Hotel developer's pitch for tax incentives needs OK from Norwich officials, who aren't convinced

Norwich - Mayor Deberey Hinchey and the new City Council hope to hear answers Monday to questions pertaining to a hotel developer's request for $2.8 million in tax breaks over a 20-year period to take over a defunct hotel construction project on Route 82 at Interstate 395.

Raleigh, N.C.-based Winston Hospitality Inc. completed a two-year complex foreclosure against the former owner, PRA at Norwich LLC. and numerous other lien holders in May for what had been a nearly completed hotel building at 154 Salem Turnpike.

Winston Chief Executive Officer Robert W. Winston III presented a plan to the previous City Council in November that would call for investing $12.7 million to rejuvenate the hotel into a 113-room Hampton Inn. The firm is seeking a tax break in the form of tax increment financing in which $140,000 in property taxes per year for 20 years owed to the city would instead be used to pay off project debt.

Tax increment financing is allowed in Connecticut by state law, but has restrictions. The council on Monday will hear a report from several city economic development, legal and financial officials on how the program would work and what the costs and benefits would be to the city.

"I want to know what are the pluses and minuses for the city," Hinchey said. "I'm all for giving deferments and whatever we can for developers, but we have to make sure the city gets what it needs. And right across the street is the Holiday Inn."

NCDC research sought

Hinchey has asked officials from the Norwich Community Development Corp. to research what the hotel occupancy rates are for the three existing hotels in the city before investing in adding another major hotel to the market.

If the city goes ahead with the proposal, Hinchey also would want assurances that local residents would be employed there.

"This is not a done deal," Hinchey said. "Before we have to make up our minds, we have some real concrete facts to base our decision."

The report from city officials on the hotel proposal is expected to be given near the start of Monday's 7:30 p.m. council meeting. Later on the agenda, the council will consider a resolution that would appoint NCDC as the development agency to oversee the project, as required by state law in tax increment financing cases. The appointment would become effective "at such time as the council adopts a resolution to proceed further in this project," the resolution states.

NCDC President Robert Mills said he plans to meet Friday with officials at the Holiday Inn, located across Route 82 from the proposed hotel.

If Norwich goes forward with the Hampton Inn proposal, NCDC would write a Municipal Development Plan as part of the project. That plan could encompass either just the project property or a district that would include other properties in the vicinity.

The I-395 Exit 80 interchange is a busy commercial spot for Norwich, serving as the gateway to a mostly commercial strip that runs in both directions along Route 82.

A Municipal Development Plan would require a 45-day public comment period with a public hearing before it could be adopted by the City Council.

c.bessette@theday.com

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