Norwich — The Norwich Community Development Corp. moved into its new Foundry 66 shared workspace at 66 Franklin St. in early October, having invested nearly $300,000 in renovations of the former Norwich Bulletin building for the innovative business plan aimed at bringing life back to lower Franklin Street.

But the city's chief economic development agency did not have one essential document critics say should have been at the top of the list for the project: a written, long-term lease for the building space.

Instead, NCDC President Robert Mills said, the agency had a verbal agreement with building owner Timothy Owens and a draft proposed 10-year lease with consideration for the significant renovation investment NCDC made to the building.

The lack of a lease has become controversial in recent weeks, as NCDC continues to recover from an accidental fire Oct. 15, one day after the grand opening ceremony. City officials question how and why the agency invested so much money into building improvements and then moved in without the protection of a long-term lease.

Mills said NCDC paid $280,000 to renovate and furnish the first floor into offices, desk cubicles, business lounge space and meeting rooms. NCDC hasn't paid any monthly rent to Owens, Mills said, as the verbal agreement called for free rent in compensation for NCDC's renovation costs. NCDC expects the written lease to include compensation for the renovations.

“We had a lease document in our hands almost immediately,” Mills said. “Then it got stretched out. There was the fire, then the holidays, and (travel schedules). Nobody ever thought we would be without one for this long.”

And now “differences” have emerged between the initial verbal agreement and the recent lease negotiations, Mills said, including a higher rent price. That would hurt NCDC's business plan that had called for using income from business memberships in the workspace facility to pay for the lease and for the agency's staff. Now, Mills said, that income in the first year might just cover the lease and operation costs.

Owens on Tuesday, however, denied that he has raised the lease price and said he actually lowered the price substantially and agreed to pay the cost of more renovations than originally planned on the second floor. NCDC, he said, would manage that space as an expansion of Foundry 66 and would raise more revenue at a relatively low cost to the agency.

“I don't understand where the controversy is coming from and why a city wouldn't support an economic development project like this that will bring jobs and economic opportunity to a city that really needs it,” Owens said Tuesday. “It doesn't make any sense to me.”

Neither party would divulge proposed lease prices Tuesday, and both said they expect to have a lease in early February.

Mills said Foundry 66 income from the rented start-up office space, cubicles and flex lounge space is expected to be about $60,000 for the first year that started in October. The fire was a significant setback, although NCDC's insurance covered the entire $64,000 damage costs, Mills said. Before the fire, NCDC had hoped for income of about $100,000 in the first year.

Mayor Deberey Hinchey and Alderwoman Stacy Gould, both members of the NCDC board of directors, said the board was not aware that there was no lease when the agency moved from its former location at 77 Main St. NCDC also had no lease there and operated on month-to-month rent payments.

The board has discussed the lease negotiations in executive session at recent meetings, including last Thursday, and Hinchey said she has expressed the urgency of the need to complete those negotiations. The city budget includes $135,000 for NCDC this year, and Norwich Public Utilities contributes $150,000 per year to the agency.

“They're negotiating with the owner of the building in as best faith as they can,” Hinchey said Tuesday. “I'm sorry about the negative connotation associated with this problem, because this is a wonderful idea and has transformed that block.”

Gould said she was upset when she learned NCDC had moved in without a lease and administrators didn't inform the board of that situation ahead of time. She said she learned about it after the fire.

“I was upset we didn't have all of our I's dotted and our T’s crossed,” Gould said. “They keep telling me and the rest of the board that this is going to be remedied shortly.”

Alderman H. Tucker Braddock, who is not a member of the NCDC board, has attended recent meetings and voiced his criticism over the lack of a lease.

“This is Business 101,” Braddock, a retired business owner, said. “You get a lease, and then you spend the money to refurbish the building. You don't do all the things without a lease.”

c.bessette@theday.com