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Impacts of Proposed Shartenberg Site Development

February 24, 2008

Introduction

The Shartenberg department store stood at 745 Chapel Street in downtown New Haven, between Orange Street and State Street, from 1915 to 1964 when it was razed in the midst of Mayor Richard C. Lee’s Model City initiative (Hunter). Redevelopment plans for the city-owned vacant land were never realized in the decades that followed and the 1.61 acre Shartenberg Site, as it came to be known, was used as a surface parking lot since 1966 (Hughes). As New Haven’s economy saw resurgence in the early part of the 21st century, however, there was increased attention paid to urban renewal with a focus on mixed-use residential and commercial developments (Prevost). The Shartenberg Site was one of the largest tracts of developable land left in downtown and was a primary focus of this redevelopment (Mayor).

On June, 16, 2006 the City of New Haven Office of Economic Development issued Request for Proposals (RFP) #26-08-475 seeking proposals from prospective developers of the Shartenberg Site (New Haven, RFP #26-08-475 1). After receiving a total of nine proposals for the property, the city announced on February 13^th, 2007 that they had chosen Fairfield, CT based firm Becker and Becker and their 32 story mixed-use high rise design (Mayor). This decision has led to controversy among business interests, elected officials, and residents over the best use of the available space, the needs of the City of New Haven, and the specifics of the Becker and Becker deal.

Features of the Shartenberg Site

The Shartenberg site is located in the heart of downtown New Haven on one of the original nine squares of the city plan laid out by surveyor John Brockett in 1639 (New Haven, Comprehensive Plan of Development 3). As seen in figure 2 below, the property borders Chapel Street to the south, Orange Street to the west, and State Street to the east. The New Haven Town Green is located one block away and the recently completed State Street train station, providing service for Metro North and Shoreline East commuters, is located across the street.

The site is in an area zoned BD-1 Central Business/Residential which specifies high density residential use mixed with commercial developments that serve a city-wide and district-wide function (New Haven, RFP #26-08-475 9). This zone has a Floor Area Ratio (FAR) of 6.0 which allows for a development not exceeding 60,000 square feet (City Planning), however, the possibility of an exception was indicated in the Shartenberg RFP (New Haven, RFP #26-08-475 9). In addition to the zoning requirements, there are a number of restrictions on the site that must be addressed by the Becker and Becker development.

A 1998 agreement between the City of New Haven and Chase Enterprises, builders of the Connecticut Financial Center located at 157 Church St, granted the company use of up to 175 parking spaces at the Shartenberg Site until 2075 (New Haven, Appendix 8. Chase Agreement 1-4). This agreement must be honored by Becker and Becker by either providing comparable parking resources at their new development or working out an alternate arrangement with Chase Enterprises (New Haven, RFP #26-08-475 10). Another stipulation of development at the site is the accommodation of the Pitkin Tunnel that runs along the north side of the site and passes under Orange Street to connect Elm Street with State Street. Air rights will be granted and access to the tunnel itself would be made available for integration with a new parking facility (Appel). These two restrictions, in conjunction with a Phase 1 Environmental Site Assessment by Payne Environmental in May 2006 which suggests an initial $1-2 million cleanup of the site, add to the complexity of the development (New Haven, RFP #26-08-475 10).

The Shartenberg Site has been leased to the parking management company ProPark since 2003 in exchange for flat revenue of $20,100 per month (Economic Development 5). Employees of the Connecticut Financial Center currently use the majority of the approximately 215 available parking spaces and the income generated from the lot provides 76% of the annual funding for New Haven’s free downtown electric trolley service (Piscitelli, RE: New Haven Transportation Fund). The most recent appraisal of the Shartenberg Site was submitted by the Michaud Company on August 31, 2007 and assessed the market value as $4,400,000 (Michaud Company, Inc.). Considering the value of the property and the important location it occupies in Downtown New Haven, the City and residents have insisted that the new development be a significant source of tax revenue, employment, housing, and retail interests.

Needs of Downtown New Haven

As home to numerous universities, churches, and other non-profit organizations about 47% of New Haven’s land was deemed to be tax-exempt in 2006 (Gordon). Yale University alone, while bringing fame to the city, owns more than $1 billion in assets that are exempt from local property taxes (Cowan). The dichotomy between the success of New Haven’s non-profit sector and the strain it puts on city services often creates budget shortfalls that are allayed only through a growth in property taxes. When excluding state aid, property tax payments account for roughly 86% of New Haven’s gross revenue (New Haven, Fiscal Year 2007-2008 Budget 24). In lieu of raising the city’s historically high mill rate, which currently stands at 43.29, most efforts in recent years have been focused on expanding the tax base through the revitalization of downtown New Haven (Macmillan).

Development Proposed by Becker and Becker

On April 12^th, 2007 the mayor’s office issued a press release stating that an agreement had been reached with Becker and Becker as to the terms of the Shartenberg Site redevelopment (Mayor). The plan was at least 400,000 square feet and featured 467 residential units, 500 on-site parking spaces, street-level retail, a grocery store, and a daycare center. The project would also include 50 affordable housing units and would follow green building practices to achieve a Leadership in Energy and Environmental Design (LEED) certification.

The total cost of the redevelopment was estimated at $165 million, with Becker and Becker arranging for approximately $117 million in private equity to be financed through union backed pension funds (Economic Development 10).  In exchange for taking responsibility of the environmental cleanup associated with the brownfield, New Haven agreed to sell the $4.4 million property for $1 (Bailey). The city also accepted a phased-in property tax deal, as illustrated in figure 3 below, and offered a number of incentives including $3.1 million for affordable housing, $2.4 million in delayed permit fees, and $550,000 in sidewalk and street improvements (Economic Development 10).

The remaining costs of the Shartenberg Site project would be provided through a number of state and federal contributions totaling $39.55 million, including a $26 million federal New Markets Loan, approved for corporations demonstrating investment in low-income communities (Treasury). Additional federal funding included a $1 million grant from the HOME Investments Partnerships Program, created to finance affordable housing or direct rental assistance to low income individuals (Housing and Urban Development).

The state of Connecticut committed $10.55 million towards the project, largely through a $9.9 million grant from the Urban Act Program, designed to promote community conservation and development and improve the quality of life for urban residents (Policy and Management). An additional $2.65 million was awarded through various avenues including the Connecticut Housing Trust Fund, the Connecticut Health and Educational Facilities Authority, and a number of green building tax credits and rebates (Economic Development 10). As seen in figure 4 below, municipal, state, and federal funding would provide roughly 30% of the total cost of the Shartenberg Site redevelopment.

The proposed project would use 100% union workers and was estimated to generate 1,265 construction jobs and 125 permanent jobs in downtown New Haven (Mayor). The expected increase in foot traffic had a projected windfall of $30 million annually for businesses in the vicinity. The city praised the economic benefits of the redevelopment and stressed the strong financial support that Becker and Becker had arranged as primary reasons for choosing the firm (Mayor).

Concerns over Becker and Becker Proposal

The exchange of the Shartenberg site for $1 was a source of contention among many residents and city leaders alike including Hill neighborhood Alderwoman Jackson-Brooks who described the deal as “absolutely insane” (Bailey). This debate intensified just prior to the Board of Aldermen approval for the final deal when the Michaud Company appraisal for the Shartenberg Site was submitted (Michaud Company, Inc.). It assessed the value of the property at over $1 million more than the previous assessment and prompted Hill neighborhood Alderman Jorge Perez to suggest changing the sale price from $1 to $1 million (Bailey). This proposal was rejected, however, and the deal was eventually approved by an 18-8 vote (Mayor).

The large of number of taxpayer subsidies included as part of the Becker and Becker deal were questioned throughout the approval process. An initial plan to waive $3.1 million in permit fees was amended after it sparked controversy among the New Haven Board of Aldermen. Hill Alderman Jorge Perez was outspoken in his criticism and pointed out the hypocrisy of granting such a waiver while city residents are assessed building fees with no chance for negotiations (Bailey). A restructured deal was eventually created that would hold Becker and Becker accountable for the fees but would allow them to be paid over three decades, beginning twelve years after construction was completed . East Rock alderman Roland Lemar pointed out that the effects of inflation during this timeline would cut the real purchasing power of the payments in half, but was unsuccessful in preventing the agreement (Bailey).

Many residents of New Haven questioned the city’s overall revitalization goals, which often seem to focus on large downtown developments while neglecting poorer, residential neighborhoods (Baran). Concerned citizens pointed out that the rising cost of housing and the growing collection of trendy, upscale shops in downtown New Haven serves to push out the area’s low-income population (Yagla). While plans call for 50 affordable housing units to be offered in the Shartenberg project, they have an initial contract term of only ten years and are solely reliant on taxpayer subsidies that may not exist in another decade (Mayor). Becker and Becker plans to offer its studio apartments starting around $1200, with more desirable units swelling close to $2000 and effectively ensuring an influx of wealthy renters (Yagla). East Rock Alderman Roland Lemar put the recent trend in a sobering context when he noted that of the more than 1,000 units of housing created downtown in recent years, none were mandated to be affordable for low-income tenants (Bailey).

Many critics have also questioned parking concessions made in the final development agreement after the New Haven Board of Zoning Appeals (BZA) overturned a requirement that Becker and Becker provide a space for each of the planned residential units (Vinocur). New plans call for 333 spaces to be built for residents of the building, along with 175 for Connecticut Financial Center employees, 98 for downtown businesses and 7 for the proposed daycare center drop-off zone.  BZA member H. Richter Elser dissented with the board’s decision and opposed the special exception stating that every developer was aware of the parking burden when the RFP was issued (Vinocur). City traffic czar Mike Piscitelli caused additional concern when he projected that the development would put 739 extra vehicles on the road at the afternoon peak hour (Piscitelli, Traffic Impact Analysis). Although the project is being billed as transit-oriented with a focus on mass transportation, some predict that the reduction in spaces and increased congestion will levee a burden on downtown New Haven’s already strained traffic and parking situation (Bailey).

Still others question the physical design of the Shartenberg proposal from a purely aesthetic standpoint. The largely glass structure would stand out among the four and five story brick buildings that dominate the area and would permanently alter the skyline of the city. Alderman Roland Lamar urged Becker and Becker to maintain community involvement in the design process in order to achieve a look that “reflects the character of the surrounding neighborhood” (Bailey). New Haven is home to a number of highly recognized and acclaimed pieces of architecture and the new high rise would be a stark divergence from other styles found in the city.

Analysis and Conclusion

On the surface, the planned development for the Shartenberg site is an ideal fit for the city of New Haven. It provides much needed expansion of the grand list, creates employment opportunities both during construction and after, and efficiently utilizes space in an environmentally conscious manner. If the project comes to fruition as it’s currently proposed it would certainly be a boon to the city of New Haven and an excellent example of intelligent urban planning.

There exists a danger, however, with rushing into land use projects and giving too many concessions in order to affect change. New Haven has a long history of short sighted and destructive development efforts that have left entire neighborhoods gutted and communities disjointed. Affordable housing requirements, pedestrian considerations, and green building standards for the Shartenberg Site must be responsibly maintained to ensure that gentrification and revitalization don’t give rise to a city that defines itself by little more than its tall buildings.

Works Cited

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Filed under: Land Use Planning