MERIDEN — A Boston-based equipment supplier is suing the Meriden Housing Authority for more than $1.3 million, claiming the agency failed to repay state and municipal lease and purchase agreements.
In a lawsuit filed in New Haven Superior Court two weeks ago, Leasing Innovations Inc. is also seeking to attach liens valued at $1.3 million on Meriden Housing Authority real estate and personal assets. A court-ordered telehearing on Leasing Innovations’ request is set for Dec. 1.
According to the lawsuit, the MHA entered into a lease and purchase agreement for equipment and fixtures for $213,205 in January 2014 that was not fully paid. In 2015, Leasing Innovations entered into another agreement with the MHA for $225,322 that was also defaulted on. In December 2019, Leasing Innovations made another agreement with the MHA for $923,142 that was also not paid in full, according to the lawsuit.
“Leasing sent written letters of default to the defendant pursuant to the terms of the lease and the defendant failed to cure said default,” the lawsuit states.
The claim further states that according to the signed agreement, Leasing Innovations is entitled to attorney’s fees related to the debt collection and court costs.
Attorneys for the housing authority and Leasing Innovations Inc. could not be reached for comment.
The Meriden Housing Authority agreed to a $3 million loan from Leasing Innovations Inc. in 2015 that would allow MHA to lend the funds to Maynard Road Corp. for work at two former elementary schools in Bristol, the Record-Journal reported in 2018.
Maynard Road Corp. is the development arm for the housing authority and shares its board of directors. Maynard Road has built and managed projects in Meriden, Bristol, Rocky Neck and other areas.
Municipal leasing and purchased agreements through government agencies such as housing authorities generally have lower interest rates and provide tax benefits to lenders.
At the time, critics of the deal questioned why the housing authority was lending money for an out-of-town project and whether federal funds were used in its financing. After receiving complaints about the arrangement, the Hartford office of the U.S. Department of Housing and Urban Development investigated and determined no federal funds were used.
"HUD has looked into the relationship between the Meriden Housing Authority and the Maynard Road Corp. thoroughly and found that since no federal funds or encumbrance on federal property occurred, HUD guidance is not triggered on conflicts of interest or development related activity or any other issue," HUD spokeswoman Rhonda Siciliano said in an email in 2018.
MHA Executive Director Robert Cappelletti said at the time, it's unfortunate that federal resources were spent to investigate and prove what he’d been saying all along. Cappelletti said the development arm's activities add value to the city's housing authority and the community.
"Maynard Road is a development company that looks to create affordable housing across the state of Connecticut," Cappelletti said in 2018. "It is also creating jobs in energy improvement and development."
Bristol Enterprises LLC manages the housing project and Maynard Road supervises the management. Both buildings are open and leased.
The Bristol project is one of several endeavors undertaken by Maynard Road Corp. and the housing authority. The development work represents a shift in public housing operations that have seen budget cutbacks in recent years, and are under pressure to develop private partnerships to generate more funding for housing.
In June 2018, Maynard Road's board of commissioners authorized Cappelletti to negotiate a $23 million loan to construct the senior market-rate housing at the two former schools.
The O’Connell and Bingham schools were added to the National Register which made them eligible for historic tax cuts. The developer Bristol Enterprises LLC is a partnership between Maynard Road Corp. and Ted Lazarus. But preserving some of the historic features required workarounds causing some delays and cost increases.
Two commissioners voted against the lease purchase in 2018, one citing unfamiliarity with the project, the other citing MHA's debt.
But the Bristol project had the backing of board Chairman Neil Ivers and a majority of members who agreed with Cappelletti that the project would bolster Maynard Road's exposure as a developer, provide jobs to workers and generate revenue for the housing authority.
In March 2018, the state agreed to give Maynard Road a $3.5 million state assistance agreement.
The project was also eligible for tax credits valued at $14 million, reducing the $23 million loan to $9.3 million, Cappelletti said at the time.
The Meriden Housing Authority and Maynard Road are also partners with Westmount Development at 24 Colony St., and with Pennrose Properties on Meriden Commons I and II. They also built veterans housing on Hanover Street .
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