GORHAM & GORHAM March 19, 2009 Robert Budway, President Scituate Town Council 195 Danielson Pike North Scituate, RI 02857 Forrest Sprague, Chairman Scituate Zoning Board of Review 195 Danielson Pike North Scituate, RI 02857 Jeffiey Hanson, Chairman Scituate Plan Commission 195 Danielson Pike North Scituate, RI 02857 David E. Provonsil, PE Town Engineer & Building Official 195 Danielson Pike North Scituate, RI 02857 Re: Hope Mill Project Status Report and Project Update. Gentlemen: I am writing to you to provide a comprehensive case status update in the above- referenced matter. As you know this project has essentially been in a holding pattern (or, ‘more accurately, stalled) since late 2007, when the Developer was forced into a Superior Court (State) Receivership. In August 2008, the Developer filed a Chapter 11 Petition in the US Bankruptcy Court for the District of Rhode Island (“Court”), whereby the State Court Receivership (“Receivership”) was held in abeyance. The effect of the Chapter 11 filing was that the Developer (for all intents and purposes, Hope Mill Village Associates,Robert Budway Forrest Sprague Jeffrey Hanson Comprehensive Status Report March 19, 2009 Page [2 LLC’s principal, Vincent Coccoli) was considered the Debtor-in-Possession (“DIP”), ostensible retaining control over the future of the project. Yesterday, following a significant hearing and much testimony in Court, Judge Arthur N. Votolato removed Mr. Coccoli as the DIP in favor of appointing a US Bankruptcy Trustee to manage and oversee the case for as long as it remains under the Bankruptcy Court's jurisdiction.! ‘The Trustee's interim report is due to the Court next Friday (March 27, 2009) and I will be present to review the Trustee’s findings. With the appointment of the Trustee, Mr. Coccoli is no longer the figure-head in this case.” Of particular note, there is a potential purchaser for the project, New England Funding & Development Corp., who appeared in Court yesterday with counsel. They are a Connecticut-based entity with readily-available funding, They indicated that they would have a purchase plan outline in the next two (2) weeks, with a more comprehensive purchase plan, and eamest money deposit (and decision) within forty-five (45) days. This appears to be a viable outside entity, not connected with Mr. Coccoli in any way. OF course, Mr. Coccoli owns privately the property previously owned by Joseph Izzi (AP 5, Lot 107), This property is necessary to the project (and therefore must be included in any sale) but is not part of either the Bankruptcy or Receivership actions All matters pending before the Town (in either the Plan Commission ot Zoning Board) are currently and indefinably being held static. The most recent site plan peddled by Mr. Coccoli shows a totally different building configuration that was presented to the Zoning Board. Obviously, this information will have to be updated, along with a number of additional contingencies, before the Zoning Board gives Final Approval. Technically, the Master Plan Extension granted by the Plan Commission expired November 2008; however, ‘because the matter was in Bankruptey Court, that action (i.c. the filing of the Bankruptcy Petition) stayed all administrative actions as well. Consequently, as soon as possible after a new developer is in place (assuming that is the direction of the case) that new developer should come before the Plan Commission and be ready to proceed with the Master Plan approval process. A major concern in this case has been Mr. Coccoli and his interactions with various State agencies, especially RIDEM. He has most recently, attempted to leverage the Town's ' Because the Developer failed to timely file a Second Reorganization Plan and Disclosure Statement, the Court had the option of automatically dismissing the case, which would have put the matter back in the Jurisdiction of the State Court Receivership process. Instead, the Court exercising its discretion, under 11 USC § 1104(3) of the Bankruptey Code, appointed a Trustee to review the case The role of the Trustee is similar to the role ofthe State Court Receiver.Robert Budway Forrest Sprague Jeffrey Hanson Comprehensive Status Report — Hope March 19, 2009 e|3 Il Project interest in gaining sewer connections for the municipal buildings of Hope Elementary School, and Scituate Police Station, as well as the privately-owned Hope Sanitary Association and the Hope-Jackson Fire Department, to speed up the sewer-line permitting process with DEM. I have emphatically restated to the Court (and to John Langlois, Esq., Chief Legal Counsel at DEM) that while the Town supports the development of the Hope Mill and the connection of municipal buildings to the yet-to-be-built sewer line, the Town does not intend to be manipulated by Mr. Coccoli or anyone else into pressing DEM to expedite their permitting and/or review processes. There are a few issues that need to be resolved in the short term; they are: 1. Resolution of DEM Notice of Violation (“NOV”), through the payment of a fine (expected to be less than $85,000.00) and the granting of certain property to the State; 2. Developing a repayment plan for all creditors, including secured and unsecured creditors; 3. Resolution of the property taxes owed to the Town (approximately $70,000.00 to date ~ representing two unpaid tax periods); and, 4. Payment of the “deposit” to the State of Rhode Island to secure the State Historic Tax Credits for the project. These items (except the repayment of creditors) must be resolved before the project or any property associated with the project can be sold or transferred. I expect that the property taxes due to the Town will be paid out of closing. 1 trust that this information is helpful to you. I am happy to answer any questions or concern that you have. In the meantime, I will continue to keep you updated as significant events ocour, ‘Thank you for your attention and cooperation in this matter. Very truly yours, DMD:eg Server: Davi\Town of SitutsHope Mil ProjechComprchensive Status Report 03-19-09