Connecticut Studios Project Granted Fourth Extension

This article was posted by Megan Bard. It was reported and written by Ted Glanzer.

The developers of the Connecticut Studios project have been granted another extension on a section of the deed that provided the developers 20 acres of town-owned land for $1.

With the extension, okayed by the Town Council on Monday evening, the deadline for construction to begin on the project is now June 30, 2013.

It’s the fourth such extension that the council has provided the developers on the reverter clause, which originally stated that the parcel would revert back to the town if construction hadn’t started by October 26, 2012.

The developers have appeared, at least for the time being, to have won back some support from Town Councilor Kevin McCann, who voted against the previous extension, which still passed 6-3.

On Monday, the vote was 7-1, with Town Councilor Keith Yagaloff voting against the extension.

The main reason for the renewed support is that, since the last extension was provided on April 1, is that the developer secured $14 million in executed commitment letters from First Niagra Bank, a sign of measurable progress that had been lacking for some time.

The project still contains a number of moving parts, including the necessity of obtaining state regulatory approval for a power purchase-agreement for a $25 million fuel cell component. The idea is for the fuel cell to generate electricity, which will be sold back to a distribution company, with the proceeds going to pay for the project’s public infrastructure. McCann has said that project needs to show it has financing for the fuel cell as well as an agreement with the town over the public infrastructure.

McCann and Yagaloff agreed that the reverter clause was not the best way for the town to maintain control over the project. Instead, the men, along with Town Councilor Cindy Beaulieu, said that the best way to determine whether the town would finally approve the project was through the infrastructure agreement.

“The [town’s] leverage is not tied up in the reverter clause, it’s in the infrastructure,” McCann said. “That is when we will say ‘Yes’ or ‘No’ to the project.”

McCann called on Town Manager Matthew Galligan to begin to put together a draft infrastructure agreement, something that Galligan was hesitant to do considering that the power purchase agreement was not in place yet.

Galligan said that he preferred to wait until the power purchase agreement was approved, which then guarantee that the town was not wasting money and resources drafting something that would not be used.

McCann, however, said that the council could not afford to have the infrastructure agreement provided to it at the last minute.

“We need to have time to understand it,” McCann said.

Town consultant Dan Marsh said that the revenue generated by the fuel cell would not fully cover the cost of a $12 million infrastructure bond, falling short some $250,000. Marsh said that other tax revenue generated by the project, including the hotel and the studios, would cover the cost of the infrastructure.
Marsh said that the power purchase agreement was the “lynchpin” of the $55 million project, something that McCann agreed with.

“Without the power purchase agreement, it’s not a viable project,” McCann said.

“We’re finally seeing progress with the financing, but there is a long way to go,” he said.