Eagle Mill receives more historic tax credits; developers apply for millions more
Lee — Lately it seems that good news just keeps on flowing for the Eagle Mill project.
Late last month, Eagle Mill developer Jeffrey N. Cohen received a letter from Secretary of the Commonwealth William Galvin’s office that the project has received another $400,000 of historic rehabilitation tax credit funds. Galvin also chairs the Massachusetts Historical Commission, which issued the tax credits.
This is on top of the tax credits of the same amount Galvin’s office issued in August and the millions in federal tax credits the project received in May. Cohen termed the recent award a “very big deal,” in part because Mass Historical is “seriously underfunded.”
“They have about $400 million in requests from legitimate, qualified projects,” Cohen said in an interview. “They have only $50 million to give away, so it’s a very competitive situation.”
Cohen added that the project faced another handicap. It’s more challenging to bring in these tax credits for a project in western Massachusetts than in, say, the Boston area “because you are immediately questioned about whether there is a market for it.”
The $60 million redevelopment project on the banks of the Housatonic River has been described by state Rep. William “Smitty” Pignatelli, D-Lenox, as “transformative.” The project will revive and expand the defunct historic mill site in downtown Lee into a combination of office space, both market-rate and affordable rental units, a hotel, and a “public market” with multiple restaurants and food kiosks. Click here to see a comprehensive listing of the planned uses.
Cohen added that the Eagle Mill project qualifies for $6 million, “so obviously we need a lot more.” The first time he applied for Mass Historical tax credits, in 2018, the project was turned down. There are three rounds per year and he intends to apply at every available opportunity.
In August when Eagle Mill won its first round of tax credits, the project got a public relations boost when a group of VIPs descended on the mill to announce the big win. Those credits are widely viewed as the most important funding step toward the redevelopment of the dormant site.
Speaking at that time were town officials, Pignatelli, state Sen. Adam Hinds, D-Pittsfield, and U.S. Rep. Richard Neal, D-Springfield, whom Cohen credited for doing much of the heavy lifting to help Eagle Mill win that first round of tax credits. In his conversation with The Edge, Cohen also thanked Pignatelli and Hinds, with whom he had also worked closely.
Lt. Gov. Karyn Polito and other state officials came to Eagle Mill last October to announce that the town of Lee had received almost $5 million from a state MassWorks Infrastructure Program grant to upgrade 9,000 linear feet of water lines and support residential and commercial development in the Eagle Mill area.
The project has obtained all of its approvals from the town of Lee boards, including the conservation commission, the zoning board of appeals and the planning board. “Everything that’s been proposed [to the town] has been approved,” Cohen said.
The next step is to obtain “predevelopment dollars” from commercial lenders “to prepare to begin construction,” and create building plans and construction documents.” If all goes according to plan, construction will begin late this year or in early 2021. The project started seven years ago last month. If construction begins in December 2020 as planned, it will be eight years from concept to shovels in the ground.
“There’s a lot of moving parts here,” he explained. “Most people don’t understand the complexity of putting deals like this together. We’re transforming a village in Lee and it took us years to acquire a total of about 16 properties.”
Rees-Larkin Development, a Boston-based developer of affordable and mixed-income housing, has partnered with Cohen’s Eagle Mill Redevelopment. The manager of the apartments will be Berkshire Housing Development Corporation. Jon Rudzinski, head of Rees-Larkin, and BHDC President Elton Ogden have applied to the state for financing of the housing.
Both Rees-Larkin and Berkshire Housing have been invited into the February round of financing by the state Department of Housing and Community Development for the renovation of the Union Mill portion of the Eagle Mill project. Both organizations were turned away last year.
The Union Mill component of the project will create 35 units, about half of which will be workforce housing, with the remainder considered “affordable” by the state for those earning 60% of the area median income.
Cohen said the recent actions by DHCD give the project additional “financial credibility” and, if the financing is ultimately approved, “creates the type of momentum that enables a bank to say, ‘Okay one aspect is financed; the other aspect looks credible now.'”
In an interview, Rudzinski said the feasibility of the housing component depends on the financing that would be possible with DHCD approval.
“Mass DHCD allocates or approves the most important component of the financing,” Rudzinski explained. “They have affordable housing tax credits, both federal and state, and subordinate loan sources.”
Rudzinski said Rees-Larkin and Berkshire Housing are asking for approximately $534,000 in tax credits in each of 10 years, for a total of more than $5 million. Investors will then provide capital in the form of cash equity. Rudzinski expects to hear back from DHCD some time in the summer.
“It’s highly competitive and they do not fund all the projects,” he explained. “They might invite us to reapply. I do know we have a very good application.”
In Berkshire County, Rees-Larkin was the lead developer in the renovation of 100 units of affordable housing at the Dalton Apartments in Pittsfield. In that venture, Rudzinski gained approval from the state in 2014 for federal low-income housing tax credits, which provided approximately $3.2 million in equity.
Cohen has said he is also working with three banks to secure almost $20 million in commercial financing for the nonresidential portion of the project, which includes office space, the public food market and a hotel.