Developers seek better terms on affordable housing project

NEW HAVEN — Developers approved by the city two years ago to build 69 units of housing, including 55 affordable units, on the triangular former “Joe Grates” property off Dixwell Avenue and Orchard Street in the heart of Dixwell now are asking the city to sweeten the deal to help make the project happen amid turbulent fiscal times.

If the project, which the local Beulah Land Development Corp. proposed with New York City-based nonprofit developer HELP USA and Spiritos Properties, moves forward, it would be the first environmentally friendly “mass timber” affordable housing project in the nation, one of the development partners told alders this week.

Darrell Brooks, chief operating officer of Beulah Land Development Corp., which the nearby Beulah Heights First Pentacostal Church formed years ago, said the project, at 340 Dixwell Ave., 316 Dixwell Ave. and 783 Orchard St., “is our very first large project” and “we were almost there — and then (came) COVID.”

Supply chain issues and other wrinkles during the COVID pandemic resulted in construction material prices that drove bids about $2.7 million higher than anticipated, the developers told a joint meeting of the Board of Alders’ Community Development and Tax Abatement committees.

The developers responded by achieving costs savings with more than $1.4 million in “value engineering” and obtaining a permanent financing solution through Community Preservation Corp. and Freddie Mac, they told the committee in a handout distributed at the meeting.

Now they’re asking the alders for help to close the rest of the gap. They want the city to sell one of the properties they need, 316 Dixwell, for $200,000 rather than the originally-agreed $280,000, and are asking the city to double the length of a previously-granted Payment In Lieu Of Taxes abatement from 15 years to 30.

The PILOT amendment “enables the project to leverage more permanent financing by extending the amortization period,” the developers said.

The joint committee, in a time-saving move, took no action, opting instead to send the matter straight to the full Board of Alders for a vote in an upcoming meeting.

The changes are aimed to improve the project’s suitability for some of the complicated financing it needs in order to proceed.

Brooks and David Cleghorn, chief housing officer for HELP USA, both said they were confident they can move the project forward despite expected increases in interest rates if they can pull a workable deal together in time to make a May 11 closing.

“We’re carrying a small buffer for that” and “it should be OK as long as we close in May,” Cleghorn said.

Brooks told the alders, “This project is really important for Dixwell. It’s going to change the face of Dixwell. Eighty percent of the units are going to be affordable.”

He said he would have preferred that 100 percent be classified as affordable but they needed some marketrate housing in order to score well on indexes related to financing.

“This is a project that just rings on multiple levels, benefiting communities like Dixwell,” he said.

The developers’ handout told the alders it would be “deeply affordable” and, in terms of quality, “on par with or better than market-rate housing.”

Cleghorn said that “when this is building is done, like most of our projects, you’re not going to be able to tell” what’s so-called “affordable housing” and what’s not.

“When you walk in this building, there’s going to be nothing that tells you that this is affordable housing,” he said.

The project will include a total of 69 units, of which 20 will be one-bedroom, 12 would be three-bedroom and the rest two-bedroom, Cleghorn told the joint committee in response to a question from Tax Abatement Committee Chairman Jose Crespo, D-16.

It will be designed to Passive House standards and mass timber developer Jeffrey Spiritos has said that will create a cleaner and more efficient building. The addition of solar panels will reduce utility costs for tenants. The two- and three-bedroom units will have outdoor balconies.

Alder Kimberly Edwards, D-19, asked whether the developers “playing with these numbers” and looked hard at a shorter abatement, such as 20-25 years, rather than going straight from 15 to 30.

Cleghorn said officials at Freddie Mac “were simply not going to go below 30.”

Edwards asked whether they were confident enough about their revised prices “so you won’t be going through this again in two weeks?”

Cleghorn responded, “We will not be asking for more money.”

Brooks told the alders that “because of the tight financing markets and because the interest rates are going up, we’re really on a tight timeline” and need to move quickly.

“I would say that we’re on the edge where we’ve got to get to the finish line,” he said.

Cleghorn said in response to a question from Alder Brian Wingate, D-29, that rents would range from $481 a month to $1,600 a month and “people won’t pay more than 30 percent of their income.”

He said in response to a question from Alder Alex Guzhnay, D-1, that the developers have entered into an agreement with Columbus House in New Haven to provide “wraparound” services for formerly-homeless individuals or those facing other difficulties or at risk of becoming homeless.

HELP USA builds nothing but affordable housing — including homeless shelters and transitional housing — in nine cities, Cleghorn said. Its other projects are in New York City; Buffalo, N.Y.; Newark, N.J.; Philadelphia; Washington, D.C.; Cecil County, Md.; and Las Vegas, he said.

In most cases, it provides services itself, but is hiring Columbus House because this is its first project in Connecticut, he said.

Joint committee Co-chair Alder Carmen Rodriguez, D-6, urged the developers to house families that already are homeless in the city and on waiting lists.

“Permanent housing is what solves homelessness,” Cleghorn said. “Shelter does not solve homelessness. But permanent housing only solves homelessness if you’ve got services built in.”

Several alders, including Wingate, Alder Evelyn Rodriguez, D-4, and Alder Steven Winter, D-21, made it clear that they think the project is exactly the kind of thing New Haven needs more of.

“I think this sounds like a tremendous project,” said Rodriguez.

The project “is exceptional. It is eco-friendly, I would say almost luxurious,” Winter said. He pointed out that two-thirds of the units would be 50 percent of area median income.

“I think it’s a phenomenal project,” said Wingate “... Clearly, this is what we’ve been looking for. It’s here before us now and I support this project.”