The taxpayers of Ansonia own the largest and most central block of real estate downtown, and we all need to play a significant role in determining the future development of these buildings and our downtown in general.
The success of our downtown, and the development outcomes in our city owned buildings will in many ways determine the future success of our city as a whole. It’s important that we come together and take the time to get the sale of these buildings right. Simply getting these buildings off of our balance sheet would be a minor accomplishment for the city, but if we get set clear guidelines about what sort of development we would like to see here, and get creative with the marketing and sale of our buildings, we could kick start a major renaissance for our downtown which could pay off big for generations to come.
Unless people speak up and take interest in this sale, we will lose the opportunity to have a say in the single most important development project in our city.
The Sale of Our Buildings Will Determine the Future Success for Our City
Our two taxpayer-owned buildings at a combined 95,000 square feet constitute the single largest real estate development project that will likely ever take place in our downtown going forward. The creativity, vision and success of this development will likely determine the future of our downtown, which I believe is our city’s greatest asset. We are seeing extraordinary development and public forum planning projects taking place in Derby and across the river in Shelton.
The advice of officials in Shelton with regard to their downtown success was to “take it slowly”, and to take an approach of “Let’s not rush into it and regret what we did”.
In Derby, the administration solicited input from over 100 residents in a three session planning project with consultants throughout 2016. Up the river in Naugatuck, City officials have recently asked for public feedback on converting a city owned building into a public market. To summarize from these other towns, take it slow, think creatively about what’s going to help the city compete for the best and brightest new residents, and engage the public to participate extensively in the planning process and vision.
Our city is filled with incredible unique assets, and we have the potential to re-position our identity as a small city which can compete with any small city around the world. We are at a critical junction in time where we are seeing a generational turnover in homes in Ansonia, as the baby boomer generation heads into retirement and starts putting their homes up for sale. Simultaneously, we are seeing a movement across the country where younger generations of buyers are leaving small towns for more densely populated urban areas with extensive amenities.
The resulting effect is a large scale brain drain, and stagnant or declining economic growth and property prices in small town America. This can be felt right here in the valley. Who will be the next generation of home owners in Ansonia? Will it be absentee landlords? Will the next generation of owners invest as much time and energy into maintaining and upgrading their homes and neighborhoods as the generation before it?
I often ask people the following two questions on the subject:
For those who live in Ansonia, I ask, “if I were to give you $500,000 like a lottery winning, but you had to spend all of it on the purchase of a new home or the renovation of an existing home, would you choose to stay in Ansonia”? How many of you reading this article would choose to stay? The vast majority of people that I ask that question to all suggest that they would move out to another town, and this a troubling reality.
The 2nd question I ask is to those who don’t currently live in Ansonia, “what would it take for you to want to move to Ansonia”?
How do we ensure that those who can afford to leave Ansonia will actually stay and invest, renovate and upgrade their homes? If we don’t figure this out, we will be left with an aging housing inventory which is vulnerable to blight, foreclosure, and absentee landlords that only invest the bare minimum.
An aggressive blight program can help, but it only treats the symptoms, not the disease, which is to say, why are home becoming blighted in the first place? We need to ensure that we position our city such that Ansonia is not just the affordable living option, but a city that competes to be the top choice for new residents among all the towns and cities in the Northeast. If someone is re-locating to Connecticut, and can afford to live anywhere, I want to them to know that we’re here, and to be considering Ansonia, not just because it’s affordable, but because it offers them the best lifestyle of any community they might choose to live in anywhere.
Of our city’s many assets, our downtown is one of the greatest opportunities to achieve the goal of being a top choice location. A densely populated downtown with social, cultural and economic amenities is essential to competing for new home buyers and businesses. Many of the surrounding suburban towns don’t have a town center, and the younger generation of buyers have a preference to be in close proximity to, or live within, transit oriented walkable locations like our downtown.
In order to truly compete for the next generation of homebuyers we will need a strategic plan and vision to understand what’s missing in the ideal mix of downtown amenities, and how to go about attracting them, or connecting to them efficiently. We happen to be located in short distance to a major cultural and economic hub in New Haven, with world renowned universities such as Yale, Quinnipiac, UNH, Southern Connecticut, and more.
How do we position our downtown to leverage that proximity and create a sense that we are an extension of that cultural economy? Our downtown is in walking distance to two beautiful state parks in Quillinan and Osbornedale, direct river access to Long Island Sound, and close proximity to the Ansonia Nature Center. How are we positioning our downtown to best capitalize on these assets and maximize the accessibility of these natural gems to all residents of our city, particularly downtown? These are unique assets that if properly invested in and incorporated into the suite of downtown amenities, will have the ability to capture the preferences of new homebuyers and businesses.
Over 18 Months of Negotiations, Due Diligence, and Proposed Giveaways
It will be two years this April since the City of Ansonia closed their last round Request for Proposals (RFP) for the sale of two city owned buildings, 497 E Main St, and 153 Main St. The request for proposal was left open for the duration of six weeks total, during which there was no known public marketing campaign held for the sale of the buildings. Only two proposals were received, and only one proposal was conceivably viable.
The only viable proposal received was from a local developer named Jerry Nocerino. No possible prices were disclosed to the public in the proposal, only that the development may include 95 apartments, retail space, and require an $8.6 million dollar renovation budget.
When the City of Ansonia accepted this proposal back in May 2015, they granted Nocerino a six month due diligence period during which he could rescind his proposal and get the $10,000 deposit back. Then in November 2015, the board of Alderman granted a 60 day due diligence extension to Nocerino, which would have expired in in February 2016. It’s now 2017 and it’s been 18 months since the Board of Aldermen granted Mayor Cassetti approval to negotiate a deal with Nocerino.
Over these 18 months we have learned that the city is considering giving the buildings away for free, assisting the developer in receiving public grants, providing property tax abatements, and $510,000 in recently approved tax payer money to assist the developer in renovation costs for the senior center renovation. All of these possible concessions are wonderful news for the developer.
It’s good to make the sale of our buildings attractive for developers, but we simultaneously need to ensure taxpayers are getting the best deal possible. The only way to properly determine the best value is to open it up for discussion with the general public and open up another highly advertised and creatively marketed request for proposals.
Taxpayers Have Paid the Cost, We Should Be Afforded the Right to Have a Say
The tax payers of Ansonia have bankrolled these buildings for over twenty years, we have invested around a million dollars in maintaining and insuring these buildings during that time, not to mention foregone property tax revenue and the implicit cost that the derelict buildings impose on other surrounding real estate downtown. The cost burden the taxpayer has been required to carry for these buildings, in addition to the fact that any development here would impact our seniors and their community center, should afford us the right as citizens to have a direct say in the future of these buildings and an opportunity to engage in multiple public forums on the matter.
What are our Buildings Worth?
With regard to the value of these buildings, let’s put it this way, the rental property market is red hot across the country right now. Developers around the country are spending billions of dollars buying up assets like our buildings in enormous quantities on the basis of their rental income potential. Our buildings happen to be in walking distance to metro north rail allowing commuter access to economic hubs like Fairfield County and even New York City. Projects like these are in high demand.
Without going into too much detail, allow me to explain how we as residents might evaluate the worth of these buildings.
There’s two methods to consider:
- Appraisal Method – The City had an appraisal carried out in 2014, which is available upon request to the City. This appraisal placed a value of $305,000 for 153 Main St and $220,000 for 497 E Main St, for a combined total value of $525,000.
- Capitalization Rate (Cap Rate) Method – The cap rate figure allows developers to compare the income of a building relative to its price to determine if it’s a good deal. By using the developers proposed renovation budget of $8.6MM and 95 rental units averaging $1,000 per unit, there’s an estimate that the developer would gross around $1.2 million in annual rental income, and net around $900,000 after expenses. If you divide $900,000/$8,600,000 you get what we developers call a cap rate of 10.4%. In our area, a competitive and attractive cap rate for a property of new quality renovations would be at least 7%. Getting the property at a cap rate of 10.4% is a pretty good deal, and is essentially paying the developer $4 million in profit for taking on the construction risk of development.
Is this a Good Deal? How can we Leverage the Sale of Our Buildings?
Paying a developer $510,000 of our tax money to develop our tax payer owned buildings at a $4 million profit is not necessarily a bad idea. The nature of this proposed deal may be exactly what the market would be willing to bear, but we don’t know for sure if that’s true unless we make a thorough effort to creatively market and advertise these buildings. If the tax paying residents of the city decide that we would like to pay a developer $510,000 in tax payer money to develop these buildings, then we should recognize what an extraordinary deal that is. As such an extraordinary deal, we should market our buildings loudly to the world to use this piece of news to put Ansonia on the map for developers far and wide. For example, in May of 2016, a bed & breakfast in Maine was being offered for sale, for free, to the winner of an essay contest. As a result of the extraordinary B&B deal, the story made national news in Time magazine, Boston.com and the New York Times. Wouldn’t it be great for millions of readers around the northeast and around the country to learn about an extraordinary real estate deal in Ansonia? How often does our little city have the opportunity to make such far reaching news that could help shape the future image of our city?
Time to Get Involved and Take Action like Your Town & Money Depends on It
It’s incumbent of all residents of our city to take an active interest in what happens in our downtown, especially in such cases where we are spending our tax payer’s money or selling tax payer’s assets. All of our future property values are riding on it. The viability of our state and even our country are riding on it. For every missed opportunity to create a better living situation for future generations, there is a missed opportunity for economic growth in cities and towns just like ours all across America.
A vibrant downtown will create a favorable supply and demand dynamic for all of the housing in walking distance to downtown. If there are efforts to create better pedestrian access to downtown, both east and west of the river, like bike paths and cross walks, the impact will be even greater.
In this new economic era, if we’re not competing for investment nationally and growing as a city in alignment with what the next generation of home buyers, renters, and businesses are looking for, then we will be left to decline as cities and towns across the country succeed in doing so. We need to think globally and act locally. We as residents of Connecticut often point our finger at Hartford for our economic circumstances, but as a state we are just a collections of towns, cities, and communities, which all bear the responsibility to compete and win with cities and towns across the entire world. If we don’t come together as a community to form that vision of what our city can be, then we will leave the fate of our city to chance, and that’s a risk I wouldn’t want to take.
Show up to the next Aldermen meeting, tell your elected officials that you want to have a say in the sale of our buildings, the future of our downtown, and the future vision of our city. Schedule a meeting with your Aldermen, let them know what it would take for you to stay in Ansonia if you suddenly won the lottery and could move wherever you wanted. What would you like to see remain, see improved, or see introduced new? Talk about it with your family, friends and neighbors, and make your voice heard. This is our city, our state, our country, and its future is in our hands. Let’s go Ansonia, we know how to win, we got this!
Submitted by Tarek Raslan
Resident of Ansonia and Member of the Ansonia Democratic Town Committee
