Residents to vote on revised hospital site clean-up plan

By Janice Steinhagen - Staff Writer
Preston - posted Tue., Dec. 11, 2012
Tom Felton poses a question for the Preston Redevelopment Agency at Thursday's meeting. Photos by Janice Steinhagen.
Tom Felton poses a question for the Preston Redevelopment Agency at Thursday's meeting. Photos by Janice Steinhagen.

On Dec. 18, Preston residents will get a chance to vote on an alternative plan for financing the clean-up at the former Norwich Hospital site, when a proposal for $4 million in clean-up work appears on the ballot. A Dec. 6 town meeting sent the question to a referendum, just one week after voters rejected an $8 million loan plan that would have had the town finance $4 million in bond issues.

At the town meeting, several town officials told residents they’d decided to support the revised plan as the best course available to get the former hospital site shovel-ready and make it marketable to developers. “There’s no turning back on this. We have a responsibility to clean this up,” said Selectman Timothy Bowles. “The deal we have on the table is probably the best deal we’re going to get. There’s no way we’re going to see this kind of deal again.”

Finance Board member Norman Gauthier said that, despite his vigorous opposition to the original $8 million plan, he joined with other board members in unanimously approving the $4 million proposal. He said that after a one-night session in which the finance board, selectmen and Preston Redevelopment Agency all addressed the issue, “I came to realize that there was no other option. This is in the best interest of the town. I swallowed really hard [and voted yes]. There’s really no other way to go. We have to keep something going on that property,” he said.

Under the plan, the town would finance $4 million of remediation work by taking on a $2 million loan and finance the remaining $2 million through the sale of bonds.

“What kinds of people buy bonds in a toxic waste site? What happens if you approve the loan but you can’t sell the bonds?” asked Tom Felton. “From day one I thought this was a bad investment, throwing good money after bad.”

First Selectman Robert Congdon said that the cost of “doing nothing” – fencing in the property and merely maintaining security and insurance – would be $3.8 million. “Doing nothing puts no equity into the property,” he said. “Borrowing $4 million puts $4 million of equity into the property.”

He added that the PRA’s professional financial consultant has assured the agency that “definitely there is a market” for bonds on properties such as the hospital site. The town’s A+ bond rating makes such bonds more attractive, he said.

The former mental hospital site was sold to Preston by the state for $1, after attempts failed to attract a large-scale developer. Since then, the PRA has been simultaneously applying for grants to clean up the site, which contains dozens of dilapidated structures and environmental pollution, and seeking developers willing to bring business and housing to the site.

Richard Morin asked why the PRA couldn’t just keep applying for grant money to clean up the site piecemeal, as it has done so far. “It could be four or five years before things pop back up,” he said of the real estate market. Until developers have more money to sink into real estate, borrowing money for clean-up would be opening “a worm can,” he said.

PRA Chairman Sean Nugent explained that the grants available to the agency top out at about $200,000 and require that each project funded by the grant be completed. The larger buildings on the hospital site, such as Kettle and Lodge, couldn’t be completely demolished and remediated for that amount, he said, so they don’t qualify.

Town resident Susan Strader said that, while the $8 million plan was what the project really needed, she would be “thrilled” with the $4 million plan. “We voted as a town to buy this property. There is money associated with that,” she said. “We have to think beyond what happened in the past and think to the future of the state.”

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