(The following story by Allan Appel appeared on the New Haven Independent website on January 3.)
NEW HAVEN, Conn. — “It sucks,” said Jorge Perez. Arlene DePino said she was uncomfortable, and recused herself.
The two aldermen sit on the city’s Litigation Settlement Committee. They were reacting Wednesday night to a vote to settle a legal appeal by a politically connected waste company that will now pocket half a million dollars in tax breaks for allegedly being a “railroad” company.
At issue was whether properties owned by the Anastasio family (three related parcels in all), which are leased from the CSX Railroad Company, and their business, which moves solid waste in railroad cars to the Midwest, “operate exclusively for railroad uses.” If so, the tax assessment could not stand, and the city would be out $480,000 in taxes accumulated so far — unless the city chose to contest this course.
However, the risk would be going to court, losing, and facing legal expenses and potentially large settlement costs, city officials argued in defending the decision not to fight the appeal.
The hefty amount has accumulated since 2003, when the Anastasios established the “Circle of Life” solid waste transfer station on Middletown Avenue. CSX Railroad owns the three properties in question. The land is leased to three separate entities, all run by the Anastasios: Circle of Life LLC, a transfer station; Nicesca LLC, a real estate company; and A Anastasio & Sons Trucking Company. Each parcel is appraised at over a million bucks. Circle of Life fought hard with neighbors and the state Department of Environmental Protection for a permit to consolidate solid waste and ship it out to the Midwest by train. In 2003, the DEP awarded them a five-year permit, and the trash-crunching was ready to go.
The city’s then-tax assessor, looking at the length of the leases and the purpose of the company, decided the property should be taxed like any other business. So the Anastasios filed an appeal to obtain the tax exemption. The appeal had been tossing around for four years until the litigation committee voted Wednesday night in the offices of the city corporation counsel.
The parties had talked in pre-trial hearings months ago. At last month’s committee meeting, city Corporation Counsel John Ward (pictured here with an assistant corporation counsel, Audrey Kramer) was prepared to agree not to challenge the Anastasios’ appeal. After Perez raised some concerns (click here for the fuller story), including a flurry of calls lobbying him to get on board, corporation counsel decided to do further research. Wednesday was the night to unveil the legal findings to committee members, and take a vote.
In addition to the two alders, the Litigation Settlement Committee includes Chief Administrative Officer Rob Smuts, Budget Director Lawrence Rusconi, and Controller Mark Pietrosimone. On this important night, DePino recused herself from voting because, she said, her husband Chris DePino’s company might have the Anastasios’ business as one of its lobbying clients. She wasn’t sure, but just in case, she passed.
That presented quorum problems because Smuts was late and could not be found. When he did arrive, the committee went into executive session, and the press was asked to leave, so that the city’s legal strategies might not be revealed. When they finished, the press was invited in, and the vote taken: As expected, DePino abstained; Rusconi, Smuts, and the controller, represented by Kevin Berry, sided with corporation counsel and voted not to contest and to settle the assessment appeal. In other words, to forgo $480,000 in taxes.
Only Perez voted against it. He said he was constrained from discussing the matter with the press. But if vocabulary is an indicator, Perez obviously appeared disgusted with the outcome. “It sucks,” he said, “but that’s democracy, sometimes. It sucks when you’re not on the majority side.”
Of the vote, City Controller Rusconi said, “Look, I’m not a lawyer, and [city lawyer] Carl Amento laid out the case law addressing four or five points that had been raised, and it satisfied a majority of the committee. Am I happy about not having that revenue for the city? Of course, not. But when a legal recommendation is not followed, there can be a heavy price to pay.”
Rusconi said it was very different from the Vollero case, an employment discrimination case, which recently went badly against the city. “I voted to accept a settlement in that instance; we didn’t, and I felt the judge and the jury took it out against us.”
What about the public perception, in some quarters, that the Anastasios, who contribute to political campaigns, were getting a break because of political connections? “That’s baseless,” he answered. “The case law was simply on their side, not ours.”
The law in question is Sec 12-255 of the Connecticut statues, which holds that railroads, which pay gross receipts to the state and federal government, cannot be taxed by the city as long as the business is being used exclusively for railroad purposes.
“We’re working hard,” Rusconi went on, “to get as many properties on the tax rolls as possible. It’s the last thing I want to do, but I’m not a lawyer. I need to follow the legal recommendation, which was laid out tonight. It’s on their side; they’re exempt. The case law is against our proceeding, but, listen, we are absolutely doing our best that people who are legally bound to pay taxes do so, so that no one gets away.”
David Ambrose, the city assessor (not a member of the committee, but who was in attendance), said that most of his cases come down to a question of evaluation, a dollar amount. “In this instance, it’s win or lose, exempt or not exempt. And that’s it.”
What if anything is to be done? “They will always be under our scrutiny,” Ambrose said, “to make sure their business is operating as intended, for ‘railroad purposes.’ We make spot checks, you know.”
Was there a next step for Perez? “What next steps?” he said. “They voted that it’s a railroad, and they’re exempt. I can’t do any more. But maybe some private citizen would like to sue.”