The would-be developers of an apartment and retail project planned for the 800 block of Massachusetts Avenue are in a race against time to keep the project on track after encountering a delay in its financing.
Trail Side, a $10 million apartment and retail building planned for 875 Massachusetts Ave. on a site owned by the Center Township Trustee's Office, was to have broken ground by now. But difficulty in closing the sale of tax credits that will be used to finance the project could cause the deal to unravel.
The closing must happen soon, probably by the end of the year, to keep the project on track.
The sticking point is the ground lease signed by the Center Township trustee, said Bill Gray, executive director of Riley Area Development Corp., which is co-developing the project with Monument Realty. The ground lease is for 45 years, but the firm lined up to purchase the tax credits wants a 55-year lease.
Gray said he’s optimistic a 10-year extension of the ground lease can be negotiated in the next 45 days. For that to happen, the Center Township board must agree to issue a request for proposals from developers interested in the 10-year extension.
Another option is to find a buyer for the credits who can live with the 45-year ground lease that’s already been signed.
Banks and other investors buy such credits to offset profits. Evan Voight, a financial analyst for Herman & Kittle Properties, a local firm that develops affordable housing using tax-credit financing, said the market for such credits was depressed but has improved this year. Voight's firm is not involved in the Trail Side deal.
The four-story Trail Side project has been in the works for more than two years. Neighbors of the project are eager to see it proceed as a way to add residents and more retail activity to that stretch of Massachusetts Ave.
The development is to include 10,900-square-feet of first-floor retail space and an underground garage with 69 parking spaces. The second, third and fourth floors would house 69 one-bedroom apartments renting for between $325 and $700 a month to tenants with incomes between 30 percent and 60 percent of the median income.
Neighbors initially had opposed the project because of fears it didn’t include enough parking. Plans were changed last spring to add the garage, which eliminated their objections.
One of those neighbors, Tom Battista, who owns a building across the street that houses R Bistro restaurant and several other tenants, was disappointed to hear about the financial snag. “We were hoping they’d get it done as fast as they could,” he said. As it is, his tenants face a vacant, one-story brick building that does nothing to attract more customers to the area.
Demolition of that building, which is owned by the trustee's office and would be replaced by Trail Side, could begin in January if the financial issues are settled, Gray said. Construction would begin immediately after that and take about eight months.
The demolition and building site is adjacent to the newly opened northeast leg of the Cultural Trail. Gray said plans have been made to make sure the trail remains open during demolition and construction.