In a move that could save New Haven $4 million, city officials nixed a 15-year-old plan to build a 749-space parking lot at the corner of Elm and Orange streets last week, deciding instead to build the lot on a site a block away.

The Mid-Block Garage project was cancelled last week because the cost of acquiring the site had increased to unacceptable levels, New Haven Deputy Director of Economic Development Tony Bialecki said. The city had appropriated $5.5 million dollars to build the lot, he said, but as negotiations with the seven property owners on the site progressed, it became clear that it would cost more money than the city had budgeted to complete the project.

“After a year and a half of discussions, the price for those seven properties was up to $6.3 million and climbing and still climbing,” Bialecki said. “[Moving the site] is a prudent move on behalf of the taxpayers.”

The decision to build the lot on a one-acre site at the corner of Wall and State streets instead will cost the city around $2.3 million, Bialecki said. The empty site, owned by SBC Communications Inc., a company recently acquired by AT&T, was not initially considered for the project and only recently came up for sale, he said. An agreement between SBC and the city has already been reached, and construction is slated to begin in six months pending the approval of the Board of Aldermen and the state, Parking Authority Executive Director William Kilpatrick said. Kilpatrick said he expects the approvals to be secured easily because the Board of Aldermen has already passed an almost identical grant for the Mid-Block Garage. The new bill will only require an amendment to the original bill changing the location of the site, he said.

The construction of the parking garage is part of a long-term plan to increase downtown New Haven’s parking capacity. Following the completion of the Gateway Development Project — a $230 million plan to move Gateway Community College and Long Wharf Theater downtown — parking demand is projected to rise substantially by 2010, and numerous parking garages are being erected downtown to increase capacity.

The relative ease of the Wall and State site’s acquisition contrasts with SBC’s response to a city plan to build the Arts and Humanities Cooperative High School on a different SBC-owned property on Audubon Street two years ago. When the city approached SBC, one of New Haven’s largest private employers, with the proposal, the phone company declined the offer threatened to relocate if the city tried to seize the property by using eminent domain, Ward 7 Alderwoman Bitsy Clark said.

“SBC told the mayor that if they took this property … they would move out,” Clark said. “And the mayor was not about to be the mayor that lost SBC.”

Representatives for SBC could not be reached for comment this week.

The Wall and State site is not as important to the company as the Audubon site was, Bialecki said. Home to a parking lot and a small retail outlet, SBC sold its site to the city because they no longer needed the property after they discontinued its retail operation there, he said.

But SBC’s closure of their retail outlet does not mean the company has plans to downsize or to leave New Haven, Bialecki said. SBC has centralized their Connecticut operations in New Haven in recent years, and the result has been an expansion of the company’s operations in New Haven, he said.

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