The developer hoping to turn the historic Colt Firearms factory into apartments and commercial space says he will be forced to put the site up for sale if he doesn't get $9.6 million from the state soon.
But state officials say they won't put any more money into Colt Gateway until its developer gets his financial house in order.
It is a dire time for the 5-year-old, $120 million-plus project that just months ago seemed to be given a much-needed boost when Coltsville took a significant step toward designation as a National Historic Landmark. But that prestige has not brought in cash, and the Colt project is now mired in a financial tangle with a bankrupt lender, rising construction costs, and a slumping economy.
"We would never have reached for historic landmark status if we knew you couldn't get a small amount of funds from the state. ? It's chump change," said Robert A. MacFarlane, of Homes for America Holdings. If a check from the state doesn't come, he said, "we would not be able to complete the buildings. I guess we would put the property up for sale."
But while the state is committed to the Coltsville neighborhood and the property Mac- Farlane now owns, it is not committed to him, officials say.
"We have been asking Homes for America for many months now to get its financial house in order, and we still don't see that they have done that," said Joan McDonald, the state's commissioner of economic and community development. She noted that the state already has at least $4.5 million committed to the site.
"Get a lender to help you with your bad debt and use some of the collateral we've already invested [to attract that lender]," she said. "Just to write a check for $9.6 million, we're not going to do it."
The Colt Gateway project is an ambitious plan to turn the old firearms factory with its familiar blue onion dome overlooking I-91 into vibrant living and work space. Of its originally estimated $120 million price tag, about $65 million comes from construction loans, $35 million from tax credits and grants, and $20 million from private equity, the developers have said.
MacFarlane said Wednesday that the cost may now be as much as $30 million higher than first estimated if the site is to be developed as a national park. In December 2007, the Coltsville neighborhood that includes and surrounds the Colt facility got the approval of a committee of the National Park Service for designation as a national landmark. More approvals are still needed to cement the landmark status. After landmark status could come the bigger prize of status as a national park.
MacFarlane bought the site in January 2003. By May 2007, construction on the South Armory building slowed nearly to a stop as financial problems at USA Capital -- one of Colt's main lenders -- meant trouble for the project's remaining search for cash.
USA Capital originally held the main mortgage for the entire Colt project, MacFarlane has said. As the developer got construction loans to begin work on individual buildings at the site, he paid down the outstanding USA Capital debt.
Now, USA Capital holds mortgages on four of the site's properties with a total value of about $10 million, MacFarlane has said. The problem for Mac- Farlane is that USA Capital is now in federal bankruptcy and lenders, including the city, won't commit funding to the project as long as USA Capital is around.
The entire project is stalled, its finances in apparent disarray. The Colt's developers are late on their roughly $466,000 city tax bill, they have at least three contractors suing them in court, and they are paying roughly $105,000 a month in interest on a loan from Sovereign Bank.
The developers say that the $9.6 million from the state would allow them to attract another private loan. That loan would allow them to buy out USA Capital, which could then clear the way to the developer obtaining between $6 million and $8 million from the city, as well as additional private construction and permanent financing.
"If everybody is waiting for someone else, you won't get it done," admitted Daniel Hayes, senior vce president for Homes for America Holdings.
McDonald put the burden back on Hayes and MacFarlane. If they can't do it, maybe someone else could, she said.
"We are willing to invest more in the overall site as long as we have a developer who has the financial resources to take the next step," she said. "We're willing to work with them or any developer ... to make sound public investments."
Reprinted with permission of the Hartford Courant.
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