HAVERHILL, Mass. — The future of Salvatore Lupoli's proposed 10-story waterfront building, The Heights, could be riding on the City Council's decision on a $1.12 million bond that would cover the cost of constructing a parking garage and extending the boardwalk.
The city had agreed to use state grant money to construct the public infrastructure — a garage and the boardwalk extension — to supplement Lupoli's $30 million investment. But construction turned out to be more expensive than anticipated, and some of the grant money was lost when the project rolled over into the next fiscal year, leaving the city looking for another way to fund the project.
Considering an expensive bond that would ultimately cost the taxpayers $420,000 in interest, councilors questioned Tuesday night why they did not have proper answers and paperwork regarding the project, and expressed concern that Lupoli could back out of the proposal if the garage and boardwalk aren't built on the city's dime.
"Is Mr. Lupoli suggesting right now if we don't build this parking garage, is he going to walk away from this project, from Haverhill Heights? Does he have the recourse to do that?" Councilor Timothy Jordan questioned.
Reached by phone Wednesday, Lupoli would say only that "it was my understanding that the state was going to support a (parking) deck to facilitate this project."
The Heights is a mixed-use development with restaurants, office space, residences at the opposite end of Merrimack Street from the recently completed Harbor Place. The Heights, which would be home to a culinary program run by Northern Essex Community College that would occupy two floors of the project, is to be supplemented by the boardwalk extension and a city-owned and constructed parking garage, sitting partially on Lupoli-owned land through an easement.
A $2 million grant the city received from the state program MassWorks last year was earmarked to help the city pay for those infrastructure improvements, according to William Pillsbury, director of economic development for the city.
Pillsbury said about $800,000 of that grant went toward the demolition of an old, dilapidated building owned by Lupoli to make way for the parking garage, and toward the completion of architectural designs for the infrastructure projects, leaving the city with $1.2 million in grant money. Then, grant money the city had expected to roll over into the current fiscal year — about $548,000 — was revoked by the state. Estimates for the construction costs came in at about $2.15 million, leaving Haverhill with a $1.12 million deficit in funds to pay for the garage and boardwalk, Pillsbury said.
"The state essentially agreed they'd allow us to roll over the money, and when the final analysis came, they decided not to do that," Pillsbury said.
Mayor James Fiorentini is now encouraging the council to approve the bond. He and Pillsbury said the city attempted to find the funds through other resources, but ultimately, feel that Haverhill will have to bear the cost.
"The state has made it clear to us we got millions and millions in MassWorks money. ... We've tapped out as much as we can of other resources. It's time for us to step up to the plate," Fiorentini said. "This is a very worthwhile investment for us."
While in support of the project as a whole, five councilors who spoke about the bond Tuesday night were skeptical of putting the city into debt without concrete plans for the property after construction. Councilors Joseph Bevilacqua, Melinda Barrett, Thomas Sullivan and Michael McGonagle recused themselves from the discussion due to conflicts of interest they have on downtown projects.
According to a chain of emails between Council President John Michitson and city Auditor Charles Benevento, the city has "no current answer" as to who will maintain the garage once built. It's also unclear how many of the 50-odd parking spaces in the garage will be public, and how many will be earmarked for Lupoli's tenants.
Benevento also said Lupoli has not yet closed on the site he purchased from the city in 2016 for $701,000. The purchasing agreement allowed for the pizza and real estate magnate to pay in annual installments. So far, he has paid the city less than $200,000.
"Where's the performance guarantee that what we get involved with is really going to complete?" asked Councilor William Macek. "I don't want to be the guy that supposedly killed the project, but if it's so good, and it's all green lights ... then put it in writing. They shouldn't have any problem unless there's something they're not telling us."
Macek added that without those written agreements, he would not support the bond.
The city requires the votes of six councilors to borrow money, so Fiorentini said he anticipates the council will invoke the Rule of Necessity, a state law that allows councilors with conflicts of interest to cast votes on a project if there are too few councilors without conflicts. As it stands, only five of the councilors are able to discuss and vote on The Heights matter.
Fiorentini said Lupoli hopes to break ground as soon as he secures a building permit, which the mayor said he cannot sign off on until he has the funds to commit to the public projects: the boardwalk and parking garage. Still, the mayor said he is "confident" in the project and that it will go forward. Lupoli said last summer that his project was going to begin before the end of 2017.
The $1.12 million bond was placed on file for 10 days at Tuesday's meeting. It will come back before the council on Aug. 21.