Pond View gets $3.2M for bailout

The final, unfinished piece of the struggling Pond View Village housing complex in West Gloucester is being resuscitated with the help of more than $3.2 million in state and federal assistance.

Hailed as a model of community redevelopment, smart growth and mixed-income housing before the national real estate market cratered, Pond View Village was left partially occupied and only two-thirds built when its developer, Cape Ann Housing Opportunity, went bankrupt last year.

Foreclosed upon by the statewide consortium of large banks that had lent money to CAHO, Pond View Village was bought in January by the Caleb Foundation, a Swampscott nonprofit that manages and preserves low-income multi-family housing throughout New England.

The Caleb Foundation, which shares much of CAHO's vision for the former LePage Glue property, was one of 39 organizations in Massachusetts to secure Affordable Rental Housing Awards from the state this month.

The aid package — a combination of state and federal low-interest state loans and tax credits totalling $3.27 million — will give Caleb the funding to move forward with plans to build 34 new rental units on the property, meeting federal affordability standards, Debbie Nutter, executive director for the Caleb Foundation said yesterday.

"This means that hopefully the third phase will be finished," Nutter said. "I believe it will continue to serve the low-income and moderate-income folks in Gloucester with rental housing. There is a market and a need for them."

To complete Pond View Village, Caleb will raze the vacant old warehouse building on the site and erect, in its footprint, a new five-story apartment building.

Caleb will complete the local permitting it needs to resume work, Nutter said, and hopes to begin construction late in the fall or early winter of this year.

Before it stepped in with a new package of loans and tax breaks, the state was already financially committed to Pond View Village, having already loaned $5.1 million to the project.

The city has also given the project more than $500,000.

The new assistance, which employs existing housing programs as part of Gov. Deval Patrick's Massachusetts Recovery Program, includes federal funds but no money from the national stimulus package now filtering out to states and local communities.

Overall, the latest round of affordable rental awards announced by the Patrick administration targets projects in 25 communities with a total of $108 million. In a normal, non-recession year, the state will usually only announce funding for around a dozen rental projects, Phil Hailer, a spokesman for the state Department of Housing and Community Development said yesterday.

The awards to Pond View Village are comprised of $1,315,000 in low-interest loans pulled from the federal HOME Program and state Affordable Housing Trust, Hailer said, combined with a $1,350,000 state tax credit and $612,000 federal tax credit.

Like most projects that receive tax credits, Caleb is planning to sell those tax credits to investors to provide the capital to begin construction.

The total cost of finishing Phase 3 of Pond View Village is estimated by Caleb at $6.7 million.

With the loftiest of intentions, Cape Ann Housing Opportunity built 84 units of mixed-income housing — 43 rental and 41 condominiums — on the site of the vacant former glue factory before becoming insolvent.

A lawsuit brought by the owners of the neighboring Heights of Cape Ann for obstructing views with the unbuilt apartment high-rise delayed construction and pushed the project into the worst throes of the recession.

When it was clear last summer that CAHO would default on its loans for the property, its primary lender, the Massachusetts Housing Investment Corp., foreclosed on the complex.

Formed by a consortium of large banks as a lender for affordable housing and community development projects, the Massachusetts Housing Investment Corp. which lost more than $10 million from all of its loans to CAHO, now manages the existing units at Pond View.

Like much of the country, the condominium market on Cape Ann has also suffered in the recession.

Of 41 condominiums in the complex, only 19 have sold, with one more under agreement to be sold, Sandra Blackman, an asset manager at the Massachusetts Housing Investment Corp., said yesterday.

Blackman said the awards to Caleb would be good news for her organization if it meant the old glue factory building would be giving way to new construction.

"It is a blighted building and needs to come down," Blackman said.

After the foreclosure, the Massachusetts Housing Investment Corp., which had issued CAHO a $1.3 million mortgage on the Phase 3 portion of the property, sold it to the Community Economic Development Assistance Corp. for $600,000.

CEDAC, a quasi-state agency that also held mortgage debt from CAHO, then sold the Phase 3 property to Caleb for $1.1 million.

The success of other CAHO creditors, such as contractors and subcontractors who worked on Pond View Village, in trying to get money back is unclear. CAHO's case is now in the hands of a state-appointed trustee.

The state and federal aid for Pond View Village — touted as a shovel-ready job creator — differs from many other government recovery efforts in that it will add new housing to the depressed market instead of getting already existing units occupied.

Hailer said projects like Pond View Village would help the economy because it creates affordable rental units to the market instead of properties to own, which are now languishing.

"Historically, the state has high housing costs and this helps keep Massachusetts affordable," Hailer said. "We are trying to attract jobs and development and if you don't have affordable housing, you are going to have a tough time. There is great demand for rental housing."

Patrick Anderson can be reached at panderson@gloucestertimes.com

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