SPRINGFIELD – The Springfield Redevelopment Authority (SRA) approved a Memorandum of Understanding (MOU) that would allow the potential redevelopment of 31 Elms St. into a mixed-use building of retail shops, offices and apartments to move forward.

The developers, however, cautioned there are still challenges to the completion of restoring the historic structure to a new use, not the least of which is raising the $35 million to $45 million needed for the project.

Part of that budget would be $11 million from MGM Springfield in order to fulfill its contractual obligation in the Host Community Agreement for the creation of 54 market-rate apartments.

Christopher Moskal, executive director of the SRA, said “this is kind of an exciting day for all of us.”

He explained the city of Springfield took the property in 2006 and then deeded it to the SRA in 2008. For more than eight years, the SRA has been trying to find a developer for the building.

Peter Picknelly was named the preferred developer for it and has become partners with Winn Companies, a Boston-based development company with a long track record of bringing new life and function to historic building.

Picknelly noted his family has been involved for the last 20 years in trying to develop a plan to redevelop the building. He noted that in the past the idea was to convert the building into a boutique hotel followed by plans to make it all commercial space or all housing. None of them were ultimately deemed viable.

“The timing is now and this is the right team to do it,” he said.

Architect Robert Verrier said the physical condition of the building at this time is poor and water damage has taken a great toll on the structure, first built in 1897 with an addition added in 1901.

He said if nothing happens to save the building it may not be standing after another two winters.

The SRA has installed a temporary roof to address the water leaks.

The plan presented to the SRA would have 10,900 square feet of office space on the ground floor. There would be 11,400 square feet of office space on the second floor. Picknelly said he would move the headquarters of his Peter Pan Bus Lines to the building.

The rest of the building would be 60 apartments. There will be 44 one-bedroom units with 730 square feet of space and 16 two-bedroom apartments with 900 square feet of space.

Picknelly said because of the nature of the building the apartments would all be singular in character.

The rents would range from $1,200 to $1,400 a month with some of the units allocated for “workforce housing” with the tenants earning between $43,000 to $61,000 annually.

With site control approved by the SRA, the developers now can go about securing the funding, including various tax credits. Lawrence Curtis, president and managing Partners of Winn Development explained that with a project such as this one public funding, such as tax credits, is essential.

The MOU states the SRA will have the obligation of remediating any hazardous materials from the building, such as lead paint.

Michael Cowley of M.F.C. Systems, who is a consultant for the developers, said the MOU is the product of nine months of negotiations with city officials.

Michael O’Brien, executive vice president of Winn Companies, said that if all goes to plan, he expects the building would be finished sometime in 2019.

The developers would create parking behind the building, as well as along Elm Street and would explore removing the building at the corner of State and Main streets that is near 31 Elm St.

Picknelly said the recent agreement to use all union labor has increased the cost of the project.  Mayor Domenic Sarno released the following statement on June 3: “After meeting jointly with all trade labor unions and the preferred developer, Opal/Winn, and after further consultation over the last couple of days, we have come to an agreement that the 31 Elm/Court Square economic development and market rate housing project will be done under a Project Labor Agreement (PLA). We all feel this is one of the last steps to make this project a reality. I am very excited that we’re moving forward on this important project. I am optimistic, with all parties involved working together, this project will be successful. This would put another long-abandoned piece of property back on the tax rolls and creating more jobs.”

The developers believe both the City Council and the Massachusetts Gaming Commission will agree to the plan that would both satisfy the requirements of the Host Community Agreement (HCA) for the creation of 54 market-rate apartments and the redevelopment of a downtown landmark. Both the Council and the Gaming Commission would have to approve the plan, as it requires an amendment to the HCA.

Once the preliminary work outlined in the MOU is completed by both the SRA and the developers, then a purchase and sale agreement could be drawn up.