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The Mayor & the Mall
DeStefano waxes enthusiastic about his vision for
downtown the waterfront, and beyond
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Business New Haven
11/30/1998
By: BNH
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On November 19, New Haven Mayor John DeStefano Jr. unveiled the centerpiece of his sweeping vision for civic renewal: the $431 million, 1.35-million-square-foot retail project at Long Wharf, on which his administration, state officials and the co-developers - the Newton, Mass.-based New England Development, and the Fusco Corp. of New Haven - have been working for two years. If approved by regional and state officials, the regional mall is expected to open in 2001 and be anchored by four department stores: Nordstrom, Macy's, Lord & Taylor and Filene's. DeStefano spent some time with BNH on November 20 to elaborate on mall issues as well as further articulate his vision for downtown and the Elm City at large.
Is the state's memorandum of understanding with the New England Patriots a positive or negative development for the Long Wharf retail project?
I think it's absolutely beneficial. The three big cities [New Haven, Hartford, Bridgeport] each devise their own approaches to the governor's invitation in terms of thinking about job-creation. They're very different. And he's been very responsive to that. I've never seen a zero-sum situation where, you know, Bridgeport gets more so Hartford gets less; or New Haven gets more...he's generally been supportive of things that we've brought to the table. I see it as positive because I can't believe we would [propose] anything that would be near those numbers announced yesterday: stadium $350 million, road improvements $160 million.
This will be published before the Regional Plan Agency votes on the mall proposal December 10. How do you expect that will really play out?
I think the project will get all the approvals it needs from both the Regional Plan Agency and from cities agencies involved.
What, legally, is the next step after that?
Closing on the financing, and I expect that, even before the city agreements are closed, for the developer to be proceeding on closing on their land options.
Now, please run down the numbers in terms of the government's financial commitment.
We're going to generate a net of $4.8 million in new taxes on this site. That's real estate taxes. Real estate taxes are $5.1 million, we estimate, on this project, netted down from the $300,000 we already collect. We're also going to collect an additional $650,000 in personal property taxes, and a one-time payment of about $4.5 million in building permits. So $4.8 million is the net real-estate [benefit]. We're going to issue $25 million in tax-increment financing, which would take part of that net of $4.8 million and pay off the principal and interest on that. What I'm doing is trading off tax revenues that I wouldn't collect were it not for this project. The second piece is $60 million in state funds. Of that amount, $28 million is state tax-increment financing, and $32 million coming from three sources: Urban Act, which will be an amount not to exceed $10 million; state DOT [Department of Transportation] funds; and probably some DEP [Department of Environmental Protection] funds that the state will allocate.
What will those funds be used for? Infrastructure?
I don't know that we have allocated [these funds] for a specific use. Obviously, state road-improvement [funds] will go toward highway improvements, which will largely be on Route 34. Traffic access to the project will be from Route 34, as opposed to I-95.
What kind of subsidy agreements did the developer enter into to get agreements with Nordstrom, Macy's, Filene's and Lord & Taylor?
I'm not going to comment on that. That's [New England Development Chairman] Steve [Karp's] business deals with the department stores.
Well, what kind of stores do you see complementing the four department-store anchors? Mostly national chains, or will there be an attempt to make space available for local retailers?
Frankly, I think you're going to see mostly formula stores. A set of convictions that I have come out of this [process with] after receiving a lot of education, is: the local stores ought to be in the Nine Squares in the buildings that are mixed-use, with retail on the first floor and other uses upstairs. Our challenge in our work on downtown is going to be accomplishing that - which is, doing for those stores the kinds of things we did with the mall stores.
Can you describe the waterfront development, 'Boathouse Landing,' in greater detail?
It would be fair to say that one of the things that got me to start thinking hard about downtown stores was that a mall might negatively impact them. So I started from sort of a defensive posture. It would also be fair to say that, as I got into it, I started from a what-am-I-going-to-say-to-the-merchants-downtown posture. We also started looking at downtown in terms of counting things: How much office space? How much retail space? How many housing units? We started counting them, and we started mapping them. It became clear that the dynamics of cities do not occur because of one big thing you do. It occurs because of these mutually supported connections which build on each other. I became very sensitive to the fact that, on lower Chapel Street, nearly all the storefronts are filled. And it's because the bus traffic is down there. Isn't it interesting? Some businesses don't want the bus traffic; other businesses depend on it. We looked at other things. [Many people say] there's a high office-space vacancy rate in New Haven? Not really. If you look at what's on the market, there's three million square feet of listed space - Century Tower, the Connecticut Financial Center, One Church Street. There's six million feet of Yale-related space that's not on the market. There's about another three million that's owner-occupied and not on the market - Knights of Columbus, SNET. So, three million feet; [Class] A, B and C. We put a list together and classified everything - A, B or C - and looked at it: [Class] A, ten percent vacant; B, 15-percent vacant; and C was 37-percent vacant. We looked at what the C was, and C was stuff that we were looking at for housing conversion. So what came back to us was, the office market is really kind of tight. We have 12,000 people living downtown in 4,500 apartments. What does that mean? It didn't mean anything to me until we called Hartford and asked, 'How many people do you have living downtown?' And we called Bridgeport [to ask the same thing]. And I said, 'Holy cow' [because Hartford and Bridgeport have so many fewer residents living in their central business districts]. It became very clear that there is a dynamic of dependent uses in the downtown that should be supported rather than replaced with new uses.
Such as?
Let me give you an example: lower Chapel Street. The difference between upper Chapel and lower Chapel is $26 per square foot [retail rent] vs. $6 to $8 a foot. You go to Ninth Square and everybody says, 'Why didn't we ever lease it?' [the ground-level commercial space] - well, we chased every business that went out when we redeveloped the space. Of the businesses that were [previously] in the McCormack Baron-related project, only Coliseum News survived. So the issue became, How do you do the conversions to residential on the upper floors of upper Chapel and keep what are not badly merchandised spaces [on lower Chapel]? You go to lower Chapel - there's a ton of merchandise. I don't like the roll-down gates; we could do something with the signage; the sidewalks and streets could be improved. And that was the topic of the second press conference - those kinds of things. And as we do project redevelopment, why don't we subsidize that retail so the rents stay down, the same way we do at the mall. Steve [Karp] is attracting the anchor tenants with subsidies in order to build the whole.
I think a lot of people have yet to really envision how downtown will physically connect to the waterfront and the mall. Can you elaborate?
I originally thought when we conceived the mall that we have to find some way to connect [the mall to downtown]. Then we started looking at some things that were on the boards - high-speed rail, the Q Bridge crossing. We started measuring things and looking at things: the high probability that Church Street South would be reused for something other than housing; the importance of the train station. We had started this Parcel H study, an inner harbor access study, a year ago. Three months ago a draft report lands on my desk. It says, 'Move the Yale boathouse.' At that time we had just completed lobbying for a grant that we got from the federal government for the suppression [of I-95 at Long Wharf] concept; I started a series of discussions with the commissioner of transportation about the Q Bridge crossing - and all these elements started falling into place.
Who might actually develop the waterfront area?
I would think that some private-public corporation that probably doesn't exist today will develop that. The city is not interested; if you look at the city today, we're moving in an entirely different direction. We would like to see created some kind of development entity that would have responsibility for doing that project. What we may be responsible for is long-term leasing of the land, getting the boathouse moved. Once we do that, I'm in the ballpark. Once we get the land there, once we get the boathouse there, it becomes finance-able.
What will happen to the food terminal after the mall is built? Are you just going to let the private sector handle that?
We put a brake on that. The development agreement precludes the developer - New England Development and the Fusco Corp. - from doing anything over there.
That doesn't mean another developer couldn't show up with money?
It's unlikely anybody's going to do anything there without the public sector, or the threat of the public sector [taking ownership of the property through eminent domain]. There are two issues. One is, I told those businesses that nothing is going to happen without our talking to them. And I'm not ready to talk to them, because I can't today say what the highest, best use for that land would be. I want to slow down any speculative dynamic that might take place. Obviously, if you look at Long Wharf and the area south of Church Street South - basically Sargent, the Register building, [One Long Wharf Drive] - is not going to change. But the food terminal is an important discrete activity. The developers had started having negotiations with the terminal, and we said no, we don't want that to happen. We needed a time out. There's so much on the table now that it would be shortsighted to try to swallow this yet and get too far ahead.
How will a teenager from Fairfield who wants to come to the mall by rail get from Union Station to the mall?
Right now you'd have a difficult time, because you'd have to make a right on Union Avenue and then make a loop under the tunnel. However, we have explored this. When you get off the train, you come into a tunnel. That tunnel is taking you halfway to the mall site. You could complete that tunnel.
You announced that the Pirelli building would house a 'retail academy.' What is that?
The retail academy was largely defined around our experiences with the Omni [hotel]. That experience was that you could successfully recruit, hire and train [city residents] for jobs [at the hotel]. We did have a high mortality rate. But it demonstrated a model to us. The city started [negotiations with the mall developers] with a requirement that 35 percent of employees be New Haven residents. However, as Steve explained to me, he leases to about 100 different stores, each with its own hiring practices. He said, 'I can't put that [hiring requirement] in their leases.' But I am very sensitive about what we take to the Board of Aldermen being something we could deliver on. So we set a [hiring] goal, rather than a specific requirement. What it is right now is a recruitment method that has worked well at the Omni. [The retail academy] is a training program that has not been defined; it will probably have some connection to the Regional Workforce Development Board, and a funding commitment from the city and the developer to fund it on an ongoing basis.
That's not going to fill up the Pirelli building, is it?
No. It may not even be in the Pirelli building. For the Pirelli building, [the developers] are going to be looking for a single-use tenant. That's my guess.
Let's talk about converting unused downtown office space into residential: In three years of a good economy, exactly one building has been [privately] redeveloped into residential units - the Lincoln building, right on the Green. Why hasn't the marketplace rushed in?
One other building has gotten done: 152 Temple Street.
Okay. But that's opposite the Omni and next to the new pedestrian mall [connecting Temple and College streets].
Those projects will require subsidies. Again it will depend on how do we want to measure cost-effectiveness? There's an economic benefit to retaining the fabric of those buildings and the uniqueness of those buildings. They are not replaceable. A wise investment would be in assisting developers in preserving those units as other than [Class B or C office space]. Unfortunately, federal assistance [favors] affordable [housing]. I think mixed-income units can work together, but [we'd prefer a majority] market-rate housing. So I think we ought to assist [potential developers]. I don't think we need to subsidize every one. But I think we should make some strategic investments.
How will this 'small-business development and marketing center' help to grow new small businesses?
The Livable Cities Initiative is my major housing office; it has 52 [employees] in it. The Office of Business Development is my downtown [and] harbor-related business office. We've got 11 people there. That tells you where we've invested. For a long time we recognized that if you looked at where our workload was, if you were a larger developer, you got a lot more attention than if you were a smaller developer. [Small developers] were clearly an area that we weren't servicing. About five months ago I organized a little group [of business people]; we meet about once a month to talk about downtown stuff. The idea was, first, we wanted a visible place where people could go to [for advice and assistance on starting or growing new and small businesses]. It needed to be staffed. So we said let's put this [small-business center] together, commit some resources to it and make it a viable place that focused on small businesses downtown and in the neighborhood commercial strips. After that it became just the commitment of money, which is what principally we're making, along with some banks. We hope to have that organized and on the street in the new year.
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