Poor economy blindsides housing project vision

The 3.5-acre “friendly 40B’’ development on Castle and Gardner roads and Goddard Drive was to include eight new stand-alone homes and 20 condominiums, with two of the homes and five condominiums priced below state guidelines for affordable housing.

Last month Bass Point Residences LLC, which was approved as the project developer at Town Meeting in November 2008, withdrew its application to purchase the land for $2.2 million.

According to those involved, the developers sought to make adjustments to the project based on the current market and banks’ concerns over financing condo projects.

“[Town officials] worked with us closely,’’ said developer Phil Singleton, a partner in the company. “We just couldn’t pull it off.’’

Specifically, Singleton said, his company sought to develop the single-family homes first and the condominium portion second.

The phasing of payments was a sticking point, acknowledged Town Administrator Mark Cullinan, because it shifted too much risk to the town and changed a plan created and supported by residents after a series of public meetings and discussions.

“We tried to work with them, but at the end of the day there were things that we could work with and things that we couldn’t,’’ Cullinan said. “There were things that were voted on at Town Meeting that can’t be changed.’’

Cullinan said he will recommend that the Board of Selectmen let some time pass and revisit the issue after several months.

Cullinan said he expects the project to be delayed for another two years.

Changing developers will require another Town Meeting vote.

The town will continue to rent the 12 existing homes on the property for another two years, under the terms of special legislation enacted following the purchase of the buildings, and will use the money to pay the interest and some principal on the purchase debt.

“The fortunate thing here is that the town is not under the gun,’’ Cullinan said. “We have some time to rethink this and may come up with the same plan.’’

Both sides said that the parting was amicable.

While Singleton said that other municipalities have adjusted the terms for projects in the current building climate, he called the town’s decision to step back and continue to rent the units very prudent.

The town first identified the possible acquisition of the property from the military in 2003 and voted to purchase it for $2 million in 2004.

The 12 single-family homes on the site were built by the US Army in 1950, though the land had been taken for military use years before that.

From the start, officials recommended that the town build affordable housing in the area earmarked for Nahant residents and town employees.

An early recommendation to sell the homes as is evolved into the current 28-unit plan, with 25 percent of the units sold as affordable housing.

“I have to tell you, it’s a fabulous idea,’’ said Judi Moccia, a Nahant-based listing agent for the development who had been marketing the project for the past five months.

“Everybody in town knew everything [about the project],’’ said Moccia, who said the news of the project’s withdrawl took her by surprise.

“You see how the market is, but we were always full-speed ahead.’’

The Residences at Bailey’s Hill were being sold for approximately $700,000 and condos ran from the high $300,000 level to penthouse units in the mid $700,000 range, she said.

“Those were the ones of interest, immediately,’’ she said.

In the current real estate climate, Cullinan said, many developers seek heavy presales to buttress their financial position with lenders, a concept that might not have been embraced by Nahant retirees looking to downsize from large homes into condominiums.

“People like my parents, or the older generation, they want to kick the tires,’’ Cullinan said. “They want to go in and look at the views, look at the apartments. It’s a whole process they go through. They’re buying them to live in, and they want to see them.

“We felt strongly that one of the big selling points of this development was the condominium development. In the meetings I attended, and the marketing meetings, the people that went to those were interested in the condominiums.’’

Moccia agreed.

“It’s still a great vision for that property,’’ she said.