A once-vibrant development agency and major downtown landlord has hit financial troubles.
The Main Street Development Corp. plans to file for Chapter 11 bankruptcy, according to representatives from its board of directors.
The private, non-profit organization owns the buildings from 36 Main St. to 88 Main St., where Massimino’s Pizza, the Ansonia Housing Authority and about 20 senior housing apartments are located.
Amid the economic downturn, vacant storefronts on the block have led to financial problems. The group hopes to reorganize under the bankruptcy code, according to the chairman of the Board of Directors, Vincent Malerba.
“We’re trying desperately to get out of this situation,” Malerba said. “We’re probably going to file for Chapter 11. Reorganization gives us some time. Time is what we need at this point.”
It’s too soon to know how the move might impact downtown tenants or redevelopment efforts, officials said.
But Malerba said he hopes the group will be able to get back on its feet and continue developing downtown properties.
A ‘Treasure’ Of Connecticut
Main Street Development Corporation was created in the early 1990s by the Ansonia Housing Authority.
The goal was to have a non-profit agency that could seek grants and low-interest loans to redevelop downtown Ansonia properties into affordable housing for senior citizens.
Main Street Development did just that for more than a decade.
Banks loaned the group money to buy and restore buildings on Main Street.
Former Gov. M. Jodi Rell even named the group a “treasure” of Connecticut in 2001, an award that recognized its work revitalizing an empty block on Main Street.
In 2006, the state Department of Economic and Community Development gave Main Street Development Corporation a $250,000 interest-free loan to develop an empty lot across the street from City Hall.
But, in the past few years, the economy went sour. The revenue from the storefront tenants dried up as the stores went empty.
Payments on the loans, however, were still due.
Malerba wouldn’t go into specific figures, but said the group was struggling with its debt. None of the properties are in foreclosure.
Tax filings with the IRS from 2009 show the group had $1.4 million in assets and $1.6 million in liabilities.
The Main Street Development Corp. has liens against its properties for a combined $1,838 owed in sewer taxes. And, the group owes about $2,000 in back taxes to the city.
Malerba said all developers are having trouble in this economy.
“It’s a sign of the times,” Malerba said. “It’s a combination of things. We’re trying desperately to make this work.”
Loan or Grant?
The financial problems have included a legal fight with the Ansonia Housing Authority — the entity that started the Main Street Development Corp.
The Ansonia Housing Authority has a lawsuit pending against the group in Superior Court in Milford.
The Housing Authority wants the Main Street Corp. to pay $79,000 after the group allegedly defaulted on a $100,000 loan.
But Main Street Development Corp. says the Housing Authority gave it $100,000 as a grant — not a loan — and that it doesn’t have to pay the money back.
“Our position was it was a gift,” said Frank Cannatelli, the attorney representing the Main Street Development Corp.
The situation is complicated because in 2004 — some seven years after the money was first distributed — Main Street Development Corp. signed a promissory note agreeing to pay the money back. It then made five $5,000 payments to the Ansonia Housing Authority, before stopping in 2010.
Ansonia Housing Authority attorney Timothy Dillon said the five payments and promissory note indicate that the money was, indeed, a loan.
Times are tough all over, officials at the Housing Authority said.
“That money needs to be paid back,” said James Finnucan, the director of the Ansonia Housing Authority. “We desperately need that money right now.”
The money originally came from the Section 8 administrative budget, which has since been slashed by the federal government, Finnucan said.
The Ansonia Housing Authority had to eliminate one Section 8 specialist this summer as a result of the cut, and Finnucan said the payments from Main Street Development Corp. would help replace her with part-time help.
Impact
Mayor James Della Volpe said the city has no official connection to the Main Street Development Corp.
“Obviously I would have a concern if they did file for bankruptcy,” Della Volpe said. “They are landlords for several tenants up there.”
The Main Street Development Corp. hopes to improve its financial health by developing a vacant lot at 218 Main St.
They received approvals to develop the lot into 14 senior apartments. The group originally wanted 28, according to the New Haven Register.
Developing 14 units at the site just isn’t economically feasible, Malerba said.
He hopes the City of Ansonia will allow more units onto the lot so that the Main Street Development Corp. could then sell the land to another developer.
“We’re hoping they’ll cooperate,” Malerba said. “That would be a big asset to us if we could get more apartments on that Main Street property.”
Della Volpe said that would be up to the zoning boards.
A. Pat Ambrogio, the former chief executive officer of the Main Street Development Corp. and a former director of the Ansonia Housing Authority, could not be reached for comment.
