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DiScala not set to ‘buy city lot for $1,’ Norwalk officials say

A November rendering of the developing plan for Head of the Harbor North.

NORWALK, Conn. — A recent editorial by independent mayoral candidate Lisa Brinton Thomson expressed concern regarding a potential sweetheart deal for a developer.

“The administration is trying to give away a city parking lot on Main Street for $1, while paying double fair market value for another lot a half mile away,” Thomson wrote.

NancyOnNorwalk inquired with multiple Norwalk officials who said an agreement with a developer is still under consideration for a Main Street parking lot, as reported by NoN in January, with no definitive plan yet.

“As majority leader and chairman of the planning committee, I have never heard any talk about giving away the parking lot on Main Street or any other,” Common Council member John Kydes (D-District C) said in an email.

“The short the answer is no, the City is not trying to give away the High Street Lot for $1,” Redevelopment Agency Executive Director Tim Sheehan said.

Thomson said she based her comment on news reports about a January Parking Authority meeting.

M. F. DiScala in January said it was looking to build an 80-apartment building over the city-owned lot, proposing to make the lot more level and replace its 91 public parking spaces with 93 spaces, in exchange for being allowed to build above the lot.

The development would be Head of the Harbor North.

“We are providing back to the City, at zero cost to the City, the same 91 public parking space that currently exist, but in a flat, well lit, secure parking garage. The City will be in control and keep the revenue from the public parking part of the garage on the first floor with access from Main Avenue.  The upper 2 floors of parking will be for the apartments above and be accessed from High Street,” said Alan Webber, M.F. DiScala & Company Chief Financial Officer, in January.

“We are still working with the City on various options to finalize the structure of the option agreement,” Webber said Aug. 14 in an email to NancyOnNorwalk. “There are a couple of different scenarios that are being discussed and until they are finalized, we can’t go into detail, but the plans are essentially the same as they were.”

To explain her comment, Thomson provided a Jan. 9 quote from The Hour:

“We are negotiating an option agreement with the City whereby when we are ready to pull permits, the City sells us the land and the compensation for the sale is we build them a new level, clean, lit, secure parking garage (with) 91 parking spaces for them to operate at no cost to the City,” Webber is quoted as saying.

 

“It’s time to stop the games and winking and nodding,” Thomson wrote in an email. “You pay for property with money, not by promising to give the City a parking lot that is already there. Anything short of an actual check for an amount equal to fair value as determined by someone other than the mayor and the developer is not legitimate and shortchanges Norwalk tax payers. When will it be time to do favors for the taxpayers, who actually pay the bills?”

DiScala in November estimated that it would spend $3 million leveling the lot, according to a document provided in November to the Parking Authority.

“The developer will remove the existing bedrock that currently creates the severe topography at the site. The entirety of the site, which currently has a high point of 35’, will be brought down to elevation 18’ in order to accommodate the new structured parking. Preliminary expert cost analysis/estimates have the excavation, bedrock removal, site prep, structured parking and on grade parking estimated at a blended average of $33,000 a space or $3,003,000,” DiScala said.

Sheehan on Aug. 10 explained that, “The acquisition structure being discussed involves a conditioned Option Agreement to purchase the property by a specific date. The option will have a fee.”

An option agreement would give DiScala site control, which would allow the company to pursue the municipal development approvals it needs to build Head of the Harbor North as well as pursue financing for the project, Sheehan said.

If DiScala then seeks to exercise the option, before it expires, the value of the land would be determined by an appraiser, Sheehan said. The city approvals would be factored into the appraisal.

Thomson’s comment about the city “paying double fair market value for another lot a half mile away” refers to the Belden Avenue lot next to the Norwalk Public Library. The city has agreed to a fixed purchase price of $4,885,000 for the property although its owner bought it for $2.65 million in February 2015. Former Mayor Alex Knopp, who brokered that deal, said that the value of the land increased when the Zoning Commission approved a plan to build apartments there.

Sheehan on Aug. 10 said that no option plan for the Main Street parking lot could advance without Common Council approval.

He, on Aug. 14, explained further:

“There are two steps and two payments involved in the process.

  1. “The Option Fee is in consideration of the City extending to the developer the exclusive right to purchase the land for a period of time (discussing one year).  The option has a market value which will be applied to it.
  2. “The FMV {Fair Market Value} purchase price for the land will be determined should the developer ultimately provide notice to the City of the intent to exercise the option within the term of the option.  The value assigned to the land at that time will be based on a FMV as built appraisal of the property, based on what the City via Zoning allows to be developed on the site. The option conditions the developer’s ability to notice the intent to exercise the option on the project being fully entitled by the City and evidencing the committed financing for the project.”

 

12 comments

Bill Nightingale, Jr August 23, 2017 at 9:13 am

This Main Street parking lot deal is the dumbest ever I have heard coming from the Redevelopment Agency.

Even dumber than Poko!

Lisa Thomson is 100% correct to oppose this.

The Redevelopment Agency should be abolished. They know nothing about pricing options. But more importantly they need to stop giving away our parking lots to developers in non competitive deals. Seriously, what city taxpayers want that? Why would any resident wish for that?

I am definitely voting for Lisa for Mayor

Debora Goldstein August 23, 2017 at 9:18 am

Quibbling about the value of the lot is a deliberate distraction. The discussions about the purchase option and improvements to the ground level lot have to take into account the “air rights” above the city owned property. Perhaps we can start with the amount GGP paid for air rights over the city owned road as a possible comp to value this deal appropriately.

Donna August 23, 2017 at 9:42 am

I have used this lot multiple times. In the absence of a multi-story building on top of the lot, there is no problem with accessing parking spaces due to the uneven and pitched grade. Could it be improved? Certainly. But the lot is underutilized as it is. The need for improved parking at this lot is driven almost entirely by the developer’s need to build parking for their tenants. Without leveling the existing lot, DiScala cannot build the deck parking they need. So I’m with Lisa. If the developer needs the lot and needs the lot to be level in order to build the parking they need for their tenants, the developer should pay the City for the land. And they should pay fair market value. In what way is the improvement of this lot a favor to the city?

DiScala is making the argument that rehabilitating the lot–removing bedrock and making it level–will cost them over 3 million dollars, or $33,000/space. But this 3 million dollars is actually associated with the build cost of the garage that the developer must have to accommodate his tenants. When is Norwalk going to hire a City Planner with the skills needed to determine the actual value of assets before the RDA and the CC make bad deals?

Patrick Cooper August 23, 2017 at 10:58 am

I’m not a lawyer, but if I had to make a case for the immediate dismantling of the Redevelopment Agency, this would be exhibit A. What a scam. “Norwalk Officials” deny it’s for a dollar, but they cannot explain why this kind of sweetheart deal is even being considered.

This is how wealth is created today. The money-man and his lawyer find a patsy – and that patsy would be Norwalk and its arcane P&Z. Figure how to use these same arcane local laws to game the system, buy a property for 2, get your development approved, and because you do – the property magically doubles in “value” to 4. Even better, you pick a property that has strategic value to the community, use it to hold that very community hostage – have some well-worn names swoop in to “save the day” – and “stand up for Norwalk” – only to assure the developer a doubling of his investment (on likely less than 20% down – so no cash really – just loans) – all for about 20 hours of legal work and a proposal a 1st year NCC student could write. Oh, and Joe Q public gets the invoice come July & January.

In this case – they want to absorb value for free that should accrue to the taxpayers of Norwalk. It transfers from our possible coffers to their valuation – which I’m sure will be assessed properly, right?

Yes – Yes – Yes @Bill Nightingale Jr., agreed on all points. @Debora Goldstein – spot on, and deliberate indeed. Space – specifically vertical and especially in proximity to water views – has value. @Donna – fair and lucid overview, and YES agreed – this is the role of a City Planner.

Lisa Brinton Thomson – thanks for shining a light on the shenanigans, and NoN for reporting.

Michael McGuire August 23, 2017 at 12:19 pm

Creating Value 101 –

Here is a win-win way to leverage this property via a public/private joint venture. Have DiScala fund the cost to re-active the train Wall Street Train Station as the “cost” to purchase the air rights over the parking lot.

This way Norwalk, and the State of CT, are not out of pocket on any costs yet Norwalk receives a substantial benefit of a revitalize downtown. And the developer benefits by creating more value for his property. And yes the State gets it cut too while the MTA gets increased ridership.

Sidebar – a recent analysis of the prospective Wall Street train Station show that 4.7 million square feet of commercial space (office, retail, industrial and multi-family housing) are within a half mile of this proposed station.

The potential value increase for these 4.7 million square feet of commercial properties is from 25 o 35 percent if a train station is re-activated here.

I won’t bore you with the math but that translates into an increase in annual tax revenues from the commercial properties within this half-mile radius of something close to $4.0 to $4.8 million.

Now that’s a worthy trade and a win-win for everyone.

I hope the Mayor, the Planning Commission, Redevelopment and our new P&Z director will take a hard look at this proposition.

Donna August 23, 2017 at 1:58 pm

Norwalk is suffering from a collective case of WBD–We’ve Been Duped. The RDA makes sweetheart deals with developers, and the taxpayers suffer the consequences. When it comes to Norwalk, developers have learned the old farmer’s saying. Why buy the cow when you can get the milk for free?

Mitch Adis August 23, 2017 at 2:28 pm

I’ll give the city double what DiScala is giving. Yes! That’s right! I’m offering a cool $2! CASH money!! Deal?

Louis August 23, 2017 at 2:55 pm

First off this parking lot is critical to the businesses in the area.

Its already not big enough to sustain if every business in the area were rented.

Take a look at a google satellite image and look at the area…. Businesses from Main St and Wall St depend on this lot. BJ Ryans, New York Bakery, El Mexicano, Fat Cat Pizza, Peaches restaurant, Norwalk Boat Club… just to name a few businesses that actually struggle with parking.

If a real resurgence to the area were to occur you would need 2 to 3 times the amount of parking currently available. His proposal is a joke at 93 spaces. These spaces would become visitor parking spaces for his building tenants.

Donna August 23, 2017 at 3:15 pm

@Louis, DiScala is buying air rights for free in return for which he gives Norwalk two more spaces than currently exist there. He can’t build on top of the lot unless he fixes the lot. The the cost of fixing the lot is not his gift to Norwalk in exchange for air rights. It’s actually part of what his build cost would be if he paid market value for the lot. Somehow “Norwalk leadership” got talked into seeing the two parking spaces as a fair trade for valuable property.

Andrew August 24, 2017 at 10:14 am

The sad part is that Discala would not have announced this if they were not already assured that it will go through. So this part, us discussing the details, etc, is just a public show for something that is going to happen whether wanted or not.

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NancyOnNorwwalk.com was conceived as the place to go for Norwalk residents to get the real, unvarnished story about what is going on in and around their city. NancyOnNorwalk does not intend to be a print newspaper online; rather, it exists to pull the curtain back and shine a spotlight on how Norwalk is run and what is happening regarding issues that have an impact on taxpayers’ pocketbooks and safety. As an independent site, NancyOnNorwalk’s first and only allegiance is to the reader.

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Nancy came to Norwalk in September 2010 and, after reporting on Norwalk for two years for another company, resigned to begin Nancy On Norwalk so she engage in journalism the way it was meant to be done. She is married to career journalist Mark Chapman, has a son, Eric (the artist and web designer who built this website), and two cats – a middle-aged lady and a young hottie who are learning how to peacefully co-exist.