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The Board of Selectmen held a Public Hearing on Tuesday, January 20, 2009 at 7:00 p.m at the Senior Center, 14 Riverside Road, Sandy Hook, CT to consider the proposal to lease Woodbury Hall on the Fairfield Hills campus to Glen Mountain Holding Company, LLC.
PRESENT: First Selectman Joseph Borst, Selectman Paul Mangiafico, Selectman Herb Rosenthal.
ALSO PRESENT: Finance Director Robert Tait, Attorney Fran Pennarola, Town Attorney David Grogins, thirty members of the public and three members of the press.
Attorney Fran Pennarola spoke as the representative for Glen Mountain Holding. Woodbury Hall was formally the nurse’s dormitory at Fairfield Hills, across the street from Newtown Hall. Lease discussions have been going on for several months. The tenant will rehab the building into a first class veterinary hospital offering 24/7 animal care where needed as well as offering specialized care not typically found in a local practice. The building will require extensive expenditures over and above the lease payment. The land was originally offered at $1,300,000 - $1,350,000 but there are environmental concerns and as a result of negotiations that occurred after environmental testing the lease was offered at $760,000 with a provision that if the environmental costs come in under $550,000 the
Town will share in any savings. The tenants will be spending millions of dollars to turn the facility into an asset to the community.
Town Attorney David Grogins announced the Public Hearing is to give the public the opportunity for the public to comment, it is not a question and answer session. The Board of Selectmen has this item on their agenda for the meeting following the public hearing. At that time the Board can raise any questions with the applicant or the Fairfield Hills Authority. The Public Hearing is not a debate; the public are free to make any comments. It is a provision of a public hearing to hear comments by the public.
PUBLIC COMMENTS:
Karen Banks, 43 West Street, Newtown believes the $760,000 lease for 30 years is far too low. When calculating it out it comes to $2,111 a month for a 30,209 square foot building, spread out over 30 years. Ms. Banks would prefer the Town get the money on an incremental basis instead of in a one lump sum, especially in a poor economic time. Ms. Banks wants clarification on the electricity and gas; will it be provided by the Town? Ms. Banks also questioned the 125 parking spaces, that seems like a lot for a veterinary hospital.
First Selectman clarified that the gas and electric is brought to the battery line, ten feet from the building. It is up to the tenant to finish the hookups from there. It is paid for by the tenant.
Dr. John Roumanis, Berkshire Veterinary Hospital, Toddy Hill Road, Sandy Hook also believes that the $760,000 lease is too low. Dr. Roumanis stated that he spoke with Elizabeth Stocker, Director of Community Development and was told that this is essentially a purchase, not a lease, as far as the Town is concerned. From a document income approach analysis a 75,000 square foot new construction project dated 5/17/07 lists, for tax purpose, Woodbury Hall worth $4,000,000. It is suggested abatement may cost $600,000. Why is the lease so low, adding the $760,000 to the remediation cost still leaves a balance? Real estate costs in this area, for commercial properties run $20-$25 per square feet. It looks as though the Town is giving away 29 years of rent. The payment terms are not
listed in the lease, town residents should know. The lease stipulates the use for only office veterinary, surgical and space for retail use as associated to support activities as related to such use. Does that mean they can rent out to MD's for office space? Dr. Roumanis also questioned provisions for tax abatements; the lease specifically prohibits tax abatements. There is no accurate representation of the cost of parking places. The Newtown Charter, section 6-690, expenditures and accounting, states "no officer or department of the Town shall expend or vote to incur any liability or expense by contract or otherwise or enter into any contract which would obligate the Town to expense in excess of an approved department line item appropriation..." Does the town have a line item expenditure for construction of the parking spaces; can you sign this lease if it is in violation of the Town Charter? Dr. Roumanis questions the need for
hospital this size considering there are similar practices in Stratford, Norwalk, Hartford and Cheshire. As a Town resident Dr. Roumanis feels the Town is giving away the value of Fairfield Hills. This is not a commercial lease, it is a give away.
Randy Murphy, Branford CT stated there are three other specialty hospitals in CT right now, each of those pay standard leases of over $18 per square foot per month, Shelton being the most recently established. A veterinary hospital lease for $760,000 seems ridiculous. If this hospital is needed, you should expect that it should be able to gross $5,000,000-$6,000,000 within its first three years of business. A fair margin number for rent is 5%-6% of the gross income. They should be able to support $300,000 rent per year.
Dr. Fred Baaf, 15 Orchard Hill Road, Newtown stated the lease is confusing. Planning and Zoning is amending the zoning regulations to allow this lease to go through. Dr. Baaf questioned the confidentiality agreement. Who is Glen Holding Company? What is their tracking record? What are the benefits to the Town? Why is the Town giving it away? What is the cost to the Town? What is the value of the acreage for parking? Is Glen Holding applying for tax incentives? The lease alludes the town will provide monetary benefits. Section 1a, 2, 3 and 4 talks about the town providing the electricity, not paying for it necessarily, but bringing the gas, electric, sewers and water to the building, at what cost? Dr. Baaf questioned the common charges.
Section 3.1of the lease states the lease is for 30 years for $760,000, that comes to 84 cents per square foot a year. The amended zoning regulation, section 6.03.300 states "a multi specialty animal hospital providing, but not limited to, surgical, emergency, medical oncology treatments of animals referred by outside veterinarians. Such a hospital does not provide routine veterinary services". The lease says "veterinary hospital", not a specialty hospital, it doesn’t say it doesn’t provide routine service. The lease does not hold Glen Mountain Holding Company to the zoning regulations. Do the taxes apply only to the land or do they apply to the building as it is reconstructed? Can Glen Holding apply for tax reductions? What happens if Glen Mountain Holding Company LLC defaults on the mortgage, how does the Town of Newtown get their land back? The lease has all the benefits to the lessee, but very few to
the people of Newtown.
LeReine Frampton, 6 Pebble Road, Newtown spoke as a citizen of Newtown stated that Glen Mountain Holding will be paying to bring building up to code. At the end of 30 years Newtown will have a building with heat and electric. Consider the cost added to the $760,000. The buildings are in bad shape, without heat and utilities since 1995. The Town has to bring gas and electric to any building at Fairfield Hills, not just Woodbury Hall; it will apply to any lease. Ms. Frampton is excited at the possibility of 24/7 service. People in Newtown care about their animals. The buildings are empty now; the area needs to be developed so people can move in. When somebody tries, they are shot down. Right now the Town is incurring the cost of Fairfield Hills, we need to
move forward. New businesses coming into Town are offered tax incentives, it's nothing new.
Ruby Johnson, 16 Chestnut Hill, Sandy Hook does not believe the people of Newtown should buy property to subsidize businesses moving into town. Fairfield Hills was purchased for municipal purposes. The Town desperately needs a new Police Department. A Town Hall bigger than what is being renovated at Fairfield Hills is needed for the town. Ms. Johnson stated she believes it is a conflict of interest because the Town Attorney has represented the Town for both t he Newtown Youth Academy and Glen Holding, as Attorney Pennarola has represented both Newtown Youth Academy and Glen Holding and Ms. Johnson stated that Claris has been engaged to renovate the building, as they were also the company that constructed the Newtown Youth Academy. The Fairfield Hills regulations states that if the
tenant invests over $3,000,000 they will pay 45% of what the building is worth. Would the Department of Health allow a veterinary hospital on the second floor, right hand side and allow retail shops on the left hand side of the first floor? Would the Department of Environmental Protection and the Department of Health allow business to be conducted on the first floor only if the top floor and the basement have not been abated of hazardous material? What company will do the abatement? I will submit questions to the Selectmen for answers.
Po Murray, 38 Charter Ridge Road, Newtown spoke as a private citizen stating she believes it is unfortunate the lease is out of the public hands. The leases will not be able to generate enough revenue to do what needs to be done at Fairfield Hills. Fred Hurley, (Director of Public Works) recently compiled a list for the possible Obama infrastructure fund. Included was $12.4 million dollars of infrastructure and demolition of Fairfield Hills buildings, Fairfield Hills water main, FFH sewer main, electric main, demolition of Greenwich, Litchfield, Plymouth and Shelton. The master plan of redevelopment also demolishes Norwalk, Stamford, Corcoran, Yale, Danbury, Kent and Canaan. The leases will not be able to fund the redevelopment of Fairfield Hills. The master plan needs to be
reevaluated. Ms. Murray urged the Board of Selectmen to commission a strategic planning group to figure out how to redevelop Fairfield Hills and questioned how the needs of the future will be funded.
Bruce Walczak, 12 Glover Road, Newtown stated his disappointment in the meeting process in that it isn't a question and answer. The Fairfield Hills Authority discussed the lease in executive session, which may be a violation of the Freedom of Information Act. Mr. Walczak asked many questions including: who is Glen Mountain Holding Company and have credit checks been done on the company and owner? Who is the landlord under the proposed lease? Is the lease being entered into by the Fairfield Hills Authority or the Town of Newtown? Does the insurance company pay for the liability if there is a problem with soil remediation, does the Town have an insurance policy and when does it expire? Will the Board of Selectman ask the tenant what their plans are and what kind of an
approval process will be exercised? What is the cost of providing parking and insurance? What is the cost to bring water, electric and sewer to Woodbury Hall? Who will incur the cost, Fairfield Hills Authority or Public Works? Who will plow the parking lot? What is the cost of maintenance? Why was the lease agreement reduced to $760,000? Why is the payment up front, with no cash flow from the lease over 30 years? Who will the lender be? How many extensions will the Board of Selectmen give to the tenants? What are the estimated taxes based on the planned improvements? Can the sewer system handle the waste; has the Board of Selectmen have evaluated the sewers? Who is responsible for the liability of any environmental contamination of the soil as a result of waste in the sewers if they are leaching? Has there been any recommendation to not use the sewers? What is the cost of permits?
First Selectman Borst declared the Public Hearing closed at 8:10 p.m.
Respectfully Submitted,
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Susan Marcinek, Clerk
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