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Battle Looms Over Capitol West

Owner sees development potential; city sees blighted property

By Gregory Seay

April 11, 2011

A court fight appears to be brewing between the city of Hartford and the owner of Capitol West over the value of its dilapidated office building, visible to tens of thousands of I-84 downtown motorists daily

But Capitol West’s owner, whose $2 million demand is reportedly at least double what the city has offered to pay so it can tear the building down, isn’t the only one with whom city leaders are butting heads.

The city is taking its first steps toward legally seizing title to the 170,000-square-foot building at 1 Myrtle St. through eminent domain. A public hearing on the matter is set for April 18, after the Hartford Redevelopment Agency recommended 4-1 the city pursue a resolution through the courts.

The building’s owner, Myrtle Realty LLC, says through its attorney that, in addition to being willing to sell the property for the right price, it is weighing options that include going to court to preempt a taking — an expensive course that one legal expert says may prompt one or both sides to reconsider legal action.

Mayor Pedro E. Segarra insists the city is doing the right thing, as do many local civic and business leaders who are on board. So, too, is Capitol West’s multi-billion-dollar Asylum Hill neighbor, insurer Hartford Financial Services Group Inc., which has anted $2 million toward buying and demolishing the property.

Sean Arena, board chair of the redevelopment agency, has emerged as a vocal critic of the strategy. Arena, a Wethersfield developer, recently cast the lone dissent in the eminent domain vote.

In an interview, Arena questions the city’s eagerness amid a fragile economy to assume the financial burden of removing from its tax rolls a building that generates $36,000 a year.

“We don’t have a line of developers chomping at the bit, waiting for that property,’’ Arena said.

Arena says that the cost alone to demolish the building is pegged at $2.4 million. Bonding that for 20 years would push the tab to well over $4 million, not counting what the city eventually pays for the property and any legal bills, which could add hundreds of thousands of dollars more to the tab, experts say.

Arena recalls the city’s longstanding efforts to acquire the dilapidated former H.B. Davis department store-office building at 1161 Main St., derided by locals as the “Butt Ugly Building.’’

In that case, the city threatened to take the property through eminent domain, he said, driving the building’s owner to the bargaining table. Last July, the city settled on a $625,000 price for 1161 Main and in November spent $312,000 to raze it.

The city may be trying a similar tactic with Capitol West, Arena says, but with both parties so far having dug in their heels, it isn’t working.

“They’re waiting to see who will blink first,’’ he said. “But [the sellers] aren’t blinking. They’re sticking to their $2 million price tag.’’

Segarra, in an interview, declined to reveal the city’s offer for Capitol West. (The city values the property at around $700,000.) He said legal steps the city is taking to gain title to the property are consistent with its “One City, One Plan’’ redevelopment strategy to make Hartford more attractive to live, work and visit.

“This is a blighted property that doesn’t add to the city,’’ the mayor said.

Capitol West’s owners, however, chafe at the city’s depiction of their property as blighted and question the legality of the redevelopment plan under state statutes. Their Farmington attorney, Coleman Levy, says the building has a new roof and is structurally sound. The windows are missing, Levy says, to protect them and because the building has undergone asbestos abatement.

Moreover, Levy says none of the city’s definitions for blighted property fit the building. Even if it did, he adds, the city’s legal remedies do not include taking the property. Levy declined to specify a sale price.

Owner Myrtle Realty LLC, whose investors include Brooklyn, N.Y., developer Joshua Guttman, had planned to convert the former insurance company office building into residential units before the economy took a nosedive and real estate values fell, Levy said.

He said Myrtle Realty is prepared to hold onto Capitol West until the economy recovers enough to possibly revive the housing proposal, or some other use or owner emerges.

Arena questions why The Hartford doesn’t itself buy Capitol West, demolish the building and add the acreage to its Asylum Hill campus.

The Hartford, through a spokeswoman, said in a statement: “For more than 10 years, Capitol West has been a barrier between Asylum Hill and downtown Hartford. Taking down the Capitol West building will help to make this a safer, more pleasant gateway between the neighborhood and downtown.’’

Scott Sawyer, a New London attorney involved in the biggest residential eminent domain seizure in Connecticut history (Kelo vs. City of New London that was heard by the U.S. Supreme Court in 2005), said the city and Capitol West’s owners each must weigh the financial burden of their choices, including going to court.

“I would be shocked if the owners do anything but count the beans and decide when it doesn’t make sense,’’ Sawyer said.

But, he added, “It’s up to the city to make a bona fide offer that makes sense.’’