Defaulted agreement places Capewell project at risk for foreclosure
By LAURA SCHREIER, Hartford Business Journal Writer
December 3, 2007
When developer John Reveruzzi proposed converting the former Capewell factory into 100 condominiums, the Capital City Economic Development Authority and the City of Hartford fully embraced the project, putting aside nearly $4 million for the project.
But the promise of Capewell was never realized, and the property in Hartford’s Sheldon-Charter Oak neighborhood is now facing possible foreclosure by the city. Despite years of extensions and a $2 million bailout by the city to get the project off the ground, the property remains vacant and dilapidated.
Michael Grunberg, a principal with Grunberg Realty, said the city and CCEDA have been far too patient with the Capewell project as a whole, leaving developers like him on the sidelines while city money and time gets swallowed up by the botched project.
It’s been three years since the Capewell project began, said Grunberg noting no progress has been made.
“It’s a travesty of political bungling,” he said.
City officials point to a defaulted 2005 land deal between the city and Reveruzzi. The agreement, contingent upon Reveruzzi completing the project within a specific timeline, gave Reveruzzi $2 million to help pay off debts on the land. That timeline has been long derailed, and the default has placed the property in limbo as the city contemplates its next move, which could include foreclosing on the property.
“That’s one of the options we’re reviewing,” said Carl Nasto, Hartford’s deputy corporation counsel. “[Reveruzzi] hasn’t fulfilled his obligations with respect to the construction.”
The project’s price tag as of 2004 was $20-$25 million, but Reveruzzi failed to secure the money necessary to finance the project. His refusal to sell the property or settle up with the city has negatively impacted the development dreams of another developer, J. Martin Hennessey.
Delays Hotel Project
While the condo project stalls out, Hennessey’s related hotel development also is caught up in red tape and financing troubles.
In early 2007, Hennessey talked of starting construction by mid-2007 on his plans for two hotels adjacent to the Capewell property. Since, the plans have been scaled back to one hotel, a Candlewood Inn, and the land title itself is in escrow, but still owned by Reveruzzi.
Reveruzzi is obligated to release that parcel of land when the city resolves its mortgage issues, said Hennessey, noting that the hotel project has captured the interest of a potential investor.
Hennessey said that it’s just a matter of getting the city to release the land, and concrete financial commitments should follow for his hotel project.
But the city has already offered Hennessy an opportunity to fast-track his project: With $150,000 up front, Hennessey could get official ownership of the land, contingent upon paying an additional $500,000 later, when investors put down money on the project. However, Hennessey is balking at the $150,000, claiming it is too much of a personal commitment, adding, “I don’t want to cough up that kind of cash.”
Despite delays to the hotel idea, CCEDA still has $3 million set aside for parking and other infrastructure expenses for the parking component of the hotel project.
“It’s kind of in the city’s hands,” said CCEDA director James F. Abromaitis, noting that Hennessey has been diligent with his work on the project by keeping in contact with community groups and working on financing.
It’s the Reveruzzi piece of the puzzle that needs sorting out, Abromaitis said.