Waterford should get a cut of a Seaside hotel
It has been painfully slow, progressing across the administrations of three Connecticut governors, but it looks like the state is poised to finally do the right thing for Seaside, the shuttered and deteriorating tuberculosis sanatorium on the Waterford shoreline.
It's been almost four years since Gov. Dannel Malloy mercifully killed a long-lingering deal to sell the property to a developer who did not appear to have the resources for the significant restoration involved.
Malloy declared the property a park and announced plans to study ways to develop it as such.
And now his Department of Energy and Environmental Protection has finally decided on a plan to lease the landmark Seaside buildings, designed by architect Cass Gilbert, to someone who will remodel them as an inn, a park lodge.
This fine plan hopefully will preserve the architecture with private funds and keep the spectacular site open to the public. DEEP plans to start looking for a developer as soon as the state Office of Policy and Management has signed off on its decision.
A 2016 report by consultants who studied the idea of a park lodge developed a hotel market analysis showing that the numbers would work. Average regional room rates would support a $21.8 million investment in the buildings. The consultants envisioned the state completing an environmental cleanup and turning over the shells of the buildings.
The state, in releasing the consultants' report, redacted the amount of money a developer might pay the state in ground rent, since that number will presumably be subject to change or negotiation, as potential developers submit bids.
This is where the town should have a voice, and regional lawmakers might best start working soon to help make this happen. Waterford should get a share of the ground rent, a take if you will.
The hotel study envisions that the town might get close to $250,000 a year in state Payment In Lieu of Taxes funds, once a hotel buildout is accomplished. That is based on the usual formula for reimbursing municipalities for state properties, a percentage of what the full payment of the taxes would be, a percentage that has and likely will continue to fall, given the state's finances.
It's unusual for the state to host a profitable business on land it is claiming its tax exemption for and, given that, Waterford deserves more than money from the PILOT formula.
Allocating a share of the ground rent to be paid by the hotel developer would be a simple and equitable way to accomplish this. It would help compensate the town for the state's decision to create a park, which prevented the property from going on tax rolls and substantially shields it from most local zoning rules.
First Selectman Dan Steward told me he would have preferred that a hotel be developed privately on the property, as initially had been proposed, since that would have generated so much more revenue for the town. But he said he welcomes the state's latest plan as a means to finally restore the buildings and to keep the entire property open to the public.
Steward said it is not unlikely more neighborhood opposition will surface over the new plan. Some neighbors there have proven to be quite litigious on the issue in the past.
"There will be backlash," he said.
I would urge the neighbors to look at fine hotel seaside resorts and how well they have been integrated into their communities, usually raising property values. Think Ocean House in Watch Hill or Chatham Bars Inn in Chatham, Mass.
The hotel consultants hired by the state used occupancy and rental rates from the region, properties like the Mystic Hilton and Mystic Marriott, that don't reflect the kind of luxury property that Seaside might inspire.
I suspect that the unique characteristics of the property, landmark architecture by one of the most renowned American architects, along with an incredible site with its long views up and down Long Island and a sandy beach, will generate a lot of interest and bids from investors willing to make a substantial investment.
That kind of investment should lead to a reasonable ground rent, and Waterford should be sure to lobby for a significant share.
More money for the town also could help tame the NIMBY tiger before it starts to roar at Seaside again.
This is the opinion of David Collins.
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