Developer to renovate troubled Danbury housing complex

July 28, 2006; As originally appeared in THE NEWS-TIMES by Elizabeth Putnam

DANBURY – A local developer soon will begin renovating the High Ridge housing complex, the center of a financial scandal a few years ago.
With state and federal approvals now granted, the Danbury Housing Authority – a federal agency whose leaders are appointed by the city – is expected to officially sell the vacant complex to Danbury-based GRC Properties by Aug. 11.
GRC then will begin constructing 60 affordable housing units that the company will sell to Danbury Housing Authority residents.

The Savings Bank of Danbury and the Housing Development Fund, a Fairfield County-based institution that provides assistance to low-income residents, will provide 99 percent mortgages for up to 40 years, along with closing-cost assistance.

"This (project) ensures the viability of the Housing Authority," Dom Chieffalo, chairman of the authority, said Thursday. "We are glad that we were able to preserve this for low-income families instead of putting market-rate condos in there." Gary Michael, one of the owners of GRC Property, said he hopes to have the project complete within 18 months after construction begins. Two-bedroom units will sell for $190,000, and three bedroom units will go for $210,000.

"Our game plan is to get the units built as quickly as we can," Michael said.

The Housing Authority, which provides public housing assistance for about 4,500 people, decided to sell the abandoned buildings last year to return them for use as affordable housing and to pay debt caused by the authority's failed 2002 attempt to renovate the buildings.

High Ridge has been empty since 2002, although residents started leaving the crime-ridden project in 1998 and 1999.

Then problems started in May 2003, when Wachovia Bank of Boston told housing officials $11 million in borrowing that was supposed to be paid back over eight years was due immediately. The authority still owed $6.5 million to the bank. The loan was taken out in 2001.

Wachovia made the move after learning former executive director Bernie Fitzpatrick gave $1 million in borrowed money to a contractor working on the High Ridge Gardens project. Fitzpatrick didn't have permission to give the contractor money.The contractor later declared bankruptcy. Fitzpatrick resigned.

In December 2003, the federal Department of Housing and Urban Development reported that the authority incurred $92,816 in costs "that were ineligible, unsupported, and were unreasonable or unnecessary."

The costs included unauthorized bonuses and personal charges on authority credit cards.

Since then, a new board of directors has worked to put in better financial management practices and to pay off the $11 million bond. It was successfully renegotiated in April 2005 and is being repaid.

The $3.1 million that GRC Property will give for High Ridge will finish paying off that bond.

The Savings Bank of Danbury has agreed to fund the entire project, which will cost about $24 million, including the $3.1 to buy the project, $8 million for construction, and $12 million in mortgage loans to the residents.

"It's a big deal for us … those buildings have been vacant, and now we will finally be able to put people in there," said Danbury Mayor Mark Boughton.