Preston — For the first time since the town has owned the former Norwich Hospital property, the Preston Redevelopment Agency is seeking town funds not directly tied to a matching grant or loan to continue the environmental abatement and demolition of buildings in the main campus area.

A referendum will be held from noon to 8 p.m. Tuesday at Town Hall on the request by the PRA for $260,000 in town surplus funds to do interior abatement and demolition of the Russell and Gallup buildings near the center of the main campus — the area deemed most attractive for future development.

If the allocation is approved by voters, the PRA would use $180,000 of the funds immediately to do interior environmental abatement of the Russell Building and would ask the Board of Finance to hold on to the remaining $80,000 until the town receives word on a pending application for a $1.25 million state Urban Act grant. The state Bond Commission would have to approve the request.

The state grant would not require matching town funds, but PRA Chairman Sean Nugent said the $260,000 requested in town funds would fill the gap in the entire projected cost of $2.14 million for the two buildings. The PRA has $630,000 remaining from existing grants and loans, and anticipates receiving the $1.25 million state grant, perhaps by the end of September, Nugent said.

“The state has been a great partner and grant partner on this,” Nugent said. “But we don’t know if we’ll be on the (next Bond Commission) agenda or not. We’re very optimistic we’ll get the grant. But with that, we’re still $260,000 short for the two buildings.”

Timing also was a factor that led the PRA to make the request for funding to the Board of Selectmen and Board of Finance in August. Demolition contractor Manafort Bros. Inc. will have demolition crews available starting in mid-September to work on the Russell Building. A delay could force the operation to shut down and would increase the cost to start up again, and winter weather also could intervene, Nugent said.

To date, the PRA has received $15 million in federal, state and matching town grant money and used the funding to demolish 49 of the 57 buildings on the 393-acre former Norwich Hospital property being marketed as Preston Riverwalk. The town’s share totaled $2.5 million, mostly from a $2 million voter-approved bond loan needed to match a $2 million state low-interest loan.

About 30 people attended a town meeting last week to discuss the new proposal before it was sent to referendum, but few residents asked questions and no one offered opinions about the funding request.

Board of Finance Chairman Norman Gauthier said the town has enough available money in the surplus fund to pay for the demolition project and still have $485,547 available for use for possible emergencies this year. Preston has $2.8 million in its surplus fund, but town policy is to hold at least an amount equal to 9.5 percent of the annual town and school combined budgets in reserve. The $473,547 is the amount held beyond the 9.5 percent, Gauthier said.

State regulations prohibit the PRA from advocating positions on referendum questions. Nugent said he was disappointed that residents did not discuss the issue and ask more questions. Since then, he has heard questions surrounding the status of the campus cleanup and marketing efforts.

Two years ago, the PRA put out a request for development proposals, but the results were slim, with both developers and real estate consultants suggesting that the property needed to be cleaned up first. Last winter, the PRA demolished the largest and most visible building at the center campus — the Kettle Building just off Route 12. Once that building came down, and the giant rubble pile slowly processed and cleared, the potential for development also became more visible, Nugent said.

Four or five “legitimate organizations” have submitted inquiries recently and are conducting their research into the site, Nugent said.

“With the Kettle down, people can see it now from the roadway,” Nugent said. “It’s the ‘wow’ factor. Now when you look, you see the Russell and Gallup buildings in the center of that campus. To get those out of there would send the message: ‘It’s here, shovel ready.’”

c.bessette@theday.com

Twitter: @Bessettetheday

Preston referendum:

Tuesday, Sept. 8, Town Hall, 389 Route 2, Preston.

Polls open noon to 8 p.m.

"Shall the town of Preston appropriate $260,000 from the town’s unreserved general fund balance for the abatement and demolition of the Russell and Gallup buildings at the Preston Riverwalk site?"