Au­thor­ity has eye on Ninth Square

CHFA look­ing for buyer of large city project

New Haven Register (New Haven, CT) - - FRONT PAGE -

By Mary E. O'Leary

NEW HAVEN — The Hous­ing Au­thor­ity of New Haven is look­ing for a part­ner to bid on The Res­i­dences at Ninth Square, the large hous­ing and com­mer­cial de­vel­op­ment that is cred­ited with set­ting down­town on a pos­i­tive growth tra­jec­tory.

It is one of some 20 com­pa­nies that are con­sid­er­ing sub­mit­ting pro­pos­als by the Nov. 20 dead­line.

The mix of af­ford­able and mar­ket-rate hous­ing, plus restau­rants, gal­leries and other ground­floor busi­nesses have been a suc­cess for the pub­lic-pri­vate part­ner­ship that came to­gether in 1993 to sta­bi­lize an im­por­tant part of down­town.

The Res­i­dences at Ninth Square is in debt, how­ever, to the Connecticut Hous­ing Fi­nance Au­thor­ity for more than $60 mil­lion on the prin­ci­ple alone, ac­cord­ing to Erik John­son, a mem­ber of the ad­min­is­tra­tive team at the Hous­ing Au­thor­ity.

New Haven is owed some $24.3 mil­lion, which in­cludes in­ter­est for more than 20 years, New Haven Eco­nomic De­vel­op­ment Ad­min­is­tra­tor Matthew Ne­mer­son said.

A third in­vestor, Yale Univer­sity, has al­ready been bought out. The last in­vestor was the state Depart­ment of Hous­ing.

New Haven is in fourth and fifth po­si­tion in terms of be­ing paid back, with CHFA first in line.

CHFA had no com­ment be­yond stat­ing it is work­ing to as­sist the sale to new own­ers.

The Re­lated Com­pa­nies and McCor­mack Baran form the part­ner­ship that now runs it.

Karen DuBois-Wal­ton, ex­ec­u­tive di­rec­tor of the Hous­ing Au­thor­ity, said her agency is run­ning the num­bers on a pro­posal and is prov­ing to be a pop­u­lar part­ner given its ex­pe­ri­ence with af­ford­able hous­ing pro­grams.

John­son said there are 335 one- and two-bed­room apart­ments in the multi­build­ing de­vel­op­ment, 55 per­cent of which are deemed af­ford­able hous­ing un­der state guide­lines and 45 per­cent are mar­ket rate. Two garages and 55,000 square feet of com­mer­cial space are also part of the project that ex­tends along South Or­ange, Crown and Ge­orge streets.

An up­grade of the prop­erty and a dis­count on the debt with CHFA and with New Haven has long been un­der con­sid­er­a­tion as the cur­rent part­ners con­tinue to strug­gle with their fi­nances.

Ne­mer­son said the city has put to­gether a list of its re­quire­ments to help the bid­ders.

The re­quire­ments in­clude: $680,000 in a yearly PI­LOT, or pay­ment in lieu of taxes, for 20 years; keep­ing 55 per­cent of the units af­ford­able for 20 years us­ing the cur­rent in­come guide­lines; a pay­ment of $2 mil­lion in re­turn for for­giv­ing all of the city’s sub­or­di­nated loans’ prin­ci­pal and ac­crued in­ter­est.

Also, ren­o­va­tions should be done where needed, in­clud­ing up­graded kitchens, bath­rooms, en­ergy ef­fi­cient win­dows and im­proved heat­ing and air­con­di­tion­ing sys­tems; a com­mit­ment to main­tain the cur­rent prop­erty man­age­ment and main­te­nance staff who have not been of­fered a po­si­tion by the ex­ist­ing own­ers

Ne­mer­son said lay­ing out the city’s po­si­tion will save de­vel­op­ers from ne­go­ti­at­ing with CHFA and then be­ing sur­prised of the need to ne­go­ti­ate with New Haven.

“We thought the best strat­egy to pro­tect the city was for us to have all 20 peo­ple, com­pet­ing to pur­chase it, know what our min­i­mum re­quire­ments are,” Ne­mer­son said.

“You bid, you know what the sell­ers want, you know what CHFA wants and you know what we want so every­one can value those things in their own dis­count rates,” Ne­mer­son said.

The ad­min­is­tra­tor said the city’s debt is not as im­por­tant as the need for a PI­LOT and main­tain­ing af­ford­abil­ity, some­thing that was re­quired in the orig­i­nal bonds.

“We want to make sure that that isn’t some­how ab­ro­gated,” he said. “We just want to put to­gether a pack­age that we think is fair and that doesn’t re­duce the value of the prop­erty.”

John­son said The Res­i­dences at Ninth Square were built in two phases in 1993 and 1994. Two of the build­ings were new con­struc­tion and the oth­ers are re­habbed cen­tury-old struc­tures.

The orig­i­nal in­vest­ment was $10 mil­lion in tax­able bonds bought by Yale; $31.8 mil­lion in tax ex­empt bonds fr­rom CHFA; $4.6 mil­lion in special obli­ga­tion bonds from New Haven; $7 mil­lion by the state Depart­ment of Hous­ing; $8.9 mil­lion in an Ur­ban De­vel­op­ment Ac­tion Grant; and eq­uity gen­er­ated through sale of fed­eral low-in­come hous­ing tax cred­its and his­toric in­vest­ment tax cred­its.

The to­tal cost in the mid-1990s was $86,600,000 or $258,000 per unit not in­clu­ing the park­ing and re­tail space, ac­cord­ing to an anal­y­sis done by Christo­pher Miller in 2011 at the Yale Law School.

New Haven in re­cent years has been get­ting tax pay­ments from the project and as­sesses it at $42 mil­lion, but for years it waived tax pay­ments.

Ne­mer­son said this re-re­fi­nanc­ing of the project demon­strates the large cost of pro­vid­ing af­ford­able hous­ing, but “it is the right thing to do.”

He said this will con­tinue to be more dif­fi­cult given pro­posed tax credit cuts at the fed­eral level and bud­get cuts at the state.

Mary O’Leary / Hearst Connecticut Me­dia

Part of the Res­i­dences at Ninth Square where there is re­tail on the first floor on Or­ange Street. The large project is for sale.

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