The state’s Department of Housing and Economic Development has turned down Gloucester’s request for a $5 million grant to upgrade pipes and other infrastructure beneath the historic Fort neighborhood.
Now, deciding just who will pay for the repairs — with engineering already underway, and connected with, but not dependent upon, the development of the proposed Beauport Gloucester hotel — is back on the drawing board this week.
In September, the city filed an application for a $5 million grant through the state’s MassWorks infrastructure program.
The money would have gone toward new water, sewer, and drainage systems underneath Fort Point. But Gov. Deval Patrick’s office announced the grant awards last Friday, and Gloucester didn’t make the cut.
While the project probably won’t receive state funding, city officials say the work still needs to be done.
The city is about six weeks into the design and engineering, while Beauport Gloucester LLC, gave the city $600,000 to fund the preliminary work.
City officials Tuesday were still holding out for some state money from the program, saying that not all of the anticipated money had been allocated. But a state spokesman said that the Friday grant announcements were final.
Mayor Carolyn Kirk, meanwhile, said the city cannot fund the full project. Beauport Gloucester LLC, the developer whose hotel proposal pushed the city to apply for the grant, will have to contribute additionally in some way, Kirk said.
“It’s going to go back to the drawing board,” Kirk said, “There is going to have to be some sort of shared cost, I don’t know what that looks like.”
Kirk said the city has traditionally used Tax Increment Financing — or so-called TIF — agreements, like the one granted in 2008 to Sam Park and his Gloucester Crossing project, to get developers to pick of some of the tab for infrastructure improvements. She said a TIF is an option, but added that she hasn’t made up her mind about how to proceed yet.
Kirk said she’s working with state Rep. Ann-Margaret Ferrante to figure out if funding still remains in the Massworks Program for Gloucester’s project.
Neither Ferrante nor Sheree DeLorenzo, Beauport’s Gloucester representative, could be reached for comment Tuesday.
Jason Lefferts, spokesman for the Department of Housing and Economic Development, confirmed that this year’s funding cycle has closed. The program, he said, allocated all of its $38 million in funding.
The state awarded that $38 million for 26 projects in communities across the state. The funds went toward road improvements, housing projects, sewer treatment plant upgrades. The largest award of the 26 was to Haverhill, for a $4 million redevelopment of Merrimack Street.
The state received 130 applications asking for a total of $323 million, Lefferts said, adding that Gloucester would be welcome to apply for the grant again next year.
“We’re more than happy to sit down and talk with them about application if they want to apply next year,” Lefferts said.
Meanwhile, the project’s engineering will continue without the grant.
Public Works Director Mike Hale said his department and contractors will move ahead with engineering work on the same schedule. DPW crews planned to have a design ready by the June. He said they’ll have a 25 percent design by Dec. 1, noting that will include a basic layout and a cost estimate.
Hale said the city initially planned on reconstructing the pipes under the Fort in 2015, but the Beauport Gloucester hotel project, headed by New Balance owner Jim Davis and Cruiseport Gloucester’s DeLorenzo, accelerated the city’s plans.
He said he’d rather do the infrastructure work along with the possible hotel construction than have to rip up the road a few years down the road. If work is going to cause a disruption, he said, it’s better to get it out of the way all at once.
Public Works, Hale said, plans to modernize the existing sewer, water, and drainage systems on Beach Court, Commercial Street, Pascucci Court, and Fort Square, adding that his department is working with business owners and residents to find how to minimize disruption.
Massachusetts requires “shovel ready” projects for the MassWorks programs, so the city had planned to have the project engineered before June 2013. But with the MassWorks grant out of the picture, city officials were wrestling with how the city will pay for the work.
“We’ll have to cross that bridge when we get to it,” said Hale. “Should funding not be available we’ll regroup and have a frank discussion on where the project moves from there.”
Steven Fletcher may be contacted at 1-978-283-7000 x3455, or firstname.lastname@example.org. Follow him on Twitter at @stevengdt.