Published April 24. 2013 4:00AM
There are two possible scenarios for what's going on with the prime city land the New London Development Corp. is planning to give away before the middle of next month, and both are vexing.
Scenario One is that the chosen developer is proposing to "self-finance" the apartment complex at Fort Trumbull because it can't find any banks to lend the money.
Under this scenario, the NLDC has agreed to some arrangement by which the developer would somehow prove the money might eventually be available to build on the land it will get for free.
But no one - no city officials or anyone from the development agency - will explain how the self-financing would work and what guarantees would be in place. Never mind Freedom of Information laws that should guarantee some transparency when you are giving away publicly owned land.
I worry that Scenario One might be similar to what happened to the Capitol Theater, after the city gave it away for $1 to someone who promised to do all kinds of grand things to the building in a development agreement, but then did nothing.
Scenario Two, which I suspect is more likely what is happening, is that not only has the developer come up short on bank financing on a project that was supposed to begin last summer, but arrangements for the self-financing are not working out so well, either.
We are in the last stretch of delay mode, on a new scheduled drop-dead deadline of May 16, a date which was set in the latest development contract extension.
The project has also been divided into phases, with the first one now scheduled to create just 34 rental apartments.
Pretty soon, at this rate, it could be down to a two-family house on free land, about the nicest waterfront site in the city, with tax abatements to boot.
The NLDC (Mayor Daryl Justin Finizio has renamed it Renaissance City Development Association, but I prefer the name NLDC as long as all the same people and attitudes are in place) is officially silent on the subject of financing.
The agency's first vice president, a lawyer, asserted last week that information about financing would not become public until after a closing in which the land is given away has taken place.
Mayor Finizio was the first to disclose that the developer is now proposing self-financing.
The mayor offered this explanation last week, when no one from the development agency would say anything. But the mayor said he is not involved with the "details" of self-financing and could not say what guarantees would be in place.
He referred questions about financing details to his staff, who dodged them.
The only reassurances I heard, in asking about the Fort Trumbull land giveaway, came from a deputy director of the Connecticut Department of Economic and Community Development, which still has mortgages on the Fort Trumbull property because of the tens of millions of state dollars invested there.
Ron Angelo, the deputy commissioner, first of all, said the state would not put its Fort Trumbull lien releases in escrow with the redevelopment agency's attorney, as the agency requested, so that it could proceed with a closing without further state review.
The state will exercise its own final authority.
Angelo also said that, prior to closing, there needs to be a financing document prepared, and in the event of self-financing, there needs to be bonds or insurance or something similar in place to prove the financing is secure.
In other words, showing a bank account with money in it is not sufficient.
The developer produced a check Tuesday for the building permit fees, which is an encouraging sign, though certainly not a guarantee of funding.
No one from the Stillman Organization, which is proposing the project, has returned my messages asking for comment.
The company lists the New London project as one of four "latest offerings" on its website. The other three are long unsold Fairfield County mansions, not yet built.
The developer uses two different business addresses. One is on the site of a proposed $4.5 million mansion in Westport, which currently has a ranch house on it. The developer bought it in 2005.
The other business address is a residential penthouse in Manhattan. It doesn't seem to be for sale, but it was listed in 2010 for rent for $30,000 a month.
I never thought the apartment project for Fort Trumbull was a good one, not when the city needs more homeowners. I also didn't think a suburban-style apartment complex was worth encouraging with hefty tax abatements.
Still, the developer got a green light and should be able to proceed, as long as the public gets a look at where the money is coming from and the developer guarantees the money will be in place from start to finish, as the development agreement dictates.
Otherwise, the city is lucky to control, as the economy turns, much developable land in a magnificent setting that might even soon be across from a National Coast Guard Museum.
Why settle for less than best?
This is the opinion of David Collins.