Norwich - Even if the city gives up $2.8 million in future property taxes for a proposed redevelopment of a defunct hotel project on Route 82, the city still would receive more than $1 million in tax and public utility revenue over the same 20-year period, a report presented to the City Council Monday said.

Winston Hospitality Inc., based in Raleigh, N.C., completed a two-year complex foreclosure of the nearly completed hotel building on Route 82 near Interstate 395 at Exit 80 in May. The developer approached the City Council in November to ask for a 20-year property tax break in the form of Tax Increment Financing - dedicating $140,000 of the new property tax over the next 20 years and using it to help finance the project.

Instead of receiving $3.4 million in property taxes for a completed hotel, Norwich would receive an estimated $603,140 in property taxes from the project over the same 20-year period. The completed hotel would pay an estimated $4.9 million in total utility revenue over the 20 years, with the city receiving about $490,774 of that. The city receives 10 percent of gross electric, gas and water revenues from Norwich Public Utilities.

After Monday's meeting, Winston Chief Executive Officer Robert W. Winston III said the company has been in discussions with city officials for the past year on the proposal, and the Norwich tax break and an accompanying requested state grant and loan package would complete the financing for the $13.4 million project. The city's portion would cover 9 percent of the project financing, and the state incentives would make up 5 percent. The developer would provide 86 percent of the project financing.

City Comptroller Josh Pothier and Norwich Community Development Corp. President Robert Mills and Vice President Jason Vincent presented an analysis of the request to the new City Council Monday.

Pothier said the tax increment financing being requested would not affect the city's revenues, would clean up a highly visible, blighted property and the hiring of local contractors could add jobs to the city.

Pothier said negative factors include the "fairness" element that other competing businesses, including the Holiday Inn across Route 82 from the project, did not receive such incentives.

Also, Pothier said, the market for the hotel and the security of jobs created could be risky, with the decline in local casino business. He said there is no guarantee that the project would reach full tax potential.

Mills said state law requires a Municipal Development Plan be written before the city would qualify for a TIF project. He said the city should build performance criteria by the developer into the plan, including the number of years the developer owns the property. He said Winston also has agreed not to seek any other city incentives, such as waiver of permit fees, if the TIF is approved.

During public comment Monday, several residents spoke against the proposed TIF for the hotel project, especially because the city does not have a written policy to govern this and possible future requests for tax increment financing. In the report, Pothier anticipated that the city likely would receive additional requests if the hotel project is approved.

NCDC officials recommended the city write a policy that would address goals such as creating good-paying jobs, cleaning contaminated properties, eliminating blight and redeveloping historic buildings and improving the city's urban center and waterfront.

The council did not vote on the Winston Hospitality request, but later during Monday's meeting the council voted unanimously to name NCDC as the lead agency in overseeing the TIF project if the city goes forward with the hotel project.

While Winston expressed urgency, the council did not set a time frame for making a decision on the request. Mills said NCDC officials would begin writing the Municipal Development Plan, which must be presented at a public hearing before being approved by the council.

c.bessette@theday.com