New London — A last-minute change in how the developer would finance the first new construction in Fort Trumbull is the reason Monday’s groundbreaking for the $24 million Village on Thames project was canceled.
The executive committee of the Renaissance City Development Association voted Friday morning to reject the latest proposal by the developer to self-finance the project, saying the agency could not certify to the state Department of Economic and Community Development that certain terms and conditions were satisfied prior to the scheduled closing, as required by the development agreement.
During its regular meeting Friday, the RCDA said it was informed Tuesday that Riverbank Construction was no longer going to obtain financing from M&T Bank, which is headquartered in Buffalo, N.Y., and instead was going to fund the project itself.
At 9:51 a.m. Thursday, Riverbank submitted an alternative “last offer” for self-funding for the development of Parcels 2B and 2C, although further details were not disclosed Friday. RCDA canceled the closing to transfer title to the property to Riverbank Construction that same day.
Prior to the vote Friday, RCDA met in executive session for more than a hour.
Karl-Erik Sternlof, RCDA’s first vice president, said the development agreement allows for self-funding, but certain terms and conditions had to be met prior to any closing. He said he could not disclose those terms because the issue is still being negotiated.
Michael Joplin, RCDA president, added that the proposal wasn’t rejected because of insufficient funds. Rather, the structure of the deal needs to be worked on, he said.
Joplin said Riverbank still has several options that would allow it to proceed with the project. He said Riverbank could go back to its original plan to seek financing from M&T Bank, show the RCDA that it has fulfilled the requirements of self-funding or ask for a two-week extension.
Joplin said it is his understanding that Riverbank thought it would be a better business deal to self-fund the project rather than abide by the terms and conditions of the bank loan. He said he expects to hear from Riverbank by early next week.
Riverbank has paid the city for $83,000 in building-permit fees. A city building official said Friday that Riverbank picked up the permits Thursday.
While the 2010 development agreement between Robert Stillman, an owner of Riverbank Construction, and the RCDA was set to expire at 5 p.m. Friday, Sternlof said the RCDA does not plan to hold Riverbank in default and is hopeful that something will be worked out. “We’re concentrating on what we can do to move the project forward,” he said.
James Watson, spokesman for the DECD, said his agency has been in regular contact with representatives of RCDA and continues to be supportive of the project.
“The department recognizes and shares RCDA’s concern that adequate protections and security arrangements be part of the project financing in order to guarantee the project’s successful completion,” he said. “We look forward to receiving confirmation and supporting documents from RCDA indicating that the developer has satisfied its obligations under the development agreement. At that time, DECD will conduct its own review of the materials and, if satisfied, will release its mortgages.”
Stillman was named preferred developer in 2010 and proposed 103 housing units, which at first were going to be condominiums but later were described as rentals.
Late last month, RCDA and Stillman announced that financing was in place and that construction would begin Monday. The first phase of the project was going to cost about $8 million. Stillman said 15 units would be built on Parcel 2B. Five units in four buildings would face Columbia Cove, and another five buildings, with a total of 10 units, would be angled toward the water. Detached garages with gabled roofs would be built behind the units.
Parcel 2C, which is adjacent to Fort Trumbull State Park, was to have 19 units. One building would have four units with garages below the living areas. Six other buildings would include three-bedroom, single-family units with attached garages.
“All delays are disappointing after three years, but we’ll see what next week brings,” Joplin said.
Stillman could not be reached for comment Friday.