Developer Tim Flannery is seeking to extend his line of credit with the city of Westbrook for one of his office buildings, One Riverfront Plaza.
The City Council’s Finance Committee is expected to discuss whether to extend the credit at a meeting, which will be held prior to the regular City Council meeting next Monday night, March 7, in room 114 of the high school. The meeting was scheduled for Monday night but had to be canceled because there were not enough members available to attend.
The line of credit in question was issued in April of 2003 to Flannery, who built and owns the office building. City Finance Director Susan Rossignol said the City Council authorized a $1.2 million line of credit to Flannery at that time because of changes in financing while the building was under construction.
City Administrator Jerre Bryant said Flannery used the $1.2 million from the city to finish construction on the office building. He said Flannery signed an agreement with the city to pay off the loan once he secured permanent financing for the building.
The agreement with the city called for Flannery to repay the loan, including all interest and legal fees, according to Bryant.
Bryant said the bank originally set a March 1 deadline for the city to extend the loan with Flannery. Because the city was unable to hold the Feb. 28 meeting, Bryant said the bank agreed to give the city more time to hold the necessary Finance Committee meeting and extend the loan.
Banknorth “has been extremely cooperative and flexible on this issue,” Bryant said.
The line of credit was intended as a short-term loan, Rossignol said. However, the loan has already been extended once, and now the city must extend the loan until at least June, because Flannery still hasn’t secured permanent financing for the building.
In addition, Rossignol said the city also made a second loan to Flannery of a little more than $1 million from the city’s revolving loan fund. She said Flannery has paid back approximately $900,000 of that loan through a federal Brownfields grant.
Flannery still owes the city a balance of approximately $1.3 million, Rossignol said.
Bryant said the city secured the line of credit through Banknorth. While the bank has agreed to extend the repayment of the loan through June, Bryant said the bank indicated to the city this would be the last time they would consider extending the loan.
It is unclear what has delayed Flannery’s securing of permanent financing for the building, which has been open since last April. A woman who answered the phone at Flannery Properties told the American Journal that Flannery was out of town and unavailable for comment for this story.
Mayor Bruce Chuluda said the city is working to settle this issue as quickly as possible. “I’m not happy that this item has not been resolved,” Chuluda said. “But we are trying to work on it.”
Chuluda said he believes one of the reasons for the delay is Flannery is looking to sell the office building. “I don’t believe there are any secrets in that regard,” he said.
Chuluda said he believes that because Flannery is considering selling the building, uncertainty over the building’s future ownership has precluded him from taking the necessary steps to secure a final mortgage on the building.
Bryant also said he believed that the delay in securing the permanent financing is due to the fact that Flannery is trying to sell the property. He said the June deadline would force Flannery to either secure permanent financing or sell the building by then.
The building has been listed for sale on LoopNet.com, a national Web site that features commercial real estate listings, since November. In November, Flannery said the listing was more of a way to gauge whether there was any interest in the building rather than a concerted effort to sell it.
The listing, which was last updated on Feb. 6, sets the asking price of the five-story building at $23.5 million. It describes the building as a 140,000-square-foot, Class A office building sitting on a 2.5-acre lot along the Presumpscot River.
Disabilities RMS, who moved to Westbrook from Portland when the building opened, has a lease to occupy 110,000 square feet of office space in the building. The lease expires in April of 2014.
Currently, Disabilities RMS occupies four floors of the building. The first floor of the building is vacant and listed as being available for lease.
In November, Flannery told the American Journal there was some interest in the building even as it was being built. He said he had offers for the building during construction, but none of the interested buyers at that time offered him the price he was looking for.
Frank O’Connor, of the Dunham Group, the listed real estate agent for the building, did not return calls seeking comment for this story.