Mortgage holder on Norwich portion of former Norwich Hospital property files foreclosure

Norwich — The minority ownership members of Thames River Landing LLC, which owns the nearly 50-acre Norwich portion of the former Norwich Hospital property, have become frustrated at the lack of progress on development plans, and the member who financed the purchase of the land from the state has filed a foreclosure lawsuit against the LLC.

Thames River Landing LLC, headed by developer Mark Fields, purchased the three separate parcels on the Norwich side for a combined total of $300,000 from the state in October 2015, with Castanho Development LLC providing a $450,000 mortgage for the purchase at the time.

On Oct. 3, Castanho Development LLC, headed by Carl Castanho of East Hartford, filed foreclosure action in New London Superior Court, claiming that Thames River Landing has defaulted on the mortgage and a demand for full payment of the $584,898 in principal, interest and fees now owed.

Thames River Landing also owes $84,047 in back property taxes and interest through November bills to the city, which has top priority in any foreclosure action. If the taxes remain unpaid, city officials plan to schedule a tax sale auction for early 2018 on the three properties, listed as 705 Laurel Hill Road, 626 Laurel Hill Road and one listed as just Laurel Hill Road.

The property abuts the much larger 388-acre former Norwich Hospital property in Preston. Unlike Preston, Norwich declined an offer from the state to take over ownership and cleanup responsibility of the Norwich piece. The state sold the three parcels containing dozens of abandoned buildings and some contaminated land “as is” to Thames River Landing. Preston last year reached a development agreement with Mohegan Gaming and Entertainment for a major $400 million to $600 million development of the Preston portion, once final environmental cleanup is completed by the town.

Two minority partners of Thames River Landing LLC said this past week they welcomed the court foreclosure action and hope it will allow Castanho to become the lead owner of Thames River Landing to spur the cleanup and development of the property.

“It’s just a matter of trying to get it going,” minority partner Anna Valente of Glastonbury said. “We have no idea what he’s (Fields) doing. It’s been four years, and nothing has happened yet.”

Castanho declined to comment on the lawsuit.

Brendan Kennedy of New Britain, also listed as a member of the LLC, said he has been working on the development of the property for five years, and he, too, expressed frustration that Fields has not brought any plans to fruition. He is confident Castanho will work with the other partners to create development plans that can be discussed with Norwich city planners.

Fields, listed as the managing member of the LLC, did not return phone calls seeking comment on the foreclosure action.

Castanho filed a motion for default on Oct. 30 after Fields failed to respond to the suit by the Oct. 24 court deadline, but Montville attorney William McCoy filed an appearance on behalf of Thames River Landing on Thursday. McCoy declined to comment on the foreclosure action Thursday.

Thames River Landing has had a rocky road in its plans to develop the Norwich portion of the property. Initially, the state legislature approved the LLC’s plan to purchase the property in the summer of 2013, but then-President Ronald Shelton died a month later. Shelton had been expected to provide the funding for the purchase.

The LLC became part of the Farmington partner’s estate, and Valente inherited a minority share of the LLC through the estate. Kennedy said the group searched for another funding source for the purchase and development. Castanho became that investor, Kennedy said.

Castanho “was more than a gentleman, and a very patient man,” Kennedy said. “We’ve had some offers. They weren’t all great, but we’ve had some offers. Mark didn’t really involve the partners.”

c.bessette@theday.com

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