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The Day – Fort Trumbull Developers See Opportunity in New London

Developers of a 203-unit apartment complex in the Fort Trumbull area see New London as an opportunity.

The same is true for federal tax law.

A webinar Thursday, hosted by the state’s Department of Economic and Community Development, touted the project as the largest in the state to date to take advantage of federal Opportunity Zone tax incentives authorized in 2017 to support low-income communities.

Construction of residences at Fort Trumbull is underway at the Howard Street site. Plots on the 80-acre peninsula, which is also home to Fort Trumbull State Park, have been vacant since being cleared for development in a city decision that led to the historic decision of the United States Supreme Court in 2005 in Kelo v. City of New London on the use of eminent domain.

The former research and development headquarters of Pfizer – the catalyst for the city’s plan to kick-start economic development in the region more than 20 years ago – is now occupied by Electric Boat.

Jason Rudnick, director of New Haven-based commercial real estate development company RJ Development + Advisors LLC, told the virtual audience of at least 40 people that his firm had for years viewed New London as a neglected area with a potential.

The tax incentive wasn’t the reason his business was drawn to the area, according to Rudnick. It was the influx of industry and the growing number of workers who didn’t have enough places to live and spend their money in New London.

“It was the city itself,” he said. “It was that opportunity.”

He highlighted the growth of Electric Boat, Lawrence + Memorial Hospital, the State Pier construction project and the resulting opportunities in areas such as the wind industry.

In 2018, the federal government approved 72 Opportunity Zones in Connecticut, including three in New London. This means that investors can benefit from significant federal tax incentives if they reinvest unrealized capital gains into development projects in these troubled areas.

The law allows investors to withdraw profits from past projects and place them in an opportunity fund within 180 days. Depending on how long they keep their earnings in the fund, taxes can either be deferred, reduced by 10-15%, or completely eliminated after 10 years.

In 2019, a former developer interested in the property dropped plans for what was then billed as a $30 million project after two years of negotiations with the city’s development arm and attempts to find a financial partner. Rudnick said he took over the project “to see it through.”

Late that same year, Rudnick’s company sold a property it had developed as a hotel in New Haven to a national construction chain. The New Haven Independent, reporting that Rudnick and his business partner Yves-Georges Joseph II secured $2.8 million for the sale, described the New Haven site as part of a stretch that was razed during the mid-century urban renewal to make way for a freeway that never came to.

The company used the proceeds from the sale to build its Opportunity Zone fund, Rudnick said. The incentive also makes it easier to attract other investors.

RJ Development’s portfolio includes several commercial buildings and the 160-unit College & Crown, billed as a “premium luxury multi-family rental apartment development in downtown New Haven.” These units, ranging from studios to two-bedroom units, are rented between $2,010 and $2,368 per month.

Rudnick could not be reached at press time for further details on the New London project.

In addition to the residences at Fort Trumbull, plans are in place for two four-story buildings – a 100-unit apartment complex and a 100-unit extended-stay hotel – on land in the Fort Trumbull peninsula sold earlier. this year to Optimus Construction Management through the city’s development arm for $750,000.

Meanwhile, nearly 7 acres of city-owned land on the peninsula has been approved for a $30 million community center. Designs are being developed for the facility, including a two-court gymnasium, eight-lane swimming pool, indoor track, practice and game rooms, and a wing of the building dedicated to the headquarters of city ​​recreation and associated programs.

Critics of the community center plan argue that the city is using prime real estate better suited to a taxpayer entity. Some said the location indicates a focus on new residents rather than the city’s existing youthful population, who may not be able to access the site as easily.

Affordability

Frida Berrigan, a member of the New London Green Party – a former mayoral candidate who also leads the New London chapter of a grassroots group focused on permanently affordable housing – is among critics who are wary of the gentrification of the city. city.

This week, Berrigan was one of the hosts of a Southeastern Connecticut Community Land Trust event titled “Homeownership in New London: A History of Racist Barriers and How to Create Equity Now.” She did not attend the Opportunity Zone webinar.

“What the people of New London need are homes,” she told The Day. “Not apartments with luxury amenities.”

She said upcoming projects with large numbers of smaller, more expensive rental units and extended-stay apartments depend on the transient nature of large corporations that are subject to boom and bust cycles over time. years.

The question revolves around what it takes “to build a real local economy that is sustainable and works for the people who are going to live here, whether General Dynamics and L+M and a handful of other big companies are here or not. “, she added. mentioned.

Berrigan’s vision for the area would recognize its natural beauty and history through a mix of homes, apartments and businesses where people “can put down roots”, she said. Many ideas were outlined in a 2011 study by the Yale Urban Design Workshop.

She also pointed to recommendations from the city’s affordable housing plan, released last month in draft form for approval by June under state law.

Among the many strategies outlined in the 62-page document is a call for increased affordable homeownership opportunities, especially for communities of color and those impacted by urban renewal. It also recommends a variety of housing types, especially family units.

“In my mind anyway, that doesn’t tick a single box on this very long checklist of what’s really needed,” she said.

Rudnick, during the Q&A portion of Thursday’s webinar, said all apartments will be sold at market price as part of a focus on supporting the workforce of the city’s largest employers. city.

“It wasn’t meant or developed to be affordable,” he said.

But he said 30% of another project he is working on outside of New London is made up of affordable units – and he would be interested in collaborating with the city on this type of project in the future.

The state considers units affordable when, through subsidies or deed restrictions, residents of a household earning 80% or less of the area median income spend no more than 30% of their income on rent or mortgage payments. The area median income for New London is $71,950 for three-person households and $63,950 per year for two-person households.

He said affordable housing developments require cooperation from all facets of the community, including government officials, residents, financial institutions and developers.

“Everyone has to play ball,” he said.

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