🔒Lamont looks to replicate CRDA’s success with statewide development agency tasked with financing transit-oriented housing

The quasi-public Capital Region Development Authority has been credited with helping spur the development of thousands of new apartments in Hartford by providing low-interest gap financing to projects that were unlikely to get off the ground with only private investment.

Now, efforts to replicate CRDA’s success in other cities and towns are gaining traction as part of a Lamont administration focus to spur transit-oriented development.

The Municipal Redevelopment Authority, or MRDA, was established in 2019 to mirror CRDA’s efforts statewide.

However, the initiative never took hold, after MRDA failed to receive funding and state and local officials became distracted by the pandemic.

The establishment of MRDA also met resistance from some municipalities over population thresholds that excluded some smaller towns and mandated the participation of larger or distressed cities.

Last year, lawmakers quietly tried to address those issues by approving funding for MRDA — $600,000 in fiscal years 2024 and 2025 — to hire staff, and eliminating membership mandates and restrictions, opening up the program more broadly.

Last year’s state budget also allows the Bond Commission to authorize up to $60 million to capitalize MRDA. The funds would allow the quasi-public agency to help finance development projects, likely through low-interest loans.

Gov. Ned Lamont earlier this month, while taking a train ride on the CTrail line from Hartford to Meriden, said he intends to name an executive director to lead MRDA, with hopes the organization’s launch will fast-track more transit-oriented development projects, like those that have already sprouted near bus stops and train stations in Meriden, New Britain, Berlin, Hartford, Windsor Locks and other places.

And while the state has invested tens of millions of dollars in recent years to support multifamily and other local economic development projects, much more needs to be done to address the state’s housing shortage, he said.

“Connecticut is gaining population and I have to make sure that keeps going, and we can’t do that without housing. And we need all types of housing, single-family, workforce, affordable…,” Lamont said.

How MRDA would work

According to the law that created the quasi-public agency, MRDA will be overseen by an executive director and 16-member board of directors. The governor has the authority to appoint the executive director and board chair, according to his office.

Lawmakers have established the framework for how MRDA will operate, but some details still need to be finalized, the governor’s office said.

MRDA’s main purpose is to assist in local development and redevelopment efforts, with a particular focus on new housing.

Any municipality that opts to join the authority must establish “housing growth zones” that are prime for development and likely to substantially increase housing production.

Towns will be able to determine where they want to see housing and what they want that housing to look like, Lamont said.

“You want no more than two-story or three-story housing? Tell us what you want to do, what you want housing to look like, and we’ll provide the financing necessary to get you over the top,” Lamont said.

Part of MRDA’s charge is also advising member municipalities on establishing zoning regulations that provide certainty to developers.

Brian O’Connor, director of public policy and advocacy for the Connecticut Conference of Municipalities, a group that represents cities and towns, said the refined MRDA program is more user-friendly.

It, for example, makes participation voluntary for some larger cities and allows smaller towns to join independently instead of in conjunction with neighboring municipalities.

MRDA can help smaller towns, O’Connor said, gain development-savvy partners that can expedite projects, or gain access to grants and tax abatements.

In the years post-Covid, smaller towns with aging populations and declining school enrollments seem more open to transit-oriented development projects, O’Connor said, with an eye toward infilling downtown areas to make them more vibrant.

“They are seeing certain value in growth, especially housing growth,” O’Connor said.

CCM is planning to host an informational webinar on MRDA guidelines, he said.

CRDA’s impact

Michael Freimuth has been the executive director of CRDA since its creation in 2012. The quasi-public agency was designed to encourage development in Hartford and several surrounding communities.

Most of its focus has been on supporting new housing development in downtown Hartford by providing low-interest gap financing to developers building new multifamily projects.

In the past, Freimuth said many downtown Hartford developments stalled because there was a huge disparity between the cost of a housing project and the value of those properties upon completion.

Essentially, rents developers could charge didn’t support a project’s costs.

“CRDA was set up to finance that gap between what it costs to build a building and what it’s worth. And we were able to use our funds in a very flexible way,” he said.

Since 2012, CRDA has invested about $172 million in loans and equity investments, leveraging $740 million in development that resulted in more than 3,300 new apartment units, Freimuth said.

Some CRDA-backed projects — like The Pennant at North Crossing, a 273-unit apartment complex near Dunkin’ Park — have been ground-up developments. Others, like the 157-unit, Spectra Pearl apartments on Pearl Street, converted former office buildings into residences.

Funds for CRDA-backed loans are typically authorized by the state Bond Commission. Developers apply to CRDA with funding requests, which must ultimately be vetted and approved by the agency’s board of directors. CRDA loans can be used for anything from environmental cleanup, to demolition or even property acquisition.

“Our funds are lent or invested, not granted. They’re generally gap fillers, they’re very flexible,” and they’re meant to come back, Freimuth said.

He added: “We fill the gap. We don’t tell you how to use the money.”

CRDA has a good track record, although it has hit the occasional road bump. It had to write off $5 million of a 2016 loan provided to a developer (50 Morgan Hospitality Group LLC) who purchased the former Radisson Hotel in downtown Hartford, at 50 Morgan St., and planned to convert most of the property into apartments.

However, the developer eventually lost the property to foreclosure.

CRDA also serves as an advisory board, and Freimuth said that function could be an asset for smaller towns that seek MRDA project funding or need guidance.

CRDA was invited into Hartford border towns, like Newington and Wethersfield, to serve as a redevelopment agency functioning under municipal control.

“We don’t fly our flag there, we fly the town flag, and we just help a town carry a project from point A to point Z, and we’re done,” Freimuth said. “What that does is allows towns to basically hire a redevelopment staff for purposes of a specific project or funding need, and not attempt to create and sustain a redevelopment entity long term.”

Statewide opportunities

Thomas Hyde, CEO of the Naugatuck Valley Regional Development Corp., said CRDA does a good job in protecting state money and ensuring the investment comes back for future projects.

He said concepts like MRDA would provide tremendous opportunities for smaller towns along the Waterbury rail line like Derby and Naugatuck, which are already underway with new train station projects.

Many towns in the Naugatuck Valley are old manufacturing communities with great development potential, but also tremendous obstacles, including brownfield sites that are complicated and expensive to clean up, Hyde said.

“There’s been a lot of money put into the railroad, and now we have to start looking at areas around the railroad for transit-oriented development opportunities,” Hyde said. “The more we can focus funding to those areas, where we know there is going to be a gap in the funding and help get developers to the table, I think the more projects we’ll see come to fruition.”