The Capital Region Development Authority board is being asked to recognize that the agency will never recover about $5 million lent for a project to convert a portion of the former Radisson Hotel in downtown Hartford into 96 apartments.
The agency made a $6.4 million loan to 50 Morgan Hospitality Group LLC in March 2016. At the time, the plan was to convert the top eight floors of the 18-story hotel.
Major downtown Hartford landlord Shelbourne Global Solutions and Waterbury-based Axela Group acquired the building at 50 Morgan St. for $22 million in 2021 and announced an $8 million effort to convert the remainder of the building into apartments.
A motion to “write-off” the loan will go to the CRDA Neighborhood and Housing Committee in a meeting Friday.
CRDA Executive Director Michael Freimuth said Thursday the loss has been fully reserved against and this week’s move amounts to bookkeeping. Even though a $6.4 million loan was originally authorized, the loss is actually about $5 million, as the full amount was never fully drawn, Freimuth said.
CRDA “carefully” analyzed the possibility of pursuing a claim against Joseph Gillespie, the guarantor of the 2016 loan, and decided it wasn’t worth the expected $12,500 to $14,500 in legal expense, according to a summary shared with CRDA board members.
“Initial searches performed by Shipman & Goodwin indicate that Mr. Gillespie does not have any assets worth pursuing,” reads the CRDA summary. “Additionally, DW, as the first lender, would likely be entitled to the proceeds recovered by CRDA.”
And so, CRDA staff are recommending the agency write off the loan balance and forgo any further claims.
