existed for the past two-plus years?
“ We don’t like it. We think it’s an embarrassment, and it’s not the way we wish to present,” he said.
Asked for the city’s take on this 80 Elm St. project, Piscitelli said, “ The hospitality market slowed considerably during the pandemic so it is very encouraging to see that two of three hotel projects moved forward, Hotel Marcel (165 rooms) and Cambria (128 rooms). It is unclear if 80 Elm Street will move forward and we are looking to assist in this regard.”
What about the empty building and vacant lots on the southern side of Chapel Street between Orange and Church Streets?
Back in December 2018, Paul Denz’s Northside Development company won site plan approval to construct a new 120-unit apartment complex atop the site of the former Kresge department store.
In March 2020, during the last in-person full Board of Alders meeting before the Covid-19 pandemic sent local legislative meetings online, the alders approved a DLDA that would sell publicly-owned vacant lots at 848 Chapel St., 812 Chapel St., and 108 Chapel St. for $1,057,500 to Denz’s company.
Denz planned to combine the land included in that swap with adjacent properties that he already owns to build the new 120-unit apartment complex at 842 – 848 Chapel St., as well as an additional new 46-unit apartment complex at the southwest corner of Chapel and Orange Streets.
According to the city land records database, Denz and Mayor Elicker signed the city-Mid Block DLDA for the site in August 2020.
Since then, the site has remained empty — an overgrown fenced in lot at Orange and Chapel, a vacant building (formerly home to Foot Locker) next door, and a surface parking lot next to that.
What happened? And what’s happening?
Paul Denz (right) and Christopher Vigilante at 2018 community meeting.
The Independent spoke with Denz twice over the past week about this project.
In the initial interview, before he received a new set of pricing for the construction project, he was more optimistic about construction starting this calendar year — either under his company, or under a potential new developer whom he might sell the project to.
Then Denz reviewed those new prices. He found that the project will cost 15 percent more than the $40 million he had initially budgeted. So in the second conversation, he was less optimistic — about construction starting this year, and about being able to sell the project.
In the first interview, he said the pandemic and its effects on the construction industry significantly slowed this development.
“ We went into a pretty long Covid scare where nothing was really progressing on the development front because everyone was worried about staying alive,” he said. “ There was a long, long delay there.”
Now, he said, “ we are actively re-pricing the development costs, and they swing pretty dramatically.” Material costs are 10 to 15 percent higher now than when the project was initially budgeted. Plus, it’s hard to actually get the construction materials his company needs, because of shortages in key materials like lumber.
“ I have talked to numerous suitors, and we’ve probably identified one that would be a really good candidate” to buy and build the new apartments as envisioned and approved.
“ My outlook on it now is that someone will be building that project in calendar 2022,” he said in that first conversation.
Given that the project is now 15 percent higher than he initially thought it would be, he said, these new higher prices will likely “ further slow us down while we continue to try to really zero in on what it’s going to cost to build.”
“ I really want to get this project going,” he said. He downgraded his assessment of whether or not construction will start this year from confident to “ hopeful.”
What about the prospects of selling the site? “ I’m less confident than when you and I spoke before,” he said. “ Now it’s more of a 50 – 50.”
Fenced-in corner lot at Chapel and Orange.
What does he make of the current state of this Chapel Street undeveloped site?
“ Unfortunately, for 20 years, it’s been a sore thumb of downtown New Haven,” he said. “ That’s why I wanted to build a development there. I’ve always said it would be a transitional development.”
In the meantime, Denz’s company has sued the city in state court in a bid to drop the 842 Chapel St.‘s post-revaluation assessed value, and therefore its local property tax bill. The city most recently assigned the property a total assessed taxable value of $531,400.
“ We filed because we think it’s been overvalued,” he said.
And what about the long-vacant former Harold’s Bridal Shop building at 19 Elm St.?
In April 2020, an affiliate company of Jacob and Josef Feldman’s MOD Equities won site plan approval to build a new 96-unit apartment building at that site.
They won that approval three years after they got permission from the City Plan Commission in 2017 to build a smaller, 46-unit apartment building at that site instead.
The developers’ application to the City Plan Commission in 2020 stated that they expected to begin construction upon site plan approval, with major construction to be completed by Spring 2021.
MOD’s Jacob and Josef Feldman.
“ After a long journey, I think we’re getting to a point where it’s going to go up soon,” Jacob Feldman told the Independent in a brief phone interview.
He did not comment on what caused the years worth of delays so far.
“ The MOD Equities project at 19 Elm Street is dormant from the City’s perspective,” Piscitelli said. “ This is an appealing site, but the development team clearly has been focused on other work including the renovations at 129 Church and State/Court.”
The Feldmans’ company has been working on converting the James English building at 418 State St. at the corner of Court Street into 39 new apartments. After winning site plan approval in June 2021 to convert the office building at 129 Elm St. into 92 new apartments, their company sold that property for $8 million to a different set of local investors.
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Oooohhhhhh- I get it....they are gonna shake down the City for more tax breaks and benefits!! I think the City should not only NOT accede to the blackmail but further-- these developers should be REQUIRED to put some sort of beautiful space holder there while they wait for better days.... They should be required to fill in with potted plants and trees-- they can be removed if and when the projects start up. Meanwhile, why should the citizens of NH be subjected to the price of the ugliness of these urban holes when the developer will reap all the future benefits? Where are woke folks to demand accountability of these real estate "carpetbaggers" when we need them???
What's happening with 500 Blake Street? The foundation work was finished before last winter but no one has been there since.
Same nonsense going on with the Haven in WH it’s a joke. Maybe the price of material are past the job quote and guys are waiting to start or just leave it there and wait for the lawsuits and blame it on the pandemic
Hope they get built, because building hundreds of new housing units every year is the only realistic way to prevent rents from skyrocketing out of control in New Haven. The state should be providing a subsidy, given that the housing crisis is getting worse and evictions are going up. If the state won’t act, maybe some of Yale’s new contributions could be put towards subsidies for these developments?
Dear Anonymous--- as I said, they are waiting for taxpayer bailout, which I oppose forprivate businesses. There is no housing shortage. People are not working or they are not working enough or they are spending too much on other things so they have no money for rent nor mortgage. The housing "crisis" is a made up deal to get tax money to support the trades and investors. Not interested in bailing them out. No one bailed me out when I made mistakes financially without a hefty price!!! What will their price be
Tom, between your Cox/Wilson article, and this article, excellent local reporting this week! This is the stuff on why I love the Indy [Reporter's note: Thank you!]
I remember when Macy's got a 400 million dollar tax free bribe from the City to stay. Just the usual business is done in every City in the United States. We're exceptional!!!
These Chapel Street lots, extending back to Crown, are blighted and have been for many years. Unlike the Spinnaker projects, the owner has no apparent ability to move forward on development. His property taxes should not be cut. Perhaps the city should take the land by eminent domain for its market price and then resell it to a willing developer. The city could increase the land value by pre-approving a large development, as would be appropriate at that location.
@ City Yankee "There is no housing shortage. People are not working or they are not working enough or they are spending too much on other things so they have no money for rent nor mortgage." Well, CY's comments have always been right-wing, arrogant, and heartless; but the lack of empathy and imagination in this one really takes the cake. Despite the statistics, the multiple stories, the general consensus, nope: City Yankee knows the actual truth, that it's easy to find an affordable place to live if you just work hard and don't waste your money; that misfortune is all due to moral failure on the part of the unfortunate. Think about what you just wrote, CY. Just THINK about it, and what it says about you as a person. There but for -- I won't say the grace of God -- there but for accidents of history go YOU.
Gretchen Pritchard about @ City Yankee- Gretchen, Thank you for your words! I have responded to CY once, however I have bit my tongue 100 times. CY, try to find the positive in our world. You spew mostly negative perspectives and your view of other human beings is often degrading and divisive, to put it nicely. Please look in the mirror and remember what kind of civic discourse we want for our communities, for our children. This is disgusting: "There is no housing shortage. People are not working or they are not working enough or they are spending too much on other things so they have no money for rent nor mortgage."
Nearly all of the apartment buildings going up in Hartford right now are getting huge public subsidies (in the form of special low interest loans). Why can’t we make those available for projects in New Haven, too? I understand the loans weren’t needed a year or two ago, but the price of construction has increased, so the state should extend them to New Haven too. If it doesn’t, then the state is directly responsible for the enormous spike in everyone’s rent that will happen due to lack of new housing supply here. Call your legislators.
There are three reasons why construction costs have increased. 1) The lumber industry closing mills in reaction to covid at the same time as consumers decided to use covid time to do renovation. This has sort of worked itself out and mills are getting back up to capacity. 2) Supply chain disruption from covid. Still working itself out as China wallows in the results of its ham-fisted covid response model. Also empty shipping containers have been stranded in many places where they aren't needed and vice versa. Also there's a shortage of last mile truck drivers because that's the bottom of the truck driving barrel and no-one wants to do it anymore. 3) Financing costs due to feds interest rate hikes. Is that a cold breeze you feel? Any of these could change but believing that construction costs might come down significantly in the future is a foolish mistake. They'll never come down to pre-pandemic levels and the only solution is to retool the projects from the design down to the expected rent.
First of all, thank you to the NHI for reporting on this topic. I hope we will see more in the future to put pressure on the developers to either move forward on these projects, or sell them to a developer who will be able to get a project completed. The city should also fine daily developers for any lot or building that looks blighted, as an incentive for them to keep the properties looking cared for and get the project moving. On another note, as much as I disagree with CY2 about so many things, and especially about the issue of affordable and sufficient housing, I do like the suggestion of requiring developers to put in a beautiful or useful space holder while they are waiting to get things moving on a stalled development plot of land. And I also agree that developers should stop putting their hands out for tax breaks and other city payouts when they haven’t shown significant progress on a development or have let other projects stall. This city and others have given away money while the developers end up walking away with money and using stalled projects as tax write offs, or selling the land at a profit to the next developer who then asks for more city money to get their project off the ground. Fool me once, Shame on you, fool me twice, shame on me. Shame me dozens of times, and the city starts looking like easy money for rip-off artists in developer’s clothing. Remember how many dollars and the gaping hole in our streetscape the city has lost on taxes for these buildings once they get torn down and sit unused.
Spinnaker CEO Clay Fowler: sits for years on several sites, leaving them empty (and in at least one case, a festering eyesore of a giant hole in the ground, about which neither he nor the City do a dang thing "Gosh, the market sure is crayyy-zayy! All of this is an impetus to raise rents!" Fowler clicks on his bank account, logs in, smiles at the balance, and goes back to reading his Wall Street Journal Mr. Folwer, if you cant do anything with the properties your company has been sitting on, then you should sell them, and do so immediately. Your company's impotence is New Haven's loss. Enough is enough
Great work, Tom! I doubt that Denz will win his suit. As the data you have published shows, post-reval sales of large multifamily properties have generally come in well above appraised values. If anything, the city undervalued this class of property. CY2, zoning approval is permission, not a mandate. The city has no legal authority to require these developers to build anything. Anonymous, there are about 50,000 housing units in the city. I’m all for building more housing. But a couple hundred units of additional housing will not have a substantial impact on rents. Rents will go up, exacerbating the city’s unaffordability problem. But that is primarily a result of the buyers of multifamily buildings paying inflated prices and higher taxes. Gretchen, CY2 would be right if she were saying that there are unoccupied housing units in the city. But that does not mean that there is sufficient affordable housing (your point). Most New Haven renters spend more than 30% of their income on housing, the standard benchmark for affordability. More than one-quarter spend more than half of their income on housing. Similar numbers apply statewide.
Does the MOD/Feldman business have any buildings that are fully renovated/completed/rented out as apartments? They have owned 418 State since 2015, the Harold's building since 2016, and flipped 129 Church before completing it. Seems like they can't or don't want to fully develop these properties and run them as rentals. Hard to determine what else they own unless one knows the names of their ownership entities. Any enlightenment is welcome.
Feldmans are doing the Church of the Redeemer conversion, which has been a very active construction site.
Glasshalffull, according to its website, MOD owns or manages $150 million in properties in New Haven, West Hartford, and Brooklyn. https://www.modequities.com/investment-portfolio There is a new sign in front of the former Church of the Redeemer (which it owns) saying that it will be renting soon. Work has been going on there for months. The website has a video showing the interior work.
Kevin, contrary to your assertion, research proves that every new housing unit makes a difference. Every time a renter rents a new unit, it means that an existing unit becomes available for another family. Without new homes being built, prices skyrocket out of control. Although a few hundred units at four projects won't change the average rent in New Haven by much, you can presume that they would be part of several thousand units under construction across dozens of other projects. Overall, getting all of those projects built is the only realistic way to keep rents from increasing across the city. Additionally, you might want to consider that each additional housing unit helps keep rents from increasing in the immediate area where it is built. So even if a renter in Morris Cove might not see their rents stabilize after a large new building opens in Westville, the renters living in Westville are likely to see a significant benefit. "Rents for rental buildings within 500 feet of completed new buildings decrease by 1.6% one year after the completion significantly and persistently," according to the research paper at https://www.fanniemae.com/research-and-insights/do-new-housing-units-next-door-raise-your-rents.
Another thing that would help with housing and rent rates and affordable housing is fixing Connecticut's antiquated and segregationist housing zoning codes. We have some of the most segregated housing and schooling in the country, mostly due to zoning issues that were put in place in communities to keep some people out of those communities. If every community in the state was required to have a decent percentage of affordable units, and the state helped those communities by expanding and building infrastructure like city water and sewer systems in areas that predominately have wells and septic systems, and expanding bus service routes and schedules to meet residents needs, then we could meet our housing needs and integrate our housing and school systems. If we had a county government system to share costs and social services and public works, then the county would decide together how to share resources and funding to create a more equitable and fair system that supports all the cities and towns within the county.
This article is showing strong demand at high price points, with room for rents to go higher if there are 30 applications for a $2400/mo one bedroom. https://www.newhavenbiz.com/article/intense-demand-fuels-new-haven-rental-boom Meanwhile, Hartford requires subsidized capital, and is still in the pump priming stage: https://www.newhavenbiz.com/article/a-tale-of-two-apartment-markets-red-hot-hartford-new-haven-multifamily-sectors-evolve-along
Tom, 19 Elm appears to be moving forward. There is an item on tomorrow’s (6/12) Board of Zoning Appeals agenda regarding parking for the project. Anonymous, markets function in the long run. But as J.M. Keynes noted, “in the long run, we shall all be dead.” Rents in New Haven rose substantially in the past 5-10 years notwithstanding a building boom, indicating that filtering has not happened in that timeframe. You can plausibly argue that rents would have gone up even more if the developments had not been built. But that is little comfort to tenants. BTW, the study you refer to and similar research refute the idea of indirect displacement. Housing advocates believe that building new developments raises rents in existing buildings, forcing tenants out. The empirical research conducted to date does not support this belief. On the other hand, direct displacement is a realty. When developers acquire and upgrade existing buildings in gentrifying neighborhoods, they often force out sitting tenants, sometimes using illegal methods.
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