Feds send Lynn $5M to loan to waterfront investors

November 15, 2010
By David Liscio/The Daily Item

Investing in the city’s waterfront just got easier.

The city’s Office of Economic and Community Development (OECD) has received $5 million from the U.S. Department of Housing and Urban Development (HUD) to make loans to investors in the newly unobstructed waterfront district.

“It’s a substantial amount of money and it’s timely because the power lines are gone and the area is ready for development,” said James Marsh, the city’s development director who played a key role in overseeing the removal of National Grid electrical transmission lines from land abutting Lynn Harbor.

“This is a pool of money that we can draw from to make loans to eligible applicants. It’s not sitting in the vault at Eastern Bank, but it has been HUD approved, so we can start taking applications.”

Donald Walker, director of project operations at OECD, described the potential loans as gap financing.

“When the mayor’s office and the city development team begin to talk to interested investors, the traditional loans from a bank are usually already in place and the equity for the project lined up. The funding we would provide is for infrastructure, utilities, roadways, sidewalks, site preparation, demolition or regrading a site,” he said. “These loans are for any type of redevelopment in the waterfront zone. And since these developments must have public access under the law, the loans can be used to create a boardwalk, promenade or other public space.”
The designated “loan zone” encompasses 305 acres and extends north from the Gen. Edwards Bridge that carries Route 1A across the Saugus River to the intersection of the Lynnway and Market Street, then eastward along the inner harbor shoreline to the Nahant traffic rotary.

Walker said the loans can be used to build out the commercial portion of a project that has retail on the ground floor and residential above.

“The loan would be applied only to the commercial part because it has the potential to create jobs, and that is one of the application requirements,” he said.

The city previously has taken advantage of the so-called Section 108 Loan Fund. According to Walker, before West Lynn Creamery was taken over by Garelick Farms, the Lynnway-based company received HUD loans to purchase additional dairy-processing equipment. “The new equipment allowed West Lynn Creamery to add new products to its line and, with it, more jobs,” he said.

The 330 Scangas Realty Trust also received loans to renovate the Clock Tower Business Center on the Lynnway, formerly a lighting factory.

“Back in the 1980s, Lowell Gray got a HUD loan to start his Internet company, Shore.Net, which became very successful before he sold it,” Walker said.

Marsh said the ability to provide loans to developers within the waterfront district will help create jobs, increase the city’s tax base, expand open space, increase housing, add more office space and allow public access to the harbor.

“The waterfront property is severely under-utilized land waiting to be transformed into a higher and better use,” he said.