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Norwich - As a controversial 10-year tax break deal for the former Daticon building in the Norwich Business Park is set to expire, the building's new owner, The William W. Backus Hospital, is removing the $6 million assessment from the tax rolls permanently.
Backus bought the Daticon building in 2010 for $3.75 million from a subsidiary of People's United Bank, which was foreclosing on the property. The hospital announced plans to use the 50,000-square-foot, high-tech building for its business operations and as an education center for hospital staff.
At the time, city leaders lauded Backus officials' commitment to keep the building taxable and use it for business purposes in keeping with the city's goal to promote business uses in the park.
But when releasing the Oct. 1, 2012, grand list of taxable property Monday, city Assessor Donna Ralston said an overall $3.4 million, 0.16 percent drop in real estate values was partly attributed to Backus' decision, as a nonprofit, to remove the Daticon building from the tax rolls. The Daticon building was assessed at $6 million. Ralston said a vacant rear parcel behind the Daticon building remains taxable at an assessed value of $1.5 million.
United Community and Family Services, a regional health care and social services nonprofit agency, also decided to remove most of the main building in the Meadows Shopping Center from the tax rolls. That portion of the building was assessed at $1.8 million.
Backus spokesman Shawn Mawhiney said hospital officials were forced to make the change because pending state cuts are expected to have a multimillion-dollar impact on the hospital.
"We'd much rather explore options like taking advantage of our not-for-profit status," Mawhiney said, "compared to options we've seen at other health care organizations that impact patient care, such as cuts to the programs, services and the community safety net. As for the economic ramifications to Norwich, we are the city's largest non-governmental employer and have a major positive impact on the region's economy that goes well beyond taxes. We'd be remiss to not consider this."
Mayor Peter Nystrom and city Comptroller Joseph Ruffo both said they understand Backus' position and financial constraints. But Nystrom added that removing a $6 million assessment from the tax rolls also hurts the city.
"I certainly understand and sympathize with what's happening nationally and statewide in the health care industry," Nystrom said. "But from the city's perspective, it's a big impact on us as well. I'm going to ask that they reconsider, considering they said they wouldn't do that."
In 2001, Norwich reached a controversial 10-year tax break deal with then-property owner Hilltop Investments, headed by Daniel Gordon, to bring the firm to the business park. Norwich gave an $800,000 grant to grade the property and build an access road and agreed to freeze taxes at $132,000 per year through 2012 and turn over that tax revenue to the Connecticut Development Authority to pay off a loan to the company.
Gordon, who is no longer involved with the property, pleaded guilty in 2003 to fraud and money-laundering charges related to the creation of two offshore energy accounts that he used to hide $43 million in embezzled money that he passed off as an energy trade. Gordon used part of that money to purchase Daticon and the land that housed the company.
UCFS Executive Director Charles Seeman said Tuesday his agency had informed city officials prior to purchasing the Meadows shopping center in 2011 that it planned to remove the main building from the tax rolls once it housed UCFS functions. The Pagoda Chinese restaurant at the left end of the building moved out on Sunday, Seeman said.
UCFS will use a $3.4 million state grant to renovate the building to expand the health center.
The second building in the plaza, which houses a People's United Bank branch and several smaller tenants, will remain on the tax rolls, Seeman said.