Kerekes, DeStefano spar over 360 State Street

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Photo by Amir Sharif.

New Haven’s second-tallest skyscraper is at the center of a highly-politicized tax dispute after its developer filed a lawsuit in Superior Courtagainst the city in June.

Becker & Becker, owner and developer of 360 State Street, is suing the city after receiving a $130 million property assessment that will quadruple its tax bill. According to a 2007 New Haven Assessors’ Office report, the 36-story development of mixed-use apartments and retail space was initially estimated to pay $1.4 million in taxes, but its 2011 assessment raised that figure to $5.7 million. Jeffrey Kerekes, who will run against Mayor John DeStefano Jr. in this November’s general election, has come out against the current assessment, while DeStefano has stood behind the assessment.

Kerekes said the fourfold increase in assessment value and tax bill is unfair, and that the city should have been more forthright and accurate to help Becker & Becker plan its development.

“When the city gives [developers] an estimate and then changes the story later, who’s going to come and develop downtown?” Kerekes said. “As a city, we need development projects going on and we need to have investors feel confident to make these kind of developments downtown.”

Kerekes said that although DeStefano might spin the assessment as a tax on big developers, higher taxes and the lawsuit’s legal costs will ultimately be passed down to residents and citizens of New Haven in the form of rent increases and higher prices at the Elm City Market food co-op, which is located in the development.

But city officials say the 2007 report was an estimate based on limited information at the time and was subject to change. The final development turned out much larger than initially planned, and included a multi-level parking garage that was not envisioned at the time of the first assessment.

Released to the public last week, the 2007 report warned that since property values and assessments would likely grow, the assessment and tax revenue estimates were “the most conservative case scenarios.”

Kerekes said he disagrees, adding that he finds this method ridiculous.

“If [the city] wanted to, [it] would give [developers] a cost range of different options and different scenarios,” Kerekes said. “The lowball thing makes it seem like you’re doing the bait-and-switch, and I think that’s disingenuous.”

City Hall Spokesman Adam Joseph said the 2011 tax assessment was in fact the first assessment that could be performed legally, and that the initial 2007 estimate should not be considered an assessment. In 2011, the building was assessed at fair market value, Joseph said, adding that undervaluing the assessment would essentially be an unfair subsidy to the developers.

Although Joseph said he could not comment directly on the lawsuit, he added that he does not see it adversely impacting future downtown development.

Kerekes also said DeStefano has used New Haven’s Grand List growth — the addition of new taxable items to the city’s register — as a “major plank” in his campaign platform. Kerekes said this growth is based on “fudged numbers” from the 360 State Street assessment, because DeStefano included the development under “net” growth while it should have been counted as “gross” growth.

City Assessor William O’Brien said DeStefano’s claim that 360 State Street accounted for a large part of that growth is “misleading” because of a tax deal the city struck with the property’s developers. But, he added, the overall Grand List growth is correct.

Construction of 360 State Street began in September 2008, and its first occupants moved into the building in August 2010.

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