From CT.Gov

PDF: Will New Haven and RMS Companies offer public housing at 22 Gold Street?

From Tastie Fish

After covering the developments at 22 Gold Street last week, and publishing a subsequent story, we filed a FOIA request with the Department of Economic Development to attain a better picture of  what took place behind the scenes.

The press conference also raised questions about RMS Companies CEO Randy Salvatore.

Economic Development released the general contract between the city of New Haven, and RMS Companies, as well as both copies the city plan approval.

These documents have been reveiwed by plenty of investigators, the Independent cleaned up on this story for months,  but for the purposes of the narrative that we see emerging, it was important to review the documentation before reaching any conclusions.

It was also important to work our sources, and get a general sense for how the city views this partnership with RMS Companies, and the sociological   decisions the city is making with public money.

The machinations of the Connecticut Department of Housing also came under internal scrutiny over the course of our research, a debate we can examine during the advanced stages of this report.

This report has been split into 4 sections. The contract, the City, Randy Salvatore, and the Connecticut Department of Housing.

The Contract

For reference purposes, we have posted the general contract between the city, and RMS companies in regards to construction project at 22 Gold street, and other parcels involved in the agreement.

You can read it here.

As this report unfolds, feel free to use it as a reference point.

We have also posted both of the city plan approvals that were endorsed by city officials in conjunction with the upcoming projects.

The City

Mayor Toni Harp, Economic Development Administrator Matthew Nemerson, and others, sold the lot at 22 Gold Street for a reported 1.2 million to RMS Companies through the CEO Randy Salvatore.

Tastie Fish asked City Hall to confirm that amount, but have not gotten word back as of the publishing of this report.

The contract obligates Mr Salvatore to construct an apartment mized use apartment building with commercial retail on the first floor, and build a similar structure on the same lot.

He also gained rights to the construction of a second building.

The payment was tranched into three disbursements, 1/3 went to the city general fund, another 1/3 went to the livable cities initiative, and the final 1/3 went to the “Neighboorhood Commercial Improvement Fund”.

From Tastie Fish

Tastie Fish has been unable to obtain paperwork, contact information, a working address, or anything else related to the NCIF, but considering they received roughly $400,000 in city money, we felt the need to ask City Hall about it.

We have not gotten any answers as of the publishing of this report, but will continue to investigate until we can confirm some of our questions.

This deal did not go off without a hitch, it was an arduous process that inflamed the community over the affordibility of these “affordable apartments”, engendered hearings, and frustrated Mr. Salavatore into actually threatning the long term development of New Haven as a whole.

As if he has the power to determine such things.

He actually had the audacity to warn of “long term consequences for the city” if the deal didn’t go through, and sources tell this magazine that this was but the tip of the iceberg.

From Tastie Fish

That statement bothers  us, that bothers us alot.

We covered much of these details last week, the city of New Haven can clearly benefit from infrastructure, that provides the lower middle class affordable housing that is in close proximity to major hubs, specifically the massive Yale/New Haven hospital campus, and interstate 95.

The city revitalizing the Hill neighboorhood is going to change the landscape, provide the borough with commercial installations, tax paying residents, continuous commerce that will help stimulate the city economically.

But the lower middle class is being  prioritized over a swarming low income population.

30% of the apartments at 22 Gold Street have been earmarked as “affordable” per the contract, which we presume(we have not seen them yet) satisfy parameters of the “Just in Time program”.

More on the Connecticut Department of Housing later.

Last week, there was some confusion over the affordiability of these affordable apartments, but Connecticut Department of Housing Deputy Commissioner Nick Lundgren  cleared up this disconnect in an extended video interview with us after the press conference.

Low income housing and affordable housing are two different things according to Mr. Lundgren, and the official defintion.

Affordable is based on the median house income, a meteric that is determined by the HUD, usually people that spend roughly 30% of their income on rent.

From CT.Gov

Low income is generally  reserved for people that spend as much as 80% of their rent on living expenses.

The latter population makes up a very large percentage of New Haven, but this new building at 22 Gold Street will address the former population as of now.

Some would call that gentrification, others would call it good business.

There is another problem.

In the defintion section, On page 10 of the general contract between the city and RMS companies, “affordable housing” is defined as “low income and workforce housing with a household income that meets the specifics of the funding provider”.

From Tastie Fish

So it would appear, that a percentage of these affordable apartments could actually be offered to low income familes, perhaps not all of them, but some of them.

But for whatever reason, City Hall, and RMS companies are not opting to take that route, even though the contract calls for it.

The contract also gives New Haven the option of exploring Section 8 housing, specifically in regards to this project, but nobody seemed to mention it last week, and we don’t sense anyone wants to discuss it now.

We have grown curious about what was represented on the official application for the Just in Time funding grant from the Department of Housing, what exactly was published to obtain the funding.

The contract states on page 42 that the city agreed to assist in all applications for state and federal funding, but those applications have seemingly disappeared into the mist.

City attorney John Ward emailed this magazine Tuesday morning, to inform us the city was not in possession of any documentation related to the $5 million affordable housing subsidies the Connecticut Department of Housing inserted into the project.

We found that statement to be in direct contravention with the contract, but took the man at his word.

Last week we were under the impression that 30% of the apartments were reserved as affordable for citizens with an acceptable AMI, but it turns out this housing is also applicable to the low income population, the city is just opting not to offer it.

Citizens that are pulling down $50,000 a year should have no problem finding affordable housing in New Haven, that’s enough to comfortably live in every neighboorhood, to spend public money on housing for people that have city wide access to housing is  questionable decision by the administration, and marginalizes the low income population in this city.

The low income population is represented in the contract, but not in actual application, that’s an unfavorable outcome.

The Connecticut Department of Housing committed $5 million dollars to the project, and despite having the option  to offer some of those apartments to the low income population, Matthew Nemerson, and Randy Salvatore are not doing it.

Matthew Nemerson, who “challanged Salvatore” to stay in New Haven after he sold the Novella for $39 million, has thrown his full support behind Salvatore’s $100 million dollar plan” to refurbish the Hill neighboorhood, but has said little about the elephant in the room.

From Tastie Fish

This $100 million plan is going to push minorities futher out of the city, create less opportunities for housing, drive up the cost of living, and do nothing to address the income and employment gap in the city.

This is risky, politically, and financially for city hall, there is no doubt about it.

One would think Mayor Harp would do everything she could to secure public housing if possible, the city needs it in the worst way, but that is not happening, and it’s raising questions.

She ran on a ticket of advancement, and optimism during campaign stops in the low income neighborhoods this past fall, she has been elected twice because people believe she is going to fight for them.

If your going to engage the Connecituct Housing Department to fund a project that won’t serve a population that is starving for housing, sell land to vibrant developer who flipped a property in New Haven less than 2 years after building it, and cut a deal for 2 brand new apartment buildings that are going to serve the middle class, then it’s expected that you will put the same effort into public housing, homesless shelters, schools, college assistance programs, and other resources that will get some of these people off the street.

Which the contract does address to some degree, Randy Salvatore agreed to consider offering jobs to New Haven residents in conjunction with the construction project, he also agreed to attend a job fair with New Haven area suppliers and contractors that could be of use to the campaign.

The contract does not force Salvatore to hire anyone, or buy anything, but it’s was a nice proviso, Nemerson and Harp deserve credit for that.

Since this agreement was executed almost 2 years ago, we are still evaluating  how those programs played out.

There was also something else that we found to be interesting in the contract.

One of the conditions of the contract between RMS companies, and the City of New Haven, was that RMS facilitate the operation of a “potential bike share program in the city”.

The contract was executed before Traffic and Transportation director Doug Hausladen rolled out his bike share program as far as can tell, but its pretty clear that the city had a specific program in mind when publishing the condition.

Doug Hausladen is deeply invested in the expansion of his bike share program, it’s his baby, it’s part of his plan to lessen the city reliance on cars, which is a great cause, more power to him.

However.

To make it an official parameter of city contract is problematic in this case because Mr. Hausladen was among the collection of officials who had to approve the city approval plan in order for the deal to go through, his office had to sign off on the deal.

from City of New Haven, Department of Transportation, Traffic and Parking

This seems to represent a conflict of interest, a concern we raised with City Hall during our communications this week.

Section 11.13 of the contract contains language barring anyone involved from interest, personal or otherwise in regards to the agreement or the project. 

If Randy Salvatore had refused the Bike Share Program option, citing cost or other factors, would Mr. Hausladen have approved the deal?

Who lobbied for the Bike Share Program to be included in the deal?

We will never know, that’s the danger with a conflict of interest, and the impetus behind section 11.13.

Given all the questions about low income housing, and aspects of the deal that could be tweaked, the bike share program being prioritized over public housing is causing some confusion, we are curious why that was among the cities demands.

The contract calls for a storage facility and other amenties that are going to add cost to the general overhead of the project.

We are still attempting to answer some questions about it, but have thus far not gotten comment.

Randy Salvatore

Mr. Salvatore has been described as a developer, not a building manager, but he currently owns and operates extensive real estate all over the northeast.

Hotels, residental developments, and mixed use apartment buildings.

His portfolio is prolific, and it’s built upon an effective ground game.

RMS CEO Randy Salvatore

Salvatore has a good reputation, his is celebrated by many for his innovative approach to development, and his documented commitment to enriching communities.

He was impressive during our interview with him, the man is walking billboard to ambition, and success.

But throwing caution to wind here would be ill advised, especially after Mr. Salvatore’s truculent behavior against the backdrop of the legislative drama  that preceeded the deal.

Salvatore (an outsider) sold the Novella for $39 million to a New York based company, then paid just $1.2 million for a lot in the same city to build another, and another, that’s brilliant business, but not the actions of someone who is considering the social implications at play here.

Buy cheap, build, wait for the market to turn favorable, sell high.

The total estimated cost of both projects RMS has in development, per the city plan approval, is roughly $40 million, $41 million if you count the site fee Salvatore paid.

These are rough estimates.

It’s not a coincidence that’s almost the same exact  amount the Novella sold for in 2017.

So in reality, Salvatore sold one building, and will now build 2 for the closing price, and could make 3 times the money off a potential sale.

Not bad, not bad at all Mr. Salvatore.

Seemingly, There is great motivation for him to get these buildings off the ground, and it has little to do with the social advancement of the Elm City.

His strategy does not seem to be market based in regards to New Haven, it seems  more about flipping properties, and building more, which is his right, this is America.

Tastie Fish is not knocking the hustle, but we are not totally buying that the revitalization of New Haven is at the very top of Mr. Salvatore’s agenda

What this process does to the surrounding neighboorhoods is irrelevant in most cases involving a real estate tycoon, the goal is to maxmize profit, and blunt overhead.

That’s a developer’s play, not a manager’s, a poignant point made by the Matthew Nemerson himself in regards to Salvatore.

It’s fair to question Salvatore’s long term commitment to the social and economic development of the city if he is going to sell New Haven based apartment buildings to out of state companies.

The Novella was sold to 1245 chapel street LLC, which is a subsidiary of Twinning properties in Manhattan New York.

Multiple phone calls to Twinning were not returned as of the publishing of this report.

1245 Chapel street LCC does not have an office in New Haven, they don’t have a website, the company was formed for the express purpose of the sale.

Not a shell company, but a clever means for Twinning to make future purchases in the city of New Haven without having to be based here.

How does that help New Haven move forward?

Prior to execution, Mr. Salvatore warned of long term consequences for New Haven if this deal didn’t go through.

Long term consequences to whom?

Who is this deal helping in reality?

From what we can tell, the deal was intended to serve the entire community, including the low income population, but the organizers are disregarding the lanaguage in the contract, and opting to serve the lower middle class, while also pushing minorities further out of the city.

That’s a long term consequence that will affect thousands of people, and because Mr. Salvatore (along with City Hall) is opting not to designate some of his apartments as public housing, he is hastening that process while telling us that he has everyone’s best interest at heart.

Nobody is faulting him for turning a profit, but to act like the city will suffer as a whole if he isn’t allowed to grind was irresponsible, and factually incorrect.

There is plenty of developers on the scene that could do great things in our city.

Mr. Salvatore was not speaking for minorities, or the low income population when he made those statements, that sub group has been facing consequences in this city for decades, and this is the latest example of it.

Brand new residential buildings(partially paid for by the state) will be built in New Haven, and the low income population will not have access to them, nor be able to afford the retail that will be developed in the neighboorhood.

That’s great for the middle class, Salvatore, Nemerson, and the city administration, but it’s bad news for the people that struggle here, and work blue collar jobs if they can even find a job.

Here is a chilling passage from the New Haven Register, this project is set to already affect the low income population, many of whom rely upon Section 8 vouchers, and these two new buildings will not be able to accommodate them

From the New Haven Register

Karen DuBois Walton, who heads the Housing Authority of New Haven, said a portion of the housing being built by Salvatore could be considered project-based affordable units that would help make up for the loss of some of the 269 apartments at nearby Church Street South housing complex.

An estimated 136 families have already moved out of Church Street South with portable Section 8 vouchers. Eventually all the tenants will leave and the site, which is owned by Northland Investment Corp., will be redeveloped to mixed use”.

136 familes, mabye more, does anyone believe they could benefit from public housing at 22 Gold Street?

This project cuts both ways, but it remains to be seen if Mr. Salvatore is in this for the reimagining of this city and it’s people, or the expansion of his bankroll.

The Connecticut Department of Housing 

The following is an email communication between Tastie Fish, and the Connecticut Department of Housing’s spokesman Dan Arsenault.

Some of the interaction has been redacted.

TF:  Could we see the approved application submitted by New Haven, and RMS companies for the Just In Time funding program?

DA: We can provide a copy of the application submitted to DOH for this project but would need to review it first and determine whether any specific information should be redacted in accordance with FOIA. 

TF: The contract between the city of New Haven, and RMS companies defines affordable as “low income and workforce housing with a household income that meets the specific requirements of the funding source”. Your department is the funding source in this case. Since the contract defines affordable as low income and workforce housing, would your department have any issue with New Haven offering a percentage of the apartments to a low income population?  Especially if they have the contractual right to do so? Would your department have an issue with section 8 vouchers?

DA: The funding DOH is providing for this project is provided pursuant to our assistance agreement and related documents.  The specific affordability restrictions are set forth in the assistance agreement and a declaration of land use restrictive covenant.  There are no provisions in our assistance agreement that prohibit additional units being restricted pursuant to another agreement.  Under Connecticut law, a property owner cannot discriminate against a potential tenant who has been issued a Section 8 voucher and expects to use that federal subsidy to pay for a portion of the rent.  Our documents require the property owner to comply with all applicable law so DOH would certainly not have any concerns with one or more tenants in the property relying on a Section 8 voucher. 

TF: Could you list the specific tax credits that RMS companies applied for or was granted?

DA: DOH is not aware of any tax credits that RMS companies applied for or was granted in connection with this project.

TF: Based on my conversation with you last week, it would seem 70% of these apartments would be geared towards the lower middle class in the city, is that a population the CDH regards as a prority as oppose to the low income population in a city that needs public housing?

DA: Under both the DOH assistance agreement and the declaration of land use restrictive covenant a total of 33 apartments are restricted for affordability for fifteen years commencing when the project is completed. These affordable apartments include 3 studio apartments, 24 one-bedroom apartments, 4 two-bedroom apartments, and 2 three-bedroom apartments.  All of these apartments will be restricted to individuals and families with an income that does not exceed 80% of the area median income. 

The maximum rents allowable are calculated annually by DOH based on information DOH receives from HUD.  On the DOH website we provide the income and maximum rent limits for designated regions within Connecticut at various area median income thresholds. You can find the most recent information at: http://www.ct.gov/doh/cwp/view.asp?a=4513&Q=531656&PM=1. (Note that a rent affordable to a household income at 80% of area median income corresponds to a “High HOME rent€ on the chart).  We see the need for affordable housing across the spectrum statewide.

TF: When your department contributes to project like 22 Gold Street, what happens if the developer sells the building? He owns the land.  If a project is built with public dollars by a private contractor, will proceeds from the sale trickle back to the state, or does Randy Salvatore keep everything?

DA: Specific requirements or conditions triggered by the sale of a property for which DOH has provided financial assistance will differ from one financing to another, but in nearly all cases the affordability restrictions set forth in the applicable declaration of land use restrictive covenant run with the land and are binding on future owners. 

Under the financing documents for this project, a sale, lease or other disposition of the property is subject to certain conditions designed to ensure compliance with the affordability restrictions by any new owner.

Our communications established that the agency that supplied $5 million dollars for the “affordable units” is open to the idea of public housing at 22 Gold Street, including Section 8 vouchers if a prospective tenants qualify.

The statement ramps up the pressure on Matthew Nemerson and Randy Salvatore to find a middle ground, the duo are not preempted by the contract or the funding source.

Mayor Harp could always intervene as well.

We also find comfort in knowing that an unforseen fire sale of the building won’t affect the apartments that  will be considered affordable, but we still have little indication that the city or the state would see a windfall from such a sale.

Earlier Tuesday morning, city attorney John Ward informed us in an email that “The City of New Haven does not have copies of the “Just in Time” funding documentation referred to in request item No. 3.

Which is understood, so it was a relief that the the Department of Housing is going to provide us with a copy after they can establish oversight.

We are anxious to see the exact details of the application.

Conclusion

This story is incomplete, the success of this project, and it’s ultimate impact on New Haven is measured in years, not months, but we have concluded that converting some of these units into public housing is an option that the organizers could exercise, but they have chosen not too, even with the general agreement defining a portion of the affordable apartments as low income, and the state of Connecticut not objecting to the idea.

The price of the decision is absolute accountibility for the eventual fallout, millions of dollars in resources from the Department of Housing should serve the low income population in some capacity, it would be prudent for the Mayor to address this disconnect at some point during this term.

It would also be wise to watch the moves Mr. Salvatore makes in the coming years, his stated commitment to New Haven will be defined by actions, not words.

 

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