Norwich – The City Council on Monday agreed to give the developer of the Reid & Hughes building a 30-day extension to its Nov. 24 deadline to secure funds for the initial stabilization phase of the project, as the developer expressed concern that the rising cost of temporary efforts to shore up the building has put the project in jeopardy.

The Women’s Institute for Housing and Economic Development has secured the necessary $500,000 to do the temporary work and give it time to secure full financing for the $6 million renovation project. But the money is in the form of a $50,000 forgivable loan from Connecticut Main Street and a $450,000 loan from the Local Initiatives Support Corp. The institute hopes to convert more of the funding into grants to make the project more viable.

The council voted 6-0 with one alderman absent to approve the extension, and on Dec. 18, officials from the Women’s Institute will give a presentation to the incoming City Council to be sworn in Tuesday on the status of the project.

In a letter to City Manager John Salomone dated Nov. 22, Women’s Institute Executive Director Betsy Crum wrote that the projected cost of the stabilization was much higher than originally estimated, making the project less viable.

“The combination of increased costs over the initial estimate (the current figure is about double where we started) and the lack of easily accessible grant financing has pushed the financial risk beyond where my Board is comfortable,” Crum wrote.”

She wrote that the board was concerned about owing a substantial loan amount for the stabilization without a future guarantee that the entire project could receive financing.

At the Dec. 18 City Council meeting, the group hopes to discuss with aldermen “the possibility of the city taking a greater role in mitigating the risk during stabilization,” the letter stated.

“I continue to believe that, with the city as a partner, there can be a viable path forward for this project,” Crum wrote.

The city approved the development agreement with the Women’s Institute for the decaying building after first voting to bond $800,000 to tear down the historic 19th century retail store. The state Historic Preservation Council voted unanimously Dec. 7, 2016 to deny the city’s request to tear down the building and threatened to seek a court injunction to stop any planned demolition.

Salomone told the City Council Monday that if the 30-day extension was not granted Monday, and the agreement terminated, there could be no action on any planned demolition within the next 30 days. If the project ultimately fails, he would have to contact the Historic Preservation Council to seek permission again to demolish the building.

c.bessette@theday.com