Preston vote should allow hospital cleanup to proceed next spring

Preston - Tuesday's referendum approval of a $4 million loan package to continue the cleanup of the former Norwich Hospital property should allow work on the property to continue uninterrupted this spring, as the new loan funding takes over when current grants are spent, town officials said Wednesday.

Residents approved the scaled-down loan package 304 to 251 Tuesday, nearly one month after voters rejected an $8 million loan proposal by a similar vote of 309 to 261. The package calls for accepting a $2 million low-cost state Department of Economic and Community Development loan matched with a $2 million town bond.

Town officials welcomed the approval but still expressed regret that the initial package did not win voter approval, as that plan would have brought an additional $964,000 federal Economic Development Administration grant that expired Dec. 1. The town loan would have matched the grant.

First Selectman Robert Congdon said town officials will make one more try to revive the federal grant now that voters have approved the local match. Congdon called the federal EDA along with U.S. Rep. Joe Courtney, D-2nd District, and U.S. Sen. Richard Blumenthal, D-Conn., to try to revive the grant.

Congdon said early indications were that the town would not be successful but could apply for the grant a second time by the March 13 deadline for the next round of funding.

New money from the loan package is not expected to be available until April or May, Congdon and Sean Nugent, chairman of the Preston Redevelopment Agency, said Wednesday. Current grant money being used to do environmental abatement and demolition of several smaller buildings on campus is expected to be used up by about the same time.

The timing was critical to the cleanup effort, as it allows the town to retain demolition contractor Manafort Bros., which has erected a security fence and operations trailers on the property.

PRA member Jim Bell, who oversees funding efforts, said the agency has in hand $800,000 in environmental assessment grants that now will be used to determine the cost of cleaning and demolishing buildings on the hospital campus.

When the smaller $2 million loan package was proposed by Bell and Town Planner Kathy Warzecha, they initially envisioned using the money to clean and demolish smaller buildings in the northern section of campus, as the largest buildings - the Kettle and Lodge - are estimated to cost $2 million or more to clean and demolish.

Nugent said the PRA will have better estimates on those costs after assessing those and other buildings to determine how best to spend the loan money.

The state loan terms include a 1.5 percent interest rate with both principal and interest deferred for five years. For every 100 permanent jobs created by future development, $1 million of the state loan would be forgiven.

Town officials do not yet know the interest rate or duration of the town loan, as officials will meet with the bonding attorney to determine whether a long-term or short-term loan would be best for the town.

Although Congdon will sign acceptance papers soon for the state loan, the town's matching portion would have to be in place before the state would release its portion of the funding, Nugent said.

"We need to have the match in place, so we'll need to work with our bond counsel and work with our process there and put it out on the market to get the final rates," Nugent said. "The state's going to expect us to have that money in place before the state gives us the loan."

c.bessette@theday.com

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