Log in Register

 

 Friday July 20, 2018

Curtis Ryan Honda Housatonic Community College The Barnum Museum Elle Sera Bridgeport Public Library
OIB the book

Fiscal Watchdog Questions East Side Development

April 25th, 2016 · 4 Comments · City Budget, City Council, Development and Zoning

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.

Share

Tags: ·

4 Comments so far ↓

  • John Marshall Lee

    Ken Flatto answered questions of B&A members in attendance. I was mistaken in thinking the matter was up for a PUBLIC HEARING. Rather it was a meeting or hearing strictly for B&A to figure out whether the City should BOND almost $2 Million to join the private developer’s $3-4 Million and all of the other borrowings to build 84 units as a second phase.

    Not one person raised a question of whether building “affordable housing” is an economic development activity in a City where current residents have seen home values decrease including Condo owners where the average decrease in valuation amounts to 34% according to numbers shown to City Council but not otherwise reported.

    The use of the word “invest,” approved by Bond lawyers who were not present, as in: “the City seeks approval to invest approximately $1.95 million in capital improvements related to the project” did raise some questions as it suggests the City, if it were an investor, would own a share of the entity. That is not true, Flatto reported.

    Well if City taxpayers are going to borrow over 20 years and increase operating budgets with an average of $150,000 per year of principal and interest per Flatto’s calculation, and if there is no profit sharing when the private investor decides to sell his interest, what is our purpose?? Flatto distributed a chart showing real estate taxes assuming the current mil rate and a projected value in 2018 of the project (?), that would yield $262,080 in that year and $459,559 in 2037 for a total of $7,042,187.

    Let’s see if we understand this issue:
    1) Bridgeport taxpayers agree to “contribute” borrowed money to a PRIVATE PROJECT to build 84 units of affordable housing (without any abatements) at 100% tax rates for a total of $2 Million over 20 years including legal and bond marketing expense.
    2) Over the same 20-year period the 84 units initially averaging over $3,000 per unit have increasing values (?) and pay increased taxes (?).
    3) The land, owned by the Housing Authority now called Park City Communities leases the land for 50 or more years. At what rate or under what conditions was not addressed.
    4) And 100 or 200 or 300 Bridgeport residents fill the units in 2018 and require Public Safety services, Schools and libraries, and social services funded by the City, but which services and expense was nowhere questioned or requested by the Budget and Appropriations Committee.
    Summary:
    A) Taxpayers contribute a total of $3 Million over 20 years and own nothing of value for this contribution.
    B) New apartment dwellers occupy 84 units with (?) residents including school age children (?) and $7 Million of taxes are paid on the units.
    C) The City seems to be ahead by $4 Million but no account has been given to the expense of serving public safety, education and social service needs (?). Why not?

    In a year when Mayor Ganim allows no increase in the BOE side of the budget and $15 Million of serious cuts may be set in motion to deal with that fact, how can we think to afford “economic development projects” with private investors who are only putting up 10% of the price with the rest borrowed or contributed? Are you happy the matter was tabled? But it will come up for another vote, with bond council present, later this week. Will you come out to the Public Hearing on Wednesday night at 6 PM and speak to this or other issues? How honest is the Ganim Budget? Time will tell.

  • Jeff Kohut

    Great work, John! You have asked most of the essential questions regarding this project. The “elephant in the room” question that needs to be asked is What is (was) the primary motivation for the creation of this project? By whom was it decided the project–as originally proposed–should happen at that site? If we can trace the initial idea back to its source, then we can probably connect the rest of the “why” and “wherefore” dots. If the original idea didn’t come from Bridgeport, then we have to ask a lot more questions. If the original idea did come from Bridgeport, then we have to ask a lot more questions. The whole idea of Bridgeport taxpayers paying for any part of a project that is going to further stress Bridgeport resources even as it lines the pockets of a private developer with strong political connections to our Governor and his home city, the latter of which is dependent on the Bridgeport workforce and Bridgeport workforce housing, needs to be examined very closely. Who will live in this housing? Are we building this housing for current Bridgeport residents, or are we inviting more service- and infrastructure-requiring people from other parts of the county to put more stress on Bridgeport municipal resources?

    This particular project has so many questions and peculiar aspects to it, it would seem to demand the application of a sensitive smell test to its origins and motivations behind it.

  • Mojo

    *** POLITICAL NUMBERS HYPE, PROJECTED ON BOGUS ASSUMED FIGURES, SUBJECT TO CHANGE DUE TO STATE BUDGET RED-INK CUTS! *** WHOOP ***

  • Frank Gyure

    All good information posted hear about the Crescent Crossings project. Very few comments, though. I first became aware of the Crescent Crossings project when the controversy erupted when the McClutchy Group asked for tax abatement on the second phase of construction which was ultimately tabled by the City Council at that time and now we have an “agreement” announced by the Ganim Administration. At first, I was generally in favor of this project and even supported some type of tax abatement etc. However since then, as I have read more details about this project, I am beginning to reach the conclusion what we are actually doing is rebuilding another Father Panik Village/Beardsley Terrace/PT Barnum low-income complex. We know it did not work in the past and will not work again. It seems we are building another mistake.

Leave a Comment

You must log in to post a comment.