New London — The New London Housing Authority has plans to recoup, in one way or another, the $150,000 it contributed toward what are now stalled plans for an affordable-housing development off Colman Street.

The Housing Authority appropriated the money last year to help finance the $600,000 purchase of the former Edgerton School property by F.W. Edgerton LLC, the team composed of Affordable Housing and Services Collaborative Inc. and Peabody Properties.

The Housing Authority board of commissioners approved a draft agreement with F.W. Edgerton on Tuesday that formally classifies the $150,000 as a predevelopment loan and sets terms for its payback, whether or not a development is ever built.

The agreement asks that F.W. Edgerton provide a promissory note calling for a 2.5 percent interest rate on the loan and requires money be paid back at the time the project is funded. It also calls for the Housing Authority to have an interest in the Edgerton School property as collateral, should it eventually be sold.

The board voted 4-0 on the draft agreement without discussion. The board had met earlier this month in a closed-door session with its attorney to discuss "real estate matters," presumably about the proposed agreement.  

The agreement reaffirms a partnership that started in 2015 when F.W. Edgerton was chosen by the Housing Authority, prompted by a class-action lawsuit, to find new homes for the people living in substandard conditions in the 124-unit Thames River Apartments on Crystal Avenue.

F.W. Edgerton now has the land to build and has drawn up plans for a 120-unit development on the Edgerton School property but has not yet had the chance to build. The requested zone change that would have allowed the housing complex was rejected by the city’s Planning and Zoning Commission. The decision is the subject of an appeal pending in New London Superior Court.

The Housing Authority since has partnered with the city and applied to the federal Department of Housing and Urban Development for a demolition disposition, a move to essentially condemn the three high-rises on Crystal Avenue in favor of mobile vouchers allowing residents to live elsewhere with the same federal housing subsidy.

The board of commissioners, most of whom were not commissioners when the money to F.W. Edgerton was approved, had expressed surprise that there was no written agreement in place for use of the $150,000.

“There were no terms. From every angle I’ve looked at it, there was never a piece of paper that specified the purpose, terms and conditions in regard to if it was capital, equity or a loan,” Housing Authority Director Roy Boling said.

Boling is the third director to take the reins at the authority since the commission terminated former Director Sue Shontell's contract.

The draft agreement passed Tuesday will go to the authority’s attorney before being presented for signing by the Housing Authority and representatives from Peabody and Affordable Housing and Services Collaborative. Boling said they already have agreed in principle on the terms of the agreement.

g.smith@theday.com