Wednesday, March 6, 2013

Commentary: The City's Interests Over Private Gain

Jennifer (Campbell) Proto spoke to the Planning and Zoning Commission last week about the application to change the zoning text to allow high-traffic commercial uses in the residential areas of Washington Street and South Main Street.  I requested permission to reproduce her remarks in The Eye.
Good evening Chairman Pelletier, Vice-Chair Fazzino, and Board members of the Planning and Zoning Commission,

My name is Jennifer (Campbell) Proto and I’m here tonight with my husband, as homeowners of 390 High Street, in strong opposition to any expansion of uses within the MX zone. In order to grant a zone change, the Planning and Zoning Commission must determine two factors: 1) that the proposed change is for the good of the community as a whole and not exclusively for the benefit of an individual or a select group of individuals; and 2) is consistent with the city’s current development plan.

I. Serving the Community As A Whole Over Special Interests
I have a Master’s degree in Public Administration and have worked in government for nearly a decade, including 3 ½ years as a non-partisan fiscal analyst for the Connecticut General Assembly. I only mention my background because I would like to dispel a few myths that are being used to justify the proposed plans for commercial development, namely 1) it will generate significant tax revenue and 2) it will create jobs.

Tax Revenue Generation
Middletown’s current budget is over $130 million. Like all other Connecticut municipalities, the city relies almost exclusively on property taxes to generate its revenue. Yet non-residential tax payments make up just over 15% (or approximately $15 million) of Middletown’s grand list. For instance, the 100,000 square foot Aerospace building on Middle Street pays $110,000 in taxes annually. The town would essentially have to attract, approve and build twelve (12) buildings like Aerospace annually if it were to rely on economic development to cover the cost of a 1% increase ($1.3 million) in the city budget.

Let’s boil this down in terms of the Centerplan proposed development, since that’s why this zoning change was proposed, after all. Centerplan’s CEO, Robert Landino has said he plans to build a 20,000 square foot building. For simplicity, as this is roughly 1/5 of the Aerospace building, we will assume the completed Centerplan building will pay 1/5 of Aerospace’s taxes, or an estimated $22,000 per year [see footnote at bottom of article]. Of course Centerplan won’t have to fork over this tax payment for up to seven years, thanks to the tax abatements, exemptions, deferrals and incentive programs provided for new commercial developments under Chapter 272 of the Middletown Code of Ordinances. It is difficult to know which exemptions Centerplan will ultimately avail itself of, but at best, Middletown will only see a portion of the $22,000 annual tax bill, until the Year 2021, or later, depending upon when the project is actually completed.

Now let’s compare this purported “increase in tax revenue” with the revenue the city will lose when the four properties on Washington Street are sold to Centerplan:

Assessed Value
Mill Rate
Est. Annual Taxes
166 Washington St
172 Washington St
180 Washington St
186 Washington St
tax exempt


Just based on these four properties, Middletown will lose $15,469 in tax revenue annually. Thus, over the next seven years while Centerplan is paying little to no taxes to offset this, the cumulative loss would amount to nearly $100,000. As Centerplan’s full commercial tax bill of approximately $22,000 is ultimately only an increase of $6,531 over the tax bills of the four residential properties, it will take 15 years – or to the year 2029 -- for the city just to begin to break even.

While this assessment does not factor in inflation, it also does not factor in the potential decrease in property values of the numerous homes surrounding the Centerplan development, which would result in further tax revenue loss to the city. It also does not factor in the additional costs to the city which are much more difficult to quantify, but nonetheless significant, namely traffic congestion, air quality, and loss of historic character on Washington Street. You can expect the arithmetic to add up similarly in other MX-zoned areas.

Job Creation
Mr. Landino is claiming his development will support 25-30 full time employees. Not 25-30 full time jobs, nor 25-30 new jobs, since existing businesses, namely his existing businesses – Greenskies Renewable Energy and Centerplan, with its existing employees will be moving into office space on the top floor of the building. As these businesses are currently tenants on Main Street, this is merely a shifting of location within the city limits and does not create any jobs.

Most of the new jobs created by Centerplan’s development will be part-time without benefits. These are jobs at restaurant such as Starbucks and Chipolte which don’t offer the permanence, pay-level or perks most wage earners need.

Of course the balance sheet for Centerplan looks great under the MX proposal, as one would expect:
  1. Centerplan, and other commercial developers like them, would get to buy cheaper residential homes (especially in the wake of the home mortgage crisis) as compared to existing commercially-zoned properties (for which Middletown has many;
  2. Mr. Landino’s first-floor tenants will foot the rent for his company’s office space and surely provide a nice monthly income-stream as well; and
  3. As previously mentioned, municipal tax incentives will keep their pesky tax payments at bay for years.
Clearly the MX proposal fails the first criteria, as it benefits the proposal’s author over the city as a whole.

II. Consistency with Current Development Plan
Taken straight from Middletown’s Plan of Conservation and Development, “Economic development will never solve the looming financial problems the City will need to confront.” A thriving city needs a balance of residential and commercial areas. Yet Middletown’s real problem in regards to this equation is that we don’t have nearly enough homeowners – some downtown neighborhoods have less than 14% owner-occupancy! The associated consequences of absentee landlords, blight and crime extend beyond the boundaries of the neighborhood itself to the city as a whole.

Middletown’s Plan of Development seeks to solve these issues in our neighborhood by significantly increasing homeownership and replicating the revitalization that has already occurred in the “Village District” – the area on the other side of Washington Street between Main Street and Wesleyan. The Plan attributes the success of the Village District to (and I’m quoting directly) “proactive zoning that created an area limited to single and two-family homes and very strong architectural standards. Perhaps more importantly, there is a committed group of existing and new residents who have formed a neighborhood organization. These actions created stability in the area that fostered a willingness to invest.”

Specific to our neighborhood, sandwiched between Washington Street and Grand & Liberty Streets, the Plan highlights the value of the historic properties and streetscapes, stating “these features add a very desirable character to the neighborhood.” The Plan goes on to say, “The current zoning …is restricted to single and two family homes, like the Village District, but there are no design controls on additions and new construction. Those interested in investing in a neighborhood such as this are interested in the historic fabric of the neighborhood…..uncertainty in what could happen with neighboring properties has a negative impact on an individual’s willingness to make an investment in homeownership.”

What kind of significant impact can a few more homeowners possibly make, right? Well, let’s first do some more math. With over 80% of Middletown’s tax payments coming from residential property owners, any small improvement in property values – even on one small block – can easily exceed the supposed increase in taxes coming from any and all new developments like the one proposed by Centerplan.

I will use our story to illustrate. We purchased our house, the yellow Queen Anne Victorian near the corner of High Street and Washington Street, in 2008 just after the sub-prime mortgage crisis had erupted. The house, having been used by Wesleyan for decades, was in need of absolutely everything. The neighborhood, while lined by prominent homes a century ago, hadn’t been cared for in at least a generation. It offered potential, but not much else. Why did we choose to take the risk?

While the neighborhood was (and still is) a lot less desirable just a block or two away, we felt that Wesleyan’s proximity would at the very least prevent any further deterioration and our property abutted a section of Washington Street Historic District listed on the National Registry of Historic Places – a fact that assured us protection from future commercial development uncertainties. So we kept returning to this dilapidated house in Middletown – a house that had been on the market for over a year with no bidders – like a lot of houses in the area. We knew with a lot of elbow grease, penny-pinching and creativity we could restore this house, and in doing so, we thought we just might encourage our neighbors to do the same.

The transformation of our block in the past four years – all with a struggling economy, mind you – has been astonishing. This small group of middle class residents has literally invested hundreds of thousands of dollars of hard-earned money in our homes and our historic neighborhood – with significant long-term benefits of these private investments going to the city as a whole. In lieu of multiple summer vacations, we painted our house, and within the year two other houses were painted. We sacrificed dinners out, new clothes and cut coupons so we could install new energy-efficient windows. Our next door neighbors put on a new roof and gutters. A coworker gave me tons of seedlings and we planted a garden in our backyard. Seeing the new garden, our neighbor on Lincoln Street apologized for leaving junk on his side of the fence and cleaned it up. So we planted more gardens. Then we called up the landlord of the other house next door and asked her to fix up the garage. A few weeks later, the rotted garage door and broken window were replaced and the whole thing was painted. This year our neighbor had her front yard landscaped by her children for Mother’s Day. There are white rocking chairs on the new front porch to admire the view. Passersby literally stop and look at our beautiful houses now, and give us their compliments if we happen to be outside. Dog owners stop and pick up after their pets now. People aren’t dropping trash on our curb and sidewalk anymore.

Middletown has already started its work for the revaluation of all real estate. It will come as no surprise to us and some of our neighbors when our homes are assessed (and subsequently taxed) at significantly higher rates, in recognition of their increased property values.

Our city needs more residents like us and the significant investments we are making – not more poorly conceived commercial development which robs from the progress we have made. We are the living, breathing HEART of Middletown’s present and future revitalization and we are the ANCHORS of these marginal neighborhoods. Yet we have our breaking point. If the MX zone is expanded to allow commercial development next to our homes, we will quickly vanish, and you will never be able to attract homeowners like us to this area again. Middletown’s Plan of Development recognizes the inherent flaw of “an ‘economic development at any cost’ mentality that in the end turns out to be counterproductive and divisive.” We hope its Planning and Zoning Commission have the same foresight. Thank you for your time and consideration.

[Footnote: CGS 12-62(b)(2) allows assessors to use one of three methods in determining a property’s value: (1) market sales comparison, (2) cost approach, and (3) income approach. Since the developer is planning to build a new structure, the assessor will more than likely value the land based on comparable commercial parcels and the building based on the cost of construction. ]


Rani Arbo said...

Jennifer, if you ever run for mayor, you have my vote. Thank you for your research and your reasoned presentation. Centerplan, in last week's meeting, offered nothing but misleading generalizations, cherry-picked phrases from the Town Plan and poorly researched comparative house appraisals (mostly from other towns). It makes a person feel that the real budgetary research behind their MX zone change proposal is the kind that can't be presented in public: political and economic benefits to vested interests, including the city, Centerplan, land owners, lawyers, and others.

Anonymous said...

I agree with Rani. The real estate person that testified on behalf of the zone change could not even answer simple questions and was painfully fumbling for words at times. At one point Mr. Wilson went up and interjected in attempt to rescue the guy from having to answer something.

Mr. Fixit said...

@Rani Arbo: Jennifer (Campbell) Proto is far too smart (& educated and bright) to ever be allowed to run, by the powers that be, for any office in Middletown.

Jennifer's presentation was supported by facts - unlike the loosey-goosey presentations of the applicant's representatives and his remarkably few supporters.