Refinancing Company May Foreclose First ––

Council Authorizes Selectmen To Foreclose On One Of Homesteads’ Properties

By Andrew Gorosko

The Legislative Council has unanimously authorized the first selectman to start foreclosure proceedings against The Homesteads Community at Newtown, LLC’s, property at 12 Pocono Road in Hawleyville, a large parcel containing 12 new unoccupied condominiums for people over age 55.

Council members voted 11-to-0 on June 19 to start foreclosure proceedings, if necessary. Last month, the selectmen had authorized a foreclosure.

The Homesteads owes the town $842,105 on 12 Pocono Road, including approximately $530,000 in sewer connection fees, almost $270,000 delinquent real estate taxes, and more than $40,000 in costs to reposition a sewage pumping station for the property.

A town foreclosure, however, apparently will be unnecessary in light of a refinancing company’s plans to foreclose on 12 Pocono Road.

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 two promissory notes from the Homesteads in the amounts of $2.4 million in principal and $1.3 million in principal.

New Haven Mortgage Refinance’s acquisition of the 12 Pocono Road mortgage precedes its plans to foreclose on that property.

The anticipated private 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.

Although the property taxes on 166 Mt Pleasant Road are up-to-date, the Homesteads is in arrears on its sewer assessments for 166 Mt Pleasant Road.

Separate corporations own the two adjoining parcels, which are collectively 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 has placed property tax liens and sewer assessment liens against The Homesteads, in seeking to collect the money owed the town. Numerous 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.

First Selectman Herbert Rosenthal said June 20 that it is unlikely that the town actually will foreclose on 12 Pocono Road. When the refinance company forecloses against 12 Pocono Road, the town, as a municipality, will be the entity that is the first to receive the money that is owed to it, he said.

The selectmen and the council authorized a town foreclosure against the Homesteads as a contingency measure, in the event there was no other way to collect the money owed to the town by the Homesteads, Mr Rosenthal said. The authorization to foreclose also created financial leverage for the town, he said.

Mr Rosenthal said a number of 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 council session. Those people wanted to know about the status of their condominium deposits, he said. Many of them sold their homes in anticipation of moving into the new condos at The Homesteads.

“We’re still homeless. I sold my house back in December,” said one woman who declined to give her name.

Another man was slated to close on his condo July 31 of last year. “I’ve been waiting for almost a year,” he said.

One woman said she thought she had everything planned just right. She had the closing of her Newtown home scheduled for August 29 and the closing of her new condo August 30. It never happened.

 “Hang in there. Someone is going to complete those condos and want to sell them. The property is too valuable,” the first selectman told them. “We’re merely trying to protect the town’s interests.

 “The developer has had some financial difficulties,” Mr Rosenthal said, prompting chuckles from the audience, which knew all too well about The Homesteads difficulties.

“We are not trying to hurt the Homesteads in any way,” Mr Rosenthal said Thursday morning.

Hopefully, the Homesteads will rectify its financial problems and complete its complex, allowing people to move into its condominiums or the new owner of 12 Pocono Road would make arrangements for those people to move into the condos, he 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. The 12 condos have never been occupied because the town will not release certificates of occupancy for the units until the debt is resolved.

The 100-unit rental apartment building is largely unoccupied. It houses some elderly assisted-living tenants. Also, people who have been waiting to move into the condominiums occupy some of the units in the assisted-living building. Some of those condos had been scheduled for occupancy last summer.

The Homesteads had approached the town in early 1998 seeking permission to build a 298-unit elderly housing complex, describing the complex as a source of local economic development. As part of the proposed 298-unit complex, the developer received generalized town approval for a 160-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.

Economic development is generally considered to be development, such as factories, warehouses, stores and offices, that generates considerable municipal property tax revenue and provides jobs, but which does not make many demands for public services.

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. The site lies across Mt Pleasant Road from Newtown Power Equipment, Inc.

In their initial concept, the developers described The Homesteads as a complex where “active adults” over age 55 would live independently in condos. As they grew older, and required more help with the activities of daily living, those residents would move into a 160-unit congregate housing complex. When they grew yet older or more infirm, those residents would move into the 100-unit assisted-living complex. Monthly rental fees in that assisted-living complex are $2,800; $3,100; $3,900; and $4,200, based on the type of unit. A section of the building is designated for people with Alzheimer’s disease. The Homesteads condominium sale prices range from about $249,000 to about $279,000.

When The Homesteads was in the planning stages several years ago, there were fewer assisted-living facilities in the area.

(Reporter Steve Bigham contributed to this story.)