New pact sparks high hopes for sale of former Norwich Hospital property

Preston - After nearly 2½ years, the town is hoping to divide and conquer, so to speak, the site that housed the former Norwich Hospital.

Town and state officials have reached an agreement that allows the town to sell parcels of the property rather than the site as a whole, and allows it to do so without cleaning up the entire site or posting a bond to cover the entire cleanup cost.

The agreement follows two failed attempts on the town's part to sell the 390-acre parcel as a unit. Under that plan, potential buyers were required to remedy any environmental problems found on the land.

The amended plan comes about a week before Gov. Dannel P. Malloy's scheduled tour of the site as well as the due date for the first development proposals,

The amendment to the purchase and sale agreement between the state and the town not only allows the town to sell portions of the parcel without the cleanup requirement, but the portions, too, can be sold without first being cleaned up, First Selectman Robert Congdon said.

The town still retains the responsibility stated in the original agreement to clean up the entire former campus of the institution, which treated patients with mental illnesses for 90 years before closing in 1994.

Since taking ownership in March 2009, town officials had hoped to change the strict language in the agreement, but negotiations were lengthy between attorneys from the town and the state Department of Public Works. Officials at the attorney general's office also made revisions.

"It's been a long process, but finally we reached an agreement everyone can live with," Congdon said.

The Board of Selectmen voted Thursday to approve the agreement and set a town meeting for 7:30 p.m. Aug. 18 at Town Hall to review and vote on it.

The revised agreement requires town meeting approval, but it does not have to go to referendum, Congdon said.

The agreement still needs to be approved by the state Properties Review Board and two legislative committees before becoming final, but the town meeting must come first, Congdon said.

The stipulation in the original purchase and sale agreement was a stumbling block for the town, as it required the town to do extensive environmental cleanup of the entire former hospital property or post a bond with the state to cover the entire cleanup cost before any portion of the land could be sold for redevelopment. But the contract did not specify what amount of bond would satisfy the state requirement.

The proposed agreement adds to a busy mid-August week for Preston officials with the hospital property, now called Preston Riverwalk. Malloy plans to meet with members of the Preston Redevelopment Agency and tour the property Aug. 15 at 2:30 p.m. Town officials hope to obtain state grants to help with the environmental cleanup of the property the state abandoned for 15 years before offering it to the town.

The first development proposals for two small parcels south of the Mohegan-Pequot Bridge are due Aug. 16 at the Boston office of the town's real estate consultant, Jones Lang LaSalle. And the town meeting is scheduled to take place two days later to allow the town to negotiate the sale of those parcels without the cost of the environmental cleanup, expected to cost tens of millions of dollars.

c.bessette@theday.com