Norwich — An $8.8 million proposed Main Street renovation project got a second chance at support through the city’s federal American Rescue Plan grant Monday — with some conditions.

The City Council voted 6-0 to approve $800,000 for the project, two weeks after stripping the funding by setting limits on amounts for single projects.

The $8.8 million renovation of two mostly vacant buildings at 77-91 Main St. was put in jeopardy Sept. 7, when the council placed a cap of $300,000 per project on a $2 million grant to the Norwich Community Development Corp. Prior to the council vote, the NCDC board of directors had approved a $400,000 grant and additional $400,000 loan to the Main Street project.

Developer Norwich Luxury Apartments LLC has proposed renovating the two buildings into 42 market-rate apartments and eight commercial spaces on Main and Water streets. The developer purchased the property in August for $1.8 million.

The City Council on Monday granted the $800,000 to NCDC, specifically for the Main Street project — a $400,000 matching building code upgrade grant and a $400,000 loan.

The council on Sept. 7 objected that NCDC had approved funding for the Main Street project prior to the council vote on distributing the first round of ARP money. And the council’s majority four Democratic aldermen opposed a single development receiving nearly half of the total $2 million NCDC money economic development money. They preferred much of the money be reserved for small businesses and directed at least $400,000 of the $2 million be reserved or businesses with 10 or fewer employees.

"Is it your intent that this limit would not allow that project to go forward?" Mayor Peter Nystrom had asked Democratic Alderman Derell Wilson at that meeting. "Because I can tell you the financing of it is contingent on it, and thus that project in essence, would be dead now."

During council discussion Monday, Democratic Council President Pro Tempore Mark Bettencourt asked for quarterly updates on the Main Street project as one condition. And if the project is not completed by the end of 2024, the city could recapture the funding from NCDC.

Wilson said the conditions were important to safeguard the city’s funding for the project.

Republican Alderwoman Stacy Gould said she was disappointed the council removed the project two weeks ago. She called it important to put “feet on the street” downtown and spur more development to support the tenants.

NCDC President Kevin Brown said the Main Street project would bring private investment downtown, and when the project is completed, it would yield an estimated $128,000 in city property taxes.

Norwich Public Utilities General Manager Chris LaRose said the finished renovation also is expected to bring in about $100,000 in utility revenue to NPU, which then distributes 10% of its revenue to the city.

NCDC attorney Mark Block told the council that both the grant and the loan would not be paid to the developer until the project is completed, assuring that the city money would not be at risk.

Resident Beryl Fishbone questioned how the project funding would work, how and when the loan would be repaid and asked for more accountability for all the ARP money given to NCDC.

Fishbone said, “Since the City Manager, Mr. (John) Salomone, Mayor Nystrom, City Councilors Ms. (Stacy Gould) and Mr. Bettencourt and Mr. LaRose of NPU are all on the NCDC board of directors, it should not be at all difficult to give a quarterly report of the funding with a bit of detail how all of the city is benefiting from the use of the ARP funding.”

c.bessette@theday.com