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Hartford's Rush To Spend

Head Of City's Democratic Party Benefits From High Price Paid

By JEFFREY B. COHEN And DANIEL E. GOREN, Courant Staff Writers

November 18, 2007

In a rush to spend money before a federal deadline expired in 2006, the administration of Mayor Eddie A. Perez paid $120,000 to buy a property owned by the head of Hartford's Democratic party despite appraisals for the property that were far lower.

The city paid Noel McGregor Jr. for his old service-station-turned-Jamaican restaurant on Albany Avenue as part of a project to build an Upper Albany neighborhood gateway. Some Perez critics say the price was about political influence, but the city says it was about getting the deal done. And in a hurry.

McGregor's property was one of several the city bought in June 2006 as part of a push to spend $6.4 million before the money would be forfeited. The proceeds were left over from the 2004 sale of the Civic Center garage, and federal tax law required it be used within two years on capital projects. Other possible options suggested by the city treasurer included spending on citywide streetscape improvements, parks projects, unpaid school construction bills and new firetrucks.

City Attorney Carl Nasto said the city overpaid because of the looming federal deadline and to avoid eminent domain and the cost of litigation. Perez's "only charge to me was, 'Don't treat [McGregor] any differently than anyone else,'" Nasto said.

Plus, the timing put city negotiators in a tough position.

"They all know you're coming, they all know you want the property, and we wanted to do it within a certain time frame," Nasto said. "Do you want to acquire it, or do you want to go to court ... and acquire it there?... Our feeling was, in the scheme of things, could we go a little above the appraisal price ... to avoid litigation? Yes, and that's what we did in this case."

The city spent the $6.4 million on nine separate projects, including more than $2.2 million on a parking lot it would later lease to North End Perez ally Abraham L. Giles, $800,000 for Park Street improvements by city contractor and Perez friend Carlos Costa, a new South End senior center, and a city-run wireless Internet network.

The year-old deals were seized upon by Perez critics in the waning days of his successful re-election bid. They argued that the payments especially the one to McGregor smacked of favoritism.

"McGregor received from city hall an amount that was some three or four times the true fair market value of this property," said Robert Ludgin, a lawyer who ran against Perez in 2003 and who represented McGregor's tenants in the building. "That can only be explained by his close alliance with the mayor and the mayor's involvement in the transaction."

Perez's spokeswoman, Sarah Barr, said Ludgin is wrong.

"This is not true," Barr wrote in an e-mail. "Mr. McGregor was not treated any differently from anybody else."

In 2005, the city council approved spending the money on several different capital projects. Finance Director Thomas Morrison said decisions on which projects to fund were made collectively by staff without regard to politics. And Barr wrote Friday that the projects were both critical to economic development and years in the making.

"The Mayor, City Council, and residents all agreed on this through an open and public process that these community development projects should proceed. Plus, the land was ready to be acquired," she wrote.

But almost seven months after getting approval, the city hadn't spent a dime.

"The money must, by law, be spent no later than June 30, 2006, or we will have to forfeit it," wrote City Treasurer Kathleen Palm Devine in an urgent March 2006 letter to Perez and his staff. "[W]ith our current budget issues and our plans for new bonds, to forfeit this money would be lamentable to say the least."

As part of that final push, the city bought three properties in the Upper Albany area, including McGregor's, in June 2006. It paid more than its appraisals called for in each case. More than a year later, the sale of the fourth parcel is still unfinished, and the projects wait.

The appraisal the city relied on for the Woodland Moving and Warehouse Inc. complex at 426 Woodland St. was $530,000; it paid $600,000. The appraisals the city relied on for an old auto repair garage at 1135H Albany Ave. were for $250,000 and $300,000; it paid $330,000.

With McGregor's property, the city had two appraisals one for $23,000, the other for $55,000.

And when McGregor balked at city negotiator Harvey Sinclair's highest offer of $66,000, Nasto took over the negotiations, he said.

They reached $120,000 based on an appraisal paid for by McGregor that came back higher $95,000 in large part because it included the value of a 10-year lease that McGregor had with the tenants of his building.

Ludgin who got involved as an attorney for McGregor's tenants when McGregor was claiming he owned their business questions the deal.

McGregor was arguing he owned a restaurant that he hadn't owned for more than a decade, Ludgin said. Only after it was proven that Ludgin's clients were the business' true owners did McGregor switch his tune and start arguing that the lease adds value to the property, Ludgin said.

Second, his client was paying $900 a month without a lease for years, and continued to pay $900 for more than a year after signing the lease that McGregor gave to the city. That lease is simply a "phony," Ludgin said, because it indicates the rent is $1,200.

Nasto has said he was aware of these issues, but they didn't change his position. The goal was to get the deal done, he said.

"From our perspective, the consequences of not reinvesting that money were far greater," Nasto said.

McGregor said the deal had nothing to do with favoritism.

"I didn't get any special treatment," McGregor said. "I really don't want to talk about this. This is something that is outside of politics outside of a lot of things. I don't want to talk about it. This is a personal part of my business, and if you want to ask me questions about politics, that is fine, but not about this."

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.
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