When I first started this web site/blog in 2006, among one of the initial stories I covered on the green building front was a project in Redding, CT that when complete, would be one of largest and greenest developments in Connecticut. The project centered on the renovation of old Gilbert & Bennett Wire Company mill and would have easy transit, mixed use and street level retail stores that would also have a transit hub. It showed a lot of promise.
The project was originally started by Stephen Soler who along with other stakeholders formed the Georgetown Special Taxing District. To help defray some of the costs, the project was also selected as a demonstration project to qualify for green tax-exempt bonds under the America Jobs Creation Act of 2004. By March of 2010, the project had not had much activity and Georgetown Green, LLC had announced its plans to take the project over but that deal didn’t go through.
So what happened to this project which started out having so much promise? According to a recent post by Shari Shapiro at greenbuildinglawblog.com, it doesn’t appear that it will be complete anytime soon and may not be as green as we thought.
According to her research, at least $14.5 million in tax exempt bonds were issued for the Georgetown project. As she states in the post, for you bond junkies, the details of the bond offer was:
Georgetown Special Taxing District
Nov 16, 2006 $14,450,000
General Obligation Bonds, Series 2006A (book entry)
Dated Nov 22, 2006.
Due Oct 1, 2036.
First coupon Apr 1, 2007.
Callable Oct 1, 2016 at par.
Purchased through negotiation by Banc of America Securities LLC, as
Due Amount Cpn Reoffered Ins
10/1/36 $14,450,000 5.125% 5.125%
L.O.: Shipman & Goodwin, Hartford, CT.
F.A.: Lamont Financial Services Corp, Wayne, NJ.
She also commented that he Georgetown project is stalled, and is having difficulty meeting its bond obligations. She continues that according to the Weston Forum, the deal mentioned before did fall through based on some factors:
With the advent of the country’s financial crisis in 2008, capitalizing the project became an issue. That, combined with the delay in state approvals, stalled the project, but the intersection work has since been funded and put out to bid.
She also found that As of July 9, 2010, according to Bond Buyer the Georgetown Special Taxing District received a forbearance on $1.5 million of tax anticipation notes after failing to pay them on time.
The district was unable to pay the notes on June 30 because it had not collected property taxes from a stalled mixed-use development. The project and district are located on a 51-acre tract in the town of Redding in affluent Fairfield County.
The forbearance gave the district two months to figure out what to do without defaulting on bond payments. The failure to make the payment by June 30 constitutes a technical default, according to disclosure documents. It is not clear whether the bonds were paid, but if they were not, another set of green bonds has gone into default.
In her post, she stated that the Georgetown Redevelopment Project was actually a thoughtful green project. It was envisioned as a transit oriented, mixed use redevelopment of a 55 acre, on a contaminated wire mill site. The master plan includes residential (including 40 units of affordable housing), commercial and light industrial uses, as well as a YMCA, performing arts center and public open space oriented around a transit station.
The project would have encouraged transit use, created a mixed use community, redeveloped contaminated property and (theoretically) integrated green building and renewable energy features. This is exactly the sort of project which should be encouraged and supported.
I agree with her concluding remarks. The fact that the Georgetown project has not come to fruition is a bad outcome for the Georgetown project in specific, and green bonded projects in general. First, this is a good project. Doing transit oriented, mixed use development is positive for communities and the environment. So, the fact that it had difficulty meeting its financial obligations and may not come to fruition is disappointing.
On a more global level, projects like Georgetown make bonds for green projects look risky, which may make financial institutions shy away from issuing and underwriting the bonds. This will make getting financing for green projects harder than it already is. Second, it makes the public sector more reluctant to support green projects if they fear that they will not be able to meet their financial obligations.
To end this on a brighter note, it appears that public entities are continuing with the site and transit work on the Georgetown project continue to progress, even though a private developer is not currently doing the mixed-use component.
Shari Shapiro is an attorney and LEED® Accredited Professional at Obermayer Rebmann Maxwell & Hippel LLP, a full service law firm headquartered in Philadelphia (Go Phillies!) Ms. Shapiro focuses her practice on green building law, which includes sustainable project financing, regulatory drafting, land use approvals, contracts, and conflict resolution. Ms. Shapiro is the Sustainability Coordinator for Obermayer’s Sustainability Initiative.