"We've been working with MHIC to use additional New Markets Tax Credits they've received to cover some of the qualified expenses and close our financing gap."

Mark Hess

After major structural problems slowed progress on the A.E. Coffin Press Lofts development last winter, construction moved into high gear this summer as interior partitions were installed and exterior masonry work completed.

Two Union Street Lofts buildings under construction.

Last year, the developers found more deterioration than anticipated in the roof of the Coffin building, resulting in leaks and a wet interior that had to be dried out before interior construction could begin. Additional structural problems — some of which required complicated engineering solutions — involved the absence of a wall between two adjoining buildings and "communication issues" between buildings that had to be resolved.

"We had a general idea of the design and costs for the solutions, but some of the final engineering wasn't completed until early this spring," says Mark Hess, senior project manager for HallKeen LLC, a developer of the initiative.

"When the good weather rolled around, we couldn't jump right into closing the building up because we had a wet building," adds Mr. Hess. "And we had a wet spring as well, so it took the greater part of the spring before we could really get back into it. We are tight, as of now, and we've been finally starting with the finishes and masonry."

The Coffin Lofts initiative involves the conversion of three vacant commercial buildings in downtown New Bedford into 18 loft-style apartments and ground-floor commercial space. Five of the apartments will be reserved for very low-income households and six for low- to moderate-income households.

Developed by the Waterfront Historic Area League (WHALE), a nonprofit dedicated to preserving historic properties, and HallKeen LLC, a real estate-investment company, the Coffin Lofts initiative is part of an ongoing effort by developers and the city to revive the downtown district.

Financing for the $4.0 million initiative included a $307,709 grant and $1.45 million subsidized advance from the Federal Home Loan Bank of Boston's Affordable Housing Program, $647,116 in New Markets and Historic Tax Credits, $1.1 million in state and local HOME funds, and a $70,000 Massachusetts Preservation Projects Grant. Member Compass Bank also took a $600,000 Community Development advance from the Bank to finance expenses associated with the project's commercial space.

Mark Hess inside the Coffin building.

"The number of unfortunate surprises we had along the way did result in some substantial cost overruns for the project, and we've been working primarily with the city and with our tax-credit investor, Massachusetts Housing Investment Corporation (MHIC), on additional sources for the project," adds Mr. Hess. "We do have a commitment for additional sources from MHIC."

To close the funding gap, the developers have been promised a new infusion of New Markets Tax Credits. Initially the Coffin Lofts project received fewer New Markets Tax Credits than it qualified for because MHIC didn't have enough to go around and was unsure if it would be getting more.

"We've been working with MHIC to use additional New Markets Tax Credits they've received to cover some of the qualified expenses and close our financing gap," adds Mr. Hess. "We're also seeking state Historic Tax Credits — a source that we hadn't originally sought — to help close the gap."

In addition to the Coffin Lofts initiative, HallKeene is developing the Lawton's Corner development in two historic buildings across the street from it. That mixed-use, mixed-income development received a $1.17 million reduced-rate advance supported by funds from the Bank's former Massachusetts Community Building Program.

As part of a strategy to market the developments together, the Coffin Lofts and Lawton's Corner initiatives have been renamed Union Street Lofts, after a street that borders the buildings. Anticipating that the buildings will be completed by November, the developers have started to focus more attention on marketing. Mr. Hess says they are counting on interest from students and faculty associated with the adjacent University of Massachusetts Dartmouth Arts Center, area businessmen, and others eager to live in an urban setting.

In June, the developers offered public tours of the Union Street Lofts buildings as part of Downtown New Bedford Inc.'s AHA! promotional project. Touring the buildings was a group of area bankers from member institutions. "We're preserving old buildings and creating a new neighborhood," says Mr. Hess. "We'd like to have everyone come here to hear about what we're doing and why it's important. It's also a marketing opportunity for us."

In addition to the Union Street Lofts, numerous other mixed-use developments are either being planned or are underway in downtown New Bedford, which is in the process of recovering from years of decline by converting former commercial buildings into mixed-use developments.

The center of the country's nineteenth century whaling industry, the downtown historic district is a national park that attracts tourists from across the country. "New Bedford is an affordable city on the sea with a lot to offer," says Mr. Hess. "It just seemed like all these planets were aligning to make this happen."