Questionable Deal: HRA Not Paying Negotiated Taxes
By Robin Vinci at April 25, 2024 | 8:00 pm | Print
In July of 2006 the City of New Britain sold 180 Clinton St., formerly Benjamin Franklin School, to the Human Resources Agency (HRA) for $325,000. According to the deed of sale, HRA agreed to pay for 25 years of taxes after owning the property for three years.
As of April 16, 2024 HRA owes over $220,000 in back taxes to the City.
“They were leasing that building for many, many years,” said Former Mayor Tim Stewart who negotiated the sale. “They wanted to purchase it. In the course of doing an expansion for their Head Start Program they were going to build an addition onto the school. I said why don’t I just sell you the building? I sold them the building for a reduced price in exchange for supporting state bonding from CHEFA (Connecticut Health and Educational Facility Authorities) requests.”
CHEFA is a state tax exempt bond structure that offers low financing.
Stewart said the caveat was that there would be taxes on the building in three years.
“So they built this $15 million addition,” said Stewart. “We put the tax part in the deed.”
An anonymous source told the New Britain City Journal that if the taxes were not paid the HRA will be out of CHEFA compliance and also the federal interest in the property may affect its Head Start eligibility.
HRA receives most of its money from state and federal grants.
The Common Council voted for what many consider an illegal deal made between Mayor Tim O’Brien and HRA to eliminate taxes on Wednesday night.
“O’Brien has negotiated to postpone the tax appeal and legally he is not even supposed to be involved in that process,” said Stewart. “That’s a legal process. You can’t undo the deal.”
But O’Brien and the Common Council did undo the deal.
Stewart said the City always intended to receive taxes on this property for 25 years.
“The whole deal was to create some taxes out of a place that paid zero because 50 percent of our tax list is on the exempt side,” said Stewart. “O’Brien cannot negotiate this.”
Alderman Michael Trueworthy said the property cost the City money to maintain it and the City asked HRA to buy it.
“The City gives HRA significant amounts of money through (CDBG) Community Development Block Grant funds,” said Trueworthy. “It’s just silly to pay one hand and have it come back for another. It’s a non-profit organization that has flourished.”
The deed states “During the 25 year period that the taxes are paid, the grantee, its successors and assigns shall not apply for any tax exemption for this property from the City of New Britain.”
That would come to about $5 million in tax dollars.
“There are over 500 kids in programs like Head Start and daycare,” said Alderman Carlo Carlozzi. “$200,000 is a lot of programs. While there is a part of me that says you signed something too bad. The other part of me says it doesn’t make any sense. It’s a great agency.”
“When it comes to children investing in their future we have to,” said Alderman Roy Centeno. “It comes from the heart to vote yes for this.”
Alderman Jamie Giantonio was the sole vote against this new deal.
“I kind of look at it that we have a signed agreement and it was they would pay the taxes and not come and ask for reduced tax,” said Giantonio. “I think we are walking down a slippery slope here. What we do here sets a precedent. If we forgive tax for one group, what is going to happen when the next group wants it?”
Had the council not approved this deal, that includes that now HRA will coordinate services, a pre-trial on the tax appeal litigation was set for court on June 25.
