The majority of the former Belmont building was recently sold to PKV, LLC, an entity of Connecticut-based developer Carlos Mouta.
The majority of the former Belmont building was recently sold to PKV, LLC, an entity of Connecticut-based developer Carlos Mouta.
NARRAGANSETT – With no buyer present, no money down and no business plan presented, the town council in split vote sold property in the Pier Marketplace to an out-of-state developer Tuesday night for $2,070,145.
The meeting at which the sale was approved was the first opportunity the public had to officially weigh in on the topic, as the town council had previously discussed the proposal exclusively in executive sessions. The sold space was intended to house the town’s new library, but with Tuesday night’s vote, coupled with a similar council decision made on Aug. 19, the property is now envisioned to host a food court and a liquor store.
Specifically, the property was sold to PKV, LLC, which is registered in Hartford, Conn. to developer Carlos Mouta, who intends to turn the space into an “eatery-style market” or food court, according to town council President Matthew Mannix.
“The concept that has been put forward is that in the middle of this area there would be a kitchen area and it would be an eatery-style concept,” said Mannix. “[Mouta] would go to different areas in town if they would want to be part of that and there would be a seating area around that. Essentially, it’s an eatery style, almost like a food court.”
Under the approved purchase and sale agreement, PKV would be required to pay $50,000 within five days of the execution of the purchase and sale agreement, an additional $700,000 upon the closing of the deal, and the town would finance the outstanding balance in the form of a three-year mortgage to Mouta with 5 percent interest in the first year. Per the contract, Mouta would be required to pay the outstanding balance after three years, but in the meantime, would only be responsible for monthly interest payments on the principal balance to the town totaling about $5,500 per month. In the second and third years of the mortgage, the interest rate would jump to 5.75 percent. The deal would also be backed with a “personal guarantee” from Mouta.
Mouta was not in attendance Tuesday night. This, combined with the 13 executive sessions in which the deal was hammered out without public input, the mortgage arrangement with the town as outlined in the purchase and sale agreement, Mouta’s business history in Connecticut and the property’s original intended use as a library, caused the sale to be largely protested at the meeting by some town councilors, local business owners, attorneys threatening litigation, a state representative serving Narragansett and the vast majority of the public in attendance. Prior to the Tuesday night approval, the property was not officially listed for sale, did not receive an appraisal following its purchase by the town in 2018 and did not come with a price tag, all motions denied by the council majority.
Mannix said if Mouta’s project “didn’t work,” ownership of the property would revert to the town, in addition to the $700,000 deposit staying with the municipality.
“That’s the mechanism we put in to protect ourselves,” he said.
Each member of the council met with Mouta individually prior to the vote. Mouta is developing a similar project in a 20,000-square-foot former brick warehouse in Hartford, Conn. According to local reports, Parkville Market was originally set to open in April of this year. Construction delays, however, have stalled the project to a late 2019 opening. This week, City of Hartford officials and members of the media visited the site on Park Street, where project leaders announced a grand opening scheduled for December. The press conference was on the same day as the meeting in Narragansett. The $5.5 million project is being bolstered by public money in the form of grants and loans from the City of Hartford.
Councilor Patrick Murray, a library supporter who voted in the council minority against the sale Tuesday, raised a concern that the project in Narragansett could be abandoned and sold to a third-party developer without the town’s input.
“The problem is, if [Mouta] pays the lien off, can he go ahead and sell the project?” asked Murray.
“Yes,” confirmed town solicitor Mark Davis, who helped draft the purchase and sale agreement.
Murray said the town should put a first right of refusal provision in the contract. He also pointed out that no proof of funds was provided by Mouta or required by the town prior to the vote, and no business plan was presented so the public understood what was being proposed. Murray’s request to grant the town a first right of refusal went ignored.
Councilor Jesse Pugh said the process would have been easier if Mouta was in attendance at the meeting.
“He could be here tonight to tell everybody what his plan is, to convince everybody about what a great idea it is and how it’s not going to hurt their business,” said Pugh. “But he’s not. He’s not here. He wants to be a part of this community, but he’s not here.”
While Mannix and council vice president Jill Lawler were adamant the project would not compete with local businesses, Pugh disagreed, adding that the mortgage arrangement present in the contract was not fair to local businesses who struggle to survive during the winter months. Upon questioning from Pugh, Davis said the monthly interest payments on the mortgage, the only form of payment to the town Mouta would be responsible for outside of the initial $750,000 deposit and regular property taxes, would equate to about $5,500.
“It’s interesting because I know a lot of businesses in the Pier area that don’t make a lot of money in the winter at all,” said Pugh. “They keep their staff on and they stay open so they can serve the people all year but they lose money in the winter because their rent [is high]. There are businesses, multiple restaurants, on Boon Street and in the pier area that spend $3,000 to $5,000 a month to run their business. This town council is spitting in their face tonight.”
Pugh went on to challenge the idea that Mouta’s project would not interfere with revenue for local businesses, pointing out there was no no-competitive clause present in the ultimately approved contract.
“Is there any stipulation that no vendor in this building is allowed to sell coffee so that they don’t compete with Cool Beans Cafe?” asked Pugh. “No sandwiches, right? Is there a guarantee that there’s no sandwiches? There’s not going to be any pizza here? That’s a guarantee, right? No burgers either, because we don’t want to compete with Crazy Burger.”
According to Lawler, in executive meetings, Mouta had stated he would not bring in any businesses that would compete with local establishments. Murray opined the town should have gotten the guarantee in writing.
Pugh raised concerns the purchase and sale contract could allow Mouta to conduct an appraisal of the property and then sell it for a profit.
“This buyer would be spending $205,000 over three years in his monthly payments to be in this building,” he said. “That plus his $750,000 down, we’re around $1 million for three years. If he wanted to sell that building for $2.5 million, or $3 million, he could do that, we know that. So he could just never open a market and sell the building and he only has to pay $5,000 or so a month to do that.”
Also upon Pugh’s questioning, Davis stated Mouta had filed for Chapter 11 bankruptcy on another LLC in Connecticut in 2015.
“What’s notable about that is in 2018, [the mayor of Hartford] and local politicians of Hartford gave him money, and celebrated the opening of one of his projects,” said Davis of Mouta.
Mouta has completed multiple restoration projects in Hartford, according to local reports.
“Businesses set up LLCs to protect themselves individually,” Davis continued. “You would like to believe Hartford wouldn’t be giving him $300,000 to $900,000 given the fact that he filed bankruptcy in that city three years earlier. From what I can tell, he has an incredibly good reputation in the areas in which he’s done business. Has he had a failure or two? Of course he has.”
Pugh concluded with harsh opposition to the sale.
“I cannot believe a town council, who is supposed to represent the people of this town, would undercut our local business, by giving an out-of-state competitor an unfair advantage,” he said.
During public comment, Michael Kelley, an attorney representing G.P. Pier Retail LLC, the arm of Gilbane, Inc., the former owner of the Pier space and the entity that oversees properties in the Pier Marketplace, said his client made concessions to the town while negotiating the sale of the former Belmont property in October of 2018 with the understanding the space would be used for a municipal library.
“My client was induced to provide the town with a discounted maintenance agreement,” said Kelley. “The maintenance agreement that was granted to the town is about $20,000 less per year than it would have been for another party or what it was actually for the Belmont Market…Now it would appear what we have is a bait and switch. The town wants to sell the property, allow an intense commercial use, and that is one of the reasons why I’m here tonight.”
Kelley said his client would pursue “whatever legal actions necessary to prevent this transaction.”
Mannix stated there was no deed restriction present when the property was transferred to the town.
Win Hames, a resident, chair of the town Democratic committee and former candidate for town council in the last election, said the town, per its charter, could only borrow up to 1.5 percent of its annual budget to finance projects without going to a public referendum.
Section 6-2-8 of the town’s code of ordinances states “no bonded indebtedness may be incurred pledging the credit of the Town in excess of one and one-half (1.5) percent of the current adopted budget in any one (1) fiscal year unless submitted to a vote of the qualified electors at either a general or special election and being then approved by a majority of the votes cast at said election.”
1.5 percent of town’s last annual budget is about $900,000. The town would mortgage about $1.3 million to Mouta.
About two hours of public testimony followed, the vast majority of which was opposed, with most calling for the motion to be continued or outright rejected, including Dist. 34 representative Teresa Tanzi.
When the motion passed in a 3-2 vote, with Mannix, Lawler, Lema in approval and Pugh and Murray against, the council chamber quickly emptied to the sound of boos and chants of “shame.”
Mouta could not be reached for comment for this article.
