Town Council extends CT Studios' deadline to April 3
By Christian Mysliwiec - Staff Writer
South Windsor - posted Thu., Dec. 6, 2012
Dec. 3 was the extended deadline for CT Studios, LLC, to begin construction on a long-anticipated movie studio project, and with no such construction having taken place, the Town Council had a crucial decision to make at its work session and regular meeting held that evening. After an explanation from the developer, Anthony DelVicario, and lengthy deliberation on the part of the council both in public and behind closed doors in executive session, a resolution was passed to extend the deadline to April 3.
This is the second extension the council has granted CT Studios. Because of the “reverter clause” within the contract, the town has the right to take back the 40.1 acres of land originally transferred to CT Studios for the project if construction does not begin by a specific deadline. The Town Council extended the original Oct. 26 deadline to Dec. 3 during its Oct. 25 meeting, at which point Mayor Thomas Delnicki gave a stern warning for CT Studios to “not come back to the well looking [for another extension].”
Prior to the vote on Dec. 3, Town Manager Matthew Galligan and Town Attorney Dwight Johnson answered questions about the project's status up to that point. With a proposed power generator included in the project to help the movie studio generate revenue, Delnicki asked if the town has a final version of the power purchase agreement.
“I did see a copy of the PPA, but not a signed copy,” said Galligan. He explained that the project originally planned on using solar generators, but the state instead asked for fuel cells, undoing a year's worth of preparation and setting the developers back to square one. Currently, two fuel cells are slated to be built. The power purchasing company has not yet signed the PPA, as they are waiting for an appraisal on the property.
The appraisal is a lynchpin component to the project. It appraised the conditions of the property, the construction, and appraised the next best use of the buildings should the studio fail in 10 years. The appraisal is key, because commercial lender Ocean Capital and the state Department of Economic and Community Development (DECD) need it to finalize their commitment to the project, and their bank, First Niagara, needs it for tax credits that they can put into the project. According to Galligan, the appraisal has been done and is awaiting finalization from involved parties.
Upon further questioning from Delnicki, Galligan said that they did not yet have projected revenue from the fuel cells, confirmation of final financing, or documented proof of financing for the proposed hotel, save a memorandum of understanding.
Councilor Saud Anwar asked Galligan if it was correct to say that many of the delays faced by CT Studios have been out of their control. Galligan agreed, citing the market fall and subsequent hurdles, including the difficulty of getting tax increment financing bonds after the market's fall, and the switch from a solar power plan to fuel cells. “It was like a comedy of errors, where every time you tried to get something done, someone turned around and put their two cents in,” said Galligan.
CT Studios principal Anthony DelVicario addressed the council, explaining the myriad difficulties he has faced in the last 30 days. DECD wanted an underwriting commitment from Ocean Capital, who in turn were waiting for the appraisal. Once the underwriting commitments are signed, he could take his PPA to get Public Utilities Regulatory Approval. However, due to banking regulations, if the deal is not closed within 60 days, the underwriting commitment goes “stale.” He anticipated this happening due to the lengthy process of receiving PURA. Meanwhile, there were setbacks finding an appraiser to meet the specific requirements of the appraisal – it was Wednesday afternoon before Thanksgiving when he finally received it. DelVicario said he paid numerous fees to the institutions who completed underwriting commitments, and will “spend the money twice” for renewed commitments when the first go stale.
DelVicario also said that he has been working with a major group in California, whose name he could not yet reveal, to finalize a commitment to invest up to $10 million into CT Studios should DelVicario need it. “I've been working on that for the past 60 days,” he said. “I'm probably a week to 10 days away from finalizing a commitment from a major group in Hollywood who has relationships in the movie business.” The investment would only be made based on need, he said. “I think people will be glad to know we have a recognizable name involved with us in the project.”
“This has been one of the most fruitful discussions we've had in a long time on this,” said Delnicki. “Compared to what we've had in the past, it's night and day.”
The council went into executive session at around 8:20 p.m., returning at 10 p.m. Councilor Gary Bazzano read the resolution to extend the reverter clause deadline.
While Councilor Keith Yagaloff stated that he would not support the resolution because it would “cause the town to give up valuable leverage,” Delnicki again stated his appreciation for the honesty he received from DelVicario. “Having the cards put on the table, having measurables and deliverables, could very well be key to bringing this project across the goal,” Delnicki said. “We've been told it's doable. Now is the time to do it.”
The motion passed 6-1, with Yagaloff voting no. Councilors Edward Havens and Cary Prague were absent from the meeting.