Some Harbour Towers owners look for way out
They argue property values have been questionably inflated and taxes are too high
New London — Suzanne Simpson was living in Groton in 2008 with a $110,000 mortgage, a part-time job and was soon to be single.
Looking back, the 68-year-old wonders how it was possible she had the good fortune to land in a $358,000 luxury condominium in the heart of New London in 2011.
And despite her love of the well-appointed one-bedroom unit at New London Harbour Towers — she raves about the craftsmanship — she now is trying to figure out how to get out. She’s not alone. A group of at least a dozen homeowners living at the 8-year-old development at 461 Bank St. have enlisted an attorney to help not only challenge what they consider inflated home values but seek “to be made whole,” in the words of attorney Gordon Videll, who represents the group.
Videll said he is poised to file a lawsuit but is looking for some type of “global resolution” to what he claims are unscrupulous practices used to boost home values and sell condominiums to some who clearly could not afford them.
“I absolutely love my home but I can’t afford it,” Simpson said. “We’re tethered to this building. Things are unraveling. Nobody can sell. Nobody can leave. I can’t retire. I’m stuck.”
Taxes play a major role in the reason Simpson said her place is becoming unaffordable. She is paying about $10,000 a year in taxes and says the $345,000 purchase price of her home is $120,000 less than the value in one appraisal.
The mill rate in the city jumped from 26.60 mills in fiscal year 2012-
“I absolutely love my home but I can’t afford it. We’re tethered to this building. Things are unraveling. Nobody can sell. Nobody can leave. I can’t retire. I’m stuck.” SUZANNE SIMPSON, CONDO OWNER
“This is extraordinarily complicated. We’re talking about layers of purposeful manipulation and it’s horrible.” GORDON VIDELL, ATTORNEY REPRESENTING HOMEOWNER GROUP
13 to 43.17 mills in 2017-18. Property taxes on Simpson’s condo jumped by nearly $4,000.
Coupled with the conclusion of a five-year tax abatement afforded to new owners, the cost is too much, she said.
Videll agrees taxes play a large role in the reason units are not selling but he argues Simpson’s and the rest of the group’s concerns rise above the level of simple buyer’s remorse.
Flawed premise
Videll claims the values established for the 52 units at the 461 Bank St. condominium complex are based on a flawed premise. He said some of the owners, especially some among the first group to buy into the concept, were able to move in with little or no cash down.
He said Simpson likely would not have been approved for a mortgage had New London Harbour Towers not loaned her the money themselves and allowed her to stay essentially rent free for two years until she applied for a reverse mortgage, which are federally insured and allow seniors to convert their home equity into cash with no monthly mortgage payments.
Harbour Towers performed house swaps and enticed other people in by giving no payment loans if they agreed to get reverse mortgages within two years — all in an effort to get people to buy in at prices that ultimately boosted the values of the entire complex, Videll said.
“You will see that the purchase prices in many cases are very high but in some cases there was no money transacted at all,” Videll said.
“We’re seeing a pattern repeated around the country with developers to secure government financing on undervalued properties,” Videll said. “Moreover, they specifically targeted people over the age of 62 who would qualify for reverse mortgages.”
“It’s certainly unethical ... and comes right out of the script of ‘The Sopranos’ season 7, episode 4,” Videll said.
A representative from the Tagliatela family, which funded the Harbour Towers project, was not immediately available to comment on the allegations.
Simpson was among the first group of condominium owners at New London Harbour Towers, an ambitious and unique project that brought luxury living to the distressed downtown area and produced eye-popping prices.
The first sale in 2010 was of a 2,000-square-foot penthouse that sold for $681,400 at a time when the real estate market was in the midst of a downturn.
Simpson said she saw an advertisement in the newspaper about the house swap arrangement and spoke to Harbour Towers developer Tony Silvestri.
As it turns out, an independent appraisal of her property puts the value at $225,000. The appraisal was completed by Norman Benedict Associates Inc., hired in 2017 by a group of homeowners fighting the city’s assessments.
The real estate values outlined in the report, which looks back at appraisals completed in 2013, were in many cases 50 percent less than purchase prices and more in line with other residential units in the area and not just purchase prices of other Harbour Towers units.
The report was in part funded by New London Harbour Towers LLC, which joined homeowners in the court appeal of the city’s assessments. The appeal calls the appraisals “inequitable and unjust in relation to comparable properties in the City of New London.”
The city is fighting the appeal, which is pending in New London Superior Court, though New London Harbour Towers LLC has since bowed out of the suit.
Videll claims the Tagliatelas no longer participate in the suit because the appraisal report revealed lower values. He said the Tagliatelas were put in the awkward position of trying to prove lower home values in an effort to reduce taxes while at the same time trying to sell units.
Steve Lopes, chief financial officer for the Tagliatela companies, said in a recent interview that the reason they are not involved in the suit is because they no longer are owners of any of the units there. The Tagliatelas last year gifted 21 remaining unsold condo units to the University of New Haven.
The Tagliatela family and their company Franklin Construction — developers, property developers and philanthropists based in New Haven — are the ones that funded completion of the project begun by Silvestri.
‘Extraordinarily complicated’
Videll said he now is focused on an investigation into the means Harbour Towers used in the beginning years to attract people to the new development, which opened in 2010. He said he has been turning up inconsistencies in the way transactions were conducted.
“This is extraordinarily complicated. We’re talking about layers of purposeful manipulation and it’s horrible,” Videll said. “Nobody can sell. The game was get as many units sold at high values as quickly as possible to create a false market, so when conventional financing was pursued by buyers, they can point to comps at Harbour Towers. Now you have one- and two-bedroom condos going for $300,000 to $400,000. One bad deal can manipulate an entire neighborhood.”
He alleges that Harbour Towers also inflated the numbers of units sold when in actuality there were rent-to-own arrangements in place.
Harbour Towers made no secret of the innovative ways it used to promote sales of its condos, allowing people to stay in the units before they bought, customizing the units to buyers’ tastes and purchasing homes and allowing the value of those homes to be applied toward the purchase.
The Tagliatelas even helped to bolster the sales by funding the development of neighboring properties as part of the much-lauded City Flats program. Silvestri has pitched it as a way to not only boost values at Harbour Towers but improve the city as a whole by revitalizing rundown neighborhoods.
Michael McJunkins, a resident and president of the New London Harbour Towers Homeowners Association, said his group as a whole disagrees with Videll’s assertions. He argues there is a much simpler reason units have not been selling: the city’s tax rate.
McJunkins, who purchased a Harbour Towers unit in 2013, said he loves the building but New London’s skyrocketing tax rate is hurting many, especially those on a fixed income. He said he feels the appraised value of his own unit is accurate but saw a 40 increase in his taxes since he moved in, enough to scare some buyers off.
“It’s insane. The tax rate is out of control,” McJunkins said.
In addition to the rise in taxes, condo owners moved in with a five-year tax abatement approved by the city. He said it hit some hard when the abatements ended, since it would have been hard to predict such a steep climb in taxes over five years.
The tax abatements work on a sliding scale. Seventy percent of the appraised value is deferred the first year and 30 percent is deferred by the fifth year.
For Leslie Christie, an employee at Electric Boat in Groton, the rise in the city’s tax rate has her taxes on her ninthfloor penthouse ballooning to about $17,000 annually.
While she still marvels at her luxurious surrounding and sweeping water views, Christie said she has been trying to sell and can count on one hand the number of people who have shown interest.
She doesn’t see a way to recoup the money she and her mother spent — $678,000 — considering one appraisal puts the value at just $375,000.
“I feel like a caged animal now,” Christie said. “I didn’t do the kind of homework I should have done.”
Christie still maintains a hint of optimism.
“I think Tony has some good ideas,” Christie said. “If it could continue, that would be great. I’m hoping there is a resurgence here. I think the city could be a gold mine if the right people were involved in the makeover.”
Videll said he hopes the concerns raised by the group of owners brings the Tagliatelas to the table, though Lopes, he said, walked out of a scheduled meeting with one tenant when he arrived.
‘Just get me out of here’
Simpson said that, however unlikely, she wishes to “go back financially to where I was.”
“Just get me out of here. Give me a way to get me out. Buy my unit back. Let me give it back,” she said.
Christie predicts that if nothing changes “more people will walk away ... just to stay solvent.”
McJunkins said that, despite fears raised by the 21 units going to the University of New Haven, it turns out they have been good neighbors. The units are being rented at full market value to local professionals.
He called the University of New Haven “true believers in New London Harbour Towers.”
Videll continues to argue that the people with reverse mortgages are either embarrassed or happy where they are because they are “planning to die there, have no heirs or don’t care about being taken advantage of.”
Attempts to reach Silvestri, Lopes and Dawn Thompson, a representative from RE/MAX Admiral and owner of the two street-level commercial properties in the complex, were unsuccessful.