More Poisonous Fruits of the "Kelo" Decision : Recipients of Ill-Gotten Eminent Domain Lands Want FHA LOANS!
WOW, is this ever just the icing on the government cake.
Take a look at this article that appeared in the New London paper "The Day":
By Kevin Dale ,
Published on 3/14/2008 in Home »Business »Business Main Photo New London — Faced with a tight lending climate, the Corcoran Jennison company has asked the Federal Housing Authority to back an $11.5 million loan to fund the long-delayed construction of housing on the Fort Trumbull peninsula.
Corcoran Jennison applied for the mortgage insurance last Friday, said Kristine Foye, spokeswoman for the New England Regional Office of the U.S. Department of Housing and Urban Development.
The request was filed three months before a crucial May 29 deadline for the Boston-based developer to secure financing and sign a construction contract for an 80-unit complex of rental apartments and townhouses.
City officials and residents have closely watched the progress of the project, which would be the first new construction since eminent domain cleared portions of the peninsula for redevelopment.
Glenn Carberry, the developer's lawyer, said the decision to seek the HUD-backed loan is among a number of financing options that Corcoran Jennison is pursuing.
While a federal commitment could bring more favorable terms for Corcoran Jennison, the company is also seeking conventional financing from major lenders, Carberry said Thursday.
“They're basically exploring a whole number of options to nail down the financing,” said Carberry, who added that, in the past four days, he attended two meetings devoted to the topic. “They're going to keep at it.”
In December, the New London Development Corp., which owns the roughly three-acre parcel, granted Corcoran Jennison a six-month extension to meet the requirements of a 98-year ground lease. The developer, citing the slowdown in commercial lending, had asked for the six-month extension after missing an already-delayed financing deadline.
A major condition for the ground lease is firm financing for the construction of the 69 apartments and 11 townhouses, which the developer estimated in its HUD application will cost $13.4 million, Foye said.
If Corcoran Jennison cannot obtain the financing by the May deadline, the developer would lose its rights to build the housing. The NLDC, without going to court, would be allowed to seek another developer.
The ground-lease deadline does not affect Corcoran Jennison's ongoing, $18 million project to convert the former Naval Undersea Warfare Center into an office complex adjacent to the proposed housing.
According to the developer's HUD application, “The development plan is for an upscale rental property that will be positioned to compete at the top of the market,” Foye said.
The proposal detailed the housing mix, which includes 26 one-bedroom apartments and 27 two-bedroom units. The project also calls for 11 “two-bedroom townhouse-style units.”
While the Federal Housing Authority backs many loans for affordable-housing projects, Corcoran Jennison applied under a program that doesn't restrict tenant income, Foye said. The FHA is the branch of HUD that insures both residential and commercial mortgages against default.
Corcoran Jennison has asked for the loan to be insured under the Section 220 program, which relates to “multifamily housing projects in urban renewal areas or other areas where local governments have undertaken revitalization activities.”
If Corcoran Jennison were to foreclose, HUD would pay the developer's lender and take possession of the property, Foye said.
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