Downtown Hartford’s biggest housing project — the $78 million conversion of the former Bank of America tower on Main Street — has stalled over uncertainty in a federal tax credit program that would finance a major chunk of the project.
“It has thrown a wrench into our timing,” Developer Bruce Becker told me.
The conversion of vacant, 26-story tower in the heart of downtown into 286 units has gotten tangled up in potential changes in the federal historic rehabilitation tax credit program. Becker is depending on about $15 million in funds from the tax program to cover about 20 percent of the Hartford conversion.
Since the spring, the Internal Revenue Service has been sorting out a court ruling that could place new requirements on investors in the program. Investors — ranging from corporations to wealthy individuals — are usually lining up for the chance to help finance rehabilitation of historic structures in exchange for the credits used to reduce their federal taxes.
Without clear direction from the IRS, investors in large projects such as Becker’s are sitting on the sidelines.
The issue is slowing projects nationwide, not just in Hartford, housing officials say.
Earlier this year, Becker said he was optimistic that the first tenants would be moving into the tower in late winter. But he is now targeting late August, but that’s only possible if the direction from the IRS comes this month.
Some of the smaller apartment conversion projects in downtown Hartford also have had the federal credits figured into their financing packages. But they have worked out other alternatives, basically because the tax credits represented a smaller portion of their financing.
For instance, the conversion of the old Sonesta Hotel on Constitution Plaza is getting a $2 million “bridge loan” from the Capital Region Development Authority.
Michael W. Freimuth, CRDA’s executive director, told me that isn’t possible for Becker’s project because it already has nearly $18 million in approved funding from CRDA. CRDA’s $60 million fund for investing in downtown Hartford housing projects simply isn’t big enough to devote more to the bank building conversion.
Freimuth said he has asked Gov. Dannel P. Malloy and the Connecticut Congressional delegation to lobby the IRS to speed up the issuing of the direction.
“We are going to get this deal done,” Freimuth said. “This is an important building right in the middle of downtown.”
Becker said he has been exploring other financing alternatives, but no matter what, the tax credits will be needed to complete the conversion.
Becker said contractors are lined up to begin the work once there is a decision from the IRS. Tenants also will be able to move in floor-by-floor while work is on-going in the building, Freimuth said.
The building is owned by New York real estate investor Michael Grunberg. Becker has an agreement to purchase the building for $7.5 million.