Company Plans To Foreclose ––

Refinancing Firm Pays Off Sewer And Tax Debt On Homesteads Property

By Andrew Gorosko

On June 21, the town received several checks totaling almost $860,000 from the firm that acquired The Homesteads Community at Newtown, LLC’s mortgage for 12 Pocono Road in Hawleyville, resolving the Homesteads’ outstanding sewer debt and delinquent real estate taxes on that property.

The town, therefore, no longer plans to pursue a foreclosure on that property, according to First Selectman Herbert Rosenthal. “I’m pleased that the mortgage company paid us what was owed,” the first selectman said June 26.

New Haven Mortgage Refinance, LLC, presented checks to Tax Collector Carol Mahoney totaling $859,052.30 to cover money owed to the town, including approximately $530,000 in unpaid sewer connection fees, approximately $270,000 in delinquent real estate taxes, and more than $40,000 in costs to reposition a sewage pumping station. The $530,000 in unpaid sewer connection fees reflects the capital costs for past sewer installation to serve 162 units of congregate housing for the elderly that were approved by the town, but which were never built.

 The almost $860,000 payment includes unpaid real estate taxes on 164, 168, and 170 Mt Pleasant Road.

Ms Mahoney said this week, “We’re extremely pleased. That’s a big debt.” The payment helps the town’s financial position as the fiscal year closes, she said. “We won’t pursue a foreclosure at this point because the debt has been paid.”

On June 19, the Legislative Council had unanimously authorized the first selectman to start foreclosure proceedings against The Homesteads Community at Newtown, LLC’s, property at 12 Pocono Road, a large parcel containing 12 new unoccupied condominiums for people over age 55. Council members had voted 11-to-0 to start foreclosure proceedings, if necessary. Last month, the selectmen had also authorized such a foreclosure.

On June 17, the New Haven Savings Bank and NewMil Bank, which had held the mortgage on 12 Pocono Road, sold that mortgage to New Haven Mortgage Refinance, LLC. The refinancing company now holds promissory notes from the Homesteads in the total principal amount of $3.7 million.

Steve Lopes, a vice president of the refinance company, speaking on behalf of the firm’s president Louis Tagliatela, Jr, said June 26 that the company is now foreclosing on the Homesteads property at 12 Pocono Road.

That foreclosure on 12 Pocono Road does not involve the Homesteads’ adjacent occupied 100-unit assisted-living building for the elderly at 166 Mt Pleasant Road, Mr Lopes said.

The Homesteads site consists of two parcels: 166 Mt Pleasant Road, where a 95,000-square-foot assisted-living building containing 100 rental apartments is situated, and 12 Pocono Road, an adjoining site where the Homesteads has built 12 of the 46 condominiums for which it has received town construction approvals.

Although the real estate taxes on 166 Mt Pleasant Road are current, the Homesteads is in arrears to the town for approximately $240,000 in sewer assessment principal for that property. The town is pursuing that getting that debt paid by the mortgage holder on 166 Mt Pleasant Road.

The two adjoining parcels are jointly known as The Homesteads. The Homesteads Community at Newtown, LLC, owns the property at 12 Pocono Road. The property at 166 Mt Pleasant Road is owned by The Homesteads at Newtown, LLC.

The Homesteads, a private housing complex for the elderly that opened in March 2001, has encountered serious financial problems. The town had placed property tax liens and sewer assessment liens against the Homesteads, in seeking to collect the money owed the town. Dozens of private creditors have filed mechanics liens against the Homesteads for various unpaid bills. The general contractor for the Homesteads construction project, Konover Construction Corporation of Farmington, has had two mechanics liens pending against the Homesteads since May 2001 on more than $1.29 million in unpaid bills.

“We own the mortgage on the [12 Pocono Road] property,” Mr Lopes said. The New Haven Savings Bank had started foreclosure proceedings on that property, after which New Haven Mortgage Refinance purchased that mortgage and continues to pursue a foreclosure, he said.

It could be between two months and one year before New Haven Mortgage assumes ownership of the site, depending on whether the Homesteads owners cooperate or fight a takeover, Mr Lopes said.

After New Haven Mortgage owns the site, the property could be conveyed to a development firm, probably Franklin Construction Company of New Haven, which is a sister firm of New Haven Mortgage, Mr Lopes said.

A number of the elderly people who are now living in the Homesteads’ 100-unit assisted living building at 166 Mt Pleasant Road, and who have placed deposits on the nearby condominiums in anticipation of moving into the condos, attended the June 19 Legislative Council session. Those people wanted to know the status of their condominium deposits. Many of them had sold their previous homes in anticipation of moving into the condos. Some condos had been scheduled for occupancy last summer.

Mr Lopes said New Haven Mortgage would like to have the elderly people who paid deposits on the 12 condominiums at 12 Pocono Road move into those condos as soon as possible. 

Because of the delinquencies on real estate taxes and sewer bills, the town has withheld certificates of occupancy on the condos at 12 Pocono Road as a form of leverage to get that debt paid. Some of the 12 condos have been completed. Others are partially constructed.

Town Financial Director Benjamin Spragg said that under the terms of a agreement between the Homesteads and the town, the town would receive a lump sum payment of $10,347 as a sewer connection fee, when each of the condos has its sales closing.

The 100-unit assisted-living rental apartment building is mostly unoccupied. The ownership of the Homesteads claims the building is about 40 percent occupied. The building houses some elderly assisted-living tenants. Also, elderly people who have been waiting to move into the condominiums occupy some of the units in the assisted-living building.

Mr Lopes said that New Haven Mortgage Refinance’s sister firm, known as Franklin Construction Company of New Haven, is a multifamily housing developer, which has built many complexes in the New Haven area.

After acquiring 12 Pocono Road, Franklin Construction would assess real estate market conditions and determine how to proceed with that property, possibly submitting to the town a revised multifamily development proposal for the site for people over age 55, Mr Lopes said.

How soon that happens depends on how soon New Haven Mortgage acquires 12 Pocono Road, Mr Lopes said.

Linda Silberstein and her husband Dr Morton Silberstein, a retired geriatric psychiatrist, are the proprietors of the Homesteads.

Mrs Silberstein said June 26 of the new mortgage holder’s $860,000 payment to the town, “I am very happy that the town has those revenues in its coffers.” The Homesteads never wanted to cause hardship to the town, she added.

The Homesteads will pursue paying its bills to its creditors, she said. The Homesteads hopes to pay off those bills and then develop its property, or have some firm of its choosing develop the property, she said.

Mrs Silberstein said the Homesteads would seek to avoid a foreclosure on 12 Pocono Road, adding that she regrets the situation has reached this stage. 

The Homesteads had approached the town in early 1998 seeking permission to build a 300-unit elderly housing complex, describing the project as a source of local economic development. As part of the project, the developer received generalized town approval for a 162-unit congregate living complex on the site, but the congregate housing aspect of the project has never materialized.

The town had designated The Homesteads as an economic development project and built the first phase of the Hawleyville sewer system to provide sanitary sewer service to the complex. The town designed the Hawleyville sewer system to foster economic development.

The town lists the Homesteads as the third most valuable local property on the October 1, 2001, Grand List of taxable properties. The Homesteads’ tax-assessed value is $10,708,630. The Connecticut Light & Power Company is the first firm on the grand list, with a tax-assessed value of $18 million. Sand Hill Plaza is second on the list with a tax-assessed value of $13.9 million.

The 60-acre Homesteads site, which is not visible from Mt Pleasant Road, formerly was a sand-and-gravel mine.