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Date: 3/23/2022
SPRINGFIELD – A $51.3 million plan to construct market rate apartments on 13-31 Elms Street halted due to the impacts of the pandemic. With the restoration project now underway, the City Council Finance Subcommittee discussed the request for an additional $6.5 million from the city during their March 16 meeting.
Chief Economic Development Officer Timothy Sheehan explained the reasoning for the city’s request, sharing that the project’s costs increased due to the post-pandemic landscape. “We thought we had a firm handle on the construction costs, but unfortunately this project has hit the market in the post-COVID-19 environment where the cost of goods and construction have just skyrocketed,” said Sheehan, who revealed that the additional costs would increase the city’s contribution to $10.5 million.
Sheehan shared that the process continues to be impacted, with construction bids enduring a shorter waiting period due to the altered marketplace. The economic development officer stressed that the city can not wait to work on the project due to its unsuitable state.
“We haven’t got time to wait for the correction in the market with the condition the building is currently in. It needs to move now into full construction and rehabilitation so that we can ultimately preserve this historic gem,” said Sheehan.
Executive Vice President of WinnCompanies Michael O’Brien discussed the project as it’s developer. He said the project continues to be “unprecedented” in its partnership between WinnCompanies, the city, the state, the state and federal historical tax credit program, MGM Springfield, MassMutual and other private investors.
“Together, we have advanced the project to this point where we’re at the .25 yard long. Everyone has had to adapt to a reset to the entire world when it comes to labor and commodities,” said O’Brien. The vice president echoed Sheehan’s explanation for the expanding costs, stating that the project has undergone more market risk due to the current construction conditions.
Due to the pause in construction, O’Brien said the WinnCompanies and the city both need to invest additional resources to address more repairs caused by the building’s time in dormancy. The vice president also stressed that without the city’s assistance, the developer would be forced to leave the project.
“We would have no other choice but to walk away from the project…Cost escalation is constant, and we would unfortunately not be able to proceed,” said O’Brien. The increased costs total $13 million, with state matching the city’s contribution through MassHousing, according to O’Brien.
Members of the subcommittee expressed mixed sentiments about the request. Ward 7 Councilor Timothy Allen expressed that communication about the project between the city and council could have been clearer during the paused period. City Councilor At-Large Tracye Whitfield also considered it a “tough decision” to fund the project further after the city provided “no wiggle room” regarding the city’s tax rate decision.
Ward 2 City Councilor Michael Fenton said spending additional funds on the project isn’t ideal for the city, but stressed that it’s a “necessary expense” to get the long-ignored project going. “This project, in particular, has evaded us in the past, not just in the last several years, but decades before any of us were in elected office,” said Fenton, who shared that proposals for the space have been proposed since former Mayor Charles Ryan’s administration.
Ultimately, the Finance Subcommittee did not vote on the item, with Whitfield stating that more information needed to be gathered about the request. If approved in the near-future, the apartment project is expected to welcome occupants by fall 2023, according to O’Brien.