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Soon-to-be-revealed $80M ‘POKO’ plan detailed in sneak peak

A February rendering of the plan for Wall Street Place, referred to by many as “POKO.”

Updated, 10:50 a.m.: More information.

NORWALK, Conn. —The plan to restart construction on Wall Street Place, otherwise known as “POKO,” does indeed include 100% affordable housing.

The details matter here: one-third of the 101 apartments would be rented to households making 80% of area median income, one-third to households with 60% of area median income and one-third to households making 40% median income. Federal law regarding Low Income Housing Tax Credits (LIHTC) changed in 2018, providing different requirements per apartment size, meaning that four adults could rent a three-bedroom apartment in the development, with a maximum combined income of $115,000. Or it could be a couple with two children, the parents making a combined $115,000.

Details of the plan were divulged Wednesday to NancyOnNorwalk by knowledgeable sources, on the condition of anonymity. The plan should become public within a month, they said.

The project is planned to include 21 one-bedroom apartments, 67 two-bedroom apartments and 12 three-bedroom apartments. The rents would be up to $2,500.

 

Background information: Citibank ‘thought it had a deal’

Wall Street Place, commonly called “POKO,” at right. Construction halted in mid-2016 and Citibank, holder of the construction loan, subsequently took ownership of the property. The City and Norwalk Redevelopment Agency declared Citibank to be in default of its legal obligations last year and have been in negotiations to restart construction.

Wall Street Place is the highly visible partially-built building on the corner of Isaac Street and Wall Street, sarcastically referred to as The Tyvek Temple by some as the hulking Tyvek-wrapped structure is seen as a blight upon the neighborhood.

It was planned as a mixed-use development to be built in three phases and supported by the City through the donation of two city parking lots. In return, the selected developer, POKO Partners, was obligated to provide an equivalent number of public parking spaces.

The project stemmed from the 2004 Wall Street Redevelopment Plan and a Land Disposition Agreement with POKO was signed in 2007. It was long delayed and in 2015, Mayor Harry Rilling supported extending the LDA’s deadline, giving POKO an extension on a split Common Council vote. Citibank provided funding and POKO began phase 1 construction but in mid-2016 Citibank halted the work after identifying a $9 million budget gap.

Citibank subsequently foreclosed on its $31.9 million construction loan, took possession of the phase 1 property and selected JHM Group (John and Tod McClutchy) as its potential redeveloper in the attempt to get the project going.

Negotiations were underway with the City and the Norwalk Redevelopment Agency, with the required parking spaces presenting a major complication: POKO Principal Ken Olson had gone to the Planning and Zoning Department and gotten approval to have some of the required parking off of phase 1 and onto properties slated for phase 2.

Citibank did not have control of the phase 2 properties, as they were owned by Richard Olson of POKO Partners, but felt it had struck a deal with Richard Olson to acquire the properties and move the project forward, according to the sources. Then, about a year ago, real estate broker Jason Milligan bought them instead.

Milligan and Olson are being sued by the City and Redevelopment Agency over this transaction, with the plaintiffs alleging “irreparable harm.”

In March, Corporation Counsel Mario Coppola revealed in court that Citibank and the public parties were close to a deal to restart construction. Milligan in May used a Freedom of Information Act request to obtain plans dating to February and April, showing that the restart proposal featured 100% affordable housing, drawing pushback from the public.

Norwalk already has 12% affordable housing and is one of 28 Connecticut communities exempt from state requirements to build more, Wall Street Neighborhood Association President Nancy McGuire said at the time, expressing a personal opinion, not one from the association.

 

New numbers

Construction is expected to take up to two years and there’s a public approval process involved. Amendments to the LDA are required, including a clarification on where the parking spaces will be, the sources said.

Milligan has argued that getting an LDA amendment will be time consuming as it involves multiple governmental bodies, and any abutter can challenge the project in court. The sources declined to comment on that.

The public parking won’t be restored until the project is completed, they said.

Local funding will stay at the same level as was approved for the previous project, the sources said.

The funding stack for the 2008-approved project included $8.64 million in 9% Low Income Housing Tax Credits and a $3.5 million Department of Housing loan. Those tax credits were cancelled in December.

“If they lose the tax credits … then Citibank {sells the project to the} highest bidder. Then they’re not going to do this type of project,” Milligan said at the time.

Citibank voluntarily returned the 9% LIHTC so that they could be redeployed to another project, the sources said Wednesday. Instead, Citi expects $25-30 million in 4% Low Income Housing Tax Credits to help fund the project through an equity investment by a limited partner, and plans to issue a $35 million construction loan.

Citibank plans to apply for a private activity bonds, described by Investopedia as “tax-exempt bonds issued by or on behalf of a local or state government for the purpose of providing special financing benefits for qualified projects. The financing is most often for projects of a private user, and the government generally does not pledge its credit.”

The funding for the bonds, referred to colloquially as a “volume cap,” come from the federal government and the 4% LIHTC are automatically awarded when the bonds are approved, the sources said, explaining that federal allocations to states have recently increased.

Tax credits are only given on the portion of a building planned to be used for affordable housing, and the “4%” number refers to a percentage of the building value, the sources said.

The previous project was approved for 36% affordable housing; thus, if this 100% affordable project were funded by 9% tax credits, that would represent more than double the $25-30 million expected from the 4% tax credits.

The income range for the 80% AMI households would be about $85,000 to $115,000, and for the 60% AMI it would be $65,000 to $85,000, the sources said, adding that the AMI is set by the United States Department of Housing and Urban Development (HUD).

Again, these figures allow for multiple people in the household. The 2018 Consolidated Appropriations Act made two changes to the LIHTC program, according to the Congressional Research Service.

“First, the act modified the so-called ‘income test,’ which determines the maximum income an LIHTC tenant may have,” the Service states. “Previously, each individual tenant was required to have an income below one of two threshold options (either 50% or 60% of area median gross income, depending on an election made by the property owner). With the modification, property owners may use a third income test option that allows them to average the income of tenants when determining whether the income restriction is satisfied. Second, the act also increased the amount of credits available to states each year by 12.5% for years 2018 through 2021.”

Area Median Income for Bridgeport-Stamford-Norwalk is $91,198, according to DataUSA.  For a single person, 60% of that would be $54,718, and 40% would be $36,479.

The prior project included services for the “very” low-income residents, who might be formerly homeless or have other special needs, the sources said. Citibank would not underwrite a project with “maximum LIHTC rents” because those would be above the market for the area.

A 1,181 square foot-two bedroom apartment in The Berkeley, a new building in the Waypointe complex, is currently being advertised for $2,607 to $2,627. A 1,747 square foot-two bedroom Berkeley apartment is available for $3,600 a month.

Again, the maximum rent at Wall Street Place would be $2,500 according to the sources, who characterized it as  not public housing, but “affordable.”

The “incremental” cost on finishing the project is $50 million, but that includes buying the Garden Cinemas, demolishing it and building a parking garage, making the actual cost of finishing the apartment building $30 million, they said.

The total cost of the project, when you add what’s already been spent to what is needed to complete it, will be about $80 million, the sources said.

This would make the price per apartment appear to be nearly $600,000. Some readers have questioned the wisdom of this type of investment in “affordable” housing, arguing that it would be cheaper to buy each renter an existing home.

That concept might seem like a better idea, but you would wind up with 101 homes spread out throughout the city that are being managed as one project and the speculated costs don’t include rehabilitation of the real estate, the sources argued.

Norwalk is frustrated and Citibank feels the project needs to be completed, they said. Citibank explored all the options, finding this proposal the best one; if the property were sold the new owner would also be subject to the LDA, which includes the public parking component.

City officials declined to comment.

The writer of this story lives in affordable housing.

32 comments

@Tony P June 27, 2019 at 6:34 am

Wow – Milligan was right. So was Meek. What a mess, right in the middle of our downtown.

Lisa Brinton June 27, 2019 at 7:00 am

There is nothing ‘affordable’ about another housing project where the units are more expensive to build than the purchase of a median priced, four bedroom home in Norwalk.

How about someone from city hall showing us the math demonstrating the project will generate enough city tax revenue to support the corresponding police, fire and education services needed when population ‘density’ is increased, because three bedroom apartments WILL have school age children.

Tod Bryant June 27, 2019 at 7:25 am

We have to give people a reason to live here and buildings like this will not do that. I’m fine with the affordable housing, but are we really going to get this ugly, hulking, charmless building as a centerpiece in the middle of a Historic District? Redevelopment should immediately exercise its design review power to improve the looks of this thing.

Jo June 27, 2019 at 7:38 am

Because lord knows, what Norwalk needs now is more apartment complexes. We were on the rooftop bar at Evarito’s on Sunday, and you’re way up there, admiring the view…and then bam, there’s the mall and a fortress apartment! It’s disappointing. The Wall Street corridor has become downright ugly, and it sounds like that will become the norm for the entire area.

Lisa Brinton June 27, 2019 at 8:22 am

Tod – Agree with your points on aesthetics and the historic district. However, the math cannot be ignored: With 12 three bedroom apartments – these will be families with kids, not single adults. Assuming 2 kids per apartment = 24 kids @ $20k per student = $480,000 per year.

Will 100% affordable housing Poko generate $480,000 in property tax revenue just to cover education? Ironworks – in Sono is generating about the same at the moment with 111 units – with predominately 1 bedroom units.

This math is not sustainable for Norwalk.

Mike McGuire June 27, 2019 at 8:36 am

Astounding that this project went from bad (original POKO with 38 % affordable) to worse with (100% affordable at the upper affordable income limits) to horrible with essentially a subsidized housing project in the heart of Wall Street (the current deal).

This is a bailout for Citibank paid for by the Norwalk taxpayer.

Norwalk just got screwed, and that screwing will be with us every day for the next 40 + years. That’s how long the income caps via the LIHTC last.

All this could be avoided if the City of Norwalk just torn up the LDA.

If our leadership thinks this is a good deal for Norwalk they need to be replaced.

Sid Welker June 27, 2019 at 8:41 am

I have a brilliant idea. How about we get all of the nay sayers out of the equation and finish this damn eye sore once and fore-all. Enough with the back and forth banter on how “you could do this better” or “I’m going to sue” etc etc. Take a deep breath and look at the big picture. This “tyvek temple” has been sitting stagnant for 10 years with complaints coming out the wazoo about it not being finished. Now that there is a developer and and a plan, “the posse” is still restless. You cant have your cake and eat it too. This deal has flaws(what defaulted loan doesn’t) but at the end of the day its 1)bringing people/foot traffic to Wall St. which will helping local businesses 2)Getting Poko finished.

Isn’t that what everyone wants in the end?

Non Partisan June 27, 2019 at 9:04 am

Nancy- can you find out what the tax abatement would be for this project?

We need to stop using the word affordable. It’s not affordable- it’s subsidized by the 88% of tax payers that are not in “ affordable” housing

Bryan Meek June 27, 2019 at 9:07 am

As of the latest balance sheet date, Citi had $2 Trillion in reported assets.

They want a $50 million public debt issuance for this project.

If you were worth $2 million, this would be like getting a $50 loan from the city to fix up your mailbox. Is common sense completely gone from 125?

Bill Nightingale June 27, 2019 at 9:21 am

$80mm / 101 = $792k per unit (not $600k)

Tear up the LDA. Auction it off. Tear it down. Abolish the RDA.

JOHN C ROMANO June 27, 2019 at 9:34 am

CITI bank gets a bailout. JHM group gets a windfall of tax credits to offset other income. Democratic party gets a future higher donations as a payback. Bridgeport gets rid of some more low income residents thru the voucher program. All of us pay, pay, pay thru our Federal, State and city of Norwalk taxes. This does nothing for the revitalization of WALL Street, what happened to all the conversations about building a great area that has growth potential with tree lined streets. Sounds like we are destining Wall street to be a future slum. CITI Bank should be held to task, take it on the chin for not being a responsible party. They can afford it. This property should/can be a focal point of revitalization if done with Market rate condo’s with no tax credits. While they are at it, a Police substation should be part of the building, it will cut down on response time.

Ted June 27, 2019 at 10:24 am

Please if you follow me out of this state, remember why you did when it’s time to vote, do not bring this states issues to another

Please

Jeff June 27, 2019 at 11:06 am

Has anyone done the math to show how much this is going to cost existing taxpayers? There is a lot of mention of tax credits and interest free bonds and affordable housing (call it what you want, it’s subsidized by taxpayers).

Bottom line: this is going to cost the city (meaning all of us) a lot of money.

Milly June 27, 2019 at 11:31 am

That building is too big for that area. Why did Norwalk become the apartment mecca – the town is ruined.

Rusty Guardrail June 27, 2019 at 12:42 pm

Mr. Welker, most of the people brought in by below-mkt rate housing won’t have money to support local indy businesses.

Bobby Lamb June 27, 2019 at 1:27 pm

I think this is a reasonable solution. Obviously this project has a ton of challenges which is why it’s been sitting here for a decade. I’m glad to see something good happening at last. And some people will never be happy. Scrap the LDA? Ok if you want another 10 years of lawsuits with this eyesore sitting there? I want to see Wall Street hopping – people walking on the street, stores and coffee shops, galleries, nice street scape. All these things can be accomplished with this plan. I’m so tired of Lisa and her crew looking for the negative in everything.

Sid Welker June 27, 2019 at 2:26 pm

@Rusty Guardrail so your saying a single person making $54,718 isn’t going to utilize the Wall Street area? I think everyone needs to rethink the idea of “low income housing”. This isn’t 100% government cheese, food stamps and burning barrels. This is 2019. The term “low income housing” has been revitalized. Is it 100% perfect with 100% amazing tenants? Absolutely not. But at the end of the day it’s better than looking at whats there now which for the last 10 years you’ve all been complaining about to get finished day in and day out.

Nancy McGuire June 27, 2019 at 3:31 pm

@bobby lamb. $115,000 divided by 4 adults – each adult cannot make more than $28,000/year. They won’t be able to afford Paul’s coffee lattes because they will be on food stamps.

Isabelle Hargrove June 27, 2019 at 3:42 pm

How many ugly, huge, incredibly expensive, tax evading, and completely unsustainable projects will we let this administration inflict on Norwalk before we stop them? The damage to our city will soon be irreversible.

Mike OReilly June 27, 2019 at 4:11 pm

$2500.00 a month for a three bedroom is mine and everyone’s dream. Remember there are no property taxes with that. It’s included in the rent. Can some one explain why it would take ten years after “tearing up the LDA. We are all in favor of a new vibrant neighborhood but at what cost. I would not be upset to see this as an eyesore for another year till we can find a much more viable plan. The current plan is not the answer. We need market rate housing. Norwalk is already at 12% affordable

Nancy McGuire June 27, 2019 at 5:34 pm

@mike oreilly,
Look in Google: ct 8-30g program in google. It should bring you to a page, that goes to a page, and then another page, that shows Norwalk at 14% affordable housing conpared to 3-4% for most of our neighbors. Also, I thought public records stated this as a 50 million dollar deal. Same site. Same foundation. The added 30 million dollar value is more tax credits for the Greenwich developers and their investors. Those investors we may never know, but I would bet they are not far from the Apple tree that is Norwalk.

Al Bore June 27, 2019 at 6:04 pm

@Sid, I have another brilliant idea our current administration needs to stop over building Norwalk, you can’t drive around anymore it is like a very congested Stamford and a over crowded Norwalk. My property tax has sitting stagnant for 10 years too. Where did the Norwalk skyline go? It is amazing what happened to Norwalk in 6 years what a shame.

Bobby Lamb June 27, 2019 at 6:20 pm

@nancy mcguire and Lisa – it’s a family of 4 with an income of $115,000, I don’t think we’re looking at 4 adults. It’s most likely 2 adults and 2 kids with either one working parent making a little over 100k or 2 working parents making 50-60k. Totally normal working family incomes. Also are you guys seriously saying 12 apartments out of the hundreds out there are going to make or break the City? At best you’re looking for any excuse to oppose this and at worst it’s just thinly veiled racism.

Tommy June 27, 2019 at 7:16 pm

Correct Bobby Lamb. McGuire is wrong. The classic family of 4 definition relative to the AMI rent is two adults two kids. There was a change in the law in 2018 that allows that to be 4 adults living together, divided by 4. I highly doubt 4 adults (that qualify after a laborious application and documentation process) would be living in a two bedroom.

Rusty Guardrail June 27, 2019 at 7:54 pm

“Naysayers”?

“Complainers”?

“THINLY-VEILED RACISM”?

When you hurl these hollow epithets and accusations at citizens whose opinions happen to differ from yours, you’re saying more about yourself than you’re saying about the targets of your childish attacks.

Steve June 27, 2019 at 7:55 pm

115k a year is not chump change. Two teachers or one full time parent and one stay at home with two kids. Lisa the City pays on average about 17k per student. I wish it was 20k and despite the trouble we have regarding State funding, I would guess ithe actual Norwalk taxpayer pays closer to 15k. Aesthetically, I actually like the rendering but my sense is that some in the audience here see blood in the water. Is Milligan really trying to improve Norwalk? Does he live here? Is the real interest to have a big pay day?

DT June 27, 2019 at 8:40 pm

And will these students living in these beautiful new homes be given free/reduced lunch?
Also, will they be “99s” or go to the closest school…which I believe is Tracey?

Mike McGuire June 27, 2019 at 9:55 pm

#bobbyLamb – This is worth clarification. I was told by Nancy Chapman that these particular units could be occupied by 4 adults with a maximum combined $115,000/year income.

Nancy McGuire June 28, 2019 at 8:53 am

@bobbylamb – the previous comment was written by me, Nancy McGuire, on Mike’s iPad. Sorry for the confusion. But it would be good to see if the units are specifically set aside for families.

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