The developers of the Chain Forge (Building 105) hotel project received another extension from the Boston Planning and Development Agency (BPDA) to secure funding, but officials and the developers are upbeat about the progress recently made to get the project moving.
The BPDA granted the latest extension at its Thursday meeting, July 11, allowing the developer – CVPA Chain Forge LLC – until September to wrap up financing. The developer has received several extension already.
However, this might be the final extension, as the developer agreed to pay $95,000 in order to approve the amendment, and agreed that any further requests for extensions would result in a re-negotiation of the development agreement.
“ln short, the ‘capital stack’ or financing for the rehabilitation of the Chain Forge Building will be immensely complicated,” read a document from the BPDA. “However, the result will be the rehabilitation of an historic building that has been vacant for over 40 years, making historical equipment available for public view, new hotel rooms to accommodate visitors to Boston, and the successful use of a new economic development tax incentive program in Boston for the first time.”
The Chain Forge project includes the creation of a 180,000 sq. ft., 230-room hotel with a restaurant/bar and function rooms. It would be located in the old industrial building, known as Building 105, in the Navy Yard. The companion development project, the Rope Walk building – which abuts Chelsea Street, has already begun the first steps in construction and is an active site right now.
One of the hold-ups for quite some time for the Chain Forge has been negotiations with the National Park Service, which requires a portion of the profits to go back to the betterment of the National Park. That has taken more than a year to resolve, but a piece of exciting news is that an agreement has been executed.
“The BPDA and the Tenant engaged in productive conversations with the NPS regarding this issue, and recently reached agreement on language that will
be included in a ground lease amendment,” read the BPDA document. “Resolution of this language is a key milestone towards enabling the Tenant to procure the equity and construction loan financing necessary for the Project, as it provides lenders and equity investors with certainty about the use of Project revenues.”
In that same vein, the developer has been moving to cobble together financing for the project – and that will be no small task.
However, a new federal program – known as Opportunity Zone financing – might be able to save the day. The building is located within an Opportunity Zone, which was created by the 2017 Tax Reform Act, and the developer is still waiting for the program to be completely fleshed out by the U.S. Treasury Department.
Once it issues final regulations for the program, the Chain Forge will seemingly have a clearer path.
Nevertheless, the BPDA said the developer has already begun working with two investors who are eager to partner with them as part of the Opportunity Zone.
“The Tenant is in final negotiations with two investors with identified capital gains that qualify for the Opportunity Zone program,” read the document. “The parties are in the process of finalizing legal and structuring arrangements for such investments.” The BPDA was upbeat that other investors might also be located who are eager to participate in the new Opportunity Zone program