Bridge Housing has 14.9 acres of land on State Road in Vineyard Haven, and completed plans for 22 affordable houses on that site. It also has no money, little prospect of raising any money and a $2.35 million loan on which it is currently in default.

And it has written promises from the financially-strapped Island Affordable Housing Fund of more than $1 million for the development, Bridge Commons.

Dick Mezger, a board member and former executive director of Bridge Housing, can’t help a little irony, as he talks about the letter he received in September last year, signed by the former executive director of the housing fund, Patrick Manning.

“It’s a gorgeous thing,” he said. “A business letter on Island Affordable Housing stationery, and the first paragraph reads: ‘We are pleased to inform you that the Island Affordable Housing Fund has made a decision to use our best efforts to raise $1,004,215 in support of the development of Bridge Commons.’”

The letter contained the caveats that the funding would be dependent on the fund itself being able to find sources of money, through Community Preservation grants and fund-raising activities. But it was strong support, and would be useful also in helping to induce other potential funders, particularly the state, that the project had momentum.

The letter — a follow-up to a more general expression of support, sent in March — said the money would be used exclusively for development related costs.

“It is anticipated that the funds will begin to be available in the first quarter of 2009 . . .” it said.

But they did not flow as promised.

“Now it’s obvious that their commitment to provide $1 million in construction funding just isn’t going to happen,” Mr. Mezger said.

Now the failure of the fund to meet its commitment is not the only thing that has gone wrong in Bridge Housing’s long effort to get its project built. But it is a particularly frustrating one, for the fund not only failed to come up with money, but discouraged Bridge Housing from its own fund-raising efforts, Mr. Mezger said.

“They had always told us they would be a partner. They had been telling us for years that they were the fund-raising arm of affordable housing on the Vineyard and please don’t fund-raise yourselves and confuse the public.

“They said ‘We’re going to un-confuse them and focus the efforts and make lots of money and spread it around.’

“I believe that was a very sincere objective on their part. The fact they were trying to centralize fund-raising in principle is good,” he said.

And at the time, it meant Bridge could focus on preparing its “one-stop” application to the state for funding, which was largely completed. But it also was a factor in leaving Bridge in a desperate financial situation

“The project was designed — the placement of the homes, the road system, the septic, storm water, the houses themselves, which were modular duplexes. We still had just a couple of things to do, like an archeological survey, but we were very close to submitting a one-stop application to Department of Housing and Community Development (DHCD),” he said.

The hope of Bridge Housing is that they can reach terms to extend their loan from Boston Community Capital, which expired at the end of October.

“We borrowed money from them in May 2007 to purchase the Norton family wood lot,” he said.

The price was $1.7 million. Then, with some money gleaned from various sources — state grants, a little from the housing fund, Episcopal City Mission and some past fund-raising on Island — they began planning.

“That was in about June or July 2008. We had a marketing study done at the time, to confirm we could sell them — which probably is not true anymore because of the state of the real estate market,” Mr. Mezger said.

“Right now we are in default to the tune of $2.35 million, that being the cost of the land, some predevelopment spending, and accrued interest.

“Boston Community Capital has expressed an interest in extending the loan, in part, I think because they hope the value of the collateral will come back from where it is at the moment.

“That’s a comment on the state of the real estate market [but] Boston Community Capital is in the business of creating affordable housing, and I believe they see the opportunity of creating 22 affordable homes on Martha’s Vineyard as something they don’t want to abandon lightly.

“They have financial incentive to extend the loan and they have a mission motivation to extend the loan, but the details are still being wrestled with.”

And if agreement is not reached?

“Either they foreclose or we give them a deed in lieu of foreclosure. But I don’t think they want to own land on the Vineyard.”

That said, though, Mr. Mezger acknowledges huge difficulties still stand in the way of actually building the project, which it is estimated will need another $5 to $6 million.

“We always understood we would avail ourselves of a state grant through the Department of Housing and Community Development. We assumed $1.2 to $1.5 million of grant money,” he said.

He believed the DHCD was “very interested in our project.

“But when the [economic] crash occurred they decided to focus exclusively in rental and not home ownership projects.”

Mr. Mezger says he can understand why that happened.

“There were a bunch of affordable rental projects reliant on investors who were doing investment tax credit deals, and 15 or 17 months ago, those investors disappeared. So DHCD had a bunch of projects suddenly without the money they needed to complete. They became distracted by those projects . . .”

And the new federal administration, too, was more interested in pushing rental over ownership housing projects.

“The bottom line is that right now there is no interest on the part of the HCD in what they have traditionally done for affordable home projects, so that big chunk of money has been lost.

“And having run out of money and not being able to pay the interest on the mortgage, we’re kind of stuck,” he said.

Mr. Mezger, a previous president of the board of Bridge, had been the executive director of the organization, and project facilitator for Bridge Commons.

“But,” he said, “recently I resigned that position, upon being asked. There was no money to pay for doing anything anyway,” he said.

In an interview with the Gazette yesterday, T. Ewell Hopkins, executive director of the fund and Kim Angell, a board member, confirmed the correspondence with Mr. Mezger.

But Ms. Angell said the commitment to give money to Bridge was contingent on Bridge receiving a state grant they had applied for.

“I remember the discussion and the board was very clear about that and we were very clear in the letter that we would not give them the money until after they had received their money from the state,” she said.

Mr. Hopkins later provided copies of both letters to the Gazette. Neither contained any such contingency language involving state funds.

In an interview just after he was hired in early October, Mr. Hopkins called Bridge Housing a top priority, and said that active talks were underway between the two housing nonprofits.

“We have been involved in intense conversation, and while 100 per cent of the parties involved have not bought in, there is a workout plan and we think we have come up with an approach . . . that is truly a priority and at the top of the list for my first 100 days,” he said.

Yesterday Mr. Hopkins clarified the relationship. “There is no financial relationship with Bridge Housing,” he said.