Connecticut's housing finance agency has agreed to sell downtown Hartford's vacant 101 and 111 Pearl St. office buildings to a group comprised of local businessmen who plan to convert the property into more apartments, authorities say.
The Connecticut Housing Finance Authority and the group, which includes a Philadelphia developer, are finalizing terms and a deal sheet has yet to be signed, CHFA President and Executive Director Eric Chatman told HartfordBusiness.com Wednesday.
But CHFA recently approved the sale to a development team -- Lewis and Pearl Street Ventures LLC— that aims to reshape a key part of real estate in downtown Hartford near Bushnell Park.
The proposed sale will also include the adjoining Trumbull on the Park apartment tower, in which CHFA has a majority stake.
The local group chosen to redevelop the properties adjoining Pearl, Trumbull, and Lewis streets include Martin Kenny, whose company owns a minority stake in Trumbull on the Park; realty investor Sanford Cloud Jr., owner of The Cloud Co. in Hartford; and Hartford parking tycoon Alan Lazowski.
They are being joined by Pennrose LLC, a Philadelphia specialist in developing multifamily housing.
Cloud said the planned development is an approximately $40 million project that will convert the vacant office buildings at 101 and 111 Pearl St. into about 90 to 100 apartments and 24,500 square feet of retail and entertainment space.
He said they will use the existing structures as part of the development, but he admitted they will require a facelift and significant remediation since they contain asbestos.
Financing for the project has not been lined up, but Cloud said the plan is to pursue every avenue to make the numbers work.
"We are going to be looking for all the available resources at the city, regional, state, and federal level to make this project economically viable," Cloud said, adding that there is still a lot of work to be done before construction gets underway.
Meanwhile, Hartford Mayor Pedro E. Segarra said he is preparing to submit a resolution to City Council that would extend a tax-fixing agreement on Trumbull on the Park for an additional three years and the adjacent garage for an additional eight years.
He says he also will ask for a 15-year tax-fixing agreement on the two vacant office buildings.
CHFA put out a request for proposals last summer seeking interested buyers of the three properties, as the housing agency tries to move away from actually owning real estate.
Currently, a subsidiary company of CHFA owns about a 90 to 95 percent stake in the Trumbull on the Park apartment complex and 111 Pearl St. Developer Martin Kenny owns the remaining shares of those properties, while the city owns 101 Pearl St.
Several bids were received, but the list was eventually pared down to two development groups: Lewis and Pearl Street Ventures LLC and Boston-based Trinity Financial.
The CHFA board of directors agreed last week to sell the properties to Lewis and Pearl Street Ventures LLC. CHFA is now negotiating a final agreement with Lewis and Pearl Street Ventures LLC.
The key to the deal is the upscale, 100-unit Trumbull on the Park apartment complex, which was built just six years ago for $38.5 million.
For the first time, all three properties were marketed as a package deal, even though they are owned by separate interests.
Officials say the new strategy aims to combine a positive cash flow apartment building and garage, with two empty buildings in need of a rehab in order to make redevelopment of the area more attractive to investors.
The adjoining buildings at 101-111 Pearl St. have been in the cross-hairs for redevelopment for years, but no plans have ever come to fruition.
The properties have an interesting history.
The 12-story, 100,000 square foot building at 101 Pearl St. was erected in 1965 and served as the Connecticut corporate headquarters of Fleet Bank. In the mid-1990s the building was transformed into a police substation, and also housed a police museum, the Hartford Guides program, as well as the Hartford police academy.
The city has tried but failed on several occasions to spur private redevelopment on the building. Several developers, including Kenny, Carlos Mouta, David Nyberg, and Cloud have pitched plans to build everything from retail, office space and apartments to luxury condos, but no deal has ever come to fruition.
One of the issues in the past has been remediation costs. The building has asbestos and cleanup costs in 2006 were estimated to be about $2 million, a price tag that scared away a New York development company from transforming the building into 33 super-sized condos.
The seven-story, 75,000-square foot office building at 111 Pearl St. has been vacant since 1987, and was at one point slated to be knocked down and converted into a 59-story office tower, which would have made it the largest office building in New England. That plan fell through after the real estate crash in the late 1980s and early 1990s.
CHFA and Kenny bought their respective stakes in the property in the early and mid-2000s, with the hope of converting it into owner-occupied housing, but that never materialized either.
Kenny was the brainchild behind the successful Trumbull on the Park apartment complex, which was constructed in 2006 and is 99 percent occupied. The property includes a 603-space adjoining parking garage, 88 residential units in the nine-story building fronting Trumbull Street, and an additional 12 residential units located in two, low-rise buildings on Lewis Street.
The property also has retail space that is home to Quiznos and Salute restaurants and the Perfect Cut hair salon.
CHFA's subsidiary entity Trumbull Center-CHFA has been the equity owner of its two properties since 2002, so it has held onto the vacant Pearl Street office tower for a decade.
There were two factors driving the decision to sell now. One is the city's and state's renewed focus on bringing more residential housing downtown. Also, CHFA is trying to purge its real estate portfolio.