March 27, 2005
By JEFFREY B. COHEN, Courant Staff Writer
of the Colt Gateway project have a commitment from Sovereign
Bank for a $28 million mortgage, one that would allow
them to begin work to turn two armories into apartment
and business space, they said.
"We still have to close, but a commitment letter like this
takes a long time to get," said Robert A. MacFarlane, a
principal with Homes for America Holdings Inc. On Wednesday,
his company got a commitment letter from the bank that includes
$18 million for the south armory and $10 million for the east
armory - the building visible from the highway beneath the blue
onion dome, he said.
"We were very fortunate to meet with Sovereign Bank. They
are familiar with historic buildings," he said.
Together, the two Hartford buildings make up more than 70 percent
of the complex's remaining unrestored square footage, he said.
Once the official closing on the mortgage happens in the next
month, work will begin on the south armory no later than May,
he said. When that building is complete, roughly eight months
later, work will begin on the east armory, he said. Upon completion,
the two buildings will have up to 300 loft apartments and roughly
100,000 square feet of commercial space, MacFarlane said.
"We try to be very supportive of signature real estate
projects that are major linchpins in the economic revitalization
of the communities we serve," said Kevin Flaherty, a market
president for Sovereign Bank.
This is not the bank's first venture into large city projects:
It has provided a $17.5 million loan to develop the retail half
of the G. Fox building, as well as a $10 million loan for the
former SNET building at 55 Trumbull St., Flaherty said.
"All around Hartford, there is strong economic development," said
Sovereign Bank vice president Richard Staples, who worked on
this project as well as the G. Fox and SNET building deals. "The
prices have moved now so that Hartford is a favorable and attractive
place for investments."
"You come here from other markets and you can look and
see the potential," Flaherty said.
In addition to confidence in Hartford, though, the bank said
it has confidence in MacFarlane's company.
Looking at the developer's
projects nationwide, Flaherty said, "They
execute beautifully. ... Their track record is pristine."
The cost of the entire project is roughly $110 million, MacFarlane
said - with tax credits and grants adding up to more than $30
million, about $60 million in mortgages, and about $20 million
in private equity, he said.
MacFarlane's company is in the early stages of applying to the
city for $6.6 million in tax increment financing.
As part of the application
for tax increment financing, the developers must show that
without the assistance "the project
in question could not reasonably be expected to move forward," according
to the city's policy.
"To the extent that there's progress, it's a very positive
sign," said Mark K. McGovern, acting executive director
of the city's economic development commission. "It's very
good news, and it certainly bolsters their application to the
city for [tax increment] financing."
In this case, the "tax increment" is
the difference between what the Colt property is worth in property
taxes today and what it will be worth in taxes when the renovation
project is complete. Under a tax increment finance plan, the
city agrees to issue $6.6 million in bonds and gives the proceeds
to Colt Gateway. The city would pay off the bond debt using
50 percent of the higher amount of taxes it collects on the
completed project. The remaining 50 percent would be accepted
as tax revenue.
MacFarlane said the mortgage commitment is an important step
for the complex.
"This is very important because they are the two largest
buildings on the site," he said.
Reprinted with permission of the Hartford Courant.
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