Councilors suspicious of details for proposed recreation center
By Christian Mysliwiec - Staff Writer
South Windsor - posted Wed., Nov. 21, 2012
A $10.5 million proposed recreation center at Evergreen Walk has caused a stir in town since it was formally introduced to the Town Council on Oct. 15 – in part due to the controversial method proposed to finance the project. The plan calls for the creation of a 63-20 non-profit corporation, which would have tax advantages similar to a municipality, and would seek its own bonded funding – which means the town does not vote on the project in referendum. Though the recreation center was nowhere on the agenda, 63-20s were much on the minds of councilors during their work session on Monday, Nov. 19.
The unfamiliar nature of 63-20s prompted Mayor Thomas Delnicki and Town Councilor Kevin McCann to submit questions to town attorney Dwight Johnson, who responded Nov. 8. Johnson reiterated his responses at the work session, and his findings shed light on the project. The town charter does allow the use of 63-20s. For-profit entities would be able to partner with the 63-20 “for the public convenience” - for example, a Dunkin Donuts could open a store within the recreation center facility. The town does not need to initiate a bidding process for individuals or corporations entering into a partnership with the 63-20, as the 63-20, not the town, would be handling the expenditure.
Johnson responded to McCann's question, “Can bonds be floated by a 63-20 corporation created by the town without the need for a referendum?” His reply was, “Because any bonds would be issued by the 63-20 corporation rather than the Town and the repayment of the bonds would be limited to revenues from the facility, no referendum would be necessary.”
Councilor Saud Anwar has been vocal in his opposition to the plan. In a Nov. 13 telephone conversation, he expressed his skepticism with the information presented by proponents of the plan. “Each and every line item that has been described has been over-inflated very significantly,” Anwar charged. He cited a claim that Dunkin Donuts will rent space at the proposed center for $37,000, as will another restaurant at the same rate. “We know from data from these companies that they're not going to pay that much money, and they may not even be interested,” he said.
Anwar released statements by e-mail on Nov. 15, saying that his opposition was the result of more than 12 hours of independent research. He contacted James Capodiece of the Leisure Services Department of West Hartford, where the town has both a town skating rink and aquatic center similar to the one proposed for South Windsor. “West Hartford, with a population of approximately 63,000, has one rink that is used by the general public. Additionally, a rink owned by Kingswood Oxford School is used primarily by West Hartford Youth Hockey and the school’s students,” said Anwar in the e-mail. “After 44 years of existence, the West Hartford rink is barely able to meet costs, even with a population that is 2.4 times that of South Windsor.”
Anwar said the proponents of the plan expect revenues to the tune of $1.54 million, which will go towards expenses of $721,000 and a land lease bond of $531,000. Anwar's own calculations are less optimistic. “According to my estimates, at best, revenue of $965,000 with expenses of $1.85 million (if the 20-year bond for $10.5 million is paid at $531,000/year) or an expense of $2.03 million (if the bond for $10.5 million is paid at $705,000/ year),” he wrote. “This will generate an annual loss to the town of between $890,000 and $1.06 million.”
During the work session, Councilor Cindy Beaulieu verified from Johnson that if the 63-20 floated its own bonds, indebtedness would belong to the 63-20, not the town. Johnson also confirmed that if the town leased a portion of the facility, payment would be through the town budget.
As the involvement of the town would be critical in order for the 63-20 to be able to float a bond, the expectation of leasing space was another concern for Anwar. “That commitment is going to allow the 63-20 to use leverage off our town and taxpayers to be able to get the bond money,” said Anwar.
Town Manager Matthew Galligan confirmed this in more neutral terms. “I think it would be easier to get bond money if a credit-worthy entity was part of the process,” he said.
When Delnicki noted that residents have the right to petition for a referendum, he asked if that referendum could end the project. Johnson said that if the charter empowers the referendum to override a resolution made by the council, then yes.
Drawing near the end of the two-hour discussion, some councilors stated that they did not have enough information at that point to make any decision.
“There are numbers thrown out there tonight,” said Councilor Gary Bazzano. “I don't know those numbers... Until we get those numbers in front of us, we can't make that educated decision we need to make.”
Councilor Keith Yagaloff agreed. “I have zero additional information other than what was provided [Oct. 15],” he said.
“We as a council haven't even decided if we want a project,” said Delnicki, eager to end the work session and move on to the regular Town Council meeting. After gaining the approval of the council, Delnicki asked Galligan to find out clear numbers for the project, to be discussed at the next Town Council meeting.