Judge OKs mortgage foreclosure on Norwich portion of former hospital property

Norwich — A judge has approved the mortgage foreclosure filed last fall by the financial backer of Thames River Landing LLC, which had purchased the 49.65-acre Norwich portion of the former Norwich Hospital property from the state in 2015 for $300,000 but failed to submit cleanup or development plans for it.

New London Superior Court Judge Emmet L. Cosgrove on Monday approved the motion for strict foreclosure filed by Castanho Development LLC, which provided the original $450,000 mortgage in October 2015 to Thames River Landing LLC. The debt owed to Castanho now totals $628,970 on the property, according to foreclosure documents, plus another $18,769 in attorney fees and court costs. Court records also list another $14,194 in “other encumbrances on the property.”

The debts listed do not include the delinquent property taxes owed to the city of Norwich, which totaled $115,320.76 as of Monday, according to Norwich Tax Collector Karlene Deal. The city has not filed a tax foreclosure lawsuit, but has been tracking the mortgage foreclosure case, city Corporation Counsel Michael Driscoll said Monday.

The judge set the final date of June 19 for Thames River Landing to pay off the debt to Castanho. If payment is not made, Castanho Development would take ownership on June 20.

Reached on Tuesday, Carl Castanho of East Hartford, head of Castanho Development, declined to comment on the foreclosure action until the property transaction takes place June 20.

Mark Fields, managing member of Thames River Landing, did not return phone calls seeking comment on the foreclosure action Tuesday.

Two minority members of Thames River Landing LLC supported Castanho’s foreclosure action, expressing frustration in interviews in November that Fields had failed to secure development proposals for the property despite interest expressed by potential developers. Brendan Kennedy and Anna Valente said they looked forward to Castanho taking over the property and the search for a developer.

Kennedy repeated those comments Tuesday, and said Fields also failed to inform the minority partners of the mortgage foreclosure proceedings.

“It’s been a long, drawn-out process,” Kennedy said Tuesday. “We were all part of Thames River Landing, and we’ve had no communication. I haven’t spoken with (Fields). Even though we’re not majority owners, we should have been kept informed. There’s been no communication. I think the city and everyone else would like to see something there, and the Mohegans as well.”

The property abuts the 393-acre former Norwich Hospital property in Preston. In 2017, Preston town leaders reached a purchase and sale agreement with Mohegan Gaming & Entertainment for the entire Preston portion, now called Preston Riverwalk, for a planned $200 million to $600 million commercial, recreational, sports, retail and residential complex. The transfer is pending the town’s final environmental cleanup of the property.

A detailed appraisal of the 49.65-acre Norwich property, done by Valbridge Property Advisors of Hartford for the foreclosure, calculated the fair market value of the property at $620,000. The appraisal divided the property into two major portions on the east and west sides of Route 12 at the Preston border. City tax records list it as three parcels: 626 Laurel Hill Road, 705 Laurel Hill Road and land without a numerical address.

The property has 26 buildings, mostly in poor condition and abandoned, although Fields is living in one renovated house at 626 Laurel Hill Road.

Although the appraisal report cited a 2005 environmental study commissioned by the city of Norwich that estimated environmental cleanup costs at $1.1 million, the appraisal report stated the value of the property assumed that the property “is not impacted by any environmental hazards.”

The Norwich land is zoned as Planned Development District, which would allow numerous types of commercial uses, but does not allow residential uses.

“The highest and best use of the site is for development of the two subject parcels with a single, mixed-use project to include office, warehouse and/or solar farm uses,” the appraisal report stated.

c.bessette@theday.com

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