Published November 16. 2012 4:00AM
Preston - Thursday's town meeting on a proposal to borrow $8 million to continue the cleanup of the former Norwich Hospital property drew only a slightly larger turnout than at the two informational meetings, but residents asked numerous questions about the plan.
About 30 residents, with perhaps half being town officials on various agencies, asked rapid-fire questions on details of the loan package, including projected interest rates, jobs that could be created, tax impact and what the state's reaction might be if the town rejects the loan package.
Residents will vote in a referendum Nov. 27 on an $8 million borrowing package for the cleanup of the former Norwich Hospital property. Polls will be open at Town Hall from noon to 8 p.m.
The proposal includes a
$4 million low-cost loan from the state Department of Economic and Community Development and $4 million the town would have to bond as the town match for the state loan. If residents approve the loans, the town also would obtain a $964,000 federal Economic Development Administration grant.
State Rep. Tom Reynolds,
D-Ledyard, whose term ends in early January, told residents he and state Sen. Andrew Maynard, D-Stonington, worked closely with the Preston Redevelopment Agency to secure more than $6 million in state grants and loans for the package. He said the loan package on the table is more generous than other major projects in the state, and he was "pleasantly surprised" at the deal.
Given the newly released projected state budget deficit of $365 million, Reynolds said the DECD would be affected by upcoming budget cuts and an expected push to reduce state bonding.
"It makes no difference to us one way or another, but there's a long line of people waiting for a deal like the town would be receiving," Maynard said.
The state loan calls for an interest rate of 1.5 percent - half the initial state offer of 3 percent interest - and deferred payments for the first five years. For every 100 permanent jobs created by future development on the property, $1 million of the loan would be forgiven. And if the town sells portions of the land, the town would be allowed to pay off the town's bonded debt and past legal bills before starting to pay off the state loan.
No presentation on the loan package was given during the town meeting. At an informational meeting just prior to the town meeting, PRA member William Legler presented slides showing potential tax impact of the loan package on residents.
Town bond counsel used estimates for both tax-exempt and taxable bonds for the estimates. The town would use taxable bonds only if prospective developers are waiting in the wings to purchase the newly cleaned property. Tax-exempt bonds cannot be used to benefit private developers, officials said.
Using taxable bonds, the worst-case scenario would see a homeowner with a house assessed at $100,000 paying an additional $42 in taxes to cover the town's portion of the loan in 2014. That would jump to an estimated $140 in 2020, followed by a decline in tax impact. Tax-exempt bonds would carry lower tax burdens, officials said.
If voters reject the package, the town still owns the property and would have to pay an estimated $165,000 per year - amounting to 0.42 mills - for maintenance, security and insurance.
During the town meeting, Board of Finance member Norman Gauthier, a strong opponent of the borrowing package, objected to the term "do nothing" as applied to a vote against the loans. Gauthier said the PRA has worked too hard to give up, and he would expect progress to continue, albeit at a much slower pace.
UPCOMING INFORMATIONAL MEETINGS AND REFERENDUM
• Nov. 17, 10 a.m., Town Hall
• Nov. 20, 7 p.m., Preston Veterans Memorial School
• Referendum: Nov. 27, noon to 8 p.m., Town Hall