Apartments For FFH—

Developer Makes Official Proposal For Cochran House

By Kendra Bobowick

An “experienced development team is prepared to invest an estimated $27, 000,000,” states a letter of intent submitted by broker J. Michael Struna to the Fairfield Hills Authority Wednesday evening.

“We won’t take action other than to receive the letter,” authority Chair John Reed had said Wednesday afternoon.

On behalf of Cochran Hall Apartments, LLC, Mr Struna confirmed that a developer is interested in negotiating a 99-year lease arrangement to convert Cochran House into an apartment building. The offer for a lease proposal from Merchant Equity Group, LLC of New York City indicates that a $250,000 up-front payment would be followed by annual payments.

The letter notes that Cochran was slated for demolition at a $2.5 million expense [old estimate], but could instead generate tax revenue for the town annually.

Mr Struna’s cover letter explains, “I have estimated that the combined savings on demolition and tax revenue on a revitalized 200,000 sf building would provide the Town of Newtown with an additional benefit of $7,000,000 over the next 10 years.”

A ground lease proposal will also “relieve the town of the requirement to provide grass cutting, snowplowing, landscaping, and lighting services for the entire demised premises. The developer will also be responsible for the installation of all required parking areas.”

Asserting that the campus redevelopment can best be completed in a public/private partnership manner, Mr Struna wrote that the developer is “sensitive to the current economy and town issues.”

His letter also states, “The developer at the developers’ expense will be responsible for all building and site remediation and the entire redevelopment costs of the former Cochran Hall (sic) building. They will also be responsible for any connections to electric, gas, water, sewer, and storm water systems for the demised premises (development site). They will install their own parking lots, parking lot lighting, and landscaping. In previous Fairfield Hills Campus projects some of these items created costly obligations for the town.”

He asks that “this proposal should be given your serious time and consideration” for various reasons, and also states that part of the “current hurdle we must overcome is that the zoning as described in the Fairfield Hills Adaptive Reuse Regulations does not endorse a residential component.”

In recent weeks the Planning and Zoning Commission has scheduled a public hearing on regulation changes that would add a residential component to the adaptive reuses at Fairfield Hills. The hearing will take place in April.

Mr Struna hopes to see any modifications regarding housing completed in a “timely manner.”

The New York developer is the same entity that had previously expressed interest in Cochran months ago, Mr Struna confirmed, stressing, “We don’t have him yet, but we have managed to keep him interested.”

A presentation of intended plans could come as soon as a month from now, Mr Struna explained.

He hopes to “engage everybody involved in this, and hopefully help all who are making the decision.”

Terms for the lease specify that the initial term will be for a period of 99 years. The tenant will have the option to renew the ground lease for three additional 33-year terms. The term of the lease will be automatically renewed unless the lessee gives the lessor notice one year prior to the expiration of the then current term. The effective lease date” will be May 2011. The term of the lease will begin on the “term commencement date,” which will be the date the certificate of occupancy has been issued for the building.

The base rent as proposed shall consist of the following:

1. “Upfront Payment” of $250,000 payable to the Town of Newtown within 60 days of the granting of a building permit by the Town of Newtown to convert the existing structure to residential rental apartments.

2. Annual Payment: Equal to six percent of the premises’ appraised value, less the upfront payment. The annual payment shall commence on the date in which the premises receives a final certificate of occupancy and shall be subordinated to any debt placed on the premises. The annual payment shall increase by ten percent every five years. The appraised value shall be equal to simple average of two appraisals independently commissioned by the town and developer provided the result of each appraisal is within ten percent of one another and be determined by the property’s “as-is/where-is” condition one month prior to the commencement date.

Claris Construction has prepared preliminary site plans for the renovated structure.