But the arrangement proved exceedingly difficult to honor as staff from City Hall and the city's housing department began to understand the rules tied to state funds and how adversely they affected the developer's needs.
The city could not simply turn over the property to a private developer and expect the state money for the project without amending the original state bond-bill legislation to reflect that change. And the state did not look kindly on giving public grants to a private developer.
Paul Georgiou, administrator of capital grants and loans for the state at the time, wrote in one e-mail: "If the new grantee is not a non-profit entity, then in all reality, they would probably not receive the grant."
Graziano said the city was in no position to take on the project alone without that state help, saying it was difficult enough for the city to "scrape up" matching funds for the state grants.
Meanwhile the developers needed millions in bank loans on their end. But the banks would not lend them money if they didn't control the land.
"Until we know we have a form of site control which will appease lenders, it is foolhardy to continued to spend our funds," Ambridge wrote in a May 2006 e-mail to City Hall and housing officials, explaining why no demolition had occurred at the site.
Further complicating matters, developers learned that additional buildings on the site were designated as historic, meaning additional renovation costs and restrictions. Just updating the windows would now cost an additional $200,000, Ambridge estimated. This new burden raised the cost of the project from $5.5 million to $9.4 million - requiring that the developers chase even more private money.
"Quite frankly, the strings attached to the state money has made this project more expensive than the grants themselves," Ambridge wrote in May 2006, referring to the historic preservation.
Nonetheless the developers pushed onward, wanting to get the work done and feeling pressure from politicians. In February 2007, Ambridge wrote to Deputy Mayor Andrew Frank asking for a progress report: "I'm sorry to be such a pain in the butt about this. ... Delegate Branch tells me he catches grief every time he goes to Church."
That month, Branch had a talk with Dixon, causing a flurry of staff-level e-mails from the mayor's office asking housing officials for a status report.
