Citizen fiscal scrutineer John Marshall Lee has been working overtime examining the proposed city budget and asking lots of questions at City Council public hearings. Monday night the Budget and Appropriations Committee considered a “Resolution Authorizing Capital Improvements and Allocation of Bond Proceeds for the Crescent Crossing Phase 1B” housing project on the East Side. Lee encouraged the committee to seek more information on this project. From Lee:
At this time of year you have worked for weeks, with three public hearings complete, to deliberate and decide on both City Operating Budget and Capital budget. Based on your timeline, you will attempt to decide on the Mayoral proposed Capital Budget plan of $46,063,308 for FY 2017 by next Saturday April 30. In context, $44,279,000 was adopted for last year, FY 2016. To help readers and listeners understand the City process, have all of the items adopted for which you have provided authorization been bonded and are they project-active at this time? And what info do you get to review, monitor or watchdog projects of this type for which taxpayers will be paying principal and interest for 20 years into the future as an operating expense?
I raise the issue in this manner because of some current confusion about funding Library and Office of Planning Development. Library Capital was approved for $2,250,000 last year but an additional amount of $13 Million for East End and East Side sites has also been presented, perhaps even adopted. Where does that stand today? Will it be incorporated into this session’s documentation to raise Council authorization to possibly $60 Million?
The other issue I presented to the City Council four months ago concerned the removal of $955,000 from OPED Capital funds account in November, 2015 with no record of transfer authorization by CC. Bond dealings are very carefully reported in bonding documents and the disappearance of such funds is alarming. Former OPED Director Kooris asked for replacement of such funds. Have you made provision for that request? If not why not as he indicated it would cause departmental delays? What can you tell the public about research and forensic investigation into such disappearance? Where is the sheriff on this matter?
Your hearing tonight asks a specific question: Does a second phase of a private real estate project call for investment by City taxpayers? The Economic and Community Development and Environmental Committee of the Council has made a report and recommendation to B&A on this matter, Item 90-15 for the Consent Calendar but no one reviewed the fiscal view.
The report proceeds with eight ‘whereas’ paragraphs followed by at least fourteen ‘resolved’ sections taking up three pages. With your permission I shall question the ‘whereas’ sections so that you can see the issues in the eyes of a taxpayer.
1. Crescent Crossings Phase 1B will be located as a second phase of an ongoing project currently funded and under construction at 252 Hallett Street, Bridgeport. However Phase 1A did not require City funding as part of initial financing. Rather it received long-term tax abatement from the City, with 100% taxpayers providing the necessary subsidy. Is housing development considered “economic development” even if the housing units generate more City expense than revenue?
2. $33 million investment will produce 84 units of mixed-income rental housing including up to 28 units of Marina Village public housing replacement. The financial details of phase 1B were not included with any material from the City Clerk office. It is quite usual for Bridgeport projects to request and receive the consulting assistance of Kevin Gremse, National Development Council, NYC. Have you received or do you anticipate receiving such information that would set out all financing details for the benefit of the taxpaying public who are being asked to back borrowed funds?
3. The project developer, Crescent Crossings 1B LLC is introduced but then we are informed that they will be “directed by Connecticut Community Renewal Associates LLC.” Who are they? A Bridgeport taxpayer, perhaps?
4. There is site work and site costs related to development. Where are the facts detailing the nature of remediation, the risks that may be encountered and the variety of expenses anticipated?
5. Entities providing construction and permanent financing are listed including Federal and State of CT sources, but again, where are the financial assumptions and estimates used by Community Renewal Associates LLC and the City arrive at this point?
6. “Whereas the City seeks approval to invest approximately $1.95 Million in capital improvements related to the project, $700,000 of which is expected to be included in the City’s 2016-2017 Capital Plan;” Why? What is the City’s purpose? Is this not a “private investment?” If the taxpayer is going to provide $2 Million of cash for a $33 Million project, who else is putting up cash as “investor?” Where is the $700,000 located in the current FY proposal?
7. The City Council in the past has authorized funds not used currently but can be assembled to make this package, but why? What are rewards to the City taxpayer as an investor? What other Operating Expenses will the City face in terms of schools, public safety, etc. and what is the schedule of full tax revenues anticipated for such units?
If Community Renewal Associates LLC sells its interest in the project in the future, do Bridgeport taxpayers as investors stand to get a 2/33 share of proceeds? Isn’t that what an investment is about?
The Resolved section allows the City to advance temporarily borrowed funds, like TANS, and to repay those funds when bonding is complete. Does that mean that the expenses on such borrowed funds will include both legal and marketing for TANS and Bonds, not to exceed 10% in each case?
Will you kindly table this item until such time as you are able to secure all of the fiscal information that stands behind the project? Will you then review it yourself as to completeness, reconvene the hearing and having made all of the info available to the taxpayers who are to become investors? Over the succeeding 20-year period taxpayers will repay the nearly $2 Million plus another $1.3 Million of interest, won’t they? Time will tell.