Stalled Innovation Center Project Expected to Resume

Complicating Matters

Jay Minkarah says that the $5.5 million Innovation Center project in downtown Springfield, like just about every other initiative in the DevelopSpringfield portfolio, has been a complicated undertaking.

This means there have been, well, complications, quite a few of them, in fact, especially in the form of cost overruns involving everything from HVAC systems to the terra-cotta façade of the buildings being renovated — 270-284 Bridge St.

These complications have manifested themselves in everything from a highly visible shutdown of the project — one that started in May and left the sole occupant of the building, the Women’s Fund of Western Mass., without access to an elevator or air conditioning — to a breach-of-contract suit filed in Hampden Superior Court by the contractor, Ludlow-based NL Construction, seeking $225,000 allegedly owed for services, labor, and materials.

These complications also led to a host of questions about when, if, and under what circumstances the project would continue — questions that weren’t really answered until Minkarah, DevelopSpringfield’s president and CEO, announced he would be leaving the organization later this month to take a position as leader of a regional planning commission in New Hampshire.

Minkarah has told the local press and BusinessWest that, with a $723,000 mortgage secured from Berkshire Bank, work is expected to resume shortly on the project and that, barring any additional unforeseen complications, the center should be ready for occupancy by the end of this year.

As for the Women’s Fund, an extension of its temporary occupancy permit, due to expire at the end of September, was being sought as BusinessWest went to press.

“Ultimately, the cost of the project definitely exceeded our initial expectations significantly,” said Minkarah, putting heavy emphasis on that adverb. “And the increases came in a few critical areas, some that became evident early on, some later on.

“Most significant was the extent of the systems overhaul that was needed — that was far greater than we expected, especially HVAC, but also electrical,” he explained. “That was a contributing factor. But another contributing factor was the cost of the façade restoration.”

Elaborating, he said DevelopSpringfield needed to bring in a specialized consulting assistant to conduct an analysis of the façade and put a restoration plan in place.

“The cost of the façade restoration greatly exceeded our initial estimates,” said Minkarah, adding that fit-out costs for various tenants also far exceeded original estimates.

Matters were further complicated, he went on, by the fact that, due to the timing of a $2.2 million grant from the state’s MassWorks Infrastructure Program, construction and design work needed to begin as soon as possible, and was actually well underway before the final (considerably higher) costs of the project were known, said Minkarah.

“We became aware that we had funding gaps and would need additional funding earlier this year,” he went on, adding quickly that it was always understood that additional, traditional financing for this initiative would be needed to supplement grant funding that was received.

Despite this awareness, Minkarah said, work on the project ground to a halt in late May because of the complicated, time-consuming process of securing that additional financing.

“We were actively working to close on that financing for the project from two different sources,” he went on. “And the financing was very complex because it involved historic tax credits, both state and federal. The process of getting through everything we needed to get through definitely took longer than we anticipated.”

The breach-of-contract suit filed last month alleges that promises of payment to NL Construction were made and not kept and that communication from DevelopSpringfield about the project and its future was lacking.

A centerpiece of downtown revitalization efforts, the Innovation Center was conceived to bring people and energy to the downtown area and specifically the Stearns Square area, which has seen a number of other developments, including the relocation of the Community Foundation of Western Mass. and renovation of the former Skyplex building by MassDevelopment.

Announced tenants in the Innovation Center included the Women’s Fund, Valley Venture Mentors, the Ground Up Café coffee shop, and a cocktail bar, as well as space for startups.

—George O’Brien