Project Promoting Homeownership At Capewell Site Needs New Backer
December 13, 2006
By JEFFREY B. COHEN, Courant Staff Writer
The investment firm backing the planned $23 million transformation of the former Capewell Horse Nail Co. factory into moderately priced condominiums has backed out of the deal, stalling plans to reinvigorate the neighborhood just south of Hartford's new convention center.
"After extensive due diligence on this project we found that it did not meet our investment criteria," said Kirk Sykes, a senior vice president at the New Boston Fund investment firm, in a statement.
The Capewell project is part of efforts to increase homeownership in the city, offering condos in a complex close to downtown. The project, with more than 90 units planned, is just blocks from the Connecticut Convention Center, the Colt Gateway apartment complex and the city's newly rebuilt Dutch Point public housing development.
New Boston's decision to pull out reflected concerns about the marketplace and profit margins - the fund questioned whether Capewell developer John Reveruzzi could keep costs down and sell condo units at a price that would bring a significant return, Reveruzzi said.
He said he will look for another backer.
There have been other condo development problems in the region lately.
Plans to turn a city-owned building at 101 Pearl St. into condominiums collapsed after the developer discovered escalating costs. The city is now considering working with another developer, who also may pursue condos there.
In West Hartford, plans to build a second complex of condominiums at Blue Back Square were changed to include apartments instead after rising construction costs caused some concern.
But developers say they are still optimistic about the condo market in Hartford, and Reveruzzi said he feels the Capewell site makes sense as condos. He is asking both the city and the state for extensions on their funding commitments while he seeks a new backer.
"The reason why we focused on housing is because the city's administration feels this is a strong need for the city of Hartford," Reveruzzi said.
John F. Palmieri the city's director of development, agreed.
"It's a good project, a historic building, and its location is perfectly suited for that type of development," Palmieri said. "I think the benefits certainly meet the challenge."
In September 2005, Mayor Eddie A. Perez pledged $2 million in city money in an attempt to jump-start the Capewell project. Reveruzzi had to come up with the rest of the financing within 18 months or the city could take over the property.
In April 2006, Reveruzzi announced that the New Boston Fund would be a partner in the deal. Since then, he and the fund went through a significant amount of "due diligence" that benefited the project, Reveruzzi said.
"We had been working with them on a number of things and we moved the project pretty far," he said.
For instance, he said, his development team brought in new architects to make the construction more efficient; trimmed the construction budget; agreed to demolish an adjacent building; and began plans for dealing with environmental problems at the Capewell site.
Also, as part of the work with New Boston, Reveruzzi signed an agreement with developer J. Martin Hennessey - a deal that splits the land on which the Capewell sits and gives Hennessey space to build three buildings of his own. One of those could soon be a hotel, Hennessey said.
While New Boston is pulling out of the Capewell project, the company said it is still interested in housing in Hartford. "We continue to see the need for mid-market homeownership opportunities downtown," Sykes said.
New Boston, in fact, is thinking about financing a 45-unit condominium project called Plaza Mayor, planned for the corner of Park and Main streets. That roughly $32 million project calls for 45 to 50 condominiums that would sell for $225,000 to $350,000.
"They are actively considering it," Theodore M. Amenta, one of Plaza Mayor's developers, said of New Boston's involvement. "Should we be able to satisfy their thresholds, I think they would be a willing participant in both equity and debt."
Other condo projects are moving forward.
Plans to turn the old American Airlines building on Main Street into condominiums are still in the works, as are plans by Northland Investment Corp. to build both condominiums and apartments at the site of the former YMCA at Bushnell Park.
"We are still very confident in the strong condo market in downtown Hartford," said Chuck Coursey, a spokesman for Northland - downtown's largest private landowner. In fact, visitors to the city's new 36-story apartment tower, Hartford 21, often express disappointment that they can't buy units, Coursey said.
"When people come into Hartford 21, one of their first questions is: Are these condos?" he said. "We see a strong demand for condos and we're not fazed by a momentary change in production costs."
Reprinted with permission of the Hartford Courant.
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