Norwich - A $3 million low-interest state loan announced Thursday for the project to convert the historic Ponemah Mill into apartments should provide the financial and political support the massive project needs to complete private financing and resume work, the project developer said Friday.
Louis Kaufman, attorney and spokesman for Onekey LLC, attended Gov. Dannel P. Malloy's press conference in Hartford Thursday, when the governor announced major commitments to boosting affordable housing in the state for the next decade. In all, several grant and loan programs announced totaled $500 million in value.
"This gives us a jump start and lends credibility in our discussions with a couple other lenders," Kaufman said. "By the state acting favorably on our project, that is a very clear signal of support. The money is extremely helpful and so is the support."
The Lofts at Ponemah, a 116-unit project at the Taftville mill, was awarded $3 million in low-interest loans as "gap financing" through the Competitive Housing Assistance for Multifamily Properties (CHAMP) program for the $26.6 million first phase of a much larger project.
Onekey's subsidiary, Ponemah Riverbank LLC, received city permits several years ago to convert Ponemah Mill No. 1 - the former Helikon Furniture building - into 300 apartments.
Kaufman said the main front building, not including two attached rear wings, originally was envisioned to have 237 apartments. But that's too much in this depressed real-estate economy, so the project has been scaled back at first, Kaufman said.
"That's a large number to flood the market," he said, "so phase one is half that building, and the exterior improvements."
The first five floors of half the building will house the first units, at least 26 of which must be affordable housing units as a condition of the state loan. The second phase will be the second half of that main building, Kaufman said, and the third phase in the future would be the rear wings.
"You look at it and it's just majestic and beautiful," Kaufman said. "It's awesome inside, too, the magnitude of it."
Kaufman said he hopes the first completed units will generate enough interest to launch the second phase. The grounds of the mill, with walkways along the Shetucket River and views of the active hydropower dam that operates in a lower rear level of the building, will be added amenities to future tenants, he said.
The historic mill is the highlight of the Taftville National Historic District and is eligible for tax breaks through the city's Mill Enhancement Program.
On Monday, the City Council will hold a public hearing at 7:30 p.m. at City Hall and is expected to vote on a revision to a tax break schedule approved several years ago when the project first was proposed. The amendments change the dates and give new time frames for construction, city Director of Planning and Development Peter Davis said Friday.
The project would not need new planning permits, he said.
The new proposal calls for construction to start no later than July 1, 2013, and be completed by July 1, 2016.
The owners would pay taxes only on the existing value through the three-year construction period and for five years after the project is completed. Then property taxes on the new value would be phased in at 20 percent per year to the full amount in the sixth year.
The ordinance also would waive all city building permit fees for the project, except the costs to hire third-party professionals to review the complex plans. Those costs would be paid for by the developer.
The entire package of tax breaks is conditional upon the developers maintaining the historic integrity and value of the building.
Robert Mills, executive director of the Norwich Community Development Corp., said the combination of state low-interest loans, federal historic tax credits and city incentives are needed to renovate gigantic vacant 19th century mills such as Ponemah.
"The gap in the cost to complete these beautiful mill redevelopments usually exceeds the value that can be used to calculate the amount of financing to complete them," Mills said. "Connecticut's CHAMP program, state and federal historic tax credits, and many other forms of capital are required to finance the projects that define this community."