Redding moves to foreclose on Gilbert & Bennett property

BY DIRK PERREFORT
Hearst Connecticut Media

Local taxpayers may be on the hook for millions of dollars in back taxes and bad debt accrued by the Georgetown Land Development Co. for the long-defunct redevelopment of the Gilbert & Bennett wire mill.

The redevelopment effort surrounding the mill was once heralded nationally as a model of transit-oriented development.

Plans created more than a decade ago had called for an economic powerhouse in the area that included a new train station, hundreds of housing units and commercial development on the 55-acre site that is traversed by both the Norwalk River and the Danbury Branch rail line. The property sits near the intersection of Redding, Ridgefield and Wilton.

The Norwalk River runs through the old Gilbert & Bennett wire mill in Redding. Town officials are preparing to foreclose on the owner, the Georgetown Land Development Co., for nonpayment of taxes. Photo by Carol Kaliff

But town officials this month said they are moving forward on foreclosure proceedings against the company after months of fruitless negotiations. Company officials, meanwhile, say there are discussions with bondholders who may take over the project in the near future.

“The Gilbert & Bennett site was looked at as a model for how these mill sites can be redeveloped, and we haven’t given up on that,” said First Selectwoman Julia Pemberton. “But despite ongoing negotiations, there hasn’t been a satisfactory resolution to either the taxes or the impasse of the project, so we are preparing to move forward with the foreclosure complaint.”

Despite receiving revenue from numerous sources, including lease payments from the National Park Service and local commercial leases to a car dealership and a landscaping firm, the company hasn’t paid any taxes for at least three years.

The company owes Redding nearly $3 million in back taxes and interest that continues to acrue at a rate of more $340,000 a year. The town is also on the hook for payments for a water treatment plant totaling more than $24,000 a month.

That’s in addition to the nearly $19 million the GLDC owes the Georgetown Special Taxing District, a local taxing authority created in 2005 that allowed the developers to float government-backed bonds. The district, however, is under the control of company officials, being the only property owners on the site.

Sources with knowledge of the situation said the company has received nearly $650,000 in lease payments from the parks service since the GLDC took over the site in 2002. The parks service has a maintenance shop on the property for the nearby Weir Farm National Historic Site.

On the hook

Pemberton said if the company is receiving revenue, then it should be paying taxes, particularly because town residents are effectively subsidizing the water control plant for future inhabitants of the site.

The taxing district secured the $5 million U.S. Department of Agriculture loan to construct the plant in 2006, and contracts called for GLDC to make “delta” payments to the district for the additional capacity at the plant. But the agreement also puts the town on the hook for the payments if the GLDC reneges on the deal, Pemberton said.

Those payments have already totaled more than $1.3 million. The plant was built as part of an early phase of the project to provide public utilities for the site.

The taxing district, meanwhile, has stopped making payments on the USDA loan as well as payments on more than $14 million of government-backed general obligation bonds secured in 2006 for infrastructure improvements on the site, which included building demolitions and daylighting ”“ or restoring ”“ a part of the Norwalk River, which was covered by a concrete tunnel on the site.

Chris Lynch, a real estate consultant brought in by the company in 2011 to help manage the taxing district and move the project forward, said that despite earning revenue on the site, there is no profit to speak of. The money, he said, is used for a variety of bills, including insurance payments, keeping approved permits active and on-site maintenance.

The project stalled, he said, because all of the necessary permits for the project weren’t secured before the financial meltdown of 2008. The significant amount of debt encumbering the property, he said, has made any effort to move forward with the project almost impossible.

Both Lynch and Scott Taylor, the undersecretary of intergovernmental policy for the state’s Office of Policy and Management, said there have been discussions with the holders of the general obligation bonds to take over the project. The bondholders, local officials said, are Oppenheimer, William Harris Investors and Invesco.

The Weir Farm maintenance office on the site of the former Gilbert & Bennett wire mill. Photo by Carol Kaliff

“At least one of the bondholders has been in discussions about a potential takeover of the property,” Taylor said.

He added that OPM actively monitors taxing districts that have government-backed general obligation bonds. Allowing such bonds to default, he said, would set a bad precedent in the state.

“The state is actively monitoring the situation to make sure that everyone who issues debt in this fashion lives up to their obligation,” he said.

Officials with the taxing district sent a letter to state officials in March, a copy of which was recently obtained by The News-Times, that states, “it is believed that the bondholders’ intent is to acquire title rights to the property and then commence development in accordance with the approved master plan.”

The letter, signed by Lynch, also states that “to this objective, the bond holders have met with other lien holders, including the town of Redding. It is our understanding that agreements have been reached between the bond holders and other lien holders, excluding the town of Redding.”

Pemberton said she could not speak about the ongoing negotiations with the company due to pending foreclosure litigation.

Hearst Connecticut Media includes four daily newspapers: Connecticut Post, Greenwich Time, The Advocate (Stamford) and The News-Times (Danbury). See newstimes.com for more from this reporter.