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April 22, 2019

Berlin's $18M town center is latest project spurred by Hartford Rail Line

HBJ Photo | Steve Laschever Tony Valenti (left) and Mark Lovley are proposing a mixed-use village next to Berlin's train station, hoping rail passenger traffic will make their project a success.
HBJ Photo | Steve Laschever Mark Lovley (left) and Tony Valenti outside the Berlin train station, where expanded passenger service along the Hartford Line has presented the next development opportunity for their decade-old business partnership.
Rendering | Contributed A rendering of Farmington & Steele. The exact architectural look will change slightly, as the developers pursue a special permit this summer.

As the 4:40 p.m. Hartford Line train accelerated southbound out of Berlin's new station recently, an excited Anthony Valenti turned to his business partner, Mark Lovley, standing nearby on the platform.

“That thing was 90 percent full,” exclaimed Valenti, who goes by Tony.

Valenti and Lovley aren't trainspotters. Their enthusiasm was sparked by the business opportunity they say the recently launched $769 million train line presents to them and other developers.

Just across the station's parking lot, several hundred yards away, is a four-acre parcel the duo plans to redevelop into an $18 million mixed-use village, with 76 apartments and 19,000 square feet of medical office and commercial space they envision will include a restaurant and bar, coffee shop and other amenities to draw hungry and thirsty rail passengers and others from the region.

The proposed five-building project is a textbook example of transit-oriented development (TOD), which state and local officials have been promoting in recent years, seeking to make economic hay from last June's launch of the CTrail commuter service on the Hartford Line that connects New Haven to Springfield.

The beefed up rail service is perhaps a once-in-a-generation transportation development, and one that has changed the perceived value of nearby land parcels for developers.

“Without the train station here, this would be a different animal,” Lovley said of the proposed project.

Investments in new mixed-use developments around existing or proposed Hartford Line rail stations have totaled approximately $430 million, according to Judd Everhart, spokesman for the state Department of Transportation.

Those projects, which encompass 1,400 residential units and 242,000 square feet of commercial and office space, date back to at least 2010, years before the Springfield-to-New Haven line expansion debuted, but in anticipation of its potential impact.

There are nine Hartford Line stations currently in operation. Four more are planned, but don't have a state funding source.

Gov. Ned Lamont recently announced a “debt diet” that would cut state borrowing. That could affect further train-station devlopment, but Chris McClure, spokesman for the Office of Policy and Management, noted that Lamont wants to level-fund next year the specific type of borrowing —   special tax obligation bonds — that have paid for a number of previous station projects.

Officials have similarly promoted transit-oriented development for properties around CTfastrak bus stations. The 9.4-mile dedicated busway, which cost about $570 million to build, launched just over four years ago.

A proper town center

Branded Farmington & Steele, Lovley and Valenti's project would be perhaps the closest thing yet to a proper town center for Berlin, a relatively sleepy town of just over 20,000 residents.

The site, which is being developed by a jointly held entity called Newport Realty Group LLC, fronts Farmington Avenue, a key two-mile corridor dotted by a mish-mash of retail, industrial and office properties.

It would also be the largest new mixed-use development for Berlin in years, said Chris Edge, the town's economic-development director.

”It's nice because our downtown area here … much like many communities, is starting to have vacancies, starting to get a little older, so hopefully it will bring some new life,” Edge said. “We'd love to see some new restaurant opportunities that are different, that we don't have in Berlin, and more importantly, that we don't have on the Berlin Turnpike.”

The project represents the second transit-oriented development for Berlin. The first, Depot Crossing, is right across the street. Developed by the nonprofit Corporation for Independent Living, the $3.3 million mixed-use project, with 16 apartments and ground-floor retail space, opened in 2015.

Town officials selected Newport to develop the town center in late 2015, following a competitive-bidding process. The project still needs a special permit, which Newport hopes to file as early as June, with an eye toward getting a shovel in the ground by late fall.

As of press time, Newport and the town were close to signing a $540,000 purchase-and-sale agreement for the land, which has been off the tax rolls for about seven years.

The residential units will be one- and two-bedroom apartments at market-rate rents of approximately $2.50 per square foot, Valenti said.

The state has kicked in approximately $2.1 million for remediation at the site, according to Edge.

Construction is planned in phases, with a projected 2021 completion date. Valenti and Lovley said bank financing would cover approximately 70 percent of the project cost, while their own equity would cover the rest.

It's the latest in a string of joint property investments for the two men, who have each been active for decades in Connecticut's real estate scene.

Lovley, the principal of Southington-based Lovley Development, has built 1,212 single-family homes over the past 34 years.

His portfolio includes a nearly complete 94-home project at North Ridge Golf Course in Southington, where he said four homes have sold for more than $1 million. He's also built medical and professional office buildings.

Besides commercial brokerage, Valenti's experience includes hotel and mixed-use developments. He's a partner in Hampton Inn properties in Farmington and Enfield.

Valenti and Lovley first paired up about a decade ago on a hotel project in Southington.

Their joint-project count has grown steadily since, with a total construction cost somewhere between $50 million and $60 million, Valenti estimated.

That includes a 25-unit development in West Hartford called The Townhomes at Ringgold Estates, which has 10 finished townhomes so far. The pair acquired a Dollar Tree plaza and restaurant property in Southington in 2017; they're building medical office space in Glastonbury; and have developed sites for fast-food franchisees in several towns.

Elsewhere along the line

While Berlin could soon see its largest transit-oriented project yet, there's been plenty of activity along the rest of the Hartford Line in recent years.

“Investors and developers are looking at these properties with a lot more interest than they were previously,” said Robert Santy, CEO of the Connecticut Economic Resource Center, a nonprofit that offers business and economic-development services.

In Meriden, a series of mixed-use and residential projects centered around the city's rail station, located in its downtown core, will ultimately result in more than 900 new apartments, said City Manager Timothy Coon.

Projects completed or approved around Meriden's station over the past few years amount to a total investment of approximately $110 million, with the state pitching in about $7 million for remediation and other work. The apartments are already bringing new residents to Meriden, and when all is said and done, Coon expects the city to reap an additional $1 million in annual tax revenues.

“There's a lot of activity, it's cause for optimism,” Coon said.

However, he said he hopes to see more interest for the 32,000 square feet of commercial space that's been built or is in the works.

Meanwhile, 25 miles to the north, Martin Kenny, president of Lexington Partners, remains pleased with his $23 million, 130-unit Windsor Station Apartments. Located next to the Windsor train station, the apartments began leasing just over two years ago and are almost 100 percent full, he said.

That includes tenants who work over the state border at MGM Springfield and Baystate Medical Center, some of whom use CTrail service to get to their jobs.

The fact that rail isn't crucial to every tenant who lives near a station is a key point about transit-oriented projects, said Santy. Creating desirable, pedestrian-friendly neighborhoods is equally significant.

“It's not always about transit, it's about creating great places,” Santy said. “[Rail] is a component to a great downtown.”

Windsor Station has performed well, which led Kenny and his partners last year to add another complex to their portfolio — the 186-unit Saybrook Station Apartments in Old Saybrook.

It's adjacent to a train station served by Amtrak along the Shore Line East rail line, and like Windsor Station, it too has filled up with tenants, Kenny said.

His experience so far has left him a fan of transit-oriented projects, but he said there can be pitfalls.

For example, property along rail lines is often contaminated from decades-old industrial activity, and remediation can be costly. Property taxes can also be unpredictable.

“Towns are thirsty for grand-list growth,” Kenny said, adding that local officials should understand that construction costs are high and brick-and-mortar retail continues to struggle in the face of online competition.

That aside, he's bullish on the continued economic impact of the Hartford Line.

Without it, many developers likely wouldn't consider footing the bill to clean up contaminated properties. The rail service puts those parcels in play, Kenny said.

“Now it's in the game, it's in the ballpark,” he said.

He's evaluating a third transit-oriented project right now, but declined to share details.

Read more

No rail needed for this town-center project

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