Hartford Business Journal

HARTFORDBUSINESS.COM | JANUARY 22, 2024 21 Financing for business success made Simple. bankatpeoples.com/businessteam Member FDIC/Member DIF $600,000 Equipment Line of Credit Construction Company Hampden County, MA $13,900,000 Commercial Mortgage Multifamily New London County, CT $6,000,000 Equipment Line of Credit Trucking Company Franklin County, MA $5,475,000 Commercial Mortgage Retail Pharmacy Worcester County, MA $900,000 Term Loan Wholesaler Hampshire County, MA $217,000 Commercial Mortgage Residential Investment Middlesex County, CT Steve Parastatidis F I R S T V I C E P R E S I D E N T C O M M E R C I A L B A N K I N G Joseph Westcott F I R S T V I C E P R E S I D E N T C O M M E R C I A L B A N K I N G Chris Scott A S S I S TA N T V I C E P R E S I D E N T C O M M E R C I A L B A N K I N G surrounding communities. Most of its focus has been on supporting new housing development in downtown Hartford by providing low-in- terest gap financing to developers building new multifamily projects. In the past, Freimuth said many downtown Hartford devel- opments stalled because there was a huge disparity between the cost of a housing project and the value of those properties upon completion. Essentially, rents developers could charge didn't support a project's costs. "CRDA was set up to finance that gap between what it costs to build a building and what it's worth. And we were able to use our funds in a very flexible way," he said. Since 2012, CRDA has invested about $172 million in loans and equity investments, leveraging $740 million in development that resulted in more than 3,300 new apartment units, Freimuth said. Some CRDA-backed projects — like The Pennant at North Crossing, a 273-unit apartment complex near Dunkin' Park — have been ground-up developments. Others, like the 157-unit, Spectra Pearl apartments on Pearl Street, converted former office buildings into residences. Funds for CRDA-backed loans are typically authorized by the state Bond Commission. Developers apply to CRDA with funding requests, which must ultimately be vetted and approved by the agency's board of directors. CRDA loans can be used for anything from environmental cleanup, to demolition or even property acquisition. "Our funds are lent or invested, not granted. They're generally gap fillers, they're very flexible," and they're meant to come back, Freimuth said. He added: "We fill the gap. We don't tell you how to use the money." CRDA has a good track record, although it has hit the occasional road bump. It had to write off $5 million of a 2016 loan provided to a developer (50 Morgan Hospitality Group LLC) who purchased the former Radisson Hotel in downtown Hartford, at 50 Morgan St., and planned to convert most of the property into apartments. However, the developer eventually lost the property to foreclosure. CRDA also serves as an advisory board, and Freimuth said that func- tion could be an asset for smaller towns that seek MRDA project funding or need guidance. CRDA was invited into Hartford border towns, like Newington and Wethersfield, to serve as a redevel- opment agency functioning under municipal control. "We don't fly our flag there, we fly the town flag, and we just help a town carry a project from point A to point Z, and we're done," Freimuth said. "What that does is allows towns to basically hire a redevelopment staff for purposes of a specific project or funding need, and not attempt to create and sustain a redevelopment entity long term." Statewide opportunities Thomas Hyde, CEO of the Naugatuck Valley Regional Devel- opment Corp., said CRDA does a good job in protecting state money and ensuring the investment comes back for future projects. He said concepts like MRDA would provide tremendous oppor- tunities for smaller towns along the Waterbury rail line like Derby and Naugatuck, which are already underway with new train station projects. Many towns in the Naugatuck Valley are old manufacturing communities with great development potential, but also tremendous obstacles, including brownfield sites that are complicated and expensive to clean up, Hyde said. "There's been a lot of money put into the railroad, and now we have to start looking at areas around the railroad for transit-oriented develop- ment opportunities," Hyde said. "The more we can focus funding to those areas, where we know there is going to be a gap in the funding and help get developers to the table, I think the more projects we'll see come to fruition." New train stations for the Hartford train line have helped spur transit-oriented development in central Connecticut. HBJ PHOTO | STEVE LASCHEVER Thomas Hyde Michael Freimuth

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