Mohegan Tribe to buy entire former Norwich Hospital property

Preston — Town officials have reached an agreement with the Mohegan tribe to sell the entire 393-acre former Norwich Hospital property for a proposed “high quality,” mixed-use development valued at up to $600 million over a five-year period — an amount that would double the town's grand list.

The Preston Redevelopment Agency met behind closed doors Tuesday and Wednesday nights to finalize a 15-page Memorandum of Understanding with the Mohegan Tribal Gaming Authority that would give the tribe 180 days to put together its master development plan to present to Preston voters at a special town meeting.

PRA Chairman Sean Nugent told the Board of Selectmen Thursday that the agency has been fielding inquiries about the property, marketed as Preston Riverwalk, from three interested entities.

“I'll have to call the other two tonight,” he said.

Voters also have to approve the MOU, and the Board of Selectmen voted Thursday to forward the MOU to voters at a town meeting May 19 at 7:30 p.m. at the Preston Veterans' Memorial School.

The agreement calls for the town to turn over ownership of the property to the tribe for $1, but would guarantee that the town receive at least $11 million, plus up to $600,000 in legal and professional services to review all plans and documents, and full value of property taxes on the property.

“The project shall be a high-quality, integrated mixed-use project,” the MOU stated, “suitable for the unique nature of the site and is contemplated to consist of entertainment, recreation, hotel, retail (including, without limitation, lifestyle center, restaurants, convenience), business, time share, senior housing, and similar and related uses, all to be determined and described in the (purchase and sale agreement) … and in conformance with the town's planning, zoning and other land use regulations.”

First Selectman Robert Congdon said in the worst case scenario, if the tribe takes ownership and does nothing with the property in five years, the town would receive the $11 million, plus property tax revenue. That would pay off the entire town debt on the property for cleanup loans and local matching shares over the past seven years and “leave us with $5 million in cash,” Congdon said. And if the tribe did not create the estimated 200 to 700 permanent jobs with the development, the tribe would pay off the town's outstanding $2 million cleanup loan from the state, Congdon said.

If the tribe develops a $600 million project and creates the 200 to 700 permanent jobs, “that would double our grand list,” Congdon said. And the state would convert the $2 million outstanding cleanup loan into a grant.

A letter from the state Department of Economic and Community Development pledges that the state would commit to paying up to $10 million in state bond funding to cover the remaining demolition and environmental cleanup to be done on the property.

“We're grateful to town leaders for engaging us in this discussion and are confident that Preston residents will see the hundreds of millions that will be invested in a blighted site as a substantial improvement to the community,” Tribal Chairman Kevin Brown said in a news release issued following the selectmen's vote. “Working together, we can create jobs and opportunity for everyone in the region.”

Over the past seven years, the PRA has overseen the acquisition of grants and loans that have paid for demolishing 80 percent of the structures on the property, along with ground contamination cleanup.

The surprise agreement was met with cheers Thursday during a disrupted Board of Selectmen meeting, as town officials fielded questions from about a dozen residents and members of the media. 

Nugent said the project would benefit the entire region, including Norwich, where the state recently sold its portion of the former Norwich Hospital property to Colchester-based Thames River Landing LLC.

Congdon and Nugent thanked Preston residents who took a “big gamble” in March 2009, when the town narrowly approved a referendum vote to buy the former Norwich Hospital property, then consisting of dozens of decaying and contaminated buildings, rampant vandalism problems and no money in hand for the cleanup.

“We would not be here today if the taxpayers of Preston didn't say 'yes,'” Congdon said. “They are the ones we need to thank more than anybody else. They ad the courage to say 'yes.'”

Congdon admitted he too had reservations about committing the small town with limited resources to such a major undertaking. He said he would not boast of an “I told you so” attitude to residents who voted against the measure.

“It wasn't a slam dunk yes or no for me,” he said. “This was a big hurdle.”

c.bessette@theday.com



Announcement and Memo of Understanding between Town of Preston and Mohegan Tribal Gaming Authority (PDF)



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