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Norwich - A report outlining details of a proposal by a hotel developer to use $2.8 million in future property tax revenue to finance the redevelopment of a defunct hotel project on Route 82 was presented to the City Council Tuesday night and will be the subject of a public hearing March 26.
The Hampton Project Municipal Development Plan was written by staff at the Norwich Community Development Corp. using project details provided by hotel developer CT Norwich LLC, a subsidiary of Winston Hospitality Inc.
Winston took over the abandoned, nearly complete, hotel project last May, but the building had been subject to three years of vandalism, metal thieves, weather damage and deterioration after the project was abandoned in 2010 by the previous developer.
The Municipal Development Plan is the required first step if the city plans to go forward with the request for tax increment financing - in which property taxes owed to the city would instead be used to pay off the bonds. Winston has asked that $140,000 per year for 20 years of future property tax revenue be used to pay off 9 percent of the project's financing.
The City Council asked NCDC to write the Municipal Development Plan in December to start its review of the request. But the plan does not bind the council to approving the project, NCDC officials said. The council would have to approve the tax increment financing after the plan is in place for it to go forward.
The plan has been posted to the NCDC website, www.askncdc.com/programs-incentives/hampton and is available at the NCDC office at 77 Main St. The public hearing will be held at 6:30 p.m. on March 26 in Council Chambers at City Hall.
The $2.8 million in city money would secure $1.3 million in financing to remediate the extensive damage in the building, with the remaining $1.5 million to cover interest and financing cost of the bonds.
The city still would receive a small portion of the annual real estate tax revenue over the years, and all of the personal property taxes on hotel equipment. The city also would receive utilities revenue to Norwich Public Utilities, and the plan projects that the completed hotel would boost property values in the key commercial Interstate 395 Exit 80 area.
Winston also hopes to obtain $625,000 from the state through various grants, loans and tax exemptions to fund the $10 million project.
Mayor Deberey Hinchey said Wednesday she has just started to review the report and the calculations for what the city might receive in future taxes and other revenue. She said she has questions about the request - including the future of the hotel market in the region - and whether this would be a good deal for Norwich taxpayers.
The developer has said without the commitment of future city tax revenue, the project would not go forward, and eventually, the derelict building would have to be torn down.
"The thing I'm concerned about is the property tax benefits," Hinchey said. "… I want the thing done, but I can't do it if it doesn't make sense for Norwich taxpayers."